Datasets:

kmfoda

/

gov_report

like 3

Introduction The Klamath River Basin, a region along the California-Oregon border, has been a focal point for local and national discussions on water resources and species management. Water management issues were brought to the forefront when severe drought conditions in 2001 exacerbated competition for scarce water resources and generated conflict among several interests—farmers; fishermen (commercial and sport); other recreationists; federal wildlife refuge managers; environmental organizations; and state, local, and tribal governments. Subsequent problems with Klamath Basin fisheries, in particular events in 2002 and 2006 (see " Previous Events ," below), and conflict over the relicensing of the Klamath Hydropower Project, exacerbated these conflicts. Low water conditions and a call for water by senior water rights holders in 2013 have again brought these issues to the forefront. Congress has oversight authority over federal activities in the Klamath Basin related to operation of the Bureau of Reclamation's (Reclamation's) Klamath Project; management of federal lands (including six national wildlife refuges, managed by the Fish and Wildlife Service); and implementation of Endangered Species Act (ESA; P.L. 93-205 ) and other federal laws. Previously, Congress has held hearings and appropriated funding to address issues in the Klamath Basin. Past congressional debate has generally focused on the ESA's role in water management, the operation of the Klamath Project, and other topics, such as supplemental support for parties impacted by federal policies. The Klamath Basin Restoration Agreement (KBRA) and the Klamath Hydroelectric Settlement (KHSA), collectively referred to as the Klamath a greements in this report, were signed in 2010 by a wide array of basin interests (although not all basin interests support the agreements). They aim to address many of the ongoing conflicts in the Klamath Basin. The KBRA would, among other things, set limits for water allocations for irrigators and wildlife refuges under a range of conditions related to the amount of water forecast in a given year; attempt to make available supplemental water and power supplies in the basin; and provide for restoration and monitoring of certain fish species. It also includes other assurances to settle ongoing water conflicts between basin tribes and other entities, although it would not settle all ongoing conflicts in the basin. The KHSA lays out a process that could lead to removal of four nonfederal hydroelectric dams currently owned and operated by a private entity, PacifiCorp. If carried out as envisioned, the project would be one of the largest, most complex dam removals in history. Under the KHSA, the Secretary of the Interior led a study process to determine whether removal of these dams is in the public interest. Most of this study process has been completed, but the final step—a determination by the Secretary—would require congressional authorization. Although the Klamath agreements require congressional authorization to move forward on key components, some activities under existing authorities have already been undertaken. Consideration of the agreements could result in Congress revisiting previous issues in the Klamath Basin, as well as considering new ones. This report focuses on congressional consideration of the Klamath agreements. It assumes some familiarity with the basin on the part of the reader. Background The Klamath River Basin is a largely sparsely populated area on the Oregon and California border with limited water resources (see Figure 1 ). Irrigated agriculture in the upper basin relies in large part on water provided by the Bureau of Reclamation's Klamath Project. Other farmers and ranchers (known as off-project irrigators) also rely on basin water supplies for irrigation. The area is home to six national wildlife refuges that rely on the same water supplies to sustain migratory bird populations and several Native American tribes that were historically dependent on lower and upper basin fish species. Two species of upper basin fish are currently listed as endangered under the ESA (the Lost River and shortnose sucker), and one species of lower basin fish is listed as threatened under the ESA (coho salmon, an anadromous fish). The basin also includes seven dams on the Klamath River and its tributaries, built between 1918 and 1962. Six of these dams are owned by PacifiCorp, a private company, and are known collectively as the Klamath Hydroelectric Project (KHP). Historically, all but one of the dams produced hydroelectric power for the basin, including low-cost power for Klamath Project irrigators. The original Federal Energy Regulatory Commission (FERC) license to operate the KHP expired in 2006, and PacifiCorp applied for relicensing of the project in 2004. To date, a new long-term license has not been granted because of the lack of state certification under Section 401 of the Clean Water Act (P.L. 92-500), as well as ongoing uncertainty related to fish passage upgrades and the status of the Klamath agreements, discussed below. In the absence of a new FERC license, the project continues to operate under a temporary annual license with the same conditions of the expired FERC license. Previous Events While water and species management issues have been prevalent throughout the history of the Klamath Project, recent congressional consideration related to Klamath Basin usually centers on one or more of three seminal events that occurred in 2001, 2002, and 2006. These events resulted in press coverage, legal conflicts, and studies that framed the negotiations and agreements currently at issue. More recently, in the summer of 2013, a call on water rights under the newly released Oregon water rights adjudication resulted in limitations on water deliveries for junior water rights holders in the upper part of the basin. Several events have put the Klamath region in the national spotlight. In 2001, as a result of previous biological opinions by the federal Fish and Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS), the Bureau of Reclamation severely curtailed water deliveries to the Klamath Project to provide more water for endangered fish in the basin and to prevent their extinction. These allocations were met with protests by area irrigators, who threatened to open irrigation head gates by force. Later, in 2002, irrigators received more water than had been allocated in 2001, but thousands of fish (mainly Chinook salmon) died on the lower part of the Klamath River, largely due to poor water conditions and fish health in that part of the basin. In 2006, the National Oceanic and Atmospheric Administration severely restricted ocean fishing for salmon in the region due to low numbers of naturally spawning adults (due in part to residual effects of the aforementioned 2002 event). This restriction resulted in a large decrease in that year's commercial and recreational salmon catch compared to previous years. The federal government provided emergency funding in response to these and other events in the Klamath Basin. The funding included at least $170 million in addition to regular programmatic expenditures over the last decade. For instance, for the 2001 and 2006 events, the federal government provided approximately $35 million and $60 million in emergency aid, respectively. Aid in addition to regular agency programs and appropriations was also provided in other years. Between 2002 and 2007, Reclamation spent $14 million on a pilot water bank to alleviate water shortages. Due to drought events in 2010, an additional $10 million in supplemental appropriations was provided to the Klamath Basin in that year and $2 million was provided for a Klamath Drought Initiative by the U.S. Department of Agriculture (USDA). The 2002 farm bill provided $50 million to the Klamath Basin, and USDA funding was also provided under other general authorities and programs authorized in the 2002 and 2008 farm bills. In addition to these events, an Oregon state water rights adjudication in the basin that was first initiated in the 1970s received added attention in 2013 (See box above, "Klamath Water Rights Adjudication"). At the conclusion of the adjudication's administrative phase, the state of Oregon upheld a number of previous water rights claims including, among other things, that the Klamath Tribes have water rights with a date of "time immemorial." These water rights are now protected under Oregon law and were exercised over junior water rights holders in the basin for the first time in the summer of 2013. The 2013 "call" on water rights (in which senior water rights holders gave notice that their demands exceeded available flows) limited or shut off water deliveries to some junior water rights holders (for the most part, off-project irrigators) in the upper basin. Klamath Settlement Agreements In response to conflicts and other issues in the Klamath Basin, the federal government facilitated talks among multiple groups between 2002 and 2010, including formal negotiations to reach two major settlement agreements between 2006 and 2010. Participants in negotiations included state governments, tribes, counties, irrigators, fishermen, conservation groups, and hydropower facility owners and users. The goal of the negotiations was a long-term solution to the multiple water and endangered species issues in the Klamath Basin, including the aforementioned issues associated with irrigation deliveries and flows for fish, as well as potential issues associated with pending water rights adjudications and relicensing of the basin's hydroelectric dams. The two agreements that resulted from the negotiations, the KBRA and the KHSA, are officially linked in that signatories see them as complementary and do not support authorization of one agreement without the other. Originally, both agreements were set to expire without congressional authorization by 2012, but this deadline has been extended to 2014. In response to concerns and outstanding issues in the upper basin, in 2013 a task force was convened to incorporate additional issues not addressed by the KBRA and KHSA. Among other things, it resulted in an additional settlement agreement in late 2013, the " Upper Klamath Basin Settlement Agreement ," discussed below. Klamath Basin Restoration Agreement The KBRA was negotiated by stakeholders and other groups in the Klamath Basin. It was agreed to by more than 40 signatories, or parties, although not all interests in the basin support it. Broadly speaking, under certain conditions, parties to the KBRA promise to support diversions for Klamath Project irrigators and federal wildlife refuges that correlate to a given year's forecast inflows into Upper Klamath Lake. Water that is surplus to these inflows and not subject to other valid water rights (e.g., off-project diversions) would be allocated to other uses, including instream flows (see Table 1 for an abbreviated summary of this arrangement). In exchange for this support, environmental interests would gain additional federal and state funding for fisheries restoration, some of the aforementioned surplus water supplies, and related assurances for dam removal under the KHSA (which is expected to restore fisheries). Parties have also agreed that the ESA will not be amended under the agreement. For their part, three of the four largest tribes in the basin agreed to support the project and refuge diversions and not make a call on certain water rights in exchange for the aforementioned restoration actions, federal actions to restore fisheries, and economic aid. The exact projections of the effects of the KBRA allocations on various water users are subject to debate. However, compared to recent water years, the allocations are generally expected to result in less water for Klamath Project irrigators in wet years but more certainty—and potentially greater allocations than may have been the case otherwise—in dry years. Under the agreement, area irrigators are also promised funding to develop low-cost power to replace hydropower previously provided by the PacifiCorp dams, as well as funding to potentially make available more water supplies through means yet to be determined. Irrigators who did not initially agree to the KBRA, including some off-project irrigators in the upper basin, were not subject to the KBRA's assurances as they relate to tribal water rights. However, these irrigators have subsequently come to an agreement with the Klamath tribes that may prevent future curtailment of deliveries in exchange for promised retirement of some water rights and support for the KBRA and KHSA. The federal government is not party to the KBRA until Congress enacts authorizing legislation. Some of the actions envisioned by the KBRA have been interpreted as not being authorized and would require significant federal appropriations to go forward. Initial estimates stated that total federal costs to implement the Klamath agreements would be $798.5 million or $536 million over 15 years (depending on the assumptions used). A 2013 revision to these figures clarified that the "new" appropriations needing to be authorized to implement the agreements would total approximately $250 million over 15 years. Klamath Hydroelectric Settlement Agreement The KHSA initiates a process that could lead to removal of four nonfederal hydroelectric dams (J.C. Boyle, Iron Gate, Copco 1, and Copco 2) currently owned and operated by a private entity, PacifiCorp. The agreement also provides related assurances. Most significantly, the KHSA lays out a process for additional studies and environmental review by the Secretary of the Interior to consider removal of the dams (known as the Secretarial Determination ). Under the agreement, the facilities' removal would be paid for by ratepayers in California and Oregon ($200 million) and an assumed California Water Bond ($250 million). The entity responsible for removal (known as the Dam Removal Entity, or DRE) has yet to be defined. The KHSA also addresses the interim operation of the dams as well as proceedings that could lead to transfer, decommissioning and removal of the dams. The KHSA would transfer one dam (Keno Dam) to the Bureau of Reclamation, and it would initiate a process to decommission other resources associated with the project. In contrast to the KBRA, the federal government was party to the KHSA. Reclamation has interpreted some actions within the KHSA as not requiring an explicit authorization by Congress (i.e., as being authorized under existing, more general, authorities), and these actions have been completed. The central component of the KHSA, the dam removal study, was conducted under Reclamation's general authorities and finalized in October 2012. The Department of the Interior (DOI) and most parties agree that congressional authorization is necessary to make a final Secretarial Determination on dam removal and to move forward with that project. The Secretarial Determination was originally expected by March 2012. However, since no authorizing legislation has been enacted, the deadline (which was not binding) has passed. Upper Klamath Basin Settlement Agreement In July 2013, members of the Oregon congressional delegation requested that a separate task force, the Klamath Basin Task Force, be convened to discuss several outstanding issues not addressed in the Klamath agreements. These issues included (1) water rights conflicts in the upper basin that were not addressed in the KBRA and that led to decreased irrigation deliveries in summer 2013 (see above section, " Previous Events "); (2) power issues among both Klamath Project and off-project irrigators; and (3) the perceived need to reduce the overall cost of the Klamath agreements. The task force released its report on December 3, 2013. It recommended support for authorizing legislation with specific components in addition to the KBRA and KHSA, such as a new settlement agreement among water rights holders in the Upper Klamath Basin (which was not provided for in the original KBRA). It also recommended the inclusion of authority to serve off-project irrigators with the same low-cost power envisioned for Klamath Project irrigators under the KBRA. Finally, it addressed cost concerns by recommending that any authorizing legislation for the Klamath agreements include only new authorities and authorizations of appropriations needed to execute the agreements at a total cost of $250 million over 15 years. The new settlement agreement recommended by the task force, the Upper Klamath Basin Comprehensive Agreement (the Upper Basin Settlement) was circulated for public comments and finalized in April 2014. It ostensibly would prevent a scenario such as the 2013 call on water rights from occurring again in exchange for, among other things, an additional 30,000 acre-feet per year in inflows into Upper Klamath Lake (resulting from reduced off-project agricultural uses in the upper basin); it also would provide for certain riparian restoration actions and certain regulatory assurances related to the ESA. In exchange, senior water rights holders have agreed to not make a call on junior water rights similar to the one made in 2013. To be implemented, the Upper Klamath Basin agreement would need to be ratified along with the KBRA in any future authorizing legislation. Congressional Action The Klamath agreements require congressional authorization to be implemented. In the 114 th Congress, S. 133 would authorize the Klamath agreements, with certain changes. In the 113 th Congress, two bills were proposed to authorize the agreements: S. 2379 and S. 2727 . S. 133 would provide congressional authorization of the actions described under the KBRA, the KHSA, and the Upper Klamath Basin agreement. It would authorize approximately $250 million in new federal activities envisioned under the KBRA and the Upper Basin Settlement for various actions in the on-project plan. Some of the prominent activities from the agreements that would be authorized (either directly or by reference) in the bill include a drought response plan, potential water rights retirement for certain junior water rights holders, economic development payments and activities for tribes, ecosystem restoration activities, and provision of low-cost power for project and off-project irrigators. S. 133 would also provide congressional authorization for certain steps under the KHSA that are important to the dam removal process moving forward. In addition to authorization of new activities in the Klamath agreements, the bill also includes assurances that certain preexisting rights and authorities (e.g., specific tribal claims/rights) would not be affected. Other significant changes to Klamath authorizing legislation have been made over time and are included in S. 133 . Among other things, the current legislation alters the proposed structure of the dam removal arrangement so that the dam removal determination under the KHSA would be made jointly by DOI and the states of Oregon and California (rather than being made solely by DOI with concurrence by the states). Similar to legislation in the 113 th Congress, S. 133 would add new reporting requirements for dam removal (including a report on planned facilities removal to be published one to two years prior to the removal of the dams) and ecosystem restoration, plus several smaller alterations to individual provisions of the agreements. Among other things, it would direct that dam removal costs include "reasonable compensation" for property owners affected by dam removal and would alter the disposition of certain revenues from FWS lands in the basin. Issues for Congress In considering legislation related to Klamath restoration, Congress may focus on a number of issues, including the cost of implementing the legislation, its position on specific strategies and actions in the two agreements versus the status quo, and the potential for future disruptions in water supply deliveries in the basin. A brief discussion of some of these issues is provided below. Role of the Federal Government The role of the federal government in the Klamath Basin centers largely on operation of the Bureau of Reclamation's Klamath Project, management of several national wildlife refuges and other fish and wildlife resources under the ESA, and tribal trust responsibilities. The federal role has been contentious in the past and is a central question related to congressional consideration of the Klamath agreements. Both agreements assume numerous actions by the federal government, and, as noted earlier, a subset of these actions cannot go forward absent new congressional authorization. In particular, the agreements envision an expanded federal role in the Klamath Basin in regard to the dam removal process (i.e., a determination on dam removal), provision of payments for water rights retirement, and pursuit of low-cost power for irrigators, among other things. These actions are not currently authorized in the basin and have been proposed to alleviate ongoing conflicts. Without authorization of these provisions, some supporters of the KBRA and KHSA may withdraw their support for the agreements. Supporters of the Klamath agreements argue that because of the federal government's prominent role in the basin, including its role in the area's resource allocation conflicts, it has a responsibility to help solve these issues. These groups note that federal involvement, including operation of the Klamath Project, implementation of ESA, and management of fisheries and federal lands, is central to conflicts in the basin. They argue that the agreements represent a consensus achieved by a majority of basin interests that are traditionally opposed to one another and are the best opportunity to solve the region's problems going forward. They also argue that many of the expenses for these agreements are likely to be offset in the form of reduced future federal expenditures for litigation and emergency financial support. Supporters also note that the agreements will be a valuable source of jobs within the basin. Opponents of one or both of the agreements cite a number of reasons for their opposition. Some note that the federal government has no clear obligation to authorize and implement the agreements, and they contend that federal involvement in this case amounts to overreach that will harm the local economy. These opponents have argued that the activities represented in both agreements, such as dam removal and water quality improvements, could potentially occur through preexisting processes and authorities. Some also generally oppose the removal of operational dams and associated hydropower facilities, including those in the Klamath Basin, on principle because of the dams' status as an energy source. Finally, some argue against federal authorization of the Klamath agreements because they believe that specific components of the agreements will undermine existing federal laws (e.g., the ESA) or federal responsibilities (e.g., tribal trust responsibilities) or that they will fail to achieve their stated goals (e.g., fisheries restoration). Cost of Implementation Some Members of Congress have expressed concerns about the cost to the federal government to implement the agreements. Most have assumed that the majority of actions in the KBRA would be federally funded, including the costs for the on-project plan, fisheries restoration, and tribal components of the agreement. A detailed discussion of the estimated costs for the agreements (in particular those for the KBRA) and how they have changed over time is provided below. There have been multiple estimates of the cost to implement the Klamath agreements, and in some cases these have contradicted one another or employed differing assumptions. The original 2010 KBRA estimated $970 million (in 2007 dollars) for the total cost to implement the KBRA over a 10-year window. Most of these costs were assumed to be incurred by the federal government, although the exact split was not specified. In 2011, this figure was revised to estimate the federal government's portion of expenses over a newly extended 15-year window. This estimate indicated that the federal cost to implement the agreement over 15 years would be $795 million (2007 dollars). Thus, there was a reduction in the estimated costs using constant 2007 dollars. The 2011 revision reflected increased state commitments for some activities and altered assumptions in other areas. The 2011 estimate also included an estimate of "base" funding already being spent in the basin that could potentially reduce the "new" costs of the agreements to the federal government, but it did not estimate the amount of budget authority required for previously unauthorized activities. The first two estimates were most recently revised in a December 2013 report by the Klamath Basin Task Force, which estimated that $923 million (in 2014 dollars) in federal funds would be required to implement the agreements and that $250 million of this funding would come from newly authorized appropriations. The 2013 report also provided a retroactive estimate for the new authorizations of appropriations under the 2011 document. Table 2 , below, provides a comparison of these costs, including estimates in constant dollars. In contrast to the KBRA, cost estimates to implement the KHSA have not changed substantially since the original agreement. They also have not garnered as much attention from Congress because states are the primary entities responsible for funding dam removal under the KHSA. Previous studies by DOI to inform the Secretarial Determination estimated potential costs of approximately $290 million for dam removal, which is less than the combined amount anticipated to be available from ratepayers ($200 million) and the state of California ($250 million). One potential issue related to these costs is whether the dam removal determination will recommend the federal government as the dam removal entity. If so, a major question may be how additional costs for dam removal, such as cost overruns and costs resulting from potential lawsuits, would be handled. There is no formal estimate of potential future savings to state and federal governments associated with the agreements. Supporters point to previous costs to federal and state governments that would be unlikely to occur if the agreements are implemented, including at least $170 million in supplemental aid for irrigators and fisheries that has been provided since 2001. Advocates also point to decreased costs for litigation as a result of agreements. Although the agreements would not prevent future litigation, supporters argue that, if authorized, they would obligate parties to pursue other dispute resolution mechanisms that are expected to be less costly and would thus render future litigation costs less likely. Opponents note that none of these savings are guaranteed under the agreements and that supplemental appropriations and expenditures for litigation may still be necessary. In addition to savings, supporters also argue that the KBRA and KHSA could create economic benefits, both in terms of traditional and "non-use" benefits. Studies commissioned to advise DOI's secretarial determination on dam removal estimated that the total potential value of restoration, including non-use values, could total $16 billion-$84 billion, depending on the assumptions and methodology used. Some dispute these estimates and argue that they are unrealistically large or derived from questionable methodologies. Obtaining authorization and appropriations for these activities from Congress may be difficult. In the 113 th and 114 th Congresses, authorization of new programs and projects by both chambers has been limited. Beyond authorization of new funds, some observers also note that it is unlikely that federal agencies will obtain the new appropriations envisioned for the KBRA in a constrained budgetary environment. Hypothetically, a lack of discretionary appropriations or overall progress associated with future actions assumed in the KBRA or KHSA could affect the status of support for either agreement among the parties and thus cause additional conflicts among the agreement's supporters. Supporters have for the most part acknowledged these difficulties, but they argue that initial authorization of the agreements is an important first step and that the basin's issues are important enough to warrant congressional authorization and funding. Dam Removal Some believe that congressional authorization of the agreements (in particular the KHSA) would be an implicit endorsement of dam removal. Since authority for the Secretary of the Interior to make a final determination on dam removal is a key step in the KHSA, some argue that authorization of the agreements is the primary opportunity for Congress to weigh in for or against this decision. Although it did not formally recommend dam removal, the study findings intended to inform the Secretary's dam removal determination did not find major drawbacks associated with this course of action. Thus, some have concluded that if Congress authorizes the dam removal determination to go forward, a finding that dam removal would be in the public interest is likely. While many in Congress support dam removal as a means to restore rivers, others see it as an unnecessary and expensive step that decreases the availability of renewable energy. Additionally, while the KHSA anticipates that ratepayers and the state of California will be the primary entities funding dam removal, the extent to which the federal government will be involved in this process remains unclear. Stakeholders disagree on whether dam removal would happen without the KHSA and the related determination by the Secretary of the Interior. Opponents have noted that PacifiCorp-funded dam removal would be likely under FERC relicensing conditions; however, PacifiCorp and other supporters of the KHSA note that a different outcome (such as fish passage upgrades) could occur under the FERC process for a number of reasons (for more information, see below section, " Stakeholder Views "). Implementation of ESA The extent to which the Klamath agreements will alter implementation of the ESA and other federal laws is a matter of disagreement. Previous biological opinions established minimum flows on the Klamath River for coho salmon, as well as actions intended to aid the recovery of Lost River and shortnose suckers. According to supporters, the Klamath agreements will be considered to the maximum extent practicable under the ESA. At the same time, both agreements state that implementation of the agreements shall not affect implementation of the ESA by DOI or the NMFS. A perceived conflict between these two objectives, and a lack of clarity on how exactly they will be interpreted and implemented, has resulted in ongoing disagreements among some stakeholders. While the agreements do not waive application of the ESA, some groups that were not signatories argue that certain provisions—in particular the defined water allocations for irrigators—would undermine the ESA. These groups note that the allocations for irrigators would provide more water than irrigators received under ESA stipulations during recent low water years and would thus decrease flows from amounts provided under recent biological opinions and provide less water for fisheries. They note that while other processes under the ESA would technically go forward, the assurances in the agreements, if adopted in legislation, could result in additional pressure on regulatory agencies to adopt biological opinions that allow the flows set forth in the proposed Water Resources Program. Supporters note that the Klamath agreements would provide for more resources and actions to improve habitat for fish species, which they argue are just as important as the difference in flows that could occur under some scenarios. Improvements under the KBRA, including new fish habitat and improved water quality, are assumed to result in greater fish abundance, which would in turn allow managers to forgo the previous restrictive flows that were provided under the ESA. Furthermore, some believe that the KBRA could in the long term encourage more cooperative actions, which could improve the likelihood of listed species' recovery and are preferable to previous "top-down" regulatory actions. Stakeholder Views While stakeholder views on the Klamath agreements can broadly be divided into those supporting the agreements and those opposed to one or both of the agreements, such a simple characterization may not do justice to the various motives, preferences, and specific interests of many of these groups. Although a majority of interest groups involved in initial settlement negotiations endorsed both agreements, reasons for support among these groups are varied and in some cases are likely to be contingent on specific parts of the agreements (e.g., guarantees related to water supplies, whether or not dam removal is provided for, etc.) going forward. Among those opposed to the agreements, reasons for opposition also vary widely. They include reasons ranging from perceived economic damages resulting from the agreements to the agreements' overall lack of environmental protections or effect on implementation of existing laws. Support for Agreements Among those supporting the Klamath agreements are all the parties listed as nonfederal parties within both the KBRA and the KHSA. For the KBRA, this includes 5 state agencies in Oregon and California, 3 tribes, 1 county (Humbolt County, in California), 25 parties related to the Reclamation Project, some off-project interests, and several other groups (including environmental interests). These same groups are also party to the KHSA. Other groups and individuals were not party to the agreements but have stated their support for them. These include, most recently, off-project irrigators in the upper basin who have agreed to support the Klamath agreements under the Upper Klamath Basin Agreement in Principle, signed in April 2014. Notably, supporters have agreed to support authorizing legislation for both agreements (e.g., KBRA signatories have backed enactment of the KHSA) and have generally argued that the agreements themselves must be linked. The states of California and Oregon, as well as the Obama Administration, support the agreements because they represent a potential solution to the protracted resource conflicts in the upper and lower basins. Government representatives also have pointed to the costs that resulted from previous conflicts in the basin, including supplemental aid, crop insurance, mitigation actions, and litigation costs. Other groups have chosen to support the agreements not only for their potential to end conflicts in the basin but also because they include specific provisions that are important to certain groups. For instance, environmental groups have pledged to support the allocations for irrigation absent a similar allocation for fish in exchange for assurances of dam removal under the KHSA and other promised fisheries restoration actions under the KBRA. Among irrigators, those on the Klamath Project have pledged to support restoration provisions and less water in wet years in exchange for benefits from water supplies in dry years that presumably would be higher than under the status quo. Approximately half of the off-project irrigators in the upper basin support the agreements, in some cases because the agreements offer potential alternatives that are preferable to losing water deliveries outright due to their junior water rights status. For its part, PacifiCorp notes that it supports removal of its four dams under the KHSA because retirement of the dams under the terms of the KHSA reportedly represents a more cost-effective option for its ratepayers than FERC relicensing. Previously there have been disagreements over which option the company would pursue in absence of the KHSA: FERC relicensing for ongoing operations on all four dams (which would entail costly improvements for fish passage, and altered operations for water quality) or a surrender of its license and related decommissioning of some or all of the Klamath hydropower projects. Both options would likely be costly for PacifiCorp and its ratepayers, and could potentially cost the company more than the arrangement under the KHSA. The KHSA also has the added benefit of allowing the company to operate the dams under the current management regime through 2019, through annual extensions to the project's FERC license. Opposition to Agreements Some groups and individuals oppose the Klamath agreements and their authorization. Some of these parties were initially involved in settlement negotiations but dropped out for various reasons, while others were not invited to participate in negotiations because they were not seen as representing significant interests. Still others, including county officials in the areas of the Reclamation project and dams, oppose the agreements in their elected capacities. Notable opponents of the Klamath agreements include local officials in Klamath County in Oregon and Siskiyou County in California, the Hoopa Valley and Resighini Rancheria and Quartz Valley tribes, the Northcoast Environmental Center, Waterwatch of Oregon, Oregon Wild, and others. As noted above, some groups that initially opposed the agreements, including approximately half of the off-project irrigators in the upper basin, recently reached an agreement, the Upper Basin Agreement, the effectiveness of which is tied to the authorization of the KBRA and KHSA. Other opponents, including Klamath and Siskiyou County, have since stated their opposition to that agreement for its ties to the KBRA and KHSA (which they also oppose). Some groups oppose the agreements because they believe the agreements will further damage the region's economy. Some off-project users continue to oppose the agreements (including the Upper Basin Settlement) because of economic damages to farmers resulting from water rights retirement and restoration requirements. Siskiyou County has opposed the agreements for a number of reasons, including the assertion that the PacifiCorp dams provide flood protection and economic benefits for downstream areas. Some residents and officials in these areas also oppose dam removal because of an expected loss of property taxes associated with certain lands that will lose lake frontage when the dams are removed. Others argue that the agreements do too little to benefit fisheries and give up too much to farmers and other interests. For instance, the Hoopa Valley Tribe has been critical of the agreements because it feels that the provisions of the KBRA have the potential to terminate the duty of the United States to assert and protect tribal fishery rights when they conflict with operation of the Klamath Reclamation Project. The tribe argues that the KBRA would subordinate its senior priority water rights to the junior water rights of the irrigation project. Some opponents have also focused on the uncertain nature of fisheries restoration in the Klamath under the KBRA. Some contend that these uncertainties were highlighted in expert panels as a part of the larger DOI dam removal study process but were not adequately acknowledged by DOI in its final studies. Some of these groups favor dam removal but argue that removal could be achieved through the existing FERC relicensing processes and does not need to be tied to the KBRA. They note that by providing annual renewals of the FERC license for the Klamath Hydroelectric Project, the KHSA allows the company to avoid project upgrades (or removal) that would otherwise be paid for by the company and benefit fisheries in the short term. Combined with a lack of performance metrics for fisheries restoration provisions and promises to not make a call on project water rights holders under the KBRA, these opponents assert that the agreements disproportionately benefit PacifiCorp and irrigators at the expense of fisheries. Some environmental groups oppose other provisions of the Klamath agreements and dropped out of negotiations as a result. Waterwatch of Oregon and Oregon Wild find fault with a number of the provisions in the agreements, including the lack of water supplies for fish and the inclusion of lease-land farming on wildlife refuges. Along with the Hoopa Valley Tribe, these groups have called for voiding the KHSA and resuming water quality certification processes under the Clean Water Act to force dam upgrades or removal through a separate process, which they argue will be more expedient and less costly for state and federal taxpayers (i.e., a process to be funded by PacifiCorp and potentially its ratepayers). The Yurok Tribe, which initially supported the Klamath agreements, issued a notice of withdrawal from the agreements in September 2015. Among other things, the tribe cited inaction by Congress and disagreements with the provisions of the Upper Klamath Settlement Agreement, in which it was not invited to participate.

The Klamath River Basin on the California-Oregon border is a focal point for local and national discussions on water allocation and species protection. Previously, water and species management issues have exacerbated competition and generated conflict among several interests—farmers; Indian tribes; commercial and sport fishermen; federal water project and wildlife refuge managers; environmental groups; hydropower facility operators; and state, local, and tribal governments. Drought conditions and a call for water by senior water rights holders in 2013 have again brought these issues to the forefront. In 2010, the Secretary of the Interior and the governors of Oregon and California, along with multiple interest groups, announced the results of a multiyear negotiation process to resolve long-standing issues in the basin: two interrelated agreements, supported by the federal government and signed by the two states and numerous other parties. These agreements, known as the Klamath Basin Restoration Agreement (KBRA) and the Klamath Hydroelectric Settlement Agreement (KHSA), together aim to provide for water deliveries to irrigators and wildlife refuges, fish habitat restoration, and numerous other related actions. Generally, the KBRA provides for actions intended to restore Klamath fisheries and for assurances for water deliveries to wildlife refuges and federal project irrigators under certain circumstances, among other things. The KHSA lays out a process that could lead to the removal of four privately owned dams on the Klamath River. This dam removal would be one of the largest and most complex projects of its kind ever undertaken. Some parts of the Klamath agreements are being carried out under existing authorities. Studies to inform a determination on dam removal under the KHSA by the Secretary of the Interior are complete, and some restoration actions have been initiated. However, congressional authorization is required for the most significant components of the agreements to be implemented. The KBRA and KHSA did not address all outstanding issues in the basin. A water rights adjudication by the state of Oregon (in progress since the 1970s) is ongoing. In 2013, the adjudication reaffirmed "time immemorial" tribal water rights in the upper part of the Klamath Basin, confirming that tribal water rights are senior to those of other water rights holders. This resulted in a "call" on water rights (i.e., notice by senior water rights holders that their demands exceed available flows), and led to reductions to water supplies for some junior users during the low water year of 2013. To resolve these issues and prevent such a scenario from occurring again, a separate settlement agreement (the Upper Klamath Basin Settlement Agreement) was negotiated by stakeholders and finalized in April 2014. To be implemented, the agreement would need to be authorized along with the KBRA and KHSA. The KBRA and KHSA were originally set to expire in 2012 if no authorizing legislation was enacted, but they have since been extended (most recently through 2015). Parties may also withdraw individually from the agreements, and several parties initiated this process of withdrawal. In the 114th Congress, S. 133 would authorize the Klamath agreements, including a suite of new federal actions that have received support from disparate parties and are required for the agreements to be implemented. Previous legislation in the 113th Congress (S. 2379) was ordered to be reported out of the Senate Committee on Energy and Natural Resources on November 13, 2014.

About HHS The mission of the U.S. Department of Health and Human Services (HHS) is to "enhance the health and well-being of Americans by providing for effective health and human services and by fostering sound, sustained advances in the sciences underlying medicine, public health, and social services." HHS is currently organized into 11 main agencies, called "operating divisions," which are responsible for a wide variety of health and human services and related research (see a list of these agencies in the G lossary below). In addition, HHS has a number of "staff divisions" within the Office of the Secretary (OS). These staff divisions fulfill a broad array of management, research, oversight, and emergency preparedness functions in support of the entire department. Eight of the HHS operating divisions are part of the U.S. Public Health Service (PHS). PHS agencies have diverse missions in support of public health, ranging from the provision of health care services and supports (e.g., IHS, HRSA, SAMHSA), to the advancement of health care quality and medical research (e.g., AHRQ, NIH), to the prevention and control of infectious and chronic diseases and environmental health hazards (e.g., CDC, ATSDR), and the regulation of food and drugs (e.g., FDA). The three remaining HHS operating divisions are not PHS agencies: ACF, ACL, and CMS. ACF and ACL largely administer human services programs focused on the well-being of vulnerable children, families, older Americans, and individuals with disabilities. CMS—which accounts for the largest share of the HHS budget by far—is responsible for administering the Medicare and Medicaid programs, and some aspects of the private health insurance market. Overview of the FY2018 HHS Budget Request The HHS budget request for FY2018 was affected by two notable circumstances. The first was a presidential transition, from the Administration of President Barack H. Obama to the Administration of President Donald J. Trump, occurring in late January 2017. As a result of this transition, the full FY2018 budget submission was delayed until May 22, 2017. The second notable circumstance affecting the FY2018 HHS budget request is that final FY2017 appropriations ( P.L. 115-31 ) were not enacted until May 5, 2017, about two weeks before the FY2018 budget was submitted. Consequently, final appropriations levels for FY2017 were largely unknown during the formulation of the FY2018 budget proposal, and the HHS budget does not include a display of FY2017-enacted levels. The HHS budget instead displays FY2017 estimates derived from two sources: For discretionary spending programs, the HHS budget displays annualized estimates of funding provided under the second FY2017 continuing resolution (CR, P.L. 114-254 ). Generally, this CR was a formulaic extension of FY2016 funding levels with an across-the-board adjustment and exceptions for particular accounts and activities. For mandatory spend ing programs, the HHS budget displays estimates of the amounts expected to be needed for FY2017 based on criteria outlined in authorizing law. (For related discussion, see " Budgetary Resources versus Appropriations .") While the estimates of annualized spending under the FY2017 CR may have informed FY2018 budget negotiations within the Administration, these estimates (in particular) should not be treated as FY2017 "final" or enacted levels for the purposes of comparison to prior years or the FY2018 proposal. Under the budget request, HHS would spend an estimated $1.131 trillion in outlays in FY2018 (see Table 1 ). This is $422 million (+0.04%) more than the FY2017 estimate (based on the annualized CR and current services mandatory spending), and about $28 billion (+2.55%) more than FY2016 actual. The Office of Management and Budget (OMB) estimates that HHS will account for more than a quarter of all federal outlays (nearly 28%) in FY2018. HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Figure 1 displays proposed FY2018 HHS outlays by major program or spending category in the President's request. As this figure shows, mandatory spending typically accounts for the vast majority of the HHS budget. In fact, two programs—Medicare and Medicaid—are expected to account for 88% of all estimated HHS spending in FY2018. Medicare and Medicaid are "entitlement" programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law. This figure also shows that discretionary spending accounts for only about 7% of FY2018 HHS outlays in the President's request. Although discretionary spending represents a relatively small share of total HHS spending, the department nevertheless receives more discretionary money than most federal departments. According to OMB data, more than half of the President's request for discretionary budget authority in FY2018 would go to the Department of Defense (56%), with the second largest share going to the Department of Veterans Affairs (7%). HHS would receive the third largest share (nearly 6%) of all discretionary budget authority requested by the President, followed by the Department of Education (5%). Budgetary Resources versus Appropriations Readers should be aware that the HHS budget includes a broader set of budgetary resources than the amounts provided to HHS through the annual appropriations process. As a result, certain amounts shown in FY2018 HHS budget materials (including amounts for prior years) will not match amounts provided to HHS by annual appropriations acts and displayed in accompanying congressional documents. There are several reasons for this, described throughout this section. First, mandatory spending makes up a large portion of the HHS budget and much of that spending is provided directly by authorizing laws, not through appropriations acts. All discretionary spending is controlled and provided through the annual appropriations process. By contrast, all mandatory spending is controlled by the program's authorizing statute. In most cases, that authorizing statute also provides the funds for the program. However, the budget authority for some mandatory programs, including Medicaid, while controlled by criteria in the authorizing statute, must still be provided through the annual appropriations process; such programs are commonly referred to as "appropriated entitlements" or "appropriated mandatories." In addition, the HHS budget request takes into account the department as a whole, while the appropriations process divides HHS funding across three different appropriations bills. While most of the discretionary spending for the department is provided through the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) Appropriations Act, funding for certain HHS agencies and activities is appropriated in two other bills—the Departments of the Interior, Environment, and Related Agencies Appropriations Act (INT) and the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act (AG). Table 2 lists HHS agencies by appropriations bill. Moreover, the Administration's estimates for HHS programs may follow different conventions than congressional scorekeepers. For example, certain transfers of funding between HHS agencies (or from HHS to other federal agencies) that occurred in prior fiscal years, or are expected to occur in this fiscal year, may be accounted for in the Administration estimates but not necessarily in the congressional documents. In addition, HHS budget materials may include two different estimates for mandatory spending programs in FY2018: proposed law and current law . Proposed law estimates take into account changes in mandatory spending proposed in the FY2018 HHS budget request. Such proposals would need to be enacted into law to affect the budgetary resources ultimately available to the mandatory spending program. HHS materials may also show a current law or current services estimate for mandatory spending programs. These estimates assume that no changes will be made to existing policies, and instead estimate mandatory spending for programs based on criteria established in current authorizing law. The HHS budget estimates in this report reflect the proposed law estimates for mandatory spending programs, but readers should be aware that other HHS, OMB, or congressional estimates might reflect current law instead. Finally, the amounts of discretionary spending provided in the appropriations bills do not necessarily account for all of the budgetary resources that are available to those agencies. This is because agencies within HHS may have the authority to expend user fees and other types of collections that effectively supplement those appropriations. In addition, agencies may receive transfers of budgetary resources from other sources, such as from the Public Health Service Evaluation Set-Aside (also referred to as the PHS Tap) or one of the mandatory trust funds established by the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 ). Budgetary totals that account for these sorts of resources in the Administration estimates are referred to as being at the "program level." HHS agencies that have historically had notable differences between the amounts in the appropriations bills and their program level include the Food and Drug Administration (due to user fees) and the Agency for Healthcare Research and Quality (due to transfers). The program level for each agency is listed in the table entitled, "Composition of the HHS Budget Discretionary Programs" in the HHS FY2018 Budget in Brief (BIB). HHS Budget by Operating Division Table 3 displays budgetary totals for each HHS operating division. These totals are inclusive of both mandatory and discretionary spending. The FY2016 actual, FY2017 estimate (based on the annualized CR and current services mandatory spending), and FY2018 request figures are taken from the HHS BIB for FY2018; the FY2015 actual figures are taken from the FY2017 BIB. The remainder of this section provides a brief summary of the mission of each operating division, the FY2018 budget request, and links to additional resources related to that request. (Links are also provided to resources on amounts enacted for FY2017 in the Consolidated Appropriations Act, 2017.) A table of Key Policy Staff is included at the end of the report. The figures in this section are provided in terms of budget authority and outlays. Budget authority (BA) is the authority provided by federal law to enter into contracts or other financial obligations that will result in immediate or future expenditures involving federal government funds. Outlays occur when funds are actually expended from the Treasury and could be the result of either new budget authority enacted in the current fiscal year or unexpended budget authority that was enacted in previous fiscal years. As a consequence, the BA and outlays in this table represent two different ways of accounting for the funding that is provided to each HHS agency through the federal budget process. Administration for Children and Families (ACF) The ACF mission is focused on promoting the "economic and social well-being of children, youth, families, and communities." ACF administers a wide array of human services programs, including Temporary Assistance for Needy Families (TANF), Head Start, child care, the Social Services Block Grant (SSBG), and various child welfare programs. Relevant Appropriations Bill: LHHS FY201 8 Request: BA: $46.535 billion Outlays: $48.289 billion Additional Resources Related to the FY201 8 Request: Congressional Justification, available at https://www.acf.hhs.gov/sites/default/files/olab/acf_master_cj_508_compmay_21_2017.pdf . All-Purpose Table (p. 6), available at https://www.acf.hhs.gov/sites/default/files/olab/acf_master_cj_508_compmay_21_2017.pdf#page=11 . BIB Chapter (p. 74), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=78 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=397 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=43 . Administration for Community Living (ACL) The ACL mission is focused on maximizing the "independence, well-being, and health of older adults, people with disabilities across the lifespan, and their families and caregivers." ACL administers a number of programs targeted at older Americans and the disabled, including Home and Community-Based Supportive Services and State Councils on Developmental Disabilities. Relevant Appropriations Bill: LHHS FY2018 Request: BA: $1.851 billion Outlays: $1.935 billion Additional Resources Related to the FY2018 Request: Congressional Justification, https://www.acl.gov/sites/default/files/about-acl/2017-05/FY%202018%20ACL%20Budget%20Congressional%20Justification%20v2.pdf . All-Purpose Table (p. 13), available at https://www.acl.gov/sites/default/files/about-acl/2017-05/FY%202018%20ACL%20Budget%20Congressional%20Justification%20v2.pdf#page=18 . BIB Chapter (p. 85), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=89 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=400 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=49 . Agency for Healthcare Research and Quality (AHRQ) The AHRQ mission is focused on research to make health care "safer, higher quality, more accessible, equitable, and affordable." Specific AHRQ research efforts are aimed at reducing the costs of care, promoting patient safety, measuring the quality of health care, and improving health care services, organization, and financing. The FY2018 President's budget proposes consolidating AHRQ's functions within NIH, in the new National Institute for Research on Safety and Quality (NIRSQ). Consequently, the FY2018 budget documents provided below reference the NIRSQ, and not AHRQ. Relevant Appropriations Bill: LHHS FY2018 Request: BA: $0 million Outlays: $288 million Additional Resources Related to the FY2018 Request: Congressional Justification, available at https://www.ahrq.gov/sites/default/files/wysiwyg/cpi/about/mission/budget/2018/NIRSQ.pdf . All-Purpose Table (p. 4), available at https://www.ahrq.gov/sites/default/files/wysiwyg/cpi/about/mission/budget/2018/NIRSQ.pdf#page=4 . BIB Chapter: There is no FY2018 BIB chapter for AHRQ. Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=395 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=40 . Centers for Disease Control and Prevention (CDC) and Agency for Toxic Substances and Disease Registry (ATSDR)19 The CDC mission is focused on "disease prevention and control, environmental health, and health promotion and health education." CDC is organized into a number of centers, institutes, and offices, some focused on specific public health challenges (e.g., injury prevention), and others focused on general public health capabilities (e.g., surveillance and laboratory services). In addition, the Agency for Toxic Substances and Disease Registry (ATSDR) is headed by the CDC director. For that reason, the ATSDR budget is often shown within CDC. Following the conventions of the FY2018 HHS Budget in Brief, ATSDR's budget request is included in the CDC totals shown in this report. ATSDR's work is focused on preventing or mitigating the adverse effects resulting from exposure to hazardous substances in the environment. Relevant Appropriations Bills: LHHS (CDC) INT (ATSDR) FY2018 Request (CDC and ATSDR combined): BA: $6.374 billion Outlays: $7.275 billion Additional Resources Related to the FY2018 Request: CDC Congressional Justification, available at https://www.cdc.gov/budget/documents/fy2018/fy-2018-cdc-congressional-justification.pdf . All-Purpose Table (p. 18), available at https://www.cdc.gov/budget/documents/fy2018/fy-2018-cdc-congressional-justification.pdf#page=18 . ATSDR Congressional Justification, available at https://www.cdc.gov/budget/documents/fy2018/fy-2018-atsdr.pdf . BIB Chapter (p. 28), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=32 . Additional Resources Related to FY2017 Appropriations: CDC appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=387 . CDC appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=31 . ATSDR appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=353 . ATSDR appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk2.pdf#page=611 . Centers for Medicare & Medicaid Services (CMS) The CMS mission is focused on ensuring "effective, up-to-date health care coverage and promot[ing] quality care for beneficiaries" of Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and new private insurance and private insurance market reform programs. The President's budget estimates that in FY2018, "over 143 million Americans will rely on programs CMS administers including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the Health Insurance Exchanges." Relevant Appropriations Bill: LHHS FY201 8 Request: BA: $1,009.626 billion Outlays: $1,019.633 billion Additional Resources Related to the FY201 8 Request: Congressional Justification, available at https://www.cms.gov/About-CMS/Agency-Information/PerformanceBudget/Downloads/FY2018-CJ-Final.pdf . All-Purpose Table (p. 10), available at https://www.cms.gov/About-CMS/Agency-Information/PerformanceBudget/Downloads/FY2018-CJ-Final.pdf#page=16 . BIB Chapter (p. 49), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=53 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=395 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=41 . Food and Drug Administration (FDA) The FDA mission is focused on regulating the safety of human foods, dietary supplements, cosmetics, and animal foods; and the safety and effectiveness of human drugs, biological products (e.g., vaccines), medical devices, radiation-emitting products, and animal drugs. It also regulates the manufacture, marketing, and sale of tobacco products. Relevant Appropriations Bill: AG FY2018 Request: BA: $1.891 billion Outlays: $2.080 billion Additional Resources Related to the FY2018 Request: Congressional Justification, available at https://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/BudgetReports/UCM559923.pdf . All-Purpose Table (p. 9), available at https://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/BudgetReports/UCM559923.pdf#page=17 . BIB Chapter (p. 14), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=18 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=29 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk2.pdf#page=32 . Health Resources and Services Administration (HRSA) The HRSA mission is focused on "improving access to health care for those who are uninsured, isolated, or medically vulnerable." Among its many programs and activities, HRSA supports health care workforce training, the National Health Service Corps, and the federal health centers program, which provides grants to nonprofit entities that provide primary care services to people who experience financial, geographic, cultural, or other barriers to health care. Relevant Appropriations Bill: LHHS FY2018 Request: BA: $10.205 billion Outlays: $10.828 billion Additional Resources Related to the FY2018 Request: Congressional Justification, available at https://www.hrsa.gov/about/budget/budgetjustification2018.pdf . All-Purpose Table (p. 15), available at https://www.hrsa.gov/about/budget/budgetjustification2018.pdf#page=16 . BIB Chapter (p. 19), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=23 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=385 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=26 . Indian Health Service (IHS) The IHS mission is focused on providing "comprehensive health services for American Indians and Alaska Natives ... to improve their health status and overall quality of life." IHS provides health care for approximately 2.2 million eligible American Indians/Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas. Relevant Appropriations Bill: INT FY2018 Request: BA: $4.898 billion Outlays: $4.939 billion Additional Resources Related to the FY2018 Request: Congressional Justification, available at https://www.ihs.gov/budgetformulation/includes/themes/newihstheme/display_objects/documents/FY2018CongressionalJustification.pdf . All-Purpose Table (p. 7), available at https://www.ihs.gov/budgetformulation/includes/themes/newihstheme/display_objects/documents/FY2018CongressionalJustification.pdf#page=17 . BIB Chapter (p. 25), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=29 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=350 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk2.pdf#page=609 . National Institutes of Health (NIH) The NIH mission is focused on supporting and conducting research "into the causes, diagnosis, treatment, control, and prevention of diseases" and promoting the "acquisition and dissemination of medical knowledge to health professionals and the public." NIH is organized into 27 research institutes and centers, headed by the NIH Director. In FY2018, the majority of the NIH budget (over 80%) will support research performed by more than 300,000 researchers who work at more than 2,500 universities, medical schools, and other research institutions. Relevant Appropriations Bill: LHHS FY2018 Request: BA: $26.049 billion Outlays: $30.195 billion Additional Resources Related to the FY2018 Request: Congressional Justification, available at https://officeofbudget.od.nih.gov/pdfs/FY18/NIH%20Overview%20Volume%20Final.pdf . All-Purpose Table (p. 16), https://officeofbudget.od.nih.gov/pdfs/FY18/NIH%20Overview%20Volume%20Final.pdf#page=20 . BIB Chapter (p. 36), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=40 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=390 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=34 . Substance Abuse and Mental Health Services Administration (SAMHSA) The SAMHSA mission is focused on reducing the "impact of substance abuse and mental illness on America's communities." SAMHSA coordinates behavioral health surveillance to better understand the impact of substance abuse and mental illness on children, individuals, and families, and the costs associated with treatment. Relevant Appropriations Bill: LHHS FY2018 Request: BA: $3.771 billion Outlays: $3.688 billion Additional Resources Related to the FY2018 Request: Congressional Justification, available at https://www.samhsa.gov/sites/default/files/samhsa-fy-2018-congressional-justification.pdf . All-Purpose Table (p. 6), available at https://www.samhsa.gov/sites/default/files/samhsa-fy-2018-congressional-justification.pdf#page=14 . BIB Chapter (p. 48), available at https://www.hhs.gov/sites/default/files/Consolidated%20BIB_ONLINE_remediated.pdf#page=44 . Additional Resources Related to FY2017 Appropriations: Appropriations language ( P.L. 115-31 ), available at https://www.congress.gov/115/bills/hr244/BILLS-115hr244enr.pdf#page=393 . Appropriations funding table (explanatory statement), available at https://www.congress.gov/crec/2017/05/03/CREC-2017-05-03-bk3.pdf#page=37 .

This report provides information about the FY2018 budget request for the Department of Health and Human Services (HHS). It begins by reviewing the department's mission and structure. This is followed by an overview of the total FY2018 request for the department. Next, the report discusses the concept of the HHS budget as a whole, compared to funding provided to HHS through the annual appropriations process. This distinction is important because certain amounts shown in FY2018 HHS budget materials (including amounts for prior years) will not match amounts provided to HHS by annual appropriations acts (and displayed in accompanying congressional documents), because they take into account a broader set of budgetary resources. The report concludes with a breakdown of the HHS request by agency, along with additional HHS resources that provide further information on the request. A table of key policy staff is included at the end of the report.

Introduction An adequate physician supply is important for the effective and efficient delivery of health care services and, therefore, for population health and the cost and quality of health care. Assessments of the adequacy of physician supply often focus on three dimensions of the physician population: its size; its composition (e.g., the distribution of primary care and specialty physicians); and its geographic distribution. Policies that aim to alter physician supply generally focus on both current and future supply along these three dimensions because physician training is a lengthy process; therefore, changes implemented to alter supply do not have immediate effects. Each of the three dimensions of physician supply is important for health care spending because physician clinical decisions affect approximately 90% of each health care dollar spent. The size of the physician population partially determines the volume of health services provided and therefore costs, as physicians provide health care services that generally cannot be provided by non-physicians. The composition may affect spending because, as some researchers have found, areas with more specialists have higher health care spending. Similarly, the geographic distribution of the physician population can affect spending since in areas with too few physicians, there may be higher utilization of potentially costly emergency room services because more appropriate physician services are unavailable. In contrast, in areas with more physicians, individuals may receive unnecessary services, which can increase health care spending. The three dimensions of physician supply are also important for population health. Too few physicians—overall or in specific geographic areas—may result in delayed or foregone care that can worsen health conditions or lead to premature death because adequate and timely services were not obtained. Too many physicians can mean that additional health services are provided, which may increase the risk of adverse events or medical errors. The composition of the physician population also affects population health. A number of studies have found that areas with more primary care physicians have better health outcomes, including, for example, all-cause mortality, life expectancy, and self-rated health. The federal government supports physician services and training, which may make the adequacy of the current and future physician supply of interest to Congress. Specifically, the federal government pays for physician services, primarily through the Medicare and Medicaid programs. The federal government also supports physician training through a number of programs in various departments and agencies. On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended ), which may affect the demand for physician services; therefore, the new law may increase congressional interest in physician supply. The ACA may expand the demand for physician services by expanding insurance coverage to those previously uninsured and by expanding Medicaid eligibility to individuals who were previously ineligible. The ACA may specifically increase the demand for primary care physicians through increased coverage of preventive services by Medicare, Medicaid, and private insurance. The ACA also (1) authorizes increased funding or program changes for a number of programs that support physician training, (2) includes provisions to increase support for primary care,; and (3) appropriates funds to expand programs that encourage physicians to practice in certain geographic areas. This report examines each dimension of physician supply, separately discussing current (and, where appropriate, future) concerns and changes included in the ACA that may affect each dimension. The report then discusses workforce planning activities included in the ACA that may affect all of these dimensions of supply. The Appendix presents relevant ACA provisions, summarizes them, and indicates which of the dimensions of physician supply each may affect. Size of the Physician Population An appropriately sized physician population is necessary for an effective and efficient health care system. As noted above, too few physicians may mean delayed care, which can worsen health conditions and increase costs through greater hospital and emergency department use. Too many physicians can mean that individuals receive unnecessary health services, which may increase the risk of adverse events and increase costs. This section provides an overview of how the physician population is measured, considerations in determining its appropriate size, and debate around the appropriateness of its current and future size. It concludes with a discussion of the ACA's potential effect on the size of the physician population, including a discussion of provisions in the law that aim to increase the number of physicians or to improve physician productivity. Measuring the Physician Population The number of physicians in the United States may be measured in two ways: (1) absolute counts of practicing physicians and (2) ratios of physicians providing services to a specified population (e.g., per 10,000 or 100,000). For ratios, the population served may refer to the population receiving services at a given health care facility or the population residing in a specified geographic area. According to both of these measures, the physician population has increased since 1970. Specifically, according to the American Medical Association (AMA) Physician Masterfile, the major source of data on the physician population, there were 985,375 physicians in the United States in 2010. This represents a 195% increase from 1970 (see Table 1 ). The AMA also calculates physician-to-population ratios and found that this ratio increased by 98% from 1970 to 2010 (from 161 per 100,000 to 319 per 100,000). Despite the wide use of physician counts and physician-to-population ratios, some have criticized these measures because they do not take into account physicians' specialties or their geographic distribution, both of which may affect access to, and quality of, care. Determining the Appropriate Size of the Physician Population When the volume of physician services available and the demand for physician services are equal, the size of the physician population is generally considered to be appropriate. Determining whether the size of the physician population is appropriate requires accurate measures of the number of physicians and the volume of services they provide, as well as demand for their services (see text box). The volume of physician services is based on the number of practicing physicians and their productivity. The number of physicians can be altered by changing the number of physicians trained, the number of physicians retiring, or both. Physician productivity is affected by factors such as the hours that physicians work, available technology, and the use of physician extenders. The demand for physician services is affected by the size, age, health, and insurance status of the population receiving services, among other factors. Policies that support the development of an appropriately sized physician population rely on measuring all of these components accurately, which can be challenging. In addition, as demand-side factors are often less amenable to policy intervention, many policies that aim to support the development of an appropriately sized physician population do so by targeting either the number of physicians or their productivity. The ACA includes provisions taking both of these approaches, and these are discussed later in the report. Experts debate whether the size of the current physician population is appropriate; that is, whether the volume of services made available is equal to demand for those services (see text box for description of expert groups). The ACA and its potential to expand insurance coverage to a previously uninsured population adds to this debate. For example, the Association of American Medical Colleges (AAMC) and the U.S. Government Accountability Office (GAO) have both studied this issue. AAMC released a report in 2012 that compiled state workforce reports and found that 34 states documented current physician shortages or were anticipating future physician shortages. In another report, the AAMC estimated that partially as a result of the passage of the ACA there were 13,700 too few physicians in 2010. In contrast, in 2009, GAO examined the physician population serving Medicare beneficiaries and concluded that approximately 97% of beneficiaries had access to physician services and that between 2000 and 2008, the number of Medicare beneficiaries using physician services and the number of services per beneficiary increased. Some of the differences between AAMC and GAO estimates may result from differences in methodologies used to assess the adequacy of the physician population or because the GAO study focuses only on the Medicare population. Other experts have suggested that the current size of the physician population is appropriate, and maintain that concerns about access to care result instead from the inefficient composition and geographic distribution of the physician population. In general, over the past 30 years, concerns about the appropriateness of the size of the physician population have been cyclical. For example, in the 1980s and early 1990s, experts predicted that physician surpluses would emerge by 2000 based on the expectation that health reform would occur in 1993 and that the increased use of managed care organizations would restrict patients' access to physician services. Instead, when these conditions did not occur, concerns about physician shortages resulted based on the aging of the U.S. population, the aging of the physician workforce, and advances in medical technology that increased the demand for physician services. Experts also debate whether, and to what extent, the size of the future physician population will be appropriate. The Health Resources and Services Administration (HRSA) and AAMC both predict future physician shortages. Specifically, in 2006, HRSA predicted that there will be between 55,000 and 150,000 too few physicians by 2020, while, in 2008, AAMC predicted that there will be nearly 124,400 too few physicians by 2025. AAMC has since revised its estimates after the ACA to project a shortfall of 130,600 physicians in 2025. Others have speculated that the future supply of physicians may be adequate because of technological and practice changes that would create efficiencies and mean that fewer physicians would be needed. These changes include the increased use of electronic records, increased use of electronic communication between physicians and patients, and greater care coordination. As with differences in estimates of the appropriateness of the size of the current physician population, differences in estimates of the appropriateness of the size of the future physician population may result from the models' assumptions and limitations. These limitations include both models' assumption that, in the base year, supply is appropriate, an assumption which is debated. Both sets of projections also draw conclusions about the future demand for physician services based on assumptions about changes in medical technology, changes in physician productivity, and the aging population. Both HRSA and AAMC note that policy changes—such as the ACA—may affect the future demand for physician services, which may alter the direction or magnitude of their projections. However, predicting the timing, content, and effect of policy changes is difficult, which adds to the uncertainty of the projections. ACA and the Size of the Physician Population The ACA may affect both the demand for physician services as well as the volume of physician services available, and therefore may influence determinations of the appropriate size of the physician population. The ACA contains a number of provisions aimed at increasing access to insurance coverage, which could, in turn, increase the demand for physician services. HRSA notes that physician use varies by insurance status, with those who are insured using more services. This increase in demand for physician services would affect models assessing the appropriateness of the current and future size of the physician population (discussed above). As noted above, AAMC, among others, predict that the ACA will increase the need for physician services; therefore, it will require additional physicians to provide these services. For example, one study predicted that the ACA would require 8,000 more primary care physicians (discussed below) in 2025. As mentioned previously, the ACA also includes a number of provisions that aim to increase the volume of physician services available. In general, these provisions may achieve this goal by targeting (1) methods to increase the number of physicians trained or (2) methods to increase physician productivity by providing incentives to coordinate care or by increasing the number of non-physician providers trained. Coordinated care may increase the volume of physician services available by decreasing physicians' administrative duties and by increasing efficiencies in care delivery. Increasing the number of non-physician providers trained may increase the volume of physician services available because non-physician providers may substitute for, or augment, physician services. ACA Provisions Targeting the Number of Physicians Trained The ACA includes three types of provisions that may increase the number of physicians trained, provisions that (1) modify federal Medicare payments for medical residency training, (2) authorize additional HRSA funding for medical residency training, and (3) authorize funding for additional medical residency training programs. The number of medical school graduates completing residency training determines the number of physicians because residency training is required to be a licensed physician able to practice independently. Therefore, because the federal government is the major source of residency funding, increased federal payments for medical residency training may increase the number of physicians. The Medicare program is the largest source of support for medical residency training, through Graduate Medical Education (GME) payments to teaching hospitals for residents training in accredited training programs. Medicare makes approximately $9.5 billion in payments to teaching hospitals annually, supporting about 90,000 residents and providing payments of more than $100,000 per resident in 2009. Medicaid, the Department of Veterans Affairs (VA), and HRSA also provide support or GME payments for medical residency training. Individual hospitals determine the types of training programs offered and receive Medicare payments based on the number of Medicare-approved residency training slots for residents in training and the size of the Medicare population the hospital serves. Medicare restricts the number of approved training slots (often called the Medicare GME Cap; see text box).Although the ACA does not remove this restriction, it does contain two provisions that may increase the number of residents trained by redistributing unused Medicare-funded residency training slots from hospitals not using them, or from hospitals that have closed, to hospitals seeking to train additional residents. Section 5503 of the ACA redistributes 65% of unused residency positions to hospitals that meet a number of criteria (e.g., are located in a state with a low resident-to-population ratio or a state that has a high proportion of its population living in Health Professional Shortage Areas [HPSAs]). As 75% of these redistributed residency positions must be used in primary care or general surgery, this section may also affect the composition of the physician population. Section 5506 requires the Secretary of HHS to develop a procedure to redistribute residency slots from closed hospitals. The ACA also includes provisions that may increase the number of non-Medicare-funded residents, specifically including residents funded by HRSA and through the ACA's Prevention and Public Health Fund (PPHF). Section 5508 provides grants to establish or expand primary care residency training in community-based settings (called teaching health centers) and appropriates GME payments for residents trained in these settings. In addition, Section 4002 establishes the PPHF to support investments in prevention and public health programs. This fund, which receives indefinite appropriations, received $750 million in FY2010, of which $167.3 million was used to fund an additional 889 primary care residents. ACA Provisions Targeting Physician Productivity The ACA includes two types of provisions to increase physician productivity and thereby increase the volume of physician services available. The first type encourages care coordination, while the second type expands the non-physician provider workforce that may augment or substitute for physician services. The ACA's care coordination provisions encourage health care providers to join accountable care organizations or to establish or expand medical homes, among other things. Medical homes, which provide integrated care to eligible patients, aim to better manage patients' chronic conditions by coordinating care across primary care physicians, specialists, and non-physician providers. The ACA includes many provisions to encourage care coordination including, among others: Section 3502 establishes a grant program to support care coordination through medical homes; Section 2703 establishes a Medicaid option for states to permit Medicaid beneficiaries with chronic conditions to designate a medical home; Section 3021 establishes a Center for Innovation within CMS to test a number of innovative physician payment approaches including the medical home; Section 3022 establishes the Medicare Shared Savings Program to pilot Accountable Care Organizations (ACOs) in the Medicare program; Section 3023 creates a pilot program in Medicare to provide payment incentives—through payment bundling or other methods—for coordinated care for hospitalized Medicare beneficiaries; and Section 3024 requires a demonstration program, within Medicare, to test payment incentives and service delivery models that use home-based primary care teams designed to reduce costs and improve health outcomes for Medicare beneficiaries. As noted above, the ACA also includes provisions to increase the number of non-physician providers trained whose services may substitute for, or augment, physician services, thereby increasing the volume of physician services. For example, Section 5301, in addition to providing support for primary care physician training, provides support for physician assistant training. Other examples include Section 5509, which establishes a new program to support the clinical training of advanced practice nurses, and Section 10501(e), which authorizes a new program to support Family Nurse Practitioner training. Composition of the Physician Population The composition of the physician population is an important determinant of access to care and health care costs. There are two main concerns about the composition of the physician population: (1) that the distribution of primary care and specialty physicians has resulted in primary care shortages and an oversupply of specialty physicians, and (2) that, despite excess specialists overall, there are shortages in certain specialties. In 2010, the physician population consisted of more than two-thirds specialists and less than one-third primary care physicians. Some experts suggest this composition is not optimal, a suggestion that is generally consistent with research that examines the effects of the composition of the physician population on health. Research suggests that primary care is correlated with improved health outcomes and decreased costs. For example, researchers have found that each additional primary care physician lowers the risk of death and that patients who have a regular primary care physician have lower overall health care costs. Similarly, in more targeted studies of the Medicare population, the supply of primary care physicians was found to correlate with reduced mortality (although associations with other health outcomes were weaker). Internationally, those countries with more primary care physicians have better overall population health as measured by indicators such as infant mortality, child health, and all-cause mortality. In contrast, research on the effects of more specialists on health outcomes is less clear. For example, a meta-analysis comparing specialty to primary care found that while some studies concluded that specialists provide better care for certain diseases, others found no differences or better outcomes from primary care physicians. Other studies have found that specialty supply has little effect on infant mortality or on all-cause mortality. Researchers have suggested that the current distribution of specialists and primary care physicians may be linked with a number of adverse health outcomes, including higher mortality rates in areas with more specialists. With respect to shortages in certain specialties, several have been documented (e.g., in cardiology, dermatology, emergency medicine, and neurology), often by studies conducted by specialty professional associations. These associations may have an interest in publicizing shortages and minimizing oversupply; therefore, determining which specialties are in shortage based only on these studies may be challenging. However, some specialties, such as general surgery, geriatrics, the pediatric subspecialties, and psychiatry, have more widely acknowledged shortages and have targeted federal programs to address these shortages. This section discusses primary care supply, as well as factors deterring entry into primary care practice. It then summarizes ACA provisions that aim to address these factors through a number of mechanisms. It concludes with an overview of ACA provisions targeting shortages in specialty areas. Primary Care Supply and Factors Influencing Primary Care Supply75 As noted previously, the U.S. physician population presently is approximately one-third primary care physicians (see text box for a discussion of primary care definitions) and two-thirds specialists, a distribution that experts suggest is not optimal. In 2010, the most recent year for which data on the physician population are available, there were 304,687 primary care physicians (31% of all physicians) practicing in the United States, which HRSA has estimated is approximately 7,000 too few primary care physicians. The Council on Graduate Medical Education (COGME) recommends that the percentage of U.S. primary care physicians be raised "to at least 40 percent." This rate would be more comparable to that of other industrialized nations such as Australia, Canada, and France, which have closer to a 50-50 split between primary care and specialty physicians. COGME also recommends changing the composition to help avert predicted future primary care shortages. Experts also suggest that the ACA's focus on care coordination and preventive care will require additional primary physicians, which may worsen primary care shortages after the ACA is fully implemented. For example, one study suggests that the ACA's insurance expansions would increase primary care shortages by an estimated 8,000 primary care physicians in 2025. This would be in addition to 43,000 more primary care physicians who are needed to care for a larger and older population. In contrast, another study suggests that there may not be future primary care shortages. Their analysis suggests that this shortage will not occur because the ACA encourages delivery system reforms to coordinate care; and there may be increased use of non-physician providers and of electronic health records, which would lessen the needs for additional primary care physicians. Altering the composition of primary care physicians and specialists would require an increase in the number of primary care physicians. Experts have identified three main barriers to primary care entry and practice: The majority of medical school and residency training occurs in hospital settings, where there are fewer primary care role models and a greater orientation toward specialty care. Role models and exposure are important factors in specialty choice; therefore, hospital-based training may influence medical students toward specialties. Prior research has found that medical students exposed to federal programs that promote primary care, such as those authorized by PHSA Title VII, during their training are more likely to enter primary care. There are large and growing salary differences between primary care physicians and specialists. The average salary for a primary care physician was $193,000 in 2009, while the average specialist salary was $302,000. Primary care physicians often have uncompensated care coordination duties and other administrative burdens that specialty physicians do not have. For example, in managed care, primary care physicians serve as gatekeepers determining access to specialists. Studies have also found that these responsibilities distract primary care physicians from providing patient care and deter students from entering primary care specialties. In general, policy options included in the ACA that aim to alter the composition of primary care and specialty physicians seek to do so by increasing primary care supply through mitigation of one or more of these three barriers. ACA and the Composition of the Physician Population A number of provisions in the ACA may influence the composition of the physician population, and specifically primary care supply, by (1) authorizing programs that may increase exposure to primary care content in physician training, (2) requiring increased Medicare and Medicaid payments for primary care providers, and (3) providing incentives to coordinate care. In general, these provisions aim to remove or lessen some of the factors noted above that deter physicians from entering and practicing primary care. In addition, the ACA includes provisions that provide support for training of specialists identified as being in shortage. This part summarizes these provisions. ACA Provisions Targeting Primary Care Supply Primary Care Content in Physician Training The ACA targets primary care content in physician training through changes to (1) PHSA Title VII programs that support physician training in primary care and (2) the Medicare GME program. ACA Section 5301 reauthorizes PHSA Section 747, "Primary Care Training and Enhancement," which provides grants or contracts to support medical students, residents, and faculty in primary care. The ACA amends this program to increase support for primary care training programs; to provide traineeships to students, residents, and faculty; and to support the development of innovative academic units in primary care. Under this program's authority, HHS, through the PPHF, is supporting additional primary care resident training beginning in July of 2011 for five years (see " ACA Provisions Targeting the Number of Physicians Trained "). In addition, the ACA authorizes a new program that may encourage physician training in community-based settings. Section 5508(a) authorizes grants to support the development or expansion of teaching health centers—community-based, ambulatory, patient care centers that operate a primary care residency program. Section 5508(b) permits National Health Service Corps (NHSC) providers, who often fulfill their service commitment in teaching health centers, to count teaching time toward their NHSC service requirement. Section 5508(c) appropriates GME payments for teaching health centers, which are in addition to GME payments received from other sources (e.g., Medicare or the Children's Hospital GME program). Although HRSA did not provide funding to operate teaching health centers in FY2011, FY2012, or the first six months of FY2013, it awarded GME funds to teaching health centers in FY2011 and FY2012, and intends to award funds in FY2013. The ACA also makes a number of changes to Medicare GME payments that may encourage primary care training. Section 5503 of the ACA redistributes 65% of unused residency positions to hospitals that meet a number of criteria and requires that 75% of these redistributed residency positions be used in primary care or general surgery. It further requires that hospitals receiving additional positions maintain their pre-redistribution level of primary care residents. The ACA requires changes to how the Medicare program counts time spent by residents in non-hospital (i.e., community-based) settings to increase payment for time spent in these settings, which may remove a barrier experts have identified as reducing primary care exposure in training. Section 5504 amends Medicare GME payment rules to count resident time spent in non-hospital settings for direct and indirect GME payments, provided that the hospital incurs most of the costs of the residents' stipends and other benefits while in the non-hospital setting. Section 5505 permits hospitals to count resident time spent at conferences and seminars in non-hospital settings for GME payments. Primary Care Physician Payment As noted above, primary care physicians, on average, earn less than specialty physicians, and these pay differentials may discourage entry into primary care practice. The ACA contains two provisions that require increased payments for certain primary care physicians providing specific primary care services to Medicare and Medicaid beneficiaries. Section 5501 establishes a new Medicare 10% bonus payment for physicians who meet specific requirements and provide certain primary care and general surgery services. These new payments were effective January 1, 2011, and will remain in effect for five years. Section 1202 of HCERA requires increased Medicaid payments to primary care physicians in 2013 and 2014, to the generally higher Medicare payment rate. Care Coordination by Primary Care Physicians As discussed above (see " ACA Provisions Targeting Physician Productivity "), the ACA includes a number of provisions to encourage care coordination, for example, through medical homes. Relevant the ACA provisions include Sections 3502, 2703, 3021, 3023, and 3024 and have been summarized previously (see " ACA Provisions Targeting Physician Productivity "). ACA Section 5405 may also facilitate care coordination by authorizing a new grant program to educate and support primary care providers about care coordination, chronic disease management, and preventive medicine. In addition, Section 3503 authorizes a new program to establish medication management programs that involve a multidisciplinary group of providers (including physicians) in order to improve the treatment of chronic disease and to reduce costs. ACA Provisions Targeting Shortages in Specialties The ACA includes a number of provisions to increase the number of physicians practicing in specialties that have identified shortages. ACA Section 5203 authorizes loan repayments for pediatric medical, surgical, and mental health subspecialists (including psychiatrists) in return for providing care in a medically underserved or health professional shortage area (HPSA). As noted previously, pediatric subspecialists are a group of specialists generally considered to be in shortage. The ACA includes two provisions that may encourage training and practice in general surgery—a specialty in shortage because an increasing number of medical residents training in general surgery are pursuing subspecialty training in a surgical subspecialty. Section 5501 establishes a new 10% Medicare bonus payment for general surgeons who perform certain surgeries in a HPSA. Section 5503, discussed above, redistributes 65% of unused Medicare residency positions to hospitals that meet certain criteria, and requires that 75% of the redistributed residency positions be used in primary care or general surgery. The ACA also includes provisions that authorize training in geriatrics and behavioral health, two areas where experts agree there are shortages. Section 5305 authorizes grants to increase physician training in geriatrics, including grants for fellowship training, training in chronic care management, and short-term training in geriatric-related topics. Section 5306 authorizes grants for programs to increase the mental and behavioral health workforce, including psychiatrists. Grants may be used to support internship and residency training in child and adolescent psychiatry or behavioral pediatrics. Geographic Distribution of the Physician Population The geographic distribution of physicians is an important determinant of health care access, quality, and cost. Physicians are distributed differently across the United States; specifically, researchers have found large regional variations in physician supply, with some areas having a 50% surplus of physicians and others having a 10% deficit. Experts suggest that both over- and undersupply may be problematic. In high-supply areas, the population may receive unnecessary and excess care, whereas in low-supply areas, the population may receive little or no care because of long wait times or long travel distance to providers. Rural areas, in particular, experience physician shortages; however, some urban areas, specifically areas with economically disadvantaged populations, may have shortages as well. This section discusses physician shortages in specific geographic areas. It begins with a discussion of Health Professional Shortages Areas (HPSAs) and Medically Underserved Populations/Areas (MUA/Ps). The federal government uses these designations to determine areas and populations that have heath professional shortages (including physician shortages). Designated areas are eligible for a number of programs—some of which were amended or created by the ACA—that aim to increase the number of health professionals in a specific geographic area. Given the use of HPSA and MUA/Ps for guiding federal policies that seek to lessen geographic shortages of health professionals, it is necessary to understand this designation when discussing the geographic distribution of the physician population. The section also discusses some reasons why geographic areas may have physician shortages, and the ACA provisions that may affect the geographic distribution of the physician population. Although areas with an excess of physicians are of concern, federal policies tend to focus on increasing access in shortage areas, and in rural areas in particular. Health Professional Shortage Areas and Medically Underserved Areas/Populations The federal government designates some areas as HPSAs or areas or populations as medically underserved (MUAs/MUPs) because these areas/populations have physician or other health provider shortages. These designations make an area eligible for federal programs that may lessen these shortages. This section discusses the definition of HPSAs and MUP/As and some of the federal programs for which these areas are eligible. HPSAs are areas with provider shortages in primary medical care, dental, or mental health, and may be located in urban or rural areas. Specific population groups (e.g., populations with unusually high needs for health services, as indicated by measures such as the poverty rate and the infant mortality rate) and specific facilities (e.g., a community health center, or a facility operated by the Indian Health Service) may also be designated as HPSAs. The HPSA designation is considered to be the most restrictive designation of physician undersupply; specifically, an area may be designated a primary care HPSA if it has a full-time equivalent primary care physician ratio of at least 3,500 patients for each primary care physician or has a ratio of between 3,500 to 3,000 patients for each primary care physician and has a population with high health care needs. Given this restrictive definition, it is possible that areas, populations, or facilities may have physician shortages without being designated a HPSA. The federal government also designates areas and populations as being MUAs or MUPs. This designation takes into account both the services available in a given area and population characteristics, such as the economic, linguistic, and cultural barriers a population may face. Policies that aim to change the geographic distribution of the physician population often do so by trying to reduce the number of HPSAs or MUA/Ps. As the number of primary care physicians is one of the criteria used to designate HPSAs and MUA/Ps, one way to reduce their number is to increase primary care supply. In addition, the majority of physicians in underserved areas (and, in particular, in rural areas) are family medicine physicians who provide primary care to individuals of all ages. However, there are documented family medicine shortages, and fewer medical school graduates are choosing to enter this field. Given the relationship between the HPSA/MUA/P definition and primary care, policies and programs that encourage primary care, and in particular, family medicine, may be of greater benefit to areas with few physicians. Areas designated as HPSAs are eligible for a number of federal programs that seek to bring providers to shortage areas and lessen the costs associated with providing medical care in a shortage area. For example, HPSAs are eligible for NHSC providers. The NHSC provides scholarships and loan repayments to health professionals (including physicians) in return for service in a HPSA for a specific period of time. Physicians in HPSAs are also eligible for Medicare bonus payments, and certain facilities in MUAs may be designated as federally qualified health centers (FQHCs) that are eligible for higher Medicare and Medicaid reimbursements. Areas and populations designated as MUA/Ps may be eligible for, or given preference in, certain federal programs, such as health workforce programs authorized by Title VII of the PHSA. Why Geographic Shortages May Exist Physician shortages in certain geographic areas may result from aspects of physician training. As discussed above, aspects of physician training may also influence specialty choice. This section discusses how the content of physician training may influence where physicians choose to practice. Specifically, the majority of medical training occurs in teaching hospitals, which are usually located in urban areas. The location of training may thereby influence the geographic distribution of physicians because students generally practice near their training site. There is also evidence that student and resident educational experiences ultimately influence individuals' career choices; therefore, training concentrated in teaching hospitals may discourage practicing in non-hospital settings. Researchers have found that medical residents who spend part of their training in community health centers—a type of FQHC—are more likely to practice in these settings after completing their residency. Some researchers have also suggested that medical students' racial and ethnic and geographic (i.e., rural, urban, or suburban) origin may influence where these students choose to practice after residency. These researchers have suggested that medical students from underrepresented groups and those from rural areas are more likely to provide care to the medically underserved. They recommend that medical schools consider these characteristics in their admission policies and that educational programs be developed to recruit and retain students more likely to provide care to the underserved. Recent research has found that medical students are increasingly considering lifestyle factors, such as the amount of on-call time, when choosing where (and which specialty) to practice. Physicians practicing in shortage areas may face lifestyle challenges not present in areas with more physicians. For example, physicians in shortage areas may be more isolated (either geographically or from colleagues to collaborate with), may care for a large population, and may feel the strain of always having to be available for emergencies (i.e., may have more on-call time). These lifestyle considerations make practicing in a shortage area less attractive to newer physicians, thereby contributing to the geographic maldistribution of the physician population. ACA and the Geographic Distribution of the Physician Population The ACA includes provisions that may expand the number of NHSC providers available to serve in shortage areas, increase the diversity of the physician workforce, and increase physician training in shortage areas. It also includes provisions to revise the criteria used to designate HPSAs and MUPs, which may affect the geographic distribution of providers by changing the areas eligible for incentives such as the NHSC. ACA Provisions Targeting the NHSC125 The ACA authorizes program changes to the NHSC that may encourage NHSC providers to serve as faculty at teaching health centers, increase loan repayment amounts, and increase provider flexibility. As previously discussed, Section 10501(n) permits NHSC clinicians to count teaching time as part of their NHSC service requirement, increases loan repayment amounts, and permits NHSC clinicians to work-part time in exchange for an extended service requirement. Teaching time at NHSC sites may be important for teaching health centers (see " ACA Provisions Targeting the Number of Physicians Trained ") because many teaching health centers rely on NHSC clinicians who might be reluctant to participate in resident training if this time did not count toward their NHSC service requirement. Part-time service may make NHSC participation more attractive to younger providers who are interested in achieving work-life balance, which may help recruit or retain NHSC providers. The ACA also increases amounts authorized for appropriation for the NHSC. Specifically, Section 5207 authorizes increased discretionary appropriations for the NHSC. In addition, Section 10503 requires that $1.5 billion be transferred—between FY2011 and FY2015—from the Community Health Center Fund (created in this section of the ACA) to support the NHSC. These transferred funds were initially required to be used to increase program funding above the FY2008 appropriation level; however, this requirement was removed for FY2011 in P.L. 112-10 . Although funding in FY2011 and FY2012 was above the FY2008 appropriation, the Community Health Center Fund was used to replace discretionary appropriations to the NHSC, which were reduced in FY2011 and eliminated in FY2012. Although FY2013 appropriations have not been finalized, under the six-month Continuing Resolution, no discretionary funds were appropriated to the NHSC. ACA Provisions Targeting the Diversity of the Physician Workforce The ACA includes provisions that authorize programs that aim to increase the diversity of the physician workforce. Prior research has found that the current physician population is less diverse than the U.S. population. In addition, research has found that individuals from racial and ethnic minorities are more likely to practice in underserved areas. Consequently, the federal government supports programs to increase the racial and ethnic diversity of medical students and faculty. Section 5401 reauthorizes the Centers of Excellence program funded in Section 736 of the PHSA. The program supports activities related to increasing the diversity of the health professions workforce, including efforts that encourage underrepresented minorities to enter health professional education and programs to assist these individuals during their studies. Section 5402 authorizes increased appropriations for scholarship, loan repayment, and fellowship programs that provide funding to students and faculty from disadvantaged backgrounds to pursue health professions education. ACA Provisions Targeting Rural Practice The ACA includes provisions to encourage training in rural areas specifically, and in HPSAs or MUAs in general. The law also authorizes a new program to recruit medical students from rural areas and to provide training in rural settings in order to encourage rural practice. Prior research has found that medical students who have participated in similar programs are more likely to practice in rural areas after completing their training. The ACA authorizes programs that may connect physicians in HPSAs and MUAs, which may reduce isolation and increase contact with colleagues. As isolation and lack of colleagues are commonly cited barriers to practice in underserved and shortage areas, programs to reduce these barriers may affect the geographic distribution of physicians. Section 5403 amends the Area Health Education Center (AHEC) program. These centers aim to address workforce shortages by supporting physician recruitment and retention from medically underserved populations and those from rural and medically underserved areas. AHECs sponsor programs for students, faculty, and providers, including programs for medical students and medical residents. The ACA authorized an expansion of the AHEC program to include new grants to medical and nursing schools to develop these programs. The ACA also authorized increased appropriations for the AHEC program and noted that it is the sense of Congress that every state have an AHEC. In addition, Section 5403 authorizes new grants to provide continuing educational support to health providers in underserved communities. Such efforts may involve distance learning, conferences, and telehealth. The content and location of training are important determinants of where physicians ultimately practice. Programs that encourage rural and community-based training may influence the geographic distribution of the physician population; therefore, the ACA includes a new program that trains students who are likely to practice in rural settings. Section 10501(l) authorizes a new program to award grants to medical schools to recruit and provide focused training and experiences to students likely to practice medicine in underserved rural communities. The program aims to recruit students most likely to enter into rural practice and includes rural-focused training experiences while in medical school. The ACA also authorizes teaching health centers, which may increase medical residency training in underserved areas (see " ACA Provisions Targeting the Number of Physicians Trained "). ACA Provisions Amending HPSA and MUP Designation Criteria The ACA requires that the criteria used to designate HPSAs and MUPs be updated in response to concerns that these criteria were outdated and that some areas designated as HPSAs may no longer have shortages. Section 5602 requires the HHS Secretary to establish new methodology for designating MUPs and HPSAs and to publish a final rule by July 1, 2011. Although HHS has been working since 1998 to develop new methodology, it has not been implemented. ACA and Workforce Planning Some experts have argued that lack of workforce planning has contributed to current physician supply concerns and that federal programs supporting the physician workforce are not coordinated. GAO has also noted that lack of data hamper efforts to evaluate programs funded under PHSA Title VII. Such data may be necessary for comprehensive workforce planning. Concerns about lack of planning and coordination and lack of data to evaluate programs existed prior to the ACA, but the ACA may exacerbate these concerns because it expands federal support for the health care workforce. The ACA includes provisions to increase workforce planning and collect data needed to support these efforts. The ACA includes provisions that may increase workforce planning at the federal and state levels. Section 5101 establishes the National Health Workforce Commission to evaluate and make recommendations about the health care workforce (including physicians). The commission was appointed by GAO in September of 2010 and is required to review health care workforce supply and demand and make recommendations on national priorities and policies. Commission members are required to make reports to Congress and to review reports from the state workforce development planning grants and from the National Center for Health Workforce Analysis (see below). Section 5102 authorizes grants for states to undertake health care workforce development. The ACA also requires additional data collection on health workforce programs and establishes a federal center to undertake health workforce analysis to support the new commission. Section 5103 requires HHS to establish a National Center for Health Care Workforce Analysis and to establish State and Regional Centers for Health Workforce Analysis. Section 5103 also requires longitudinal evaluations of individuals who have received support (education, training, or financial assistance) from grants awarded under PHSA Title VII. The section authorizes increased grant amounts for this purpose and requires PHSA Title VII advisory groups to develop performance measures and guidelines for longitudinal evaluations for the programs they advise. Concluding Observations The current and future physician supply may be inadequate. Some experts suggest that there are too few physicians overall, too few primary care physicians specifically, and that physicians are inadequately distributed throughout the United States. The ACA may intensify some of these concerns; specifically, although the ACA includes a number of provisions that aim to alter physician supply, it is not yet known whether and how these provisions will affect physician supply. Many of the programs established by the ACA have not yet been implemented, and others may not have immediate effects. In addition, some the ACA programs are temporary, and many rely on discretionary funding. Appendix. ACA Provisions That May Affect Physician Supply

An adequate physician supply is important for the effective and efficient delivery of health care services and, therefore, for population health and the cost and quality of health care. Assessments of the adequacy of physician supply often focus on three dimensions of the physician population: its size; its composition (e.g., the mix between primary care and specialty physicians); and its geographic distribution. Policies that aim to alter physician supply generally focus on both current and future supply along these three dimensions because physician training is a lengthy process; therefore, changes implemented to alter supply do not have immediate effects. Each of the three dimensions of physician supply is important for health care spending and for population health because physician clinical decisions affect approximately 90% of each health care dollar spent. In addition, as physicians provide health care services that, with some exceptions, cannot be provided by non-physicians, the size, composition, and geographic distribution of the physician population affects the amount and type of health care services available. A number of studies have found physician shortages overall, in certain specialties, and in certain geographic areas. The federal government pays for physician services, primarily through the Medicare and Medicaid programs, and supports physician training through a number of programs in various departments and agencies. Given current investments in physician services and the physician workforce, the adequacy of the current and future physician supply may be of interest to Congress. The Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) may affect the demand for physician services, a major determinant of physician supply, because it expands insurance coverage to some of those previously uninsured. The ACA also includes provisions that may affect the size, composition, and geographic distribution of the physician population by supporting changes to physician training, compensation, and practice. Specifically, provisions targeting the number of physicians trained and their productivity may affect the size of the physician population. The composition of the physician population may be altered by provisions targeting the supply of primary care providers or specialties in shortage. Provisions addressing the diversity of the physician workforce and those incentivizing practice in rural or other underserved areas may affect the geographic distribution of the physician population. Finally, the ACA includes provisions that provide for data collection and evaluation of the adequacy of the workforce in general, and federal workforce programs specifically. Whether and how these provisions will affect physician supply is not yet known because some of these provisions have not been implemented yet, are temporary, will not have immediate effects, or rely on discretionary funding. This report examines each dimension of physician supply, separately discussing current (and, where appropriate, future) concerns and relevant changes included in the ACA that may affect each dimension. The report then discusses workforce planning activities included in the ACA that may affect all three dimensions of supply.

MFN/NTR and the GATT/WTO Most-favored-nation (MFN) treatment is a fundamental principle of the General Agreement on Tariffs and Trade (GATT 1994), which governs trade in goods; of the General Agreement on Trade in Services (GATS); and of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). In essence, the principle requires that each WTO member treat the product of another member no less favorably than it treats a like product from any other member. If a member country lowers a tariff or nontariff barrier in its trade with another member that "concession" must apply to its trade with all other member countries. The United States grants all but a few countries, namely Cuba and North Korea, normal trade relations (NTR), or MFN, status. In practice, duties on the imports from a country that has not been granted NTR status are set at much higher levels—rates that are several times higher than those from countries that receive such treatment. Thus, imports from a non-NTR country can be at a significant price disadvantage compared with imports from NTR-status countries. The WTO agreements also require that MFN treatment be applied "unconditionally." However, when a WTO member determines that it cannot, for political or other reasons, accede to this or any other GATT/WTO principle toward a newly acceding member, it can "opt-out" of its obligations toward that member by invoking the non-application provision (Article XIII of the WTO or Article XXXV of the GATT). In so doing, the WTO member is declaring that the WTO obligations and mechanisms (e.g., the dispute settlement mechanism) are not applicable in its trade with the new member in question. Invoking the non-application clause is a double-edged sword. Although it relieves the member invoking the provision of applying MFN or any other obligations toward the new member, it also denies the benefits and protections that the WTO would provide to the former in its trade with the latter. Jackson-Vanik Amendment and Communist and Former Communist Country GATT/WTO Members In 1951, the United States suspended MFN status to all communist countries (except Yugoslavia) under Section 5 of the Trade Agreements Extension Act. That provision was superseded by Title IV of the Trade Act of 1974. Section 401 of Title IV requires the President to continue to deny nondiscriminatory status to any country that was not receiving such treatment at the time of the law's enactment on January 3, 1975. In effect, this meant all communist countries, except Poland and Yugoslavia. Section 402 of Title IV, the so-called Jackson-Vanik amendment, denies the countries eligibility for NTR status as long as the country denies its citizens the right of freedom of emigration. These restrictions can be removed if the President determines that the country is in full compliance with the freedom-of-emigration conditions set out under the Jackson-Vanik amendment. The Jackson-Vanik amendment also permits the President to waive full compliance with the freedom-of-emigration requirements if he determines that such a waiver would promote the objectives of the amendment, that is, encourage freedom of emigration. While Title IV addresses only freedom of emigration, Congress has used the law to press the subject countries on a number of economic and political issues. Removal of a country from Jackson-Vanik restrictions requires Congress to pass legislation. Czechoslovakia was an original signatory to the GATT in 1947. In 1951, the United States suspended MFN treatment because it had become communist. Because Czechoslovakia was an original signatory to the GATT and not a newly acceding member, the non-application provision did not apply. Instead, the United States sought and obtained from the other GATT signatories approval for the suspension of MFN treatment. The United States invoked the non-application provision when Romania and Hungary became GATT signatories in 1971 and 1973, respectively. These restrictions no longer applied after the United States, through legislation, extended unconditional MFN, or permanent normal trade relations (PNTR), status to Czechoslovakia (later the Czech Republic and Slovakia), Hungary, and Romania after the fall of the communist governments in those countries. The United States granted PNTR to Albania, Bulgaria, and Cambodia before these countries acceded to the WTO, making it unnecessary to invoke the non-application provision. This was also the case for the former Soviet republics of Estonia, Latvia, and Lithuania. Mongolia joined the WTO on January 29, 1997, more than two years before the United States granted it PNTR. During that time, the United States invoked the non-application provision. It also invoked the provision with Armenia when it joined the WTO on February 5, 2003, and received PNTR on January 7, 2005, and with Kyrgyzstan when it joined the WTO on December 20, 1998, before receiving PNTR on June 29, 2000. Each bill authorizing PNTR for Mongolia, Armenia, Kyrgyzstan, and Georgia contained a "finding" that extending PNTR would enable the United States to avail itself of all rights within the WTO regarding that country. The United States invoked Article XIII also in its trade relations with Vietnam on November 7, 2006, before PNTR for Vietnam went into effect, but had granted Ukraine PNTR status in 2006 prior to that country's accession to the WTO. It invoked non-application regarding Moldova and Russia prior to thsoe countries receiving PNTR status. The Case of China As with the other communist countries, China was subject to the provisions of the Jackson-Vanik amendment. The United States denied China MFN status until October 1979, when it was granted conditional MFN under the statute's presidential waiver authority. China acceded to the WTO on December 11, 2001. Congress passed legislation ( P.L. 106-286 ) removing the Jackson-Vanik requirement from U.S. trade with China and authorizing the President to grant PNTR to China, which he did on January 1, 2002. However, in the legislation, Congress linked the granting of PNTR to U.S. acceptance of conditions for accession to the WTO. It states that prior to making a determination on granting PNTR, "the President shall transmit to Congress a report certifying that the terms and conditions for the accession" of China to the WTO "are at least equivalent to those agreed to" in the bilateral agreement the United States and China reached as part of the accession process. China's bilateral agreement with the United States, which is contained in the final accession agreement, contains provisions for special safeguard procedures (codified in U.S. law as Sections 421-423 of the Trade Act of 1974) to be used when imports cause or threaten to cause market disruption in the United States. It also provides for a separate safeguard procedure in the case of surges in imports of textiles and wearing apparel from China, as well as special antidumping and countervailing duty procedures. All of these provisions have time limits. The legislation authorizing PNTR for China also provided for the establishment of a congressional-executive commission to monitor human rights protection in China to replace Congress's focus on this issue that occurred during the annual NTR renewal debate. Prospective WTO Accessions Countries that are still subject to the restrictions have also applied for membership to the WTO and are at various stages of the accession process: Azerbaijan, Belarus, Kazakhstan, Tajikistan, and Uzbekistan. Congress usually has no legislative role in the accession of countries to the WTO. However, the legislative requirement for repeal of Title IV provides a role, albeit indirectly, in the cases of the above-mentioned affected countries by giving Congress leverage on the negotiation of conditions for WTO accession. Congress has several options. It could repeal the restrictions before the country(ies) actually enter(s) the WTO, completely separating the issues of Title IV repeal and WTO accession. This is the course that Congress has followed in most cases to date and would allow the United States to fulfill the unconditional MFN requirement prior to the country acceding to the WTO. Many of the countries in question, view the Jackson-Vanik requirements and the rest of the Title IV restrictions as Cold War relics that have no applicability to their current emigration policies and, more generally, to the types of governments they now have. They assert that their countries should be treated as normal trade partners and, therefore, that the restrictions should be removed unconditionally. A second option would be for Congress to link the granting of PNTR with the country's accession to the WTO. For example, Congress could follow the model established with PNTR for China by requiring the President to certify that the conditions under which the country is entering the WTO are at least equivalent to the conditions that the United States agreed to under its bilateral accession agreement with the country. It can be argued that in this way, Congress helped define, at least indirectly, the conditions under which China entered the WTO. However, the candidate countries would probably bridle at such treatment, asserting that they would be asked to overcome hurdles that are not applied to most of the other acceding countries, especially countries not subject to Jackson-Vanik. During the debate on PNTR for Russia, some Members of Congress raised concerns about Russia's fulfillment of commitments in certain areas and wanted some assurances. H.R. 6156 , which authorized PNTR for Russia, contained provisions that required the USTR report annually to the Senate Finance Committee and the House Ways and Means Committee on Russia's implementation of its WTO commitments, including sanitary and phytosanitary (SPS) standards and IPR protection and on acceding to the WTO plurilateral agreements on government procurement and information technology; the USTR report to the two committees within 180 days and annually thereafter on USTR actions to enforce Russia's compliance with its WTO commitments; the USTR and the Secretary of State report annually on measures that they have taken and results they have achieved to promote the rule of law in Russia and to support U.S. trade and investment by strengthening investor protections in Russia; the Secretary of Commerce to take specific measures against bribery and corruption in Russia, including establishing a hotline and website for U.S. investors to report instances of bribery and corruption; a description of Russian government policies, practices, and laws that adversely affect U.S. digital trade be included in the USTR's annual trade barriers report (required under section 181 of the Trade Act of 1974); and the negotiation of a bilateral agreement with Russia on equivalency of SPS measures. A third option would be for Congress to not repeal Title IV at all. This option would send a strong message to the partner country of congressional concerns or discontent with its policies or practices without preventing the country's entrance into the WTO. At the same time, the United States would have to invoke the non-applicability provision (Article XIII) in its trade relations with that country. The United States would not benefit from the concessions that the partner country made in order to accede to the WTO. The United States would not be bound by WTO rules in its trade relations with the country, nor would that country be so bound in its trade with the United States. For example, the WTO dispute settlement body mechanism would not be available to the two countries in their bilateral trade relationship. In determining which option to exercise, Congress faces the balance of costs and benefits of each. In addition, how Congress treats each of the countries relative to the others could have implications for U.S. relations with them. The 113 th Congress may face the issue of extending PNTR to at least two r countries. On December 10, 2012, WTO members invited Tajikistan to join, subject to that country's ratification of its accession package. In addition, Kazakhstan may accede to the WTO in 2013. Both countries are currently subject to Title IV of the Trade Act of 1974.

Unconditional most-favored-nation (MFN) status, or in U.S. statutory parlance, normal trade relations (NTR) status, is a fundamental principle of the World Trade Organization (WTO). Under this principle, WTO members are required unconditionally to treat imports of goods and services from any WTO member no less favorably than they treat the imports of like goods and services from any other WTO member country. Under Title IV of the Trade Act of 1974, as amended, most communist or nonmarket-economy countries were denied MFN status unless they fulfilled freedom-of-emigration conditions as contained in Section 402, the so-called Jackson-Vanik amendment, or were granted a presidential waiver of the conditions, subject to congressional disapproval. The statute still applies to some of these countries, even though most have replaced their communist governments. The majority of these countries have joined the WTO or are candidates for accession. Several countries are close to completing the accession process, and Congress could soon face the issue of what to do about their NTR status to ensure that the United States benefits from those accession agreements. During the 112th Congress, Members faced the issue of whether to extend permanent normal trade relations (PNTR) status to Russia and Moldova. On November 16, 2012, the House passed (365-43), and on December 6, 2012, the Senate passed (92-4) H.R. 6156, which did just that, among other things. The legislation also included provisions—the Magnitsky Rule of Law Accountability Act of 2012—that impose sanctions on individuals linked to the incarceration and death of Russian lawyer Sergei Magnitsky. President Obama signed the legislation into law (P.L. 112-208) on December 14, 2012. The 113th Congress may face the issue of extending PNTR to at least two other countries. On December 10, 2012, WTO members invited Tajikistan to join, subject to that country's ratification of its accession package. In addition, Kazakhstan may accede to the WTO in 2013. Both countries are currently subject to Title IV of the Trade Act of 1974.

Introduction Multilateral negotiations regarding Iran's nuclear program date back to 2003 after the International Atomic Energy Agency (IAEA) reported on the existence of clandestine nuclear facilities at Natanz. In October of that year, Iran concluded an agreement with France, Germany, and the United Kingdom under which Iran temporarily suspended aspects of its nuclear program, including enrichment of uranium, and signed an Additional Protocol to its IAEA safeguards agreement, but also asserted its right to develop nuclear technology. In January 2006, Tehran announced that it would resume research and development on its centrifuges at Natanz. After that time, Iran held multiple rounds of talks with China, France, Germany, Russia, the United Kingdom, and the United States (collectively known as the P5+1). The U.N. Security Council meanwhile adopted several resolutions, the most recent and sweeping of which (Resolution 1929) was adopted in June 2010. These resolutions required Iran to cooperate fully with an ongoing IAEA investigation of its nuclear activities, suspend its uranium enrichment program, suspend its construction of a heavy water reactor and related projects, and ratify the Additional Protocol to its IAEA safeguards agreement. Resolution 1929 also required Tehran to refrain from "any activity related to ballistic missiles capable of delivering nuclear weapons" and to comply with a modified provision (called code 3.1) of Iran's subsidiary arrangement to its IAEA safeguards agreement. The resolutions also imposed sanctions on Iran. Diplomacy bore fruit after the June 2013 election of Iranian President Hassan Rouhani with the achievement, on November 24, 2013, of an interim nuclear accord—the Joint Plan of Action (JPA; referred to in international documents as JPOA). The JPA set out an approach toward reaching a long-term comprehensive solution to international concerns regarding Iran's nuclear program. The two sides began implementing the JPA on January 20, 2014. The P5+1 and Iran reached a framework of a Joint Comprehensive Plan of Action (JCPOA) on April 2, 2015, and the JCPOA was finalized on July 14, 2015. With the JPA remaining in effect until the JCPOA entered into implementation, the IAEA certified on January 16, 2016, that Iran had completed its required JCPOA nuclear-related tasks for Implementation Day. The United States, the U.N., and the EU ceased application of most sanctions that day. Since Implementation Day, the agency has "verified and monitored Iran's implementation of its [JCPOA] nuclear-related commitments." On November 11, 2013, coinciding with concluding the JPA, Iran and the IAEA signed a joint statement that included a "Framework for Cooperation" to "strengthen their cooperation and dialogue aimed at ensuring the exclusively peaceful nature of Iran's nuclear programme through the resolution of all outstanding issues that have not already been resolved by the IAEA." The agency had long sought to resolve some outstanding questions regarding Tehran's nuclear program, some of which concern possible Iranian research on nuclear weapons development. Amano issued the IAEA's "Final Assessment on Past and Present Outstanding Issues Regarding Iran's Nuclear Programme" on December 2, 2015. Background on Iran's Nuclear Program5 Iran has nuclear programs that could potentially provide Tehran with the capability to produce both weapons-grade highly enriched uranium (HEU) and plutonium—the two types of fissile material used in nuclear weapons. (In addition to the production of weapons-grade nuclear material, a nuclear weapons program requires other key elements, such as warhead design and reliable delivery systems [see Appendix B ].) Statements from the U.S. intelligence community indicate that Iran has the technological and industrial capacity to produce nuclear weapons at some point, but the U.S. government assesses that Tehran has not mastered all of the necessary technologies for building a nuclear weapon. A November 2007 National Intelligence Estimate assessed that Iran "halted its nuclear weapons program" in 2003, but the estimate and subsequent statements by the intelligence community also assessed that Tehran was keeping open the "option" to develop nuclear weapons. Then-Under Secretary of State for Political Affairs Wendy Sherman explained during an October 3, 2013, Senate Foreign Relations Committee hearing that Iran would need as much as one year to produce a nuclear weapon if the government made the decision to do so. Tehran would have needed two to three months of this time to produce enough weapons-grade HEU for a nuclear weapon. Iran's implementation of the JCPOA lengthened the latter timeline to one year, according to February 9, 2016, congressional testimony from then-Director of National Intelligence James Clapper. (See " Major Nuclear Provisions of the JCPOA .") U.S. officials argue that the IAEA and/or U.S. intelligence would likely detect an Iranian attempt to produce weapons-grade HEU with either its safeguarded facilities or clandestine facilities . Regarding the former, Clapper testified that the JCPOA has enhanced the transparency of Iran's nuclear activities ... [a]s a result, the international community is well postured to quickly detect changes to Iran's declared nuclear facilities designed to shorten the time Iran would need to produce fissile material. T he intelligence community assesses that Iran is more likely to use clandestine facilities to produce weapons -grade HEU, Director Clapper stated in a March 2015 interview. U.S. officials have express ed confidence i n the ability of U.S. intelligence to detect Iranian covert nuclear facilities and have indicated that Iran currently does not appear to have any nuclear facilities of which the United States is unaware. IAEA Safeguards The IAEA's ability to inspect and monitor nuclear facilities in, as well as to obtain information from, a particular country pursuant to that government's comprehensive safeguards agreement has been limited to facilities and activities that have been declared by the government. Additional Protocols to IAEA comprehensive safeguards agreements increase the agency's ability to investigate undeclared nuclear facilities and activities by increasing the IAEA's authority to inspect certain nuclear-related facilities and demand information from member states. Iran signed such a protocol in December 2003 and agreed to implement the agreement pending ratification. However, following the 2005 breakdown of limited agreements with the European countries to suspend uranium enrichment, Tehran stopped adhering to its Additional Protocol in 2006. Subsidiary arrangements to IAEA safeguards agreements describe the "technical and administrative procedures for specifying how the provisions laid down in a safeguards agreement are to be applied." Code 3.1 of Iran's subsidiary arrangement to its IAEA safeguards agreement requires Tehran to provide design information for new nuclear facilities "as soon as the decision to construct, or to authorize construction, of such a facility has been taken, whichever is earlier." Declared Iranian Nuclear Facilities19 Iran did not build any new nuclear facilities or expand the existing facilities since the JPA went into effect in January 2014. Iran operates a Russian-built nuclear power reactor, for which Russia is providing fuel until 2021. The JCPOA focuses on Iran's enrichment program and its heavy water reactor due to their potential for nuclear weapons material production. Iran has two gas centrifuge enrichment facilities: the Natanz Fuel Enrichment Plant and the Natanz Pilot Fuel Enrichment Plant. Gas centrifuges enrich uranium by spinning uranium hexafluoride gas at high speeds to increase the concentration of the uranium-235 isotope. Such centrifuges can produce low-enriched uranium (LEU), which can be used for fuel in nuclear power reactors or research reactors, and weapons-grade highly enriched uranium (HEU). LEU used in nuclear power reactors typically contains less than 5% uranium-235; research reactor fuel can be made using 20% uranium-235; HEU used in nuclear weapons typically contains about 90% uranium-235. Tehran argues that it is enriching uranium for use as fuel in nuclear power reactors and nuclear research reactors. Natanz Commercial-Scale Fuel Enrichment Plant . In this facility, Iran is using first-generation centrifuges, called IR-1 centrifuges, to produce LEU containing up to 5% uranium-235. As of November 2013, Iran had installed about 15,400 of these centrifuges, approximately 8,800 of which are enriching uranium. Iran had also installed about 1,000 centrifuges with a greater enrichment efficiency, called IR-2m centrifuges, in the facility, but they are not enriching uranium. Natanz Pilot Fuel Enrichment Plant . Iran had been using IR-1 centrifuges in this facility to produce LEU containing approximately 20% uranium-235 until halting this work pursuant to the JPA. Tehran's production of LEU enriched to the 20% level has caused concern because such production requires approximately 90% of the effort necessary to produce weapons-grade HEU, which, as noted, contains approximately 90% uranium-235. Iran is testing other centrifuge models in this facility under IAEA supervision, but such work was monitored by the IAEA, even before the JPA (see below) limited this testing. Iran has been constructing a nuclear reactor moderated by heavy water at Arak, a type of reactor that produces spent fuel containing plutonium that is better suited for nuclear weapons than plutonium produced by light water-moderated reactors. Tehran has asserted that the reactor is intended to produce radioisotopes for medical use and to replace the Tehran Research Reactor. Heavy water production requires a separate production plant, which Iran possesses. Prior to JCPOA implementation, the Arak reactor, if it had been completed, could have produced enough plutonium for between one and two nuclear weapons per year. However, plutonium must be separated from the used fuel—a procedure called "reprocessing." Iran has always maintained that it would not engage in reprocessing. Prior to the JPA, Tehran notified the IAEA that it had produced enough heavy water to commission the reactor. The "Joint Plan of Action" (JPA) The JPA, also widely known as the JPOA, essentially froze most aspects of Iran's nuclear program to allow time to negotiate the JCPOA. When the JPA went into effect in January 2014, Iran had enough uranium hexafluoride containing up to 5% uranium-235, which, if further enriched, would have yielded enough weapons-grade HEU for as many as eight nuclear weapons. The total amount of Iranian LEU containing 20% uranium-235 would, if it had been further enriched, have been sufficient for a nuclear weapon. After the JPA went into effect, Iran either converted much of that material for use as fuel in a research reactor located in Tehran (called the Tehran Research Reactor), or prepared it for that purpose. Iran diluted the rest of that stockpile so that it contained no more than 5% uranium-235. Tehran's uranium conversion facility is not set up to reconvert the reactor fuel to uranium hexafluoride. According to a November 14, 2013, IAEA report, Iran had generally stopped expanding its enrichment and heavy water reactor programs during the negotiations leading up to the JPA. Nuclear Program Provisions under the JPA28 Under the JPA, Iran agreed to refrain from "any further advances of its activities" at the Natanz commercial-scale facility, Fordow facility, and Arak reactor. Tehran was also required to provide the IAEA with additional information about its nuclear program, as well as access to some nuclear-related facilities to which Iran's IAEA safeguards agreement does not require access. The JPA required Iran: Centrifuge Limits . To refrain from feeding uranium hexafluoride into its installed centrifuges that were not previously enriching uranium, to replace existing centrifuges only with "centrifuges of the same type," and to produce centrifuges only to replace damaged centrifuges. Tehran was also required to refrain from installing additional centrifuges at the Natanz facility. Iran was permitted to use its previously operating centrifuges in the Natanz commercial facility and the Fordow facility to produce enriched uranium containing as much as 5% uranium-235. Level of Enrichment Limits . To only enrich uranium up to 5% uranium-235. Tehran was also to dilute half of its stockpile of uranium hexafluoride containing 20% uranium-235 to no more than 5% uranium-235. The rest of the uranium hexafluoride containing 20% uranium-235 was to be converted to uranium oxide for use as fuel for the Tehran Research Reactor. Iran also agreed to refrain from building a line in its uranium conversion facility for reconverting the uranium oxide back to uranium hexafluoride. LEU Stockpile Limits . To, in effect, freeze the amount of stocks of enriched uranium hexafluoride containing up to 5% uranium-235. Centrifuge R&D . To continue its "current enrichment R&D Practices" under IAEA safeguards, "which are not designed for accumulation of the enriched uranium." This provision prohibited Tehran from producing enriched uranium hexafluoride containing more than 5% uranium-235. Additional Monitoring . The JPA provided for additional IAEA monitoring of the enrichment facilities by allowing IAEA inspectors to access video records from those facilities on a daily basis. Previously, inspectors did not access such records daily (and the video is not streamed in real time to the agency). Arak Reactor . Iran pledged to refrain from commissioning the reactor, transferring fuel or heavy water to the reactor site, testing and producing additional reactor fuel, and installing remaining reactor components. Tehran was permitted to continue some construction at the reactor site and to produce some reactor components off-site. Iran also agreed to refrain from reprocessing spent nuclear material and building a reprocessing facility. Additional Pledges/ Information . The JPA reiterated previous Iranian statements "reaffirm[ing] that under no circumstances will Iran ever seek or develop any nuclear weapons." In addition, Iran was to provide the IAEA with other information, such as plans for future nuclear facilities, even though Iran was already required to provide some of this information by code 3.1 of Iran's subsidiary arrangement to its IAEA safeguards agreement. Iran also provided IAEA inspectors with "managed access" to its centrifuge assembly workshops, centrifuge rotor production workshops, centrifuge storage facilities, and uranium mines and mills. "Right to Enrichment" The JPA acknowledged that Iran's right to the peaceful use of nuclear energy under the nuclear Non-Proliferation Treaty (NPT) would be part of a comprehensive solution, but shied away from stating that uranium enrichment is part of this right. The JPA stipulated that an enrichment program in Iran would have defined limits and transparency measures. The Obama Administration applied to Iran its interpretation that the NPT does not contain an explicit right to enrichment. A senior Administration official explained on November 24, 2013, that "the United States has not recognized a right to enrich for the Iranian government, nor do we intend to. The document does not say anything about recognizing a right to enrich uranium." Sanctions Easing Under the JPA The JPA provided for some modest sanctions relief for Iran. Its provisions, which remained in force until "Implementation Day" (January 16, 2016), included the following: Access to Hard Currency . Iran was able to repatriate $700 million per month in hard currency from oil sales, and to access an additional $65 million per month of its foreign exchange reserves for tuition for Iranian students abroad. Oil Exports Capped . Iran's oil exports were required to remain at their December 2013 level of about 1.1 million barrels per day (mbd). Resumption of Trade in Selected Sectors. International sanctions were suspended on Iran's sales of petrochemicals, trading in gold and other precious metals, and transactions involving Iran's auto production sector. The Joint Comprehensive Plan of Action (JCPOA) The JPA stated that a JCPOA would include a "mutually defined [Iranian] enrichment programme with practical limits and transparency measures to ensure the peaceful nature of the programme." Specifically, Iran and the P5+1 would, in a JCPOA, reach agreement on permanent, comprehensive sanctions relief in exchange for restrictions—"for a period to be agreed upon"—on the "scope and level" of Iran's enrichment activities, the capacity and location of Iranian enrichment facilities, and the size and composition of Tehran's enriched uranium stocks. P5+1-Iran negotiations on a comprehensive settlement began in February 2014 but did not meet July 20 or November 24 deadlines in 2014. On November 24, 2014, Iran and the P5+1 announced their intent to finalize a detailed agreement by June 30, 2015, after first attempting to reach an overarching framework and roadmap for the agreement within four months. The framework accord was agreed on April 2, 2015, in Lausanne, Switzerland. The parties strived to meet the June 30 deadline because the Iran Nuclear Agreement Review Act ( P.L. 114-17 ) mandated a 30-day congressional review period for an agreement completed by that date. However, the JCPOA was not finalized until July 14, 2015; the failure to meet the June 30 deadline triggered a 60-day review period under that act. The provisions of the JPA remained in effect until the JCPOA was formally "adopted," as discussed below. Timeline for Implementing the JCPOA The JCPOA outlines steps, as follows: Finalization Day: July 14, 2015. Iran and the P5+1 countries, along with the High Representative of the European Union for Foreign Affairs and Security Policy (Frederica Mogherini), endorsed the JCPOA. A U.N. Security Council Resolution to endorse the JCPOA was submitted for adoption. Adoption Day /New U.N. Security Council Resolution . The JCPOA formally came into effect 90 days after endorsement of JCPOA by U.N. Security Council, (or earlier by mutual consent). Resolution 2231 was adopted for that purpose on July 20, 2015, placing Adoption Day at October 18, 2015. The Administration asserted that the 90-day time frame allowed for review of the JCPOA by the U.S. Congress and by any legislature of any party to the JCPOA. On Adoption Day, the United States issued the provisional presidential waivers required to implement U.S. sanctions relief, with the waivers to take effect on Implementation Day. Implementation Day. This day was defined in the JCPOA as the day the IAEA verified that Iran has completed the several stipulated nuclear related measures (e.g., reducing centrifuges, removing the core of the Arak reactor) and the United States, the U.N., and the EU cease application of specific sanctions (see text below). The U.N. Security Council terminated the provisions of its resolutions on Iran: 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), 1929 (2010), and 2224 (2015); and Resolution 2231 became the sole operative U.N. Security Council resolution on Iran's nuclear program. Implementation Day was declared on January 16, 2016, after the IAEA made the required certification of Iran's completion of the stipulated tasks. Transition Day. Represents initial stages of Iran's emergence from U.N. Security Council scrutiny. Transition Day is eight years from Adoption Day (October 18, 2023)—or upon "Broader Conclusion" report from the IAEA Director General to the IAEA Board of Governors and U.N. Security Council—whichever is earlier. As of Transition Day, additional EU entities are to be removed from sanctions, the United States is required to remove from designation specified additional Iranian entities subjected to sanctions, and the Administration is required to seek legislative termination of sanctions that were suspended on Implementation Day. UNSCR Termination Day . Ten years from Adoption Day (October 18, 2025). Provisions and measures imposed in U.N. Security Council Resolution endorsing JCPOA would terminate and the Security Council would not be involved in the Iran nuclear issue. However, the JCPOA itself and its remaining provisions do not terminate on this day: the accord states that, following successful implementation of the final steps of the JCPOA, Iran's nuclear program "will be treated in the same manner as that of any non-nuclear weapon state party to the NPT." Iran's IAEA safeguards obligations, as well as some JCPOA obligations, last for an indefinite duration. Potential nuclear-related exports to Iran remain subject to the Nuclear Suppliers Group's export guidelines. Resolution 2231 also ended the role of the U.N. panel of experts, which Resolution 1929 had created to work with a committee (established in Resolution 1737) that monitored states' compliance with the resolutions discussed above. The Security Council decided on January 16, 2016, to "select on an annual basis one member to serve as its facilitator" for implementing certain provisions of Resolution 2231, including Security Council approval of various Iranian exports and imports described in Annex B of the resolution. Major Nuclear Provisions of the JCPOA The JCPOA places constraints on Iran's enrichment and heavy water reactor programs and includes monitoring provisions designed to detect Iranian efforts to produce nuclear weapons using either declared or covert facilities. The nuclear-related provisions of the agreement, according to U.S. officials, extend the amount of time that Iran would need to produce enough weapons-grade HEU for one nuclear weapon to a minimum of one year, for a duration of at least 10 years. In addition to the restrictions on activities related to fissile material production, the JCPOA indefinitely prohibits Iranian "activities which could contribute to the design and development of a nuclear explosive device," including research and diagnostic activities. An IAEA report on January 16, 2016, certified that Iran had met the requirements for Implementation Day stipulated below. Enrichment Program The JCPOA limits Iran's enrichment of uranium for fixed durations. The agreement required the IAEA to certify that Iran had completed most of the tasks described below in order for Tehran to qualify for Implementation Day sanctions relief. According to the JCPOA, expiration of the JCPOA enrichment restrictions will be "followed by gradual evolution, at a reasonable pace" of Iran's enrichment program. Iran has submitted an "enrichment R&D plan" to the IAEA as part of Tehran's initial declaration for its Additional Protocol. (See " Verification " section below.) Iranian adherence to that plan is a JCPOA requirement. Centrifuge L imitation (10 years) . For 10 years, Tehran is to use no more than 5,060 IR-1 centrifuges to enrich uranium, and to install only IR-1 centrifuges in the facility. All excess centrifuges are to be used only as replacements for operating centrifuges and equipment. Level of E nrichment L imitation (15 years) . For at least 15 years, Iran is to refrain from producing enriched uranium containing more than 3.67% uranium-235. Facility L imitation (15 years) . For 15 years, Iran is to enrich uranium only at the Natanz commercial facility and is not to build any new enrichment facilities. LEU S tockpile L imitation (15 years) . For 15 years, Iran is to maintain its LEU stockpile at no more than 300 kilograms of LEU containing 3.67% uranium-235. Tehran's three options for disposing of the remaining portion of its LEU stockpile were (1) diluting the material so that it contains the same levels of uranium-235 found in natural uranium; (2) selling the LEU to another country; or (3) selling it to an IAEA-established international LEU bank. Iran's LEU containing between 5% and 20% uranium-235 is to be "fabricated into fuel plates for the Tehran Research Reactor or transferred, based on a commercial transaction, outside of Iran or diluted" so that it contains a maximum of 3.67% uranium-235. Iran is to export LEU that cannot be fabricated into fuel for the Tehran Research Reactor or dilute that LEU to at most 3.67% uranium-235. On December 28, 2015, Iran shipped out LEU to Russia to reduce its stockpile to the required levels. All fuel plates for the Tehran Research Reactor were irradiated, according to the January 2016 IAEA report. The JCPOA-established Joint Commission has deemed some enriched uranium in Iran as "unrecoverable"—and therefore not counted against the JCPOA limits on Iran's enriched uranium stockpiles. Such exempted material includes LEU contained in low-level solid waste and LEU containing as much as 3.67% uranium-235 in low-level liquid and sludge waste "provided that Iran does not build or operate any facility or part of a facility capable of recovering" this material for 15 years. Tehran will store this waste under IAEA safeguards. The commission has similarly deemed enriched uranium containing 20% uranium-235 described as "laboratory contamination." The commission announced on January 10, 2017, that it had approved an Iranian plan to flush enriched uranium from the process lines of an Iranian facility designed to produce uranium dioxide powder from LEU containing up to 5% uranium-235. Iran had approximately 100 kilograms of this material when Tehran and the P5+1 agreed to the JCPOA. Any LEU remaining after Iran completes the specified process, which the government started on January 31, 2017, will be deemed "unrecoverable" and will not count against the 300 kilogram limit described above. Fordow C onversion (15 years) . For 15 years, Iran is to maintain no more than 1,044 IR-1 centrifuges at the Fordow enrichment facility. Iran is not to conduct uranium enrichment or related research and development (R&D) there and the facility will not contain any nuclear material. Iran agreed to convert Fordow into "a nuclear, physics, and technology centre." 348 of the IR-1 centrifuges may be used to produce stable isotopes for medical and industrial uses. Cen trifuge P roduction (8, 10 years) . With regard to centrifuge manufacturing, Iran for 10 years is to use the excess IR-1 centrifuges from the Natanz and Fordow facilities "for the replacement of failed or damaged machines." Tehran may resume producing IR-1 centrifuges if its stock of replacement centrifuges "falls to 500 or below." After 8 years, Iran will be permitted to begin to manufacture 2 types of advanced centrifuges; after 10 years, Iran will be permitted to produce complete versions of those centrifuges and store them under IAEA monitoring "until they are needed for final assembly." Centrifuge R& D (10 years ) . For 10 years, Iran is to refrain from pursuing R&D on any technologies other than gas centrifuge enrichment. Arak Reactor The JCPOA commits Iran to redesign and rebuild the Arak reactor based on a design agreed to by the P5+1 so that it will not produce weapons-grade plutonium. Iran is to export the spent fuel from this reactor and all other nuclear reactors. The JCPOA also requires Tehran to render the Arak reactor's original core inoperable; the IAEA report of January 16, 2016, said that Iran had met this requirement. Tehran is managing an international project to redesign and construct the replacement reactor; P5+1 participants established a working group "to support and facilitate the redesigning and rebuilding of the reactor." The group was to "conclude an official document" before Implementation Day which would "define the responsibilities" assumed by the P5+1 participants. China's Atomic Energy Authority and the U.S. Department of Energy "affirmed their readiness to convene and co-chair" the working group, according to an October 18, 2015, joint statement from China, Iran, and the United States, which added that the three parties "intend to work together to conclude expeditiously" the document described above. The parties issued the document on November 22, 2015. The United States is no longer participating in the project and the United Kingdom has taken the U.S. role. Chinese and Iranian companies signed the first consultancy services contract" for this project on April 23, 2017, and the "conceptual redesigning" of the reactor was completed thereafter, according to an April 2018 official Iranian news report. The JCPOA prohibits Iran from reprocessing spent reactor fuel, except to produce "radio-isotopes for medical and peaceful industrial purposes." The JCPOA text states that Iran "does not intend" to engage in reprocessing after the 15-year period expires. Furthermore, Tehran has also committed to refrain from accumulating heavy water "beyond Iran's needs"; Iran is to "sell any remaining heavy water on the international market for 15 years." The JCPOA requires Iran to refrain from building heavy water-moderated reactors for 15 years, and Iran pledges to refrain from constructing any such reactors indefinitely. Iran's stock of heavy water has exceeded 130 metric tons on 2 occasions since the JCPOA began implementation. On February 17, 2016, the IAEA verified that Tehran's heavy water stock had exceeded 130 metric tons; on November 8, 2016, the IAEA verified that Iran's stock of heavy water had again exceeded the JCPOA limit. Iran resolved the issue on both occasions by exporting the excess heavy water. Tehran has sent this material to Russia and the United States, shipping at least some of it via Oman. Iran told the IAEA on June 18, 2017, letter that it had transferred 19.1 metric tons of heavy water to a destination outside the country. According to an April 2018 report covering 2017, "[m]ost Iranian excess heavy water has been sold and delivered to international buyers; the remainder is awaiting sale and is stored in a location outside Iran, under IAEA seal, though it remains Iranian property." The IAEA verified on May 6, 2018, that Iran had 120.3 metric tons of heavy water. Other Provisions Verification The IAEA monitors Iranian compliance with the JCPOA provisions concerning its enrichment program and the Arak program, as well as dual-use nuclear weapon-related activities. To do so, the agency has increased the number of its inspectors in Iran and begun using more-advanced modern verification technologies, such as the Online Enrichment Monitor. Iran pledged to allow a "long-term IAEA presence in Iran" and "has agreed to implement" the Additional Protocol to its safeguards agreement. Iran is also to implement the modified code 3.1 of the subsidiary arrangements to its IAEA safeguards agreement. According to IAEA reports, the government has taken these steps since it began implementing the JCPOA in January 2016. Iran submitted its declarations pursuant to its Additional Protocol in July 2016. It is worth noting that Iran's IAEA safeguards obligations last for an indefinite duration. Potential nuclear-related exports to Iran would remain subject to the Nuclear Suppliers Group's (NSG) export guidelines. The April 2018 State Department report noted that "Tehran's adherence" to its JCPOA commitments "will hinder its ability to produce a nuclear weapon even after the time-bound provisions of the deal expire, helping to ensure that its nuclear program remains exclusively peaceful in nature." The JCPOA also describes other monitoring and inspections. For 15 years, the IAEA will monitor the stored Iranian centrifuges and related infrastructure. During this time, Iran will also permit the IAEA "daily access" to "relevant buildings" at the Natanz facilities. For 20 years, Tehran will allow the agency to verify Iran's inventory of certain centrifuge components and the manufacturing facilities for such components. Additionally, Iran is to allow the IAEA to monitor the country's uranium mills for 25 years and to monitor Iran's plant for producing heavy water. As noted, Amano also reported that, since Implementation Day, the IAEA "verified and monitored Iran's implementation of its nuclear-related commitments under the JCPOA." IAEA Director-General Yukiya Amano told reporters on July 14, 2015, that the agency's workload would increase under the JCPOA. On August 25, 2015, the IAEA Board of Governors authorized Amano "to undertake the verification and monitoring" of Iran's nuclear-related JCPOA commitments "subject to the availability of funds and consistent with our standard safeguards practices." The IAEA has integrated these costs into its regular budget. The Obama Administration argued that these provisions will prevent Iran from developing a nuclear weapon covertly. Then-Secretary of State John Kerry explained in a September 2, 2015, speech that Iran "would have to come up with a complete ... and completely secret nuclear supply chain," adding that "our intelligence community and our Energy Department ... both agree Iran could never get away with such a deception." The JCPOA and U.N. Security Council Resolution 2231 contain a variety of reporting provisions for the IAEA. For example, the resolution requests the agency's Director General to provide regular updates to the IAEA Board of Governors and, as appropriate, in parallel to the Security Council on Iran's implementation of its commitments under the JCPOA and also to report to the IAEA Board of Governors and in parallel to the Security Council at any time if the Director General has reasonable grounds to believe there is an issue of concern directly affecting fulfillment of JCPOA commitments. It is worth noting that, although the IAEA reports findings of its inspection and monitoring activities and the JCPOA-established Joint Commission monitors the parties' implementation of the agreement, compliance determinations are national decisions. Access to Undeclared Sites . The JCPOA describes arrangements for the IAEA to gain access to Iranian sites other than those Tehran declares to the agency "if the IAEA has concerns regarding undeclared nuclear materials or activities, or activities inconsistent with" the JCPOA. If the IAEA has such concerns at one of these sites, the agency "will provide Iran the basis for such concerns and request clarification." The IAEA could request access to the site if Iran's explanation did not provide sufficient clarification, and Tehran may respond by proposing alternative means of resolving the IAEA's concerns. If such means did not resolve the IAEA's concerns or the two sides did not "reach satisfactory arrangements ... within 14 days of the IAEA's original request for access," Iran "would resolve the IAEA's concerns through necessary means agreed between Iran and the IAEA." Tehran would make such a decision "in consultation with the members of the Joint Commission" established by the JCPOA. If the two sides cannot reach agreement, the commission "would advise on the necessary means to resolve the IAEA's concerns" if at least a majority of commission members agreed to do so. The Joint Commission would have seven days to reach a decision, and Iran is required to implement the necessary means within three additional days. ( The total time for the stipulated procedures would be 24 days. ) The JCPOA contains several provisions that address Iranian concerns that IAEA inspectors may try to obtain information unrelated to the country's nuclear program. For example, the IAEA may only request access to the types of facilities described above "for the sole reason to verify the absence of undeclared nuclear materials and activities or activities inconsistent with the JCPOA." In addition, the agency would provide Iran with written reasons for access and "make available relevant information." Procurement Channel. The JCPOA established a "procurement channel" for Iran's nuclear program. The Joint Commission established by the JCPOA is to monitor and approve transfers made via the channel for 10 years. The agreement requires Iran to provide the IAEA with "access to the locations of intended use of all items, materials, equipment, goods and technology" listed in the NSG's "Guidelines for Nuclear Transfers." Moreover, Tehran is to permit exporting governments to "verify the end-use of all items, materials, equipment, goods and technology" listed in the NSG's "Guidelines for Transfers of Nuclear-Related Dual-Use Equipment, Materials, Software, and Related Technology." IAEA officials will have access to information about and may participate in meetings regarding such transfers when they are proposed. According to a June 2016 GAO report, IAEA officials asserted that "there is additional work to be done in informing exporting countries of their obligations and standardizing the data that the countries would report to IAEA so that they are usable to the agency." According to a December 8, 2017, report by U.N. Secretary-General António Guterres, the Security Council had received 37 nuclear-related export proposals since Implementation Day; the council approved 24 of those proposals and disapproved three. Five proposals were withdrawn by the submitting states and three were under review. Broader Conclusion . The JCPOA also indicates that the IAEA will pursue drawing a "Broader Conclusion that all nuclear material in Iran remains in peaceful activities." According to the IAEA, the agency can draw such a conclusion for states with comprehensive safeguards agreements and additional protocols in force. According to the IAEA, The conclusion of the absence of undeclared nuclear material and activities is drawn when the activities performed under an additional protocol have been completed, when relevant questions and inconsistencies have been addressed, and when no indications have been found by the IAEA that, in its judgement, would constitute a safeguards concern. The average time for the IAEA to draw the broader conclusion for states with complex nuclear programs has been five to seven years. Former IAEA Deputy Director General Heinonen wrote that "it has taken up to five years for the IAEA to reach a 'broader conclusion' for other countries with large nuclear programs that are in good standing under the Non-Proliferation Treaty." Amano explained on March 20, 2017, that "I cannot tell how many years it will take" to draw such a conclusion for Iran, adding that "it depends very much on the level of cooperation from Iran." In October 2017, Amano stated that the process is "likely to take many years," and there are no recent public indications that the IAEA is close to issuing that conclusion. International Cooperation The JCPOA discusses a variety of nuclear projects in Iran that would include other countries. These include the Arak reactor project; research at the Fordow facility; other nuclear reactor projects; nuclear medicine; nuclear safety; and the supply of nuclear fuel. This latter form of cooperation is presumably designed to obviate the need for Iran to produce its own nuclear fuel. Some, but not necessarily all, of the P5+1 countries, will participate in these projects. The JCPOA also envisions forms of technical cooperation between Iran and the IAEA. The Obama Administration argued that international nuclear cooperation would provide additional transparency into Iran's nuclear program. The United States does not have a civil nuclear cooperation agreement with Iran, and U.S. sanctions laws prohibit the United States from engaging in most forms of nuclear cooperation with Iran. Section 129b.(1) of the Atomic Energy Act (AEA) of 1954, as amended, forbids the export of "nuclear materials and equipment or sensitive nuclear technology" to any country designated as a state sponsor of terrorism. Section 129b.(3) allows the President to waive this provision. Section 57b.(2) of the AEA allows for limited forms of nuclear cooperation related to the "development or production of any special nuclear material outside of the United States" without a nuclear cooperation agreement if that activity has been authorized by the Secretary of Energy following a determination that it "will not be inimical to the interest of the United States." Nuclear Weapons Research and Development In addition to addressing Iran's ability to produce fissile material, the JCPOA contains other provisions intended to render Iran unable to produce a nuclear weapon. For example, the agreement indefinitely prohibits specific activities "which could contribute to the design and development of a nuclear explosive device." Neither Iran's comprehensive safeguards agreement nor its additional protocol explicitly prohibit these activities. As noted, the U.S. government assesses that Tehran has not mastered all of the necessary technologies for building a nuclear weapon. In addition, for 15 years Iran is to refrain from "producing or acquiring plutonium or uranium metals or their alloys" and "conducting R&D on plutonium or uranium (or their alloys) metallurgy, or casting, forming, or machining plutonium or uranium metal." Producing uranium or plutonium metals is a key step in producing nuclear weapons. Resolving Questions of Past Nuclear Weapons-Related Research The IAEA has concluded its investigation of the outstanding issues concerning Iran's nuclear program. According to IAEA reports, the agency has evidence that Iran may have conducted work relevant to nuclear weapons, such as research about a nuclear payload for missiles. U.N. Security Council resolutions required Iran to resolve these questions by providing full information to the IAEA, and the agency has held regular talks with Iran to chart a path forward. But past reports from Amano to the agency's Board of Governors said that, although the IAEA could verify that there was no diversion of nuclear material from Iran's declared nuclear facilities, it could not conclude that no nuclear weapons-related activity was taking place in the country. According to the JCPOA, Tehran would "complete" a series of steps set out in an Iran-IAEA "Roadmap for Clarification of Past and Present Outstanding Issues." According to Amano, this road map set out "a process, under the November 2013 Framework for Cooperation, to enable the Agency, with the cooperation of Iran, to make an assessment of issues relating to possible military dimensions to Iran's nuclear programme." "All the activities contained in the road-map were implemented in accordance with the agreed schedule," according to a December 2, 2015, report from Amano. On December 2, 2015, in advance of the December 15 deadline in the road map, Amano presented the stipulated report, as a final assessment on all past and present outstanding [Iranian nuclear] issues described in a November 2011 report. It indicated that the information provided by Iran did not allow the IAEA to resolve some outstanding issues and also casts doubt on some of the information's accuracy. Nevertheless, the report assesses that "before the end of 2003, an organizational structure was in place in Iran suitable for the coordination of a range of activities relevant to the development of a nuclear explosive device." Iran conducted "a range of activities relevant to the development of a nuclear explosive device ... prior to the end of 2003 as a coordinated effort," the report says, adding that "some [nuclear weapons-related] activities took place after 2003," but "were not part of a coordinated effort." The report concludes that "these activities did not advance beyond feasibility and scientific studies, and the acquisition of certain relevant technical competencies and capabilities" and notes that the IAEA "has no credible indications of activities in Iran relevant to the development of a nuclear explosive device after 2009." Amano told the IAEA board on December 15 that, although "it was not possible for the Agency to reconstruct all the details of activities conducted by Iran in the past, we were able to clarify enough elements to provide an assessment of the whole picture." The IAEA reiterated this conclusion on May 1, 2018, following Israeli Prime Minister Benjamin Netanyahu's disclosure of documents concerning Iran's past nuclear weapons program, though the agency did not comment on the documents specifically. On June 5, 2018, Nicole Shampaine, the Chargé d'Affaires at the U.S. Mission to International Organizations in Vienna, stated that Israeli Prime Minister Benjamin Netanyahu's April 2018 disclosure of documents concerning Iran's past nuclear weapons program "further reaffirms" the IAEA's December 2015 conclusion that Iran had conducted such research in the past. In accordance with the road map, Iran presented, in writing, its "comprehensive assessment to the IAEA" on Amano's report, on January 7, 2016. The document apparently acknowledges Iranian "scientific studies of dual-use technologies" for "peaceful civilian or conventional military uses." But the statement reiterated previous Iranian claims that the country has done no work on nuclear weapons and that some of the evidence underlying the agency's concerns is inauthentic. Virtual Closure of the Issue. The JCPOA states that, following Amano's report, the P5+1 "in their capacity as members of the [IAEA] Board of Governors, will submit a resolution to the Board of Governors for taking necessary action, with a view to closing the issue." The board adopted a resolution on December 15 which closed "the Board's consideration" of the "outstanding issues regarding Iran's nuclear programme." The Board is no longer focused on Iran's compliance with past Security Council resolutions and past issues concerning Iran's safeguards agreement, but is instead focused on JCPOA implementation and verification and monitoring in Iran in light of Security Council Resolution 2231. The resolution requests the Director General to issue quarterly reports to the board regarding Iran's "implementation of its relevant commitments under the JCPOA for the full duration of those commitments." The Director General is also to report to the Board of Governors and the Security Council "at any time if the Director General has reasonable grounds to believe there is an issue of concern" regarding Tehran's compliance with its JCPOA or safeguards obligations. It is worth noting that the IAEA will not be able to draw the "Broader Conclusion that all nuclear material in Iran remains in peaceful activities" without addressing these issues. The April 2018 State Department report notes that closing the agenda item concerning Iran's past military-related nuclear activities "does not preclude the IAEA from investigating if there is reason to believe Iran is pursuing any covert nuclear activities, including nuclear weapons work." Issue Significance. The significance of resolving these issues for ensuring that Iran's current program is for purely peaceful purposes is unclear. Former IAEA Deputy Director General Olli Heinonen argued during a July 2014 Senate hearing that gaining full understanding of Iran's past suspected nuclear weapons program is important for determining that Iran is not reconstituting that program and also for determining the probability that Iran will use a future centrifuge program to produce nuclear weapons. However, in April 2015, Jofi Joseph, a former Obama Administration official whose portfolio included the Iran nuclear issue, commented Some argue that it will be very difficult to identify future covert Iranian nuclear weapons efforts without a detailed understanding of what happened before. I'm not so sure. It is not clear if the individuals involved with the previous [nuclear weapons program] would be the ones tapped again for a future covert program or whether a clear understanding of their previous actions would help identify future efforts. Former State Department official Robert Einhorn argued that It is sometimes argued that full Iranian disclosure is essential to designing an effective JCPOA monitoring system. But the provisions of an agreement that could be most effective in monitoring small-scale weaponization activities would be more intrusive than any sovereign state would be willing to accept (e.g., keeping close track of all scientists with the necessary expertise, on-site verification of all equipment in the country that could be used in nuclear weapons design and diagnostics). With or without full knowledge of past Iranian activities, it would have been nearly impossible to reach agreement on such intrusive arrangements. Einhorn also explained that the United States already has considerable knowledge of past Iranian nuclear weapons work. And in any event, in calculating how much time it would have to thwart an Iranian breakout, the United States would have to make the conservative assumption that Iran had made substantial headway in weaponization and would not require much time to proceed from the production of fissile material to the fabrication of a weapon. It is unlikely that anything the Iranians might say about past weaponization efforts would affect U.S. planning to stop an Iranian breakout, especially because whatever they said would hardly be taken at face value. Iranian Compliance with the JCPOA Nuclear Requirements Regarding Iranian compliance with the JCPOA, the Iran Nuclear Agreement Review Act of 2015 (INARA, P.L. 114-17 ) requires the President to "determine whether the President is able to certify" that Iran "is transparently, verifiably, and fully implementing the agreement, including all related technical or additional agreements"; "has not committed a material breach" of the agreement or cured any material breaches that Iran has committed; and "has not taken any action, including covert activities, that could significantly advance its nuclear weapons program." Then-Secretary of State Rex Tillerson issued this certification on July 17, 2017. , All official reports and statements from the United Nations, European Union, the IAEA, and the P5+1 indicate that Iran has complied with the JCPOA. The most recent report from IAEA Director General Amano states that the IAEA has continued verification and monitoring of the restrictions described in Section T of the JCPOA, which prohibits a number of nuclear weapons-related activities. Secretary of State Michael Pompeo stated during an April 12, 2018, Senate Foreign Relations Committee hearing that he had seen no evidence of Iranian noncompliance with the agreement. High Representative of the European Union for Foreign Affairs and Security Policy Mogherini stated on April 16 that "Iran is fully compliant with its nuclear commitments." The agreement, as noted, describes arrangements for agency inspectors to gain access to Iranian sites, including military sites, other than those that Tehran has declared to the agency, "if the IAEA has concerns regarding undeclared nuclear materials or activities, or activities inconsistent with" the JCPOA. The agreement also provides for alternative means to clarify the matter. The IAEA has not reported whether it has requested access to any Iranian military facilities, but the agency has a number of methods other than inspections, such as analyzing open source information and receiving intelligence briefings from governments, to monitor Iranian compliance with these and other JCPOA commitments. According to the April 2018 State Department report, [t]he IAEA continues to exercise its full authorities in pursuing any new safeguards-relevant or JCPOA-related information in Iran, including any new concerns regarding weaponization should they arise, through implementation of Iran's Safeguards Agreement, Additional Protocol, and the enhanced transparency and verification measures contained in the JCPOA. In a June 4, 2018, statement to the IAEA board Amano noted that the IAEA has been able to access "all the sites and locations in Iran which" agency inspectors "needed to visit." Sanctions Relief under the JCPOA and Reimposition Under the JCPOA, the overwhelming bulk of sanctions relief occurred at Implementation Day. The U.S. sanctions laws waived and executive orders revoked are discussed in detail in CRS Report RS20871, Iran Sanctions , by Kenneth Katzman, which also analyzes the reimposition of all U.S. sanctions that were suspended or revoked, in accordance with President Trump's May 8, 2018, announcement of the U.S. withdrawal from the JCPOA. Iran remains subject to its obligations pursuant to the JCPOA and Resolution 2231. A "snap back" mechanism was incorporated into the JCPOA to account for the possibility that Iran might not satisfactorily resolve a P5+1 inquiry about possible JCPOA noncompliance. According to the JCPOA, the United States (or any veto-wielding member of the U.N. Security Council) would be able to block a U.N. Security Council resolution that would continue the lifting of U.N. sanctions despite Iran's refusal to resolve the dispute. In that case, "... the provisions of the old U.N. Security Council resolutions would be reimposed, unless the U.N. Security Council decides otherwise." These provisions are included in U.N. Security Council Resolution 2231. The wording implies that the Council has the option to reimpose some, but not all, sanctions that existed prior to the JCPOA. The total time for this " dispute resolution" mechanism — between the time of the complaint of Iranian non compliance and the reimposition of U.N. sanctions — is 65 days. The other P5+1 states are able to invoke this mechanism, if they choose. But whether the United States may do so is unclear because the resolution provides that only a "JCPOA participant state" may bring a noncompliance finding to the Security Council; U.S. officials have stated that the United States is no longer participating in the agreement. Formal Congressional Review and Oversight105 Legislation providing for U.S. congressional review was enacted as the Iran Nuclear Agreement Review Act of 2015 (INARA, P.L. 114-17 ). Because the agreement was reached after July 10, the congressional review period was 60 days from the date of submission to Congress, which is to be within 5 days of finalization of the accord. The transmission of all required materials, according to the Administration, took place on July 19, 2015. No statutory sanctions could be waived during the review period, which concluded on September 17. Joint resolutions of disapproval were introduced in each chamber: H.J.Res. 64 in the House, and S.Amdt. 2640 to H.J.Res. 61 in the Senate. However, the House acted on three bills: H.R. 3461 to approve the deal was voted down 162-269. Another bill, H.Res. 411 , asserting that the President did not comply with P.L. 114-17 because the IAEA-Iran agreements were not submitted to Congress, passed the House 245-186. A third bill, H.R. 3460 , denying the President the ability to waive any sanctions laws until January 2017, passed 247-186. None of the bills was taken up by the Senate. In that body, several cloture motions on the disapproval resolution ( H.J.Res. 61 ) were defeated and the review process under P.L. 114-17 ended on September 17, 2015, with no resolution either approving or disapproving the JCPOA being enacted. Iranian Parliamentary Review. In August 2015, the Iranian Majles (parliament) set up a 15-person committee to review the JCPOA. The committee asserted that the JCPOA had "flaws," but stopped well short of saying it should not be adopted. Acting just before the deadline for Adoption Day, the Majles formally voted to approve the agreement, and Council of Guardians concurred. On October 21, 2015, Supreme Leader Khamene'i formally accepting the Majles and Council of Guardians decisions, while stressing stipulations, reservations, and distrust of the U.S. intent to fully implement its JCPOA commitments. Ongoing Oversight under INARA INARA provides for Administration reporting to Congress under several scenarios and at differing intervals: Material Breach Report . INARA requires that the President report to Congress any information relating to a potentially significant Iranian breach of the JCPOA, within 10 days of receiving information on such a possible breach. Within 30 calendar days after submitting such a report, the Administration is to make a determination whether there has been a material breach of the JCPOA by Iran. This reporting requirement is largely mooted by the U.S. exit from the JCPOA. Compliance Certification . Under INARA, the Administration is required to certify, within 90 days or less of the end of the INARA congressional review period (first report by December 16, 2015), and each 90 days thereafter, that Iran is fulfilling its commitments under the JCPOA. If the President does not make the required certification of Iranian compliance, or reports a material breach by Iran, Congress "may" initiate within 60 days "expedited consideration" of legislation that would reimpose any Iran sanctions that the President had suspended through use of waiver or other authority. As is any legislation, such "snap back" sanctions legislation would be subject to potential presidential veto. This certification requirement is mooted by the U.S. exit from the JCPOA. Semi-Annual Report . INARA requires an Administration report every 180 days on Iran's nuclear program and Iran's compliance with the agreement during the period covered in the report. The report is also to include whether Iranian banks are involved in terrorism financing; Iran's ballistic missile advances; and whether Iran continues to support terrorism. (First report was due by March 12, 2016.) It is unclear whether this reporting requirement remains active in light of the U.S. exit from the JCPOA. U.S. Implementation of and Exit from the JCPOA The Obama Administration and the IAEA asserted that they put in place measures to vigorously enforce the terms of the agreement. On September 17, 2015, then-Secretary of State Kerry announced the appointment of Ambassador Stephen Mull as Lead Coordinator for Iran Nuclear Implementation, leading an interagency effort to ensure that the nuclear steps Iran committed to in the JCPOA are fully implemented and verified. Deputy Secretary of State John Sullivan indicated during a July 17, 2017, hearing that Mull's position was "under review." The position no longer exists; its functions are now handled by the State Department's Bureau of International Security and Nonproliferation. The JCPOA in the Trump Administration During the 2016 presidential campaign, Donald Trump was a vocal critic of the agreement. At times, he pledged to seek to renegotiate it, to strictly enforce its terms on Iran, or to abrogate it outright. The JCPOA does not contain a provision for any party to end the agreement; nevertheless, the President could decide to stop implementing some or all of the U.S. commitments in the deal, but doing so leaves open the possibility for the agreement to be implemented by the remaining parties, including Iran. Throughout some of its first year, the Trump Administration indicated support for the agreement. On February 10, 2017, following meetings with the Administration focused on the JCPOA, the EU High Representative for Foreign Policy, Frederica Mogherini, stated that Administration officials "reassured" her that the Administration intended to fully implement the JCPOA. However, by the beginning of 2018, U.S. officials expressed increasing hostility toward the JCPOA. Then-Secretary of State Rex Tillerson told reporters on April 19, 2017, that the Administration will "review completely the JCPOA itself." Asserting that "Iran's nuclear ambitions are a grave risk to international peace and security," Tillerson argued that the "JCPOA fails to achieve the objective of a non-nuclear Iran; it only delays their goal of becoming a nuclear state." Asked whether the United States should stop fulfilling its JCPOA commitments, Tillerson replied, "[w]e just don't see that that's a prudent way to be dealing with Iran, certainly not in the context of all of their other disruptive activities." Trump Administration officials argued that Iran may pursue nuclear weapons in the future. Trump Administration officials stated on July 17, 2017, that the Administration is "trying to take stronger steps to interpret the agreement more stringently against Iran" because the "existing restrictions on the JCPOA were, in our view, inadequately enforced." The February 2018 Nuclear Posture Review asserts that "Iran's development of increasingly long-range ballistic missile capabilities, and its aggressive strategy and activities to destabilize neighboring governments, raises questions about its long-term commitment to foregoing nuclear weapons capability." President Trump announced on October 13, 2017, that the Administration had completed the Iran policy review described above. With respect to the JCPOA, Trump announced that the Administration would not issue an INARA-specified compliance certification, and that he would direct his Administration to "work closely with Congress and our allies to address the deal's many serious flaws so that the Iranian regime can never threaten the world with nuclear weapons." Secretary Tillerson did not address Iranian compliance, but he wrote in a letter to Congress the same day that he was "unable to certify" that "continued suspension of [U.S.] sanctions" is "appropriate and proportionate to the specific and verifiable measures taken by Iran with respect to terminating its illicit nuclear program." The withholding of the certification under INARA permitted Congress to act on legislation, under expedited procedures, reimposing those sanctions that were suspended. Congress did not take such action. On January 12, 2018, President Trump stated that "the United States will not again waive sanctions" pursuant to the JCPOA absent "our European allies' agreement to fix the terrible flaws of the Iran nuclear deal." In this statement, Trump also demanded new congressional legislation concerning the JCPOA. A senior Administration official explained the same day that Trump "hopes to see an amendment to the Iran Nuclear Agreement Review Act" which must "demand that Iran allow timely, sufficient and immediate inspections at all sites that are requested by international inspectors from the IAEA"; "ensure" that Iran does not become capable of producing enough fissile material for a nuclear weapon in less than one year; allow the United States for an indefinite period of time to reimpose U.S. nuclear sanctions if Iran does not comply with these new criteria; and "state explicitly ... that we view Iran's long-range missile programs and nuclear weapons as inseparable and that Iran's development and testing of missiles should be subject to severe sanctions." Congress has not acted on such legislation. A senior Administration official stated on January 12 that the Trump Administration would "work with our European partners on some kind of follow-on agreement" to the JCPOA to address Iran's ballistic missile program, the JCPOA restrictions containing expiration dates, and improved inspections of Iran's nuclear program. U.S. officials subsequently met several times with their counterparts from France, Germany, and the United Kingdom to discuss Trump's demands, but the two sides did not reach agreement on a path forward that was sufficient to satisfy President Trump's demands. U.S. Exit from the JCPOA On May 8, President Trump, noting that the two sides had been unable to reach an agreement, announced that the United States would no longer participate in the JCPOA and would reimpose sanctions that had been suspended pursuant to the JCPOA. President Trump ordered Secretary of State Pompeo to "take all appropriate steps to cease the participation of the United States in the JCPOA," and, along with Secretary of the Treasury Steven Mnuchin, immediately "begin taking steps to reimpose all United States sanctions lifted or waived in connection" with the agreement. The United States has notified the other P5+1 states that the United States will no longer attend meetings of the joint commission, the working group concerning the Arak reactor, and the procurement working group. Secretary Pompeo detailed a new U.S. approach with respect to Iran during a May 21, 2018, speech as applying "unprecedented financial pressure on the Iranian regime," working "with the Department of Defense and our regional allies to deter Iranian aggression," and advocating "tirelessly for the Iranian people." He asserted that, in exchange for "major changes" in Iran's behavior, the United States is "prepared to end the principal components of every one of our sanctions against the regime ..., re-establish full diplomatic and commercial relationships with Iran ..., [a]nd support the modernization and reintegration of the Iranian economy into the international economic system." Pompeo listed a number of essential elements for any new agreement: "First, Iran must declare to the IAEA a full account of the prior military dimensions of its nuclear program, and permanently and verifiably abandon such work in perpetuity. Second, Iran must stop enrichment and never pursue plutonium reprocessing. This includes closing its heavy water reactor. Third, Iran must also provide the IAEA with unqualified access to all sites throughout the entire country. Iran must end its proliferation of ballistic missiles and halt further launching or development of nuclear-capable missile systems. Iran must release all U.S. citizens, as well as citizens of our partners and allies, each of them detained on spurious charges. Iran must end support to Middle East terrorist groups, including Lebanese Hizballah, Hamas, and the Palestinian Islamic Jihad. Iran must respect the sovereignty of the Iraqi Government and permit the disarming, demobilization, and reintegration of Shia militias. Iran must also end its military support for the Houthi militia and work toward a peaceful political settlement in Yemen. Iran must withdraw all forces under Iranian command throughout the entirety of Syria. Iran, too, must end support for the Taliban and other terrorists in Afghanistan and the region, and cease harboring senior al-Qaida leaders. Iran, too, must end the IRGC [Islamic Revolutionary Guard Corps] Qods Force's support for terrorists and militant partners around the world. And too, Iran must end its threatening behavior against its neighbors—many of whom are U.S. allies. This certainly includes its threats to destroy Israel, and its firing of missiles into Saudi Arabia and the United Arab Emirates. It also includes threats to international shipping and destructive ... cyberattacks." On May 21, 2018, State Department Director for Policy Planning Hook stated that "the plan is to continue working with our allies, as we have been over the last few months, to create a new security architecture." During a July 2, 2018, press briefing Hook explained that, following Trump's May 8, 2018, announcement, Secretaries Pompeo and Mnuchin "decided to create joint teams of senior officials to visit every region of the world. These teams were launched on June 4." The United States is "bringing severe economic pressure on Iran until the regime changes its destabilizing policies," Hook stated. Although Hook explained that the administration's policy "is not about changing the regime, it is about changing the behavior of the leadership in Iran," most observers assert that it would be inconceivable for the current regime in Iran to change its behavior to comport with the requirements outlined by Secretary Pompeo. Pompeo himself stated during a June 22 television interview that, if Iran were to "ramp up" work on its nuclear program, "the wrath of the entire world will fall upon" the government, explaining that "wrath" referred to "moral opprobrium and economic power," rather than military action. Reaction to the U.S. Exit The U.S. exit from the JCPOA attracted broad criticism among the other parties to the JCPOA. The other JCPOA parties assert that unilateral U.S. reimposition of sanctions appears to violate the JCPOA. The agreement requires that a noncompliance notification to the U.N. Security Council, which would be necessary to trigger the reimposition of U.N. sanctions, be accompanied by "a description of the good-faith efforts the participant made to exhaust the dispute resolution process specified in this JCPOA." The agreement also states that the P5+1 and Iran "commit to implement this JCPOA in good faith and in a constructive atmosphere, based on mutual respect, and to refrain from any action inconsistent with the letter, spirit and intent of this JCPOA that would undermine its successful implementation." Whether this course of action violates UNSCR 2231 is unclear. U.S. officials have argued that the JCPOA is not legally binding. But a European Union official told CRS in a November 30, 2016, email that "the commitments under the JCPOA have been given legally binding effect through UNSC Resolution 2231 (2015)." Other P5+1 countries immediately reiterated their support for the JCPOA and announced that they intend to fulfill their JCPOA commitments and protect their companies from the effects of any U.S.-imposed sanctions. In a joint statement, France, Germany, and the United Kingdom declared their intention to remain party to the JCPOA and to "work with all the remaining parties" to the deal to ensure that Iran continues to receive "the continuing economic benefits ... linked to the agreement." EU High Representative Mogherini stated that, if "Iran continues to implement its nuclear related commitments ... the European Union will remain committed to the continued full and effective implementation" of the agreement. Iranian Reaction Iranian officials have repeatedly stated that Tehran would fulfill its JCPOA commitments, as long as the United States did, and repeatedly have rejected renegotiating the JCPOA or negotiating a new agreement such as the sort described by U.S. officials. However, Zarif has asserted that Iran "is fully prepared to return to the pre-JCPOA situation or even [to conditions] more robust than that if the US reneges on its promises to the extent that the JCPOA's continuation harms our national interests," Iranian Foreign Minister Javad Zarif asserted the previous month. Deputy Foreign Minister Seyed Abbas Araqchi claimed that Iran "will be able to reach the industrial enrichment phase in less than two years"; other Iranian officials have asserted that the country can rapidly reconstitute its fissile material production capability. Iranian officials have described a number of possible responses to a U.S. decision to reimpose U.S. sanctions, including resuming uranium enrichment, referring the matter to the Joint Commission, decreasing cooperation with the IAEA, and withdrawing from the NPT. These responses do not include the possible Iranian development of nuclear weapons, Iranian officials have said. Asked on April 21 if Iran will continue to meet its JCPOA obligations if all P5+1 parties except for the United States continue to uphold their obligations, Zarif replied, "I believe that's highly unlikely," adding that it is important for Iran receive the benefits of the agreement. And there is no way that Iran would do a one-sided implementation of the agreement. And it would require a major effort because right now, with the United States ostensibly in the agreement, a lot has been lacking in terms of Iran benefiting from the deal. Following Trump's May 8 announcement, Iranian officials rejected negotiating any new agreements. In a May 10, 2018, letter to U.N. Secretary General António Guterres, Foreign Minister Zarif wrote that "[i]f JCPOA is to survive, the remaining JCPOA Participants and the international community need to fully ensure that Iran is compensated unconditionally through appropriate national, regional and global measures," adding that Iran has decided to resort to the JCPOA mechanism in good faith to find solutions in order to rectify the United States' multiple cases of significant non-performance and its unlawful withdrawal, and to determine whether and how the remaining JCPOA Participants and other economic partners can ensure the full benefits that the Iranian people are entitled to derive from this global diplomatic achievement. Supreme Leader Khamene'i stated on May 23 that Iran will only continue to participate in the JCPOA if Europe provides "concrete guarantees" that it maintains Iran's existing revenue stream from oil sales to the EU countries. He also demanded that Europe not to raise the issues of Iran's missiles programs or regional influence, and added that "Iran has the right to resume its nuclear activities." President Rouhani expressed a similar view in a July 4 speech. According to Iranian officials, Tehran has begun preparations for expanding its uranium enrichment program, albeit within the parameters of the JCPOA for the time being. Spokesman of the Atomic Energy Organization of Iran (AEOI) Behrouz Kamalvandi stated on June 5 that the organization "will start the process of boosting the capacity of the country's uranium enrichment," by increasing Iran's capacity to produce uranium hexafluoride. On June 27, 2018, Iran's official news agency announced that Iran has resumed operations at its uranium conversion facility, which Iran has used to produce this material. Kamalvandi also explained that Iran would begin the process of "manufacturing and assembly of centrifuge rotors," which are critical components of such machines. Iran "will begin building a centrifuge rotor plant," he noted. In addition, AEOI head Ali Akbar Salehi stated that Tehran will begin using an "advanced centrifuge assembly centre in the Natanz nuclear facility," which Iran had not disclosed publicly. Kamalvandi noted that Iran would continue to operate within the constraints of its JCPOA commitments, but added that, should the JCPOA collapse, Iran would produce centrifuges beyond those constraints. As noted, Iran remains subject to its obligations pursuant to the JCPOA and Resolution 2231 and could be subject to the reimposition of multilateral sanctions if Tehran violates these obligations. Efforts to Preserve the Accord Following the initial reactions to the U.S. exit from the accord, Iran and the other parties began negotiations on concrete steps that would continue to provide Iran with the economic benefits of the JCPOA. On May 16, 2018, in an apparent effort to meet Iran's demands for remaining in the agreement, the EU announced "practical measures" for continued implementation of the JCPOA, including the following: maintaining and deepening economic relations with Iran; the continued sale of Iran's oil and gas condensate petroleum products and petrochemicals and related transfers; effective banking transactions with Iran; continued sea, land, air, and rail transportation relations with Iran; provision of export credit and special provisions in financial banking to facilitate economic and financial cooperation and trade and investment; further memoranda of understanding and contracts between European companies and Iranian counterparts; further investments in Iran; and the protection of European Union economic operators and ensuring legal certainty; and finally further development of a transparent, rules-based business environment in Iran. Several multilateral meetings since the U.S. exit have not produced a firm Iranian commitment to the JCPOA. At Iran's request, the Joint Commission held meetings, attended by all of the JCPOA parties except for the United States, on May 25 and July 6. At the conclusion of the July 6 meeting, the Joint Commission participants reaffirmed their commitment to the EU "practical measures" enumerated above. However, President Rouhani reacted to the pledges by saying that "Unfortunately, the EU's package of proposals lacked an operational solution and a specific method for cooperation." Rouhani's reaction likely reflected a lack of confidence that EU and other countries can counter the effects of a steady stream of announcements by EU, Japanese, South Korean, and Indian companies that they are leaving the Iran market rather than face the risk of reimposed U.S. sanctions. The corporate announcements are the result, at least in part, of Trump Administration official statements that the Administration plans to fully enforce reimposed sanctions and will likely deny requests by companies and their governments for waivers or exemptions to the U.S. sanctions. The issue of efforts by EU and other countries to preserve the economic benefits of the JCPOA is analyzed in: CRS Report RS20871, Iran Sanctions , by Kenneth Katzman, and CRS In Focus IF10916, Efforts to Preserve Economic Benefits of the Iran Nuclear Deal , by Cathleen D. Cimino-Isaacs, Kenneth Katzman, and Derek E. Mix. Appendix A. Chart on the JCPOA Appendix B. Nuclear Weapons Development An effective nuclear weapons capability has three major elements: producing fissile material in sufficient quantity and quality for a nuclear explosive device; designing and weaponizing a survivable nuclear warhead; and producing an effective means for delivering the weapon, such as a ballistic missile. The U.S. government assesses that, although Iran could eventually produce nuclear weapons, it has not yet decided to do so and has not mastered all of the necessary technologies for building a nuclear weapon. Tehran had a nuclear weapons program but halted it in 2003, according to U.S. government estimates. Before the JCOA took effect, then-Under Secretary of State for Political Affairs Wendy Sherman explained during an October 3, 2013, Senate Foreign Relations Committee hearing that Iran would have needed as much as one year to produce a nuclear weapon if the government made the decision to do so. This estimate took into account the amount of time that Iran would have needed to produce a sufficient amount of weapons-grade highly enriched uranium (HEU), which is widely regarded as the most difficult task in building nuclear weapons, as well as to develop the other components necessary for a nuclear weapon. This estimate did not include the time that Iran would need to be able to render a nuclear weapon deliverable by a ballistic missile. Then-Secretary of Defense Leon Panetta stated in January 2012 that Iran would have needed "possibly ... one to two years in order to put [a nuclear weapon] on a deliverable vehicle of some sort." A senior intelligence official explained during a December 2007 press briefing that the "acquisition of fissile material" was the "governing element in any timelines" regarding Iran's production of a "nuclear device." However, the estimate articulated by Sherman assumed that Iran would need two to three months to produce enough weapons-grade HEU for a nuclear weapon. This estimate also apparently assumed that Iran would use its declared nuclear facilities to produce fissile material for a weapon. The other assumptions behind the estimate are not clear. Tehran would probably use covert enrichment facilities to produce fissile material for nuclear weapons—a tactic that would require a longer period of time, according to testimony from then-Director of National Intelligence James Clapper during an April 18, 2013, Senate Armed Services Committee hearing. In his February 2016 testimony to Congress, Director Clapper said that We continue to assess that Iran's overarching strategic goals of enhancing its security, prestige, and regional influence have led it to pursue capabilities to meet its nuclear energy and technology goals and give it the ability to build missile-deliverable nuclear weapons, if it chooses to do so. Its pursuit of these goals will dictate its level of adherence to the JCPOA over time. We do not know whether Iran will eventually decide to build nuclear weapons. As noted in the body of this report, U.S. officials have argued that the International Atomic Energy Agency would likely detect an Iranian attempt to use its safeguarded facilities to produce weapons-grade HEU. They have also expressed confidence in the United States' ability to detect covert Iranian enrichment plants.

On July 14, 2015, Iran and the six powers that had negotiated with Tehran about its nuclear program since 2006 (the United States, the United Kingdom, France, Russia, China, and Germany—collectively known as the P5+1) finalized a Joint Comprehensive Plan of Action (JCPOA). The JCPOA required constraints that seek to ensure that Iran's nuclear program can be used for purely peaceful purposes in exchange for a broad lifting of U.S., European Union (EU), and United Nations (U.N.) sanctions on Iran. The agreement replaced the Joint Plan of Action (JPA), an interim nuclear accord in effect from 2014 to 2016. Congress did not enact a resolution of disapproval of the JCPOA by the deadline of September 17, 2015, which was set by the Iran Nuclear Agreement Review Act (P.L. 114-17); the JCPOA formally took effect on "Adoption Day" (October 18, 2015). "Implementation Day" was declared by the P5+1 on January 16, 2016, representing the completion of Iran's nuclear requirements; entry into effect of U.N. Security Council Resolution 2231, which endorsed the JCPOA; and the start of sanctions relief stipulated in the agreement. Officials from both the Barack Obama and Donald Trump Administrations have certified that Iran has abided by its JCPOA commitments. The Obama Administration and other P5+1 leaders asserted that the JCPOA is the most effective means to ensure that Iran cannot obtain a nuclear weapon and that all U.S. options to prevent Iran from developing a nuclear weapon are available indefinitely. The agreement contains provisions for U.N. sanctions to be reimposed if Iran violates its commitments. Top Trump Administration officials have argued that the JCPOA does not adequately serve U.S. interests because the extensive sanctions relief provided under the accord gives Iran additional resources to conduct "malign activities" in the region, and does not restrict Iran's development of ballistic missiles. Resolution 2231, which was adopted in July 2015, prohibits arms transfers to or from Iran, but only for five years, and contains a voluntary restriction on Iran's development of nuclear-capable ballistic missiles for only up to eight years. On May 8, President Trump announced that the United States would no longer participate in the JCPOA and would reimpose sanctions that had been suspended pursuant to the agreement. The other powers that negotiated the accord with Iran—Russia, China, France, Britain, and Germany—opposed the U.S. decision and have been meeting with Iranian officials to continue implementing the JCPOA. Iran's President Hassan Rouhani has pledged to continue implementing the accord, provided Iran continues to receive the economic benefits of the agreement. In the 114th and 115th Congresses, legislation has been introduced with the stated purpose of redressing asserted weaknesses of the deal or preventing any U.S. sanctions relief beyond that explicitly promised in the JCPOA. The Countering America's Adversaries through Sanctions Act (P.L. 115-44) mandates sanctions on Iranian proliferation, human rights abuses, and support for terrorist activities. For details on the sanctions relief aspects of the JCPOA, see CRS Report RS20871, Iran Sanctions, by Kenneth Katzman.

Introduction Emergency management generally refers to activities associated with avoiding and responding to natural and human-caused hazards. Emergency management in the United States is highly decentralized and contextual in nature. Multiple jurisdictions as well as a vast number of agencies, nongovernmental organizations, and private sector entities are often involved. In general, emergency management begins locally, but the federal government plays an important role when a state requests assistance. Consequently, the number and type of actors involved in an incident vary tremendously depending on the context and severity of the event. Similarly, the legal framework through which emergency management functions and activities are authorized is also decentralized and stems from multiple authorities. This report provides Members of Congress and their staffs with an introduction to the principles and foundations of federal emergency management in the United States. It examines the activities of several federal agencies, including the Federal Emergency Management Agency (FEMA), the National Guard, Department of Agriculture, Department of Defense, Army Corps of Engineers, Department of Health and Human Services, Department of Housing and Urban Development, Department of Transportation, Environmental Protection Agency, Forest Service, and Small Business Administration. In addition, this report discusses the four phases of emergency management: (1) mitigation, (2) preparedness, (3) response, and (4) recovery; the process for requesting federal assistance for major disasters, emergencies, and fires; and the types of assistance provided through each type of Stafford Act declaration. This report also includes a description of federal-to-state cost shares under the Stafford Act, a discussion on how federal assistance is funded, and the process through which FEMA requests assistance from other federal entities. This report also outlines the frameworks that guide various emergency management activities at the federal and state level, and discusses some of the key federal laws and policies influencing federal emergency management and highlights federal entities that provide assistance to states and localities. Related CRS products examining these issues more in-depth are footnoted in this report. Key Concepts and Approaches in Emergency Management The following sections describe key concepts that undergird federal emergency management. Many of these concepts originated at the state level and are still being put to use by states and localities. Some concepts developed by the states have been modified and/or adopted by the federal government as a national standard. All-Hazards Model The all-hazards model is based on the idea that there are generic processes and capabilities needed to address most kinds of emergencies and disasters. For example, preparing and responding to an earthquake entails similar activities and capabilities for preparing and responding to an explosion or terrorist bombing. Thus emergency managers can conduct emergency management activities in a more flexible and cost-effective manner than using a standalone, emergency, or disaster-specific program. Another benefit is that carrying out emergency management functions generally involves adaptation, which is a guiding principle of the all-hazards model. Thus preparations and lessons learned associated with one type of event, can often be applied to another type of emergency or disaster scenario. NIMS and ICS Emergency management functions are managed according to the principles of the National Incident Management System (NIMS). Authorized by Homeland Security Presidential Directive 5 (HSPD-5), NIMS is a preparedness and response management model based on the Incident Command System (ICS). ICS is a command and control model developed by firefighters after the 1970 fires in southern California. The response to the fires was hindered due to duplication of efforts, lack of coordination, and communication problems. ICS standardizes response operations by using similar terminology, communication systems, and organizational structure to eliminate or reduce confusion during a unified response. NIMS uses ICS concepts to establish a response structure that is scalable (capable of growing as more organizations come together to respond to the incident) that can be used by all jurisdictions, agencies, and organizations to ensure a unified response to complex events. State and local governments must be NIMS compliant to be eligible for certain preparedness grants. Phases of Emergency Management Emergency management functions are generally grouped into four phases: (1) Mitigation, (2) Preparedness, (3) Response, and (4) Recovery. The grouping of emergency management functions is useful for classifying and conceptualizing activities. Use of the four phases at the state level is not, however, a requirement for grant funding. As discussed later, the federal government uses a framework approach that differs somewhat from the four phases. The following sections provide examples of the types of activities that take place in each phase. While conceptually useful for targeting efforts and resources, the phases of emergency management are not distinct—activities in each phase often overlap. For example, recovery projects often include elements of mitigation (for example, rebuilding structures using current building codes) and response often includes recovery measures (immediate debris removal). The phases are also cyclical in nature—lessons learned from an incident might be applied in preparedness efforts for future emergencies and major disasters. Mitigation Mitigation activities entail identifying risks and hazards to either substantially reduce or eliminate the impact of an incident usually through structural measures. Mitigation activities often have a long-term or sustained effect and may have an impact on insurance premiums. In many cases, mitigation activities occur in the recovery stage of a major disaster. Some examples of mitigation include: building codes that address risks such as fires, high winds, or earthquakes; zoning rules that restrict construction in floodplains; rebuilding damaged structures with more resilient materials; flood mapping to identify low lying areas and relocating homes and structures located in floodplains and flood prone areas; and dams and levees that help prevent flooding. Preparedness Preparedness is distinct from mitigation because rather than focusing on eliminating or reducing risks, the general focus of preparedness is to enhance the capacity to respond to an incident by taking steps to ensure personnel and entities are capable of responding to a wide range of potential incidents. Preparedness activities may include: training; planning; procuring resources, such as food, water, and medication stockpiles; intelligence and surveillance activities to identify potential threats; and exercising to assure the adequacy of planning efforts and the use of after-action reports to improve emergency response plans. Response Response activities are comprised of the immediate actions to save lives, protect property and the environment, and meet basic human needs. Response involves the execution of emergency plans and related actions, and may include: evacuating victims; deployment of response teams, medical stockpiles, and other assets; and establishment of incident command operations. Recovery Recovery activities are intended to restore essential services and repair damages caused by the event. Recovery activities may include: the reconstitution of government operations and services (e.g., emergency services, public safety, and schools); housing and services for displaced families and individuals; and replenishment of stockpiles. The Framework Approach On March 30, 2011, President Barack Obama issued Presidential Policy Directive 8: National Preparedness (hereinafter PPD-8). PPD-8 superseded Homeland Security Presidential Directive 8 (HSPD-8), which was signed by President George W. Bush on December 17, 2003. Similar to its predecessor, PPD-8 provides a guide as to how the nation, from the federal level to private citizens, can "prevent, protect against, mitigate the effects of, respond to, and recover from those threats that pose the greatest risk to the security of the Nation" including acts of terrorism and other human caused incidents (such as oil spills) as natural disasters. PPD-8 is also intended to meet several "comprehensive preparedness system" requirements in Subtitle C of the Post-Katrina Act. PPD-8 establishes that preparedness objectives are to be accomplished by subdividing emergency management components into a system of integrated, national planning frameworks according to functionality—prevention, protection, mitigation, response, and recovery. The frameworks are intended to assign roles and responsibilities to various federal agencies with mission areas involved with aspects of federal emergency management. These frameworks either exist in various stages of development or have been implemented. The following sections provide brief descriptions of each framework. National Prevention Framework While the other planning frameworks address natural hazards and disasters as well as human-caused incidents, the focus of the National Prevention Framework is mainly on preventing imminent terrorist threats. As such, upon issue, the National Prevention Framework is to assign roles and responsibilities and coordinate federal agencies involved with intelligence and information sharing, surveillance, providing public information and warnings, as well as other elements that help the federal government identify, discover, or locate terrorist threats. National Protection Framework The National Protection Framework, upon issue, would assign roles and responsibilities and coordinate agencies on a wide range of emergency management and homeland security areas, encompassing cyber security, border security, transportation security, and agriculture and food security, among others. In addition, the working draft of the National Protection Framework proposes the use of academic and research centers to develop new protection technologies and establish protection-related curricula and degree programs. National Mitigation Framework The National Mitigation Framework, upon issue, would address capabilities that reduce the loss of life and property by lessening the impact of disasters. The National Mitigation Framework is distinct from the other planning frameworks because most mitigation activities take place at the local level; the role of the federal government in the National Mitigation Framework is not as prominent as with the other planning frameworks. National Response Framework Issued in January 2008, the National Response Framework (NRF) is the successor of two previous response documents, the Federal Response Plan, which was thought to be too narrow in scope, and the National Response Plan, which was found to be problematic for a variety of reasons, including unclear designations and confusing language and jargon. The NRF guides the federal response to natural and human-caused incidents. However, the NRF is not an "operational plan." Rather, it articulates the overarching emergency management principles used to coordinate and conduct a multi-agency and multijurisdictional response to all types of incidents. The NRF is executed through the use of three supplemental annexes consisting of the (1) Emergency Support Functions Annex, (2) Support Annexes, and (3) Incident Annexes. Emergency Support Functions Annexes There are 15 Emergency Support Function (ESF) Annexes. ESFs group federal departments and agencies by matching their resources and capabilities with a particular incident. For example, federal entities with a role in responding to an oil spill are listed in ESF #10—the Oil and Hazardous Materials Response Annex. ESFs also designate which federal entities have management oversight responsibility and which entities have a support role. Support Annexes There are eight Support Annexes that group federal, state, local, private sector, and nongovernmental organizations that execute functional processes and administrative functions. The Support Annexes also designate roles and responsibilities. Incident Annexes There are eight Incident Annexes that explain the authorities and policies relevant to a particular incident, describe the incident situation, and make planning assumptions for the incident. An Incident Annex also identifies the "coordinating and cooperating" agencies involved with response to the incident. National Disaster Recovery Framework Issued in September 2011, the National Disaster Recovery Framework (NDRF) coordinates and assigns roles and responsibilities to entities involved in disaster recovery. The focus of the NDRF is to "restore, redevelop and revitalize the health, social, economic, natural and environmental" aspects of disaster-impacted states and local jurisdictions. The NDRF has six Recovery Support Functions (RSF): (1) Community Planning and Capacity Building, (2) Economic, (3) Health and Social Services, (4) Housing, (5) Infrastructure Systems, and (6) Natural and Cultural Resources. Federal Assistance Through Stafford Declarations The system of emergency management in the United States is scalable. This means that local governments request assistance from the state if responding or recovering from the incident is beyond their capacity. In cases when a state is overwhelmed by the incident, the state governor may elect to request assistance from the federal government. Scalability makes emergency management response more practical, but it also contains a political element because it is embedded within the federalist system of governance aimed at the preservation of state autonomy. The state-initiated request may also alleviate concern that the federal government might assume leadership of response and recovery operations. The Robert T. Stafford Disaster Relief and Emergency Assistance Act (hereinafter the Stafford Act) does provide the President authority to issue an emergency declaration in the absence of a gubernatorial request if the President determines the incident involves a subject area under the Constitution or laws of the United States, in which the United States exercises preeminent responsibility and authority of the incident. Such cases, however, are rare. The majority of federal disaster assistance is released only after a presidential declaration is issued in response to a gubernatorial request for federal assistance. The Stafford Act authorizes federal assistance through three types of declarations: (1) major disaster declarations, (2) emergency declarations, and (3) Fire Management Assistance Grant declarations (FMAG). However, FMAG declarations are typically declared through the Federal Emergency Management Agency (FEMA) Regional Director. Emergency and major disaster declarations can only be issued by the President. Each of these declarations are described in more detail in the following sections. Major Disaster Declarations The Stafford Act defines a major disaster as: any natural catastrophe (including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance under this chapter to supplement the efforts and available resources of states, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby. When a governor submits a request for a major disaster declaration FEMA meets with state representatives to develop preliminary damage assessments. In general, FEMA will make a recommendation to the President to declare a major disaster if the state's preliminary damage assessment exceeds certain thresholds established in regulation. The President in turn may or may not act on the recommendation. Assistance Provided Under Major Disaster Declarations Under the Stafford Act three main types of assistance can be provided and administered through FEMA when the President issues a major disaster declaration: (1) the Public Assistance (PA) Grant Program, (2) the Individual Assistance (IA) program, and (3) the Hazard Mitigation Grant Program (HMGP). Under the Stafford Act, the President may issue a major disaster declaration that provides only PA if damage to dwellings is not severe enough to warrant IA, or if there is sufficient damage, both PA and IA may be provided. The PA program provides assistance to state and local governments and certain nonprofit organizations and includes emergency protective measures, debris removal, and the repair, replacement, or restoration of eligible facilities. Hazard mitigation measures during the recovery process are also provided under the PA program. However, not all of the entities affected by the incident are eligible for assistance—aid is only provided to entities that have been determined by FEMA officials to be in need of the assistance. There is no cap to the amount of assistance that can be provided through the PA program. The IA program is also limited to those deemed to be in need of assistance by FEMA officials. IA assistance includes temporary housing, disaster unemployment, legal services, crisis counseling and other needs assistance (e.g., disaster-related medical, dental, and burial costs), and the repair and replacement of uninsured damages to a home. At the time of this writing, the maximum grant amount available to an individual household is roughly $31,400. HMGP provides grants to states in which major disasters have been declared. These funds must be used for activities that prevent future disasters or reduce their impact if they cannot be prevented. The Post-Katrina Act adjusted the percentage amounts for HMGP awards by establishing a scale that authorizes a higher percentage (15% of the total Stafford Act assistance in a state) for major disasters in which no more than $2 billion is provided, 10% for assistance that ranges from more than $2 billion to $10 billion, and 7.5% for major disasters that involve Stafford Act assistance of more than $10 billion to $35.3 billion. Emergency Declarations31 The Stafford Act defines an emergency as: any occasion or instance for which, in the determination of the President, federal assistance is needed to supplement State and local efforts and capabilities to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe in any part of the United States. As with disaster declarations, FEMA generally meets with state representatives to make a recommendation to the President on whether to issue an emergency declaration. However, unlike major disasters, a per capita formula to assess the magnitude of the disaster's costs is not used for the recommendation. Assistance Provided Under Emergency Declarations Emergency declarations authorize activities that can help states and localities carry out essential services and activities that may reduce future damage. As such, emergency declarations may be declared before an incident occurs to save lives and lessen the impact of the incident. For example, emergency declarations have been declared prior to a hurricane making landfall to help state and local governments conduct evacuations and pre-position resources. The types of assistance provided after an emergency declaration is declared include debris removal, distribution of food and medicine, and technical advisory assistance to state and local governments. Emergency declarations do not provide assistance for repairs and replacement of public infrastructure or nonprofit facilities, nor do they provide assistance to individuals and households. Fire Management Assistance Grant Declarations Section 420 of the Stafford Act authorizes various forms of federal assistance, such as equipment, personnel, and grants to any state or local government for the control, management, and mitigation of any fire on public or private forest land or grassland that might become a major disaster. FEMA meets with state representatives when a governor submits a request for a FMAG, but does not use a per capita formula to assess the magnitude of the fire's costs when making recommendations whether to issue a FMAG declaration. Assistance Provided under Fire Management Assistance Grants Section 420(c) authorizes the President to provide essential assistance under Section 403 of the Stafford Act. Essential assistance includes the distribution of medicine, medical equipment, and food through local governments and disaster assistance organizations such as the National Red Cross and the Salvation Army. Essential assistance also includes debris removal, search and rescue, emergency mass care and shelter, clearance of roads and temporary structures such as bridges and facilities for schools, and other services deemed essential to the community. Other essential assistance includes warnings and the dissemination of public information. FMAG does not provide long-term assistance to individuals and households. Cost-Shares Under the Stafford Act, the costs of response and recovery efforts are usually split between the state and the federal government. The Stafford Act contains language detailing the amount the federal government must pay to the state for eligible repairs, restoration projects, and replacements of damaged facilities. The formula is called a "cost-share," and the Stafford Act provides that the federal share "shall be not less than 75 percent." The cost-share can be adjusted to reduce, but not increase, the state share. The reduced state share is known as a cost-share waiver. In most cases, waivers are adjusted according to FEMA regulatory authority and carried out by the executive branch through administrative actions based on per capita preliminary damage estimates. Additionally, since 1997, and particularly in the wake of concerns raised about state capacity to meet their cost-shares following the Gulf Coast storms of 2005, Congress has begun to exercise its authority to adjust cost-shares. Disaster Relief Fund The majority of assistance provided under the Stafford Act is paid out of FEMA's Disaster Relief Fund (DRF). The DRF is a no-year account used to fund response activities and pay for ongoing recovery programs. The DRF is also used to reimburse Mission Assignments (discussed in the next section) to other federal agencies. Current budgetary practice generally consists of funding the DRF through regular appropriations acts and then providing additional funding through supplemental appropriations when the account is deemed to be at risk of running out of funding. When the DRF balance becomes low, FEMA generally initiates a spending freeze on long-term recovery projects (primarily PA and HMGP projects), to save DRF funds to meet immediate, life-threatening needs. This policy remains in effect until the DRF is replenished with a new appropriation. The DRF balance is not a criterion used by FEMA to recommend a major disaster declaration, nor does the President use the available balance to determine whether to issue a major disaster declaration. Closeout The terminations of Stafford Act recovery projects are not subject to strict deadlines. The requirements to "close out" a major disaster are established in 44 C.F.R. 13.50. In general, PA and HMGP projects take the longest to complete. Typically, major infrastructure projects take years to complete. Both the PA and HMPG have a common closeout sequence: Individual projects are managed by applicants and each project is separately closed by FEMA and the state when all of the costs associated with the project have been reconciled with supporting documentation. Disasters and emergencies are closed when all of the applicant's projects are closed and the applicant's administrative allowance expenses have been reconciled to supporting documentation. When all of the disaster's applicants are closed, the program can be closed. Programs are closed when the state's administrative costs have been reconciled with supporting documentation. When all programs within a disaster are closed, the disaster can be closed. Funding for recovery projects and activities carried out by federal agencies through Mission Assignments that are completed under budget is returned to the DRF. The state can make an appeal if they believe the project requires additional federal funding to be completed. Other Types of Federal Declarations In some cases a major disaster declaration issued under the Stafford Act will trigger certain federal programs outside of FEMA. For instance, in certain circumstances a major disaster declaration will also trigger the Small Business Administration (SBA) disaster loan program. However, several federal departments and agencies have authorities to respond and declare certain types of disasters and emergencies separate from the Stafford Act. As with the above SBA example, these authorities may be exercised concurrently, or independently of FEMA. They may also be part of a response coordinated by the Secretary of Homeland Security under Homeland Presidential Directive-5. As mentioned previously, these authorities and responsibilities are carried out within the construct set forth in the National Response Framework (NRF), or under supplementary (known as "Annexes"), or complementary operational plans. Table 1 provides brief examples of other federal agencies and departments with separate authorities to respond to and declare certain types of disasters. Federal to Federal Support Federal agencies and departments with responsibilities for handling incidents may work in conjunction with other federal entities when the scope of the work is beyond their normal operations. Federal to federal support under the Stafford Act is generally carried out through "Mission Assignments," while non-Stafford incidents, such as the ones described in Table 1 , are carried out through other mechanisms such as interagency agreements and mutual aid agreements. Stafford Act Incidents and Mission Assignments Even when an emergency or major disaster is declared, FEMA does not exclusively perform all disaster response and recovery operations for the federal government. The President has the authority to direct any federal agency to use its authorities and resources in support of state and local response and recovery efforts under Sections 402, 403, and 502 of the Stafford Act. In general, when an emergency or major disaster declaration is declared FEMA coordinates federal entities and organizations that are involved in the incident by "assigning" missions to relevant agencies to address a state's request for federal assistance or support overall federal operations pursuant to, or in anticipation of a Stafford Act declaration. The activities carried out by other agencies through Mission Assignments are generally reimbursed by FEMA through the DRF. For example, FEMA may request the Department of Health and Human Services to establish and operate a shelter collocated with a federal medical station to support non-medical care givers and family members accompanying patients being treated at the station. Non-Stafford Act Incidents Federal agencies and departments that respond to incidents under the NRF may request and provide federal to federal support by executing interagency, intra-agency, or mutual aid agreements in accordance with applicable authorities. Other Key Federal Laws and Policies A number of statutory laws and policies supplement the Stafford Act. These statutes and policies organize and define the federal role in emergency preparedness, mitigation, response, and disaster relief. The following sections highlight some of these key laws and policies. Disaster Mitigation Act of 2000 P.L. 106-390 , the Disaster Mitigation Act of 2000, amended the Stafford Act to authorize the President to establish a program of technical and financial assistance to states and local governments to assist in the implementation of pre-disaster hazard mitigation measures that are cost-effective and are designed to reduce injuries, loss of life, and property damage and destruction, including damage to critical services and facilities under the jurisdiction of the states or local governments. The Disaster Mitigation Act of 2000 also established the National Predisaster Mitigation Fund and authorized the President to provide technical and financial assistance to each state and local government that has identified all natural disaster hazards in its jurisdiction and has demonstrated its ability to form effective public-private disaster hazard mitigation partnerships. Post Katrina Emergency Management Reform Act A wide range of reforms in federal emergency management were made in response to the 2005 hurricane season. Most of those reforms were included in Title VI of the DHS appropriations legislation for FY2007, the Post Katrina Emergency Management and Reform Act of 2006 (hereinafter the Post Katrina Act). The Post Katrina Act established new leadership positions and position requirements within FEMA, brought new missions into FEMA, and restored some that had previously been removed. The Post Katrina Act also enhanced the agency's authority by directing the FEMA Administrator to undertake a broad range of activities before and after disasters occur. The Post Katrina Act contains provisions that set out new law, and amended the Stafford Act and the Homeland Security Act (hereinafter HSA). Among the provisions set forth by the Post Katrina Act were certain preparedness requirements. For example, the President was authorized to establish a national preparedness goal and national preparedness system, and to complete, revise, and update (as necessary) the goal to ensure the nation's ability to prevent, respond to, recover from, and mitigate against disasters of all kinds, including acts of terrorism. The goal must be consistent with NIMS and the National Response Plan (now the NRF). The Post Katrina Act also established reporting requirements intended to ensure that Congress receives information on the implementation of specified new policies, including those directed at ensuring that a qualified workforce exists, and guidelines for enhanced aid to individuals and families are developed. Other provisions included oversight and accountability measures to audit expenditures and develop and maintain internal management controls to detect and eliminate fraud, waste, and abuse. Homeland Security Presidential Directives In response to the September 11 th terrorist attacks, President Bush signed a number of Homeland Security Presidential Directives (HSPD) that have influenced federal emergency management policies. Key among these are HSPD-8 (see " The Framework Approach ") signed on December 17, 2003, and HSPD-5 signed on February 28, 2003. The purpose of HSPD-5 is to enhance the ability of the United States to manage domestic incidents by establishing a single, comprehensive national incident management system. HSPD-5 mandated the DHS Secretary to develop a national response plan, and a concept of operations that would incorporate all levels of government within a single unifying framework to manage domestic incidents through the implementation of NIMS. Under HSPD-5, all federal agencies are required to adopt NIMS. Homeland Security Act On November 25, 2002, President Bush signed into law the Homeland Security Act of 2002 (hereinafter HSA). HSA authorized the reorganization of various federal agencies and established the Department of Homeland Security (DHS). In addition to the creation of DHS, HSA made several changes to existing federal programs and created new ones. Most of these changes were related to terrorism. However, others had an influence on emergency management. Section 501 of Title V established in DHS the Directorate of Emergency Preparedness and Response. Section 502 makes the DHS Secretary responsible for helping to ensure the effectiveness of emergency response providers to terrorist attacks, major disasters, and other emergencies; aiding recovery from terrorist attacks and major disasters; consolidating existing federal government emergency response plans into a single, coordinated national response plan; and developing comprehensive programs for developing interoperative communications technology and helping to ensure that emergency response providers acquire such technology. National Oil and Hazardous Substances Pollution Contingency Plan54 The National Oil and Hazardous Substances Pollution Contingency Plan, commonly referred to as the National Contingency Plan (NCP) for short, is the federal government's principal plan for responding to oil spills and releases of hazardous substances. It provides the framework for coordinating the federal, state, and local roles in responding to such incidents and notifying the relevant agencies. The procedures of the NCP are codified in federal regulation and are binding and enforceable. In contrast, most federal emergency response plans are only administrative frameworks internal to the federal government for guiding agency roles and responsibilities, making the NCP somewhat unique in this respect among federal emergency response plans. Three federal laws authorized the development of the regulations that are embodied in the NCP. The first two, the Oil Pollution Act (OPA) and Section 311 of the Clean Water Act, authorize federal emergency response to oil spills into U.S. waters, onto adjoining shorelines, or that may affect natural resources under the jurisdiction of the United States. The third law, the Comprehensive, Environmental Response, Compensation, and Liability Act (CERCLA, commonly referred to as Superfund) authorizes federal emergency response to releases of hazardous substances into the environment. The term "environment" includes surface and subsurface lands, surface waters, groundwater, and ambient air, making the response authorities for hazardous substances broader in terms of their physical reach than that for oil spills. Other response authorities apply to oil released under certain circumstances not covered by the NCP. The President's response authorities under these three laws are delegated by executive order to the Environmental Protection Agency (EPA) in the inland zone and to the U.S. Coast Guard in the coastal zone. The inland zone is the environment inland of the coastal zone, excluding the Great Lakes and specified ports and harbors on inland rivers which are part of the coastal zone. The above laws also directed the President to develop the regulations of the NCP to establish procedures for carrying out response actions. Consistent with the executive orders, the NCP designates EPA and the U.S. Coast Guard as the lead federal agencies within their respective zones, and outlines the roles of other supporting federal agencies and state and local governments that may participate in a federal response. State and local officials often act as the "first responders" under the NCP to initiate measures to protect public safety. Two dedicated trust funds finance the costs of federal response actions carried out under the NCP. The U.S. Coast Guard administers the Oil Spill Liability Trust Fund to finance the costs of responding to oil spills. EPA administers the Hazardous Substance Superfund Trust Fund to finance the costs of responding to releases of hazardous substances. The federal government may recover its response costs from the responsible parties, which are to be deposited back into the respective trust fund to finance future response actions. The responsible parties also may use their own funds to carry out response actions under federal oversight. If the responsible parties cannot be found or cannot pay, federal response costs ultimately are borne by the taxpayer. Once an emergency response is complete, the NCP also governs any long-term remediation of environmental contamination that may be needed. Long-term remediation may continue for several years, even decades in some cases, depending on the nature and extent of the contamination. For example, the remediation of contamination in groundwater typically is a lengthy and technically complex process lasting multiple years. In some cases, the federal response also may entail the long-term restoration of natural resources affected by an oil spill or a release of a hazardous substance. Although the NCP is most often used as a stand-alone authority, the Secretary of Homeland Security may invoke the NCP under the National Response Framework in situations that may warrant coordination with other federal response plans. Such situations may include a major disaster or emergency declared under the Stafford Act, and other multi-faceted incidents. ESF#10 of the National Response Framework—Oil and Hazardous Materials Annex—applies the NCP as the operative federal response plan for incidents involving an oil spill or a release of "hazardous materials" (i.e., hazardous substances, as termed in the NCP). Regardless of whether the NCP is applied as a stand-alone authority or through the structure of the National Response Framework, the procedures for responding to an oil spill or a release of a hazardous substance are the same because the NCP remains the operative federal response plan in either instance. Key Federal Assistance for Disaster Response and Recovery As mentioned earlier in this report, while the majority of emergency and disaster assistance is coordinated and provided by FEMA, other federal agencies provide assistance under authorities in conjunction with the Stafford Act declaration or through separate authorities. Several of these agencies are able to provide assistance without a presidential declaration. The concluding section highlights of some of the key agencies that provide emergency and disaster assistance to states and localities including a brief description of the work performed by each agency. National Guard65 The National Guard is both a state and federal organization: it is simultaneously the organized militia of a state or territory and a reserve component of the Army and the Air Force. Due to its size (over 450,000 individuals), trained personnel, and available equipment, it is frequently used for emergency response. Normally, the National Guard operates in a state status, under the control of state and territorial governors, who can order National Guard personnel to perform full-time "state active duty" in response to disasters and civil disorders. In this state capacity, National Guard personnel are not subject to the restrictions of the Posse Comitatus Act (that is, they can perform law enforcement functions). The National Guard can also be activated under the authority of 32 U.S.C. 502(f). This provision of federal law provides that "a member of the National Guard may ... without his consent, but with the pay and allowances provided by law ... be ordered to perform training or other duty in addition to [inactive duty for training or annual training]." The advantage of using this authority is that the National Guard personnel called will receive federal pay and benefits and are entitled to certain legal protections as though they were in federal service, but they remain under the control of their state or territorial governor and are therefore not subject to the restrictions of the Posse Comitatus Act. Such activation can only occur with the approval of the Department of Defense. Finally, the National Guard can be activated in a purely federal status. When federally activated, National Guard personnel operate under the control of the President, receive federal pay and benefits, and are subject to the Posse Comitatus Act. Department of Agriculture68 The U.S. Department of Agriculture (USDA) has several agencies that provide emergency and disaster assistance, including the Farm Service Agency, the Natural Resources Conservation Service, and Rural Development. The majority of USDA assistance does not require a Stafford declaration. Rather, depending on the program, decisions regarding assistance are typically made by the Secretary (e.g., emergency loans). Assistance may also be provided to participating producers under standing programs (e.g., federally subsidized crop insurance). Assistance for agricultural producers includes emergency loans, direct payments under the noninsured crop disaster program, and crop insurance. Disaster assistance is also provided for impairments to watersheds, including debris removal from stream channels, road culverts, and bridges, repairing levees, reseeding damaged areas, and purchasing floodplain easements. Private land assistance includes repairs to damaged farmland and re-establishment of forest land. Community assistance is also available in the form of housing disaster loans and grants, moratoria on loan payments, loan servicing assistance for essential community facilities, and emergency community water assistance grants. Department of Defense72 The role of the Department of Defense (DOD) and its components in supporting domestic response efforts is potentially significant. DOD has a broad range of capabilities that could be useful to civil authorities in emergency situations, including transportation assets, medical personnel and supplies, security forces, and communications equipment. However, the extent of the support DOD can provide is limited by the need to conduct its principal mission of national defense. The two principal ways in which DOD can provide defense support of civil authorities (DSCA) are by way of an "immediate response," or in response to a formal "request for assistance" (RFA). Additionally, as part of a proactive federal response, DOD could preposition assets in anticipation of a request. Immediate Response Certain defense officials can provide DSCA in a limited manner using "immediate response" authority. Immediate response authority enables local military commanders and certain DOD civilians to act immediately to "save lives, prevent human suffering, or mitigate great property damage within the United States" when they receive a request for assistance from a civil authority under conditions that are "imminently serious" and when time "does not permit approval from higher authority." Assistance provided under this authority might include providing medical care, restoring critical public services, and distributing food and other supplies. However, commanders using this authority are obligated to seek approval or authorization through their chain of command as soon as possible. Requests for Assistance The Department of Defense may also provide support in response to a "request for assistance" from state, local, or tribal entities, or from another federal agency. The Secretary of Defense has the principal authority for approving DSCA requests and retains control of all DOD assets provided. The forces provided in response to an RFA could include units from multiple military services and could include activated members of the National Guard and Reserve. Members of the federal reserves are always activated after a request for assistance under Title 10 of the U.S. Code. Therefore, when acting in a federal capacity, the National Guard operates under the control of the President, receives federal pay and benefits, and is subject to the Posse Comitatus Act in the same manner as active duty military personnel. National Guard forces remain under the control of their respective governors unless ordered into federal service (see the previous section on the National Guard). There are a number of statutory authorities which can be used to activate members of the National Guard and Reserve, although they all have constraints that could potentially limit their utility in providing reserve forces for domestic response missions. Army Corps of Engineers77 Under its Civil Works Program, the U.S. Army Corps of Engineers (Corps) performs emergency response actions to respond to flood and coastal emergencies, droughts, and other disasters. The Corps also plans, builds, operates, and maintains a wide range of water resources facilities, including hurricane protection and flood damage reduction projects. The Stafford Act authorizes FEMA to direct the Department of Defense (DOD), which generally works through the Corps, to provide assistance in the event of an emergency or major disaster. The Corps provides assistance to monitor and stabilize damaged structures and demolish structures designated as immediate hazards to public health and safety. Other forms of assistance include technical assistance in clearing, removing, and disposing of contaminated and uncontaminated debris from public property, and establishing ground and water routes into affected areas. The Corps also has authorities specific to the type of natural disaster that has occurred. After a flooding event, the Corps has the authority to rehabilitate certified flood control works (e.g., levees) and federally constructed hurricane or shore protection projects and to conduct related inspections. In the case of drought emergencies, the Corps may allow for temporary water withdrawal from reservoirs for municipal and industrial use, as well as the construction of wells for transport of water to drought-distressed areas. Department of Health and Human Services82 The Department of Health and Human Services (HHS) provides grants to states and localities to strengthen public health and medical system capacity in preparedness for health threats. Under the NRF, the department serves as the primary agency for ESF #8 (Public Health and Medical Services) to respond to the public health and medical consequences resulting from natural disasters and human-caused incidents. The Secretary of HHS has general authority under the Public Health Service Act to provide public health assistance to states, upon their request, without a Stafford Act declaration. In addition, the Secretary has authority to determine that a public health emergency exists. Pursuant to such a determination, the Secretary may waive certain administrative requirements, provide additional forms of assistance, and take certain other actions to expand federal aid to state and local governments, not-for-profit entities, and others. In either case, however, the Secretary lacks a dedicated funding mechanism for the provision of assistance. Department of Housing and Urban Development85 The Department of Housing and Urban Development (HUD) may play a variety of roles in disaster recovery. When the President declares a major disaster, HUD may offer waivers of various program rules and regulations to allow communities to use their existing HUD program funding and resources to meet needs arising from the disaster. In some years, Congress has provided additional appropriations for these programs—particularly the Community Development Block Grant (CDBG) program—to be used specifically for disaster assistance and recovery. Similarly, in some years, Congress has provided HUD with funding to provide housing vouchers to disaster displaced survivors, in conjunction with FEMA, or directed FEMA to contract with HUD for the provision of such vouchers. HUD, through the Federal Housing Administration (FHA), may also offer special mortgage insurance products to and special forbearance for borrowers affected by major disasters. Community Development Block Grants HUD's Community Development Block Grant (CDBG) program provides formula grants to eligible communities to use for a range of housing and community development activities. The CDBG program has been used frequently by the federal government to respond to natural and human-caused incidents. In general, Congress has provided increased flexibility and allocated additional CDBG funds to affected communities and states to help them mitigate against, respond to, and recover from presidentially declared disasters. Department of Transportation89 The U.S. Department of Transportation (DOT) works with FEMA to coordinate transportation support to disaster stricken areas. DOT reports on damage to transportation infrastructure, coordinates alternative transportation services, and coordinates the restoration and recovery of the transportation infrastructure, as well as other emergency responses involving transportation. DOT's Federal Highway Administration's (FHWA's) Emergency Relief Program (ER) is the department's disaster program for highways. The ER program is administered through the state departments of transportation in close coordination with FHWA's division offices. While ER is a federal program, the decision to seek ER funding is made by the state rather than the federal government. The ER program provides funds for the repair and reconstruction of roads on the federal-aid highway system that have suffered serious damage as a result of either (1) a natural disaster, such as a flood, hurricane, tidal wave, earthquake, tornado, severe storm, or landslide; or (2) a catastrophic failure from any external cause. In 2012, Congress passed the Moving Ahead for Progress in the 21 st Century Act (MAP-21; P.L. 112-141 ). Section 20017 of the act included a new disaster relief program for mass transit, the Public Transportation Emergency Relief Program. Once established, the program is to fund "operating costs" for evacuation services; rescue operations; temporary public transportation service; or reestablishing, expanding, or relocating public transportation route service before, during, or after an emergency. The program is to be funded from the General Fund on a such sums as necessary basis and will require appropriations action. Most observers expect the new program will be administered by the Federal Transit Administration. Federal Highway Administration As noted above, the FHWA has a permanent program dedicated to disaster relief, the ER program. Historically, the vast majority of ER funds have gone for natural disaster repair and reconstruction. For example, since 2005, ER funding allocations for Gulf Coast Hurricane response have totaled over $3 billion. Funding provided for hurricane relief includes funds from the Program's annual $100 million highway trust fund authorization and from additional appropriations provided in supplemental or other appropriations acts. Generally, ER funds can only be used for roads and bridges on the federal-aid highway system. Repairs and reconstruction costs for other damaged roads (mostly local roads and neighborhood streets) may be reimbursed by FEMA. Environmental Protection Agency94 The U.S. Environmental Protection Agency (EPA) is most frequently involved in emergency response as the lead federal agency responsible for responding to oil spills and releases of hazardous substances within the inland zone under the National Contingency Plan. EPA also serves in this capacity if this plan is invoked under the National Response Framework through ESF #10—Oil and Hazardous Materials Annex. (See the section on the " National Oil and Hazardous Substances Pollution Contingency Plan " in this report.) EPA also has various other response roles under the National Response Framework and may perform a wide array of support functions in responding to a disaster or emergency. EPA support to other federal agencies and state and local governments broadly includes activities necessary to address threats to human health and the environment focusing on impacts to drinking water and wastewater treatment facilities and post-disaster cleanup. In accordance with various ESFs under the NRF, as well as Homeland Security Presidential Directive 7: Critical Infrastructure Identification, Prioritization, and Protection (HSPD-7), EPA may provide a wide range of support functions to other federal agencies (primarily FEMA and the Army Corps of Engineers) and state and local governments to protect drinking water or wastewater facilities. As needed, EPA may provide guidance and technical assistance to determine impacts from firefighting chemicals on wastewater treatment facilities; safely manage contaminated debris; identify critical water and wastewater systems requiring priority power restoration; or identify alternate water supplies and wastewater collection and treatment for critical health care facilities. EPA also has additional emergency response roles related to protecting water infrastructure under other response plans and authorities. EPA is the lead federal agency for the water sector under the National Infrastructure Protection Plan. EPA also has statutory "emergency powers" under the Safe Drinking Water Act to issue orders and commence civil action if a contaminant likely to enter a public water supply system poses a substantial threat to public health, and state or local officials have not taken adequate action. The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 amended these emergency powers to include the authority for EPA to take actions in response to a threatened or potential terrorist attack, or other intentional act, that would disrupt the provision of safe drinking water or impact the safety of a community's water supply. EPA may play a prominent role in post-disaster cleanup under the NRF. EPA may support the Army Corps of Engineers in its mission under ESF #3—Public Works and Engineering Annex—to remove disaster debris. The removal of contaminated debris, and hazardous materials comingled with debris, is coordinated under ESF #10—Oil and Hazardous Materials Annex. In responding to such incidents, EPA may provide technical assistance to state solid waste agencies regarding proper hazardous and nonhazardous waste management, including identifying recycling/reuse opportunities to minimize disaster debris and identifying potential waste staging or storage areas and disposal facilities. EPA also may support the U.S. Department of Energy's responsibility to maintain continuous and reliable energy supplies for the United States during disaster recovery under the National Response Framework through ESF #12—Energy Annex. In practice, EPA support for this function has involved waiving environmental requirements applicable to motor vehicle fuel under the Clean Air Act. As part of the federal response to hurricanes in 2005, EPA granted certain waivers under this statute in response to requests from state and local officials when significant disruptions in fuel production or distribution occurred in the wake of these natural disasters. Forest Service103 The Forest Service (FS) is one of two federal entities responsible for protecting most federal lands from wildfire—a situation that often requires immediate assistance. Wildfire management is generally split into three categories: preparedness, suppression, and fuel reduction. The FS has received more than $2.0 billion annually over the last few years for wildfire management. Federal wildfire policy is to actively suppress all wildfires and to protect lives, property, and resources on federal lands. In an emergency wildfire situation, the FS may work with multiple agencies. The National Interagency Fire Center (NIFC)—of which the FS is a member—coordinates federal, state, and private forces to assist the state or region in need for complex situations while maintaining local wildfire protection. As mentioned previously, there are FMAGs available from FEMA that provide grants, equipment, personnel, and supplies to supplement community resources when fires threaten destruction that might warrant a major disaster declaration. If the President declares a disaster, fire management assistance and other recovery programs are also available from FEMA under the Stafford Act. The type of assistance depends on a number of factors, such as the nature and severity of the wildfire damages and the insurance coverage of the affected parties. Also, the FS is involved in site rehabilitation and restoration following a wildfire via the Burned Area Emergency Response (BAER) program. Under BAER, emergency treatments on federal lands are prescribed and implemented to minimize threats to life or property resulting from the effects of a fire or to stabilize and prevent unacceptable degradation to natural and cultural resources. Small Business Administration Since its creation in 1953, the Small Business Administration (SBA) Disaster Loan Program has offered direct loans to individuals and businesses to help repair, rebuild, and recover from economic losses after a disaster. The majority of disaster loans (approximately 80%) are made to individuals and households (renters and property owners) to help repair and replace homes and personal property. The three main types of loans for disaster-related losses provided by the SBA Disaster Loan Program are (1) Home Disaster Loans, (2) Business Disaster Loans, and (3) Economic Injury Disaster Loans (EIDL). Home disaster loans are used by homeowners and renters to repair or replace their disaster-damaged primary residences or personal property. SBA regulations limit home loans to $200,000 for the repair or replacement of real estate and $40,000 for the repair or replacement of personal property. Business disaster loans help businesses of all sizes and nonprofit organizations repair or replace disaster-damaged property, including inventory and supplies. EIDLs provide working capital to businesses that have been impacted by an incident. EIDLs cannot be used to restore or repair businesses. Both Business Disaster Loans and EIDLs are limited by law to $2 million per applicant. They also provide assistance to small agricultural cooperatives (but not enterprises), and certain private, nonprofit organizations that have suffered substantial economic injury resulting from a physical disaster or an agricultural production disaster.

The federal government plays a significant role in emergency management, which generally refers to activities associated with avoiding and responding to natural and human-caused hazards. Emergency management in the United States is highly decentralized and contextual in nature: activities often involve multiple jurisdictions as well as a vast number of agencies, nongovernmental organizations, and private sector entities. In addition, the number and type of actors involved in an incident will vary tremendously depending on the context and severity of the event. Similarly, the legal framework through which emergency management functions and activities are authorized is also decentralized and stems from multiple authorities. Congress annually appropriates funds for a wide range of activities and efforts related to emergency management. For example, between 2005 and 2011 Congress provided an average of $12 billion annually to the Federal Emergency Management Agency, the lead federal agency responsible for disaster relief through regular and supplemental appropriations. Congress has also invested over $120 billion through various federal agencies to help the Gulf Coast Region recover from the hurricanes that hit the Gulf Coast in 2005 and 2008. In recent years congressional interest in emergency management has focused on funding, program administration, and program coordination—both among federal agencies and state emergency management agencies. This report provides an introduction to the principles and foundations of federal emergency management in the United States and a description of the activities of the federal agencies that provide assistance, focusing primarily on the Federal Emergency Management Agency, but also including information on the National Guard, Department of Agriculture, Department of Defense, Army Corps of Engineers, Department of Health and Human Services, Department of Housing and Urban Development, Department of Transportation, Environmental Protection Agency, Forest Service, and Small Business Administration. This report is designed to provide Members of Congress and congressional staff with a general overview of principles and foundations of federal emergency management in the United States as well as the types of activities provided by various federal agencies. The report begins with a description of the four phases of emergency management: (1) mitigation, (2) preparedness, (3) response, and (4) recovery, and includes examples of some of the activities that take place in each of these phases. The report then discusses a recent movement at the federal level to carry out these phases of emergency management through a system of frameworks. The frameworks include (1) the National Prevention Framework, (2) the National Protection Framework, (3) the National Mitigation Framework, (4) the National Response Framework, and (5) the National Disaster Recovery Framework. The frameworks are used to designate roles and responsibilities and coordinate various activities. Next, this report describes the process for requesting federal assistance for major disasters, emergencies, and fire suppression. The declaration section also includes brief summaries of the types of assistance provided through each type of declaration. This discussion is followed by description of federal-to-state cost shares, how federal assistance is funded, and the process through which FEMA requests assistance from other federal entities. The section then provides a description of the close-out process—the process in which FEMA terminates its recovery efforts. The report includes a discussion of key federal laws and policies that influence federal emergency management, and concludes by highlighting some of the federal activities that take place in response to emergencies and disasters.

Constitutional Separation of Powers Foreign intelligence collection is not among Congress's powers enumerated in Article I of the Constitution, nor is it expressly mentioned in Article II as a responsibility of the President. Yet it is difficult to imagine that the Framers intended to reserve foreign intelligence collection to the states or to deny the authority to the federal government altogether. It is more likely that the power to collect intelligence resides somewhere within the domain of foreign affairs and war powers, both of which areas are inhabited to some degree by the President together with the Congress. The Steel Seizure Case is frequently cited as providing a framework for the courts to decide the extent of the President's authority, particularly in matters involving national security. In that Korean War-era case, the Supreme Court declared unconstitutional a presidential order seizing control of steel mills that had ceased production due to a labor dispute, an action justified by President Truman on the basis of wartime exigencies and his role as Commander-in-Chief, despite the fact that Congress had considered but rejected earlier legislation that would have authorized the measure, and that other statutory means were available to address the steel shortage. The Court remarked that It is clear that if the President had authority to issue the order he did, it must be found in some provision of the Constitution. And it is not claimed that express constitutional language grants this power to the President. The contention is that presidential power should be implied from the aggregate of his powers under the Constitution. Particular reliance is placed on provisions in Article II which say that 'The executive Power shall be vested in a President ... '; that 'he shall take Care that the Laws be faithfully executed'; and that he 'shall be Commander in Chief of the Army and Navy of the United States.' The order cannot properly be sustained as an exercise of the President's military power as Commander in Chief of the Armed Forces. The Government attempts to do so by citing a number of cases upholding broad powers in military commanders engaged in day-to-day fighting in a theater of war. Such cases need not concern us here. Even though 'theater of war' be an expanding concept, we cannot with faithfulness to our constitutional system hold that the Commander in Chief of the Armed Forces has the ultimate power as such to take possession of private property in order to keep labor disputes from stopping production. This is a job for the Nation's lawmakers, not for its military authorities. The Court also rejected the argument that past similar assertions of authority by presidents bolstered the executive claims of constitutional power: It is said that other Presidents without congressional authority have taken possession of private business enterprises in order to settle labor disputes. But even if this be true, Congress has not thereby lost its exclusive constitutional authority to make laws necessary and proper to carry out the powers vested by the Constitution 'in the Government of the United States, or any Department or Officer thereof.' The Steel Seizure Case is not remembered as much for the majority opinion as it is for the concurring opinion of Justice Robert Jackson, who took a more nuanced view and laid out what is commonly regarded as the seminal explication of separation-of-powers matters between Congress and the President. Justice Jackson set forth the following oft-cited formula: 1. When the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate.... A seizure executed by the President pursuant to an Act of Congress would be supported by the strongest of presumptions and the widest latitude of judicial interpretation, and the burden of persuasion would rest heavily upon any who might attack it. 2. When the President acts in absence of either a congressional grant or denial of authority, he can only rely upon his own independent powers, but there is a zone of twilight in which he and Congress may have concurrent authority, or in which its distribution is uncertain. Therefore, congressional inertia, indifference or quiescence may sometimes, at least as a practical matter, enable, if not invite, measures on independent presidential responsibility. In this area, any actual test of power is likely to depend on the imperatives of events and contemporary imponderables rather than on abstract theories of law. 3. When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus any constitutional powers of Congress over the matter. Courts can sustain exclusive Presidential control in such a case only by disabling the Congress from acting upon the subject. Presidential claim to a power at once so conclusive and preclusive must be scrutinized with caution, for what is at stake is the equilibrium established by our constitutional system. To ascertain where in this framework the President's claimed authority might fall appears to require a determination of the Congress's will and an assessment of how the Constitution allocates the asserted power between the President and Congress, if at all. If the Constitution forbids the conduct, then the court has a duty to find the conduct invalid, even if the President and Congress have acted in concert. In the absence of a constitutional bar, Congress's support matters, except in the rare case where the President alone is entrusted with the specific power in question. In other words, under this view, the President may sometimes have the effective power to take unilateral action in the absence of any action on the part of Congress to indicate its will, but this should not be taken to mean that the President possesses the inherent authority to exercise full authority in a particular field without Congress's ability to encroach. William Rehnquist, at the time an Associate Justice of the Supreme Court, took the opportunity in Dames & Moore v. Regan to refine Justice Jackson's formula with respect to the cases falling within the second classification, the "zone of twilight in which he and Congress may have concurrent authority, or in which its distribution is uncertain." In such a case the analysis becomes more complicated, and the validity of the President's action, at least so far as separation-of-powers principles are concerned, hinges on a consideration of all the circumstances which might shed light on the views of the Legislative Branch toward such action, including "congressional inertia, indifference or quiescence." [I]t is doubtless the case that executive action in any particular instance falls, not neatly in one of three pigeonholes, but rather at some point along a spectrum running from explicit congressional authorization to explicit congressional prohibition. This is particularly true as respects cases such as the one before us, involving responses to international crises the nature of which Congress can hardly have been expected to anticipate in any detail. In Dames & Moore , petitioners had challenged President Carter's executive order establishing regulations to further compliance with the terms of an executive agreement he had entered into for the purpose of ending the hostage crisis with Iran. The orders, among other things, directed that legal recourse for breaches of contract with Iran and other causes of action must be pursued before a special tribunal established by the Algiers Accords. President Carter relied largely on the International Economic Emergency Powers Act (IEEPA), which provided explicit support for most of the measures taken, but could not be read to authorize actions affecting the suspension of claims in U.S. courts. The Carter Administration also cited the broad language of the Hostage Act, which states that "the President shall use such means, not amounting to acts of war, as he may think necessary and proper to obtain or effectuate the release" of the hostages. Justice Rehnquist wrote for the majority Although we have declined to conclude that the IEEPA or the Hostage Act directly authorizes the President's suspension of claims for the reasons noted, we cannot ignore the general tenor of Congress' legislation in this area in trying to determine whether the President is acting alone or at least with the acceptance of Congress. As we have noted, Congress cannot anticipate and legislate with regard to every possible action the President may find it necessary to take or every possible situation in which he might act. Such failure of Congress specifically to delegate authority does not, "especially ... in the areas of foreign policy and national security," imply "congressional disapproval" of action taken by the Executive. On the contrary, the enactment of legislation closely related to the question of the President's authority in a particular case which evinces legislative intent to accord the President broad discretion may be considered to "invite" "measures on independent presidential responsibility." At least this is so where there is no contrary indication of legislative intent and when, as here, there is a history of congressional acquiescence in conduct of the sort engaged in by the President. The Court remarked that Congress's implicit approval of the longstanding presidential practice of settling international claims by executive agreement was critical to its holding that the challenged actions were not in conflict with acts of Congress. The Court cited Justice Frankfurter's concurrence in Youngstown stating that "a systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned ... may be treated as a gloss on 'Executive Power' vested in the President by § 1 of Art. II." Finally, the Court stressed that its holding was narrow: We do not decide that the President possesses plenary power to settle claims, even as against foreign governmental entities.... But where, as here, the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between our country and another, and where, as here, we can conclude that Congress acquiesced in the President's action, we are not prepared to say that the President lacks the power to settle such claims. A review of the history of intelligence collection and its regulation by Congress suggests that the two political branches have never quite achieved a meeting of the minds regarding their respective powers. Presidents have long contended that the ability to conduct surveillance for intelligence purposes is a purely executive function, and have tended to make broad assertions of authority while resisting efforts on the part of Congress or the courts to impose restrictions. Congress has asserted itself with respect to domestic surveillance, but has largely left matters involving overseas surveillance to executive self-regulation, subject to congressional oversight and willingness to provide funds. Background: Government Surveillance Investigations for the purpose of gathering foreign intelligence give rise to a tension between the Government's legitimate national security interests and the protection of privacy interests and First Amendment rights. The Fourth Amendment The Fourth Amendment to the Constitution provides: The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. While the right against unreasonable searches and seizures was originally applied only to tangible things, Supreme Court jurisprudence eventually expanded the contours of the Fourth Amendment to cover intangible items such as conversations. As communications technology has advanced, the technology for intrusion into private conversations has kept pace, as have government efforts to exploit such technology for law enforcement and intelligence purposes. At the same time, the Court has expanded its interpretation of the scope of the Fourth Amendment with respect to such techniques, and Congress has legislated both to protect privacy and to enable the government to pursue its legitimate interests in enforcing the law and gathering foreign intelligence information. Yet the precise boundaries of what the Constitution allows, as well as what it requires, are not fully demarcated, and the relevant statutes are not entirely free from ambiguity. The Origin of Wiretap Warrants In Katz v. United States , the Court held for the first time that the protections of the Fourth Amendment extend to circumstances involving electronic surveillance of oral communications without physical intrusion. In response, Congress enacted Title III of the Omnibus Crime Control and Safe Streets Act of 1968 ("Title III") to provide for search warrants to authorize electronic surveillance for law enforcement purposes, but prohibiting such surveillance in other instances not authorized by law. The Katz Court noted that its holding did not extend to cases involving national security, and Congress did not then attempt to regulate national security surveillance. Title III, as originally enacted, contained an exception. It stated that Nothing contained in this chapter or in section 605 of the Communications Act ... shall limit the constitutional power of the President to take such measures as he deems necessary to protect the Nation against actual or potential attack or other hostile acts of a foreign power, to obtain foreign intelligence information deemed essential to the security of the United States, or to protect national security information against foreign intelligence activities.... Intelligence Surveillance Several years later, the Supreme Court addressed electronic surveillance for domestic intelligence purposes. In United States v. United States District Court , 407 U.S. 297 (1972) (the Keith case), the United States sought a writ of mandamus to compel a district judge to vacate an order directing the United States to fully disclose electronically monitored conversations. The Sixth Circuit refused to grant the writ, and the Supreme Court granted certiorari and affirmed the lower court decision. The Supreme Court regarded Katz as "implicitly recogniz[ing] that the broad and unsuspected governmental incursions into conversational privacy which electronic surveillance entails necessitate the application of Fourth Amendment safeguards." Mr. Justice Powell, writing for the Keith Court, framed the matter before the Court as follows: The issue before us is an important one for the people of our country and their Government. It involves the delicate question of the President's power, acting through the Attorney General, to authorize electronic surveillance in internal security matters without prior judicial approval. Successive Presidents for more than one-quarter of a century have authorized such surveillance in varying degrees, without guidance from the Congress or a definitive decision of this Court. This case brings the issue here for the first time. Its resolution is a matter of national concern, requiring sensitivity both to the Government's right to protect itself from unlawful subversion and attack and to the citizen's right to be secure in his privacy against unreasonable Government intrusion. The Court held that, in the case of intelligence gathering involving domestic security surveillance, prior judicial approval was required to satisfy the Fourth Amendment. Justice Powell emphasized that the case before it "require[d] no judgment on the scope of the President's surveillance power with respect to the activities of foreign powers, within or without the country." The Court expressed no opinion as to "the issues which may be involved with respect to activities of foreign powers or their agents," but invited Congress to establish statutory guidelines. Thus, at least insofar as domestic surveillance is concerned, the Court has recognized that Congress has a role in establishing rules in matters that touch on national security. Court of appeals decisions following Keith met more squarely the issue of warrantless electronic surveillance in the context of foreign intelligence gathering. In United States v. Brown, while affirming Brown's conviction for a firearm violation, the Fifth Circuit upheld the legality of a warrantless wiretap authorized by the Attorney General for foreign intelligence purposes where the conversation of Brown, an American citizen, was incidentally overheard. The Third Circuit, in United States v. Butenko , in affirming the district court's denial of an espionage defendant's application for disclosure of wiretap records, concluded that warrantless electronic surveillance was lawful, violating neither Section 605 of the Communications Act nor the Fourth Amendment, if its primary purpose was to gather foreign intelligence information. The Ninth Circuit, in United States v. Buck , affirmed the conviction of a defendant found guilty of furnishing false information in connection with the acquisition of ammunition and making a false statement with respect to information required to be kept by a licensed firearm dealer. In responding to Buck's contention on appeal that it was reversible error for the district court to fail to articulate the test it applied in ruling, after an in camera inspection, that the contents of one wiretap did not have to be disclosed to the appellant because it was expressly authorized by the Attorney General and lawful for purposes of gathering foreign intelligence, the Ninth Circuit stated that "[f]oreign security wiretaps" were "a recognized exception to the general warrant requirement and disclosure of wiretaps not involving illegal surveillance was within the trial court's discretion." The court found a determination that the surveillance was reasonable was implicit in the lower court's conclusion. In its plurality decision in Zweibon v. Mitchell , a case involving a suit for damages brought by 16 members of the Jewish Defense League against Attorney General John Mitchell and nine FBI special agents and employees for electronic surveillance of their telephone calls without a warrant, the District of Columbia Circuit took a somewhat different view. The surveillance was authorized by the President, acting through the Attorney General, as an exercise of his authority relating to the nation's foreign affairs and was asserted to be essential to protect the nation and its citizens against hostile acts of a foreign power and to obtain foreign intelligence information deemed essential to the security of the United States. The D.C. Circuit, in a plurality decision, held that a warrant was constitutionally required in such a case involving a wiretap of a domestic organization that was not an agent of a foreign power or working in collaboration with a foreign power posing a national security threat. The court further held that the appellants were entitled to the liquidated damages recovery provided in Title III unless appellees on remand establish an affirmative defense of good faith. While its holding was limited to the facts before it, the plurality also noted that "an analysis of the policies implicated by foreign security surveillance indicates that, absent exigent circumstances, all warrantless electronic surveillance is unreasonable and therefore unconstitutional." Surveillance for Foreign Intelligence Purposes The Foreign Intelligence Surveillance Act of 1978 (FISA) sought to strike a balance between national security interests and civil liberties. The legislation was a response both to the Senate Select Committee to Study Government Operations with Respect to Intelligence Activities (hereinafter the Church Committee) revelations of past abuses of electronic surveillance for national security purposes and to the somewhat uncertain state of the law on the issue. The Church Committee found that every President since Franklin D. Roosevelt had both asserted the authority to authorize warrantless electronic surveillance and had utilized that authority. Concerns over abuses of such authority provided impetus to the passage of the legislation. As the Senate Judiciary Committee noted in its statement of the need for legislation: The need for such statutory safeguards has become apparent in recent years. This legislation is in large measure a response to the revelations that warrantless electronic surveillance in the name of national security has been seriously abused.... While the number of illegal or improper national security taps and bugs conducted during the Nixon administration may have exceeded those in previous administrations, the surveillances were regrettably by no means atypical. In summarizing its conclusion that surveillance was "often conducted by illegal or improper means," the Church committee wrote: Since the 1930's, intelligence agencies have frequently wiretapped and bugged American citizens without the benefit of judicial warrant ..... past subjects of these surveillances have included a United States Congressman, Congressional staff member, journalists and newsmen, and numerous individuals and groups who engaged in no criminal activity and who posed no genuine threat to the national security, such as two White House domestic affairs advisers and an anti-Vietnam War protest group. (Vol. 2, p.12) * * * * The application of vague and elastic standards for wiretapping and bugging has resulted in electronic surveillances which, by any objective measure, were improper and seriously infringed the Fourth Amendment rights of both the targets and those with whom the targets communicated. The inherently intrusive nature of electronic surveillance, moreover, has enabled the Government to generate vast amounts of information—unrelated to any legitimate government interest—about the personal and political lives of American citizens. The collection of this type of information has, in turn, raised the danger of its use for partisan political and other improper ends by senior administration officials. (Vol. 3, p. 32.) The Senate Judiciary Committee also focused on the potentially chilling effect of warrantless electronic surveillance upon the exercise of First Amendment rights: Also formidable—although incalculable—is the "chilling effect" which warrantless electronic surveillance may have on the constitutional rights of those who were not targets of the surveillance, but who perceived themselves, whether reasonably or unreasonably, as potential targets. Our Bill of Rights is concerned not only with direct infringements on constitutional rights, but also with government activities which effectively inhibit the exercise of these rights. The exercise of political freedom depends in large measure on citizens' understanding that they will be able to be publicly active and dissent from official policy, within lawful limits, without having to sacrifice the expectation of privacy that they rightfully hold. Arbitrary or uncontrolled use of warrantless electronic surveillance can violate that understanding and impair that public confidence so necessary to an uninhibited political life. The Senate Judiciary Committee stated that the bill was "designed ... to curb the practice by which the Executive Branch may conduct warrantless electronic surveillance on its own unilateral determination that national security justifies it," while permitting the legitimate use of electronic surveillance to obtain foreign intelligence information. Echoing the Church Committee, the Senate Judiciary Committee recognized that electronic surveillance has enabled intelligence agencies to obtain valuable and vital information relevant to their legitimate intelligence missions which would have been difficult to acquire by other means. Electronic Surveillance: The Current Statutory Framework The interception of wire, oral, or electronic communications is regulated by Title III of the Omnibus Crime Control and Safe Streets Act of 1968 ("Title III"), as amended. Government surveillance for criminal law enforcement is permitted under certain circumstances and in accordance with the procedures set forth in Title III. Government surveillance for the gathering of foreign intelligence information is covered by FISA. These statutes are relevant to the analysis of the legality of the reported NSA surveillance to the extent that their provisions are meant to cover such surveillance, prohibit it, or explicitly exempt it from requirements therein. If Congress meant for FISA to occupy the entire field of electronic surveillance of the type that is being conducted pursuant to the President's executive order, then the operation may fall under the third tier of Justice Jackson's formula, in which the President's "power is at its lowest ebb" and a court could sustain it only by "disabling the Congress from acting upon the subject." In other words, if FISA, together with Title III, were found to occupy the field, then for a court to sustain the President's authorization of electronic surveillance to acquire foreign intelligence information outside the FISA framework, FISA would have to be considered an unconstitutional encroachment on inherent presidential authority. If, on the other hand, FISA leaves room for the NSA surveillance outside its strictures, then the claimed power might fall into the first or second categories, as either condoned by Congress (expressly or implicitly), or simply left untouched. Title III Title III provides the means for the Attorney General and designated assistants to seek a court order authorizing a wiretap or similar electronic surveillance to investigate certain crimes (18 U.S.C. § 2516). Most other interceptions of electronic communications are prohibited unless the activity falls under an explicit exception. Under 18 U.S.C. § 2511, any person who "intentionally intercepts ... any wire, oral, or electronic communication" or "intentionally uses ... any electronic, mechanical, or other device [that transmits a signal over wire or radio frequencies, or is connected with interstate or foreign commerce] to intercept any oral communication," without the consent of at least one party to the conversation, is subject to punishment or liability for civil damages. The statute also prohibits the intentional disclosure of the contents of an intercepted communication. It prohibits attempts to engage in the prohibited conduct as well as solicitation of other persons to carry out such activity. Certain exceptions in Title III apply to federal employees and other persons "acting under color of law," including exceptions for foreign intelligence acquisition. Section 2511 excepts officers, employees, and agents of the United States who, in the normal course of their official duty, conduct electronic surveillance pursuant to FISA (18 U.S.C. § 2511(2)(e)). Furthermore, Congress emphasized in § 1511(2)(f) that Nothing contained in [chapters 119 (Title III), 121 (stored wire or electronic surveillance or access to transactional records) or 206 (pen registers and trap and trace devices) of title 18, U.S. Code], or section 705 of the Communications Act of 1934, shall be deemed to affect the acquisition by the United States Government of foreign intelligence information from international or foreign communications, or foreign intelligence activities conducted in accordance with otherwise applicable Federal law involving a foreign electronic communications system, utilizing a means other than electronic surveillance as defined in section 101 of the Foreign Intelligence Surveillance Act of 1978, and procedures in this chapter [119] or chapter 121 and the Foreign Intelligence Surveillance Act of 1978 shall be the exclusive means by which electronic surveillance, as defined in section 101 of such Act, and the interception of domestic wire, oral, and electronic communications may be conducted. Title III does not define "international or foreign communications" or "domestic." It is unclear under the language of this section whether communications that originate outside the United States but are received within U.S. territory, or vice versa, were intended to be treated as foreign, international or domestic. Recourse to the plain meaning of the words provides some illumination. Webster's New Collegiate Dictionary (1977), in pertinent part, defines "international" to mean "affecting or involving two or more nations" or "of or relating to one whose activities extend across national boundaries." Therefore, "international communications" might be viewed as referring to communications which extend across national boundaries or which involve two or more nations. "Foreign" is defined therein, in pertinent part, as "situated outside a place or country; esp situated outside one's own country." Thus, "foreign communications" might be interpreted as referring to communications taking place wholly outside the United States. "Domestic" is defined, in pertinent part, in Webster's to mean "of, relating to, or carried on within one and esp. one's own country." Therefore, "domestic communications" may be defined as communications carried on within the United States. The phrase "utilizing a means other than electronic surveillance [under FISA]" could be interpreted as modifying only the clause immediately before it or as modifying the previous clause as well. If it is read not to pertain to the clause regarding acquisition of intelligence from foreign or international communications, then Title III and the other named statutes would not affect the interception of foreign and international communications, whether they are acquired through electronic surveillance within the meaning of FISA or through other means. The legislative history does not support such a reading, however, for two reasons. First, the second clause, relating to intelligence activities involving foreign electronic communications systems, S. Rep. No. 99-541, at 18 (1986). "Proposed chapter 121" refers to FISA. was inserted into the law in 1986 between the first clause and the modifying phrase. It is thus clear that the modifier initially applied to the first clause, and nothing in the legislative history suggests that Congress intended to effect such a radical change as exempting any electronic surveillance involving communications covered by FISA from the procedures required therein. Second, this conclusion is bolstered by the last sentence of the subsection, which specifies that the methods authorized in FISA and the other statutes are to be the exclusive methods by which the federal government is authorized to intercept electronic communications. Whether given communications are covered by the exclusivity language would require an examination of the definitions of covered communications in Title III and in FISA. As originally enacted, § 2511 contained what appeared to be a much broader exception for national security intercepts. It excluded from the coverage of Title III surveillance carried out pursuant to the "constitutional power of the President to take such measures as he deems necessary to protect the Nation against actual or potential attack ... , [and] to obtain foreign intelligence information deemed essential to the security of the United States.... Congress repealed this language when it enacted FISA, and inserted § 2511(2)(f), supra , to make the requirements of Title III or FISA the exclusive means to authorize electronic surveillance within the United States, and to "put[] to rest the notion that Congress recognizes an inherent Presidential power to conduct such surveillances in the United States outside of the procedures contained in chapters 119 and 120 [of title 18, U.S. Code]." Subsection (2)(f) was intended to clarify that the prohibition does not cover NSA operations (as they were then being conducted) and other surveillance overseas, including that which targets U.S. persons. FISA The Foreign Intelligence Surveillance Act (FISA) provides a framework for the use of "electronic surveillance," as defined in the Act, and other investigative methods to acquire foreign intelligence information. In pertinent part, FISA provides a means by which the government can obtain approval to conduct electronic surveillance of a foreign power or its agents without first meeting the more stringent standard in Title III that applies to criminal investigations. While Title III requires a showing of probable cause that a proposed target has committed, is committing, or is about to commit a crime, FISA requires a showing of probable cause to believe that the target is a foreign power or an agent of a foreign power. In the aftermath of the September 11, 2001, terrorist attacks on the United States, Congress amended FISA so that it no longer requires a certification that the (primary) purpose of a search or surveillance is to gather foreign intelligence information. As amended by the USA PATRIOT Act, FISA requires that a "significant purpose" of the investigation be the collection of foreign intelligence information, which has been interpreted to expand the types of investigations that may be permitted to include those in which the primary purpose may be to investigate criminal activity, as long as there is at least a measurable purpose related to foreign intelligence gathering. Congress later enacted a measure that removed, for a time, the requirement for the government to show that the intended target, if a non-U.S. person, is associated with a foreign power. Electronic Surveillance Under FISA Whether FISA applies to the electronic surveillances at issue turns in large part on the definition of "electronic surveillance" under FISA. To constitute "electronic surveillance" under FISA, the surveillance must fall within one of four categories set forth in 50 U.S.C. § 1801(f), FISA. These include: (1) the acquisition by an electronic, mechanical, or other surveillance device of the contents of any wire or radio communication sent by or intended to be received by a particular, known United States person who is in the United States, if the contents are acquired by intentionally targeting that United States person, under circumstances in which a person has a reasonable expectation of privacy and a warrant would be required for law enforcement purposes; (2) the acquisition by an electronic, mechanical, or other surveillance device of the contents of any wire communication to or from a person in the United States, without the consent of any party thereto, if such acquisition occurs in the United States, but does not include the acquisition of those communications of computer trespassers that would be permissible under section 2511(2)(i) of Title 18; (3) the intentional acquisition by an electronic, mechanical, or other surveillance device of the contents of any radio communication, under circumstances in which a person has a reasonable expectation of privacy and a warrant would be required for law enforcement purposes, and if both the sender and all intended recipients are located within the United States; or (4) the installation or use of an electronic, mechanical, or other surveillance device in the United States for monitoring to acquire information, other than from a wire or radio communication, under circumstances in which a person has a reasonable expectation of privacy and a warrant would be required for law enforcement purposes. The legislative history of the Act suggests that some electronic surveillance by the National Security Agency involving communications taking place entirely overseas, even involving U.S. persons, was not intended to be covered. At the same time, FISA was clearly meant to cover some communications even if one party to the communication is overseas. The interception of wire or radio communications sent by or intended to be received by a targeted United States person in the United States is covered under 50 U.S.C. § 1801(f)(1). The interception of international wire communications to or from any person (whether or not a U.S. person) within the United States without the consent of at least one party is covered under § 1801(f)(2), where the communications are acquired within the United States. The interception of a radio communication is covered under § 1801(f)(3) if all parties to it are located within the United States, unless there is no reasonable expectation of privacy and a warrant would not be required under Title III, even if the interception is acquired by using a device located outside of the United States. The interception of wire, oral, or electronic communications that is not included within the definition of "electronic surveillance" for the purposes of FISA may nevertheless be prohibited by or subject to a warrant requirement pursuant to 18 U.S.C. § 2511 (Title III). In discussing the repeal in the conforming amendments to FISA of the "national security disclaimer" in former 18 U.S.C. § 2511(3), and the addition of 18 U.S.C. § 2511(f) in the conforming amendments in S. 1566 , the Senate Judiciary Committee observed: Specifically, this provision is designed to make clear that the legislation does not deal with international signals intelligence activities as currently engaged in by the National Security Agency and electronic surveillance conducted outside the United States. As to methods of acquisition which come within the definition of 'electronic surveillance' in this bill, the Congress has declared that this statute, not any claimed presidential power, controls. At the same time, the Committee signaled its intent to reserve its option to regulate U.S. electronic surveillance operations that did not fall within the ambit of FISA: The activities of the National Security Agency pose particularly difficult conceptual and technical problems which are not dealt with in this legislation. Although many on the committee are of the opinion that it is desirable to enact legislative safeguards for such activity, the committee adopts the view expressed by the attorney general during the hearings that enacting statutory controls to regulate the National Security Agency and the surveillance of Americans abroad raises problems best left to separate legislation. This language insures that certain electronic surveillance activities targeted against international communications for foreign intelligence purposes will not be prohibited absolutely during the interim period when these activities are not regulated by chapter 120 and charters for intelligence agencies and legislation regulating international electronic surveillance have not yet been developed. FISA Exceptions to Requirement for Court Order Three current provisions of FISA provide for some measure of electronic surveillance without a court order to gather foreign intelligence information in specified circumstances, 50 U.S.C. §§ 1802 (electronic surveillance of certain foreign powers without a court order upon Attorney General certification); 1805(f) (emergency authorization of electronic surveillance for up to 72 hours, while an order approving such surveillance is sought from a judge of the Foreign Intelligence Surveillance Court (FISC)); and 1811 (electronic surveillance without a court order for 15 days following a declaration of war by the Congress). In particular, 50 U.S.C. § 1802 permits the Attorney General to order electronic surveillance without a court order for up to one year to acquire foreign intelligence information for periods of up to one year if the Attorney General certifies in writing under oath that the electronic surveillance is solely directed at means of communications used exclusively between or among foreign powers or on property or premises under the open and exclusive control of a foreign power (the definition here does not include international terrorist organizations) However, for the purpose of § 1802, only subsections 1801(a)(1) through (3) are included. where "there is no substantial likelihood that the surveillance will acquire the contents of any communication to which a United States person is a party;" and minimization procedures are put in place. The Attorney General is also required to report minimization procedures to the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence 30 days in advance. The 30-day requirement can be waived if the Attorney General determines immediate action is required, in which case he is to notify the committees immediately of the minimization procedures and the reason for the urgency. The FISA court is to receive a copy of the certifications under seal. The emergency authorization provision in 50 U.S.C. § 1805(f) authorizes the Attorney General to issue emergency orders to permit electronic surveillance prior to obtaining a court order if the Attorney General determines that emergency conditions make it impossible to obtain an order with due diligence before the surveillance is begun. The Attorney General or his designee must immediately inform a FISA judge and submit a proper application to that judge as soon as practicable, but not more than 72 hours after the Attorney General authorizes such surveillance. Minimization procedures must be followed. In the absence of a judicial order, the surveillance must terminate when the information sought is obtained, when the application for the order is denied, or after the expiration of 72 hours from the time the surveillance was authorized. No information obtained or evidence derived from such surveillance may be used as evidence or otherwise disclosed in any trial, hearing, or other government proceeding, and no information concerning any U.S. person may be disclosed at all without that person's consent except with the Attorney General's approval where the information indicates a threat of disaster or serious bodily harm to any person. Where Congress has passed a declaration of war, 50 U.S.C. § 1811 authorizes the Attorney General to conduct electronic surveillance without a court order for fifteen calendar days following a declaration of war by Congress. This provision does not appear to apply to the AUMF, as that does not constitute a congressional declaration of war. Indeed, even if the authorization were regarded as a declaration of war, the authority to conduct warrantless electronic surveillance under 50 U.S.C. § 1811 would only extend to a maximum of 15 days following its passage. The Administration's Position The Administration's position, as set forth in the Office of Legislative Affairs letter to the leaders of the House and Senate intelligence Committees, is that the President has the constitutional authority to direct the NSA to conduct the activities he described, and that this inherent authority is supplemented by statutory authority under the AUMF. The Administration interprets the AUMF, based on its reading of the Supreme Court opinion in Hamdi , as authorizing the President to conduct anywhere in the world, including within the United States, any activity that can be characterized as a fundamental incident of waging war. It includes communications intelligence among the fundamental incidents of waging war. The following sections analyze the extent to which the President's authority to conduct warrantless electronic surveillance is inherent, whether the AUMF authorizes the operations, and whether the NSA operations are consistent with FISA and Title III. The President's Inherent Authority to Conduct Intelligence Surveillance The statutory language in FISA and the legislative history of the bill that became FISA, S. 1566 (95 th Cong.), reflect the Congress's stated intention to circumscribe any claim of inherent presidential authority to conduct electronic surveillance, as defined by the Act, to collect foreign intelligence information, so that FISA would be the exclusive mechanism for the conduct of such electronic surveillance. Thus, in the conforming amendments section of the legislation, the previous language explicitly recognizing the President's inherent authority was deleted from 18 U.S.C. § 2511(3), and the language of 18 U.S.C. § 2511(f) was added to Title III of the Omnibus Crime Control and Safe Streets Act of 1968, as amended, which states, in part, that "procedures in this chapter or chapter 121 and the Foreign Intelligence Surveillance Act of 1978 shall be the exclusive means by which electronic surveillance, as defined in section 101 of that Act, and the interception of domestic wire, oral, and electronic communications may be conducted." The House amendments to the bill provided that the procedures in the bill and in 18 U.S.C., Chapter 119 (Title III), were to be the exclusive "statutory" means by which electronic surveillance as defined in the bill and the interception of domestic wire and oral communications may be conducted, while the Senate bill did not include the word "statutory." The House Conference Report, in accepting the Senate approach, stated, in part, that The conferees agree that the establishment by this act of exclusive means by which the President may conduct electronic surveillance does not foreclose a different decision by the Supreme Court. The intent of the conferees is to apply the standard set forth in Justice Jackson's concurring opinion in the Steel Seizure case: "When a President takes measures incompatible with the express or implied will of Congress, his power is at the lowest ebb, for then he can rely only upon his own constitutional power minus any constitutional power of Congress over the matter." Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 637 (1952). In this language, the conferees acknowledge that the U.S. Supreme Court, as the final arbiter of constitutional power, might reach a different conclusion. The Court has yet to rule on the matter. The passage of FISA and the inclusion of such exclusivity language reflects Congress's view of its authority to cabin the President's use of any inherent constitutional authority with respect to warrantless electronic surveillance to gather foreign intelligence. The Senate Judiciary Committee articulated its view with respect to congressional power to tailor the President's use of an inherent constitutional power: The basis for this legislation is the understanding—concurred in by the Attorney General—that even if the President has an "inherent" constitutional power to authorize warrantless surveillance for foreign intelligence purposes, Congress has the power to regulate the exercise of this authority by legislating a reasonable warrant procedure governing foreign intelligence surveillance. On the other hand, the Administration asserts constitutional authority under Article II of the Constitution, including his Commander-in-Chief authority, to order warrantless foreign intelligence surveillance within the United States: This constitutional authority to order warrantless foreign intelligence surveillance within the United States, as all federal appellate courts, including at least four circuits, to have addressed the issue have concluded. See, e.g. , In re Sealed Case , 310 F.3d 717, 742 (FISA Ct. of Review 2002) ("[A]ll the other courts to have decided the issue [have] held that the President did have inherent authority to conduct warrantless searches to obtain foreign intelligence information.... We take for granted that the President does have that authority.... "). The U.S. Foreign Intelligence Surveillance Court of Review (Court of Review) was created by FISA, 50 U.S.C. § 1803, and has appellate review over denials of FISA applications by the Foreign Intelligence Surveillance Court which was also established under that section. Denials of such applications by the Court of Review may be appealed to the U.S. Supreme Court. The Court of Review has decided only one published case, which is cited by the Administration above. The case was not appealed to the U.S. Supreme Court. As the Court of Review is a court of appeals and is the highest court with express authority over FISA to address the issue, its reference to inherent constitutional authority for the President to conduct warrantless foreign intelligence surveillance might be interpreted to carry considerable weight. The Court of Review, in its opinion, make two references which appear pertinent to the Administration's position. The first statement, which is cited by the Administration, was made by the Court of Review, in In re Sealed Case , in its discussion of the constitutionality of FISA and its exploration of the underlying rationale of the "primary purpose" test as articulated in United States v. Truong Dinh Hung , (which dealt with a pre-FISA surveillance). The Court of Review, in this portion of its constitutional analysis, was considering whether the primary purpose of a FISA electronic surveillance must be to gather foreign intelligence information in order for it to pass constitutional muster. Truong saw such a standard as a constitutional minimum. In assessing and rejecting the Truong approach, the Court of Review stated: It will be recalled that the case that set forth the primary purpose test as constitutionally required was Truong . The Fourth Circuit thought that Keith 's balancing standard implied the adoption of the primary purpose test. We reiterate that Truong dealt with a pre-FISA surveillance based on the President's constitutional responsibility to conduct the foreign affairs of the United States. 629 F.2d at 914. Although Truong suggested the line it drew was a constitutional minimum that would apply to a FISA surveillance, see id . at 914 n. 4, it had no occasion to consider the application of the statute carefully. The Truong court, as did all the other courts to have decided the issue, held that the President did have inherent authority to conduct warrantless searches to obtain foreign intelligence information. It was incumbent upon the court, therefore, to determine the boundaries of that constitutional authority in the case before it. We take for granted that the President does have that authority, and, assuming that is so, FISA could not encroach on the President's constitutional power. The question before us is the reverse, does FISA amplify the President's power by providing a mechanism that at least approaches a classic warrant and which therefore supports the government's contention that FISA searches are constitutionally reasonable. While the Court of Review does not cite to the cases to which it is referring, its allusion to the holdings of "all the other courts to have considered the issue," appears to have been to cases which pre-date FISA's passage or which address pre-FISA surveillances. Such cases dealt with a presidential assertion of inherent authority in the absence of congressional action to circumscribe that authority. Where the Congress has exercised its constitutional authority in the areas of foreign affairs and thereby has withdrawn electronic surveillance, as defined by FISA, from the "zone of twilight," between Executive and Legislative constitutional authorities, it might be argued that the President's asserted inherent authority to engage in warrantless electronic surveillance was thereby limited. In the wake of FISA's passage, the Court of Review's reliance on these pre-FISA cases or cases dealing with pre-FISA surveillances as a basis for its assumption of the continued vitality of the President's inherent constitutional authority to authorize warrantless electronic surveillance for the purpose of gathering foreign intelligence information might be viewed as somewhat undercutting the persuasive force of the Court of Review's statement. The second reference to the "President's inherent constitutional authority" in In re Sealed Case is in the conclusion to the opinion. Here the Court of Review makes an oblique reference to the President's inherent authority: Even without taking into account the President's inherent constitutional authority to conduct warrantless foreign intelligence surveillance, we think the procedures and government showings required under FISA, if they do not meet the minimum Fourth Amendment warrant standards, certainly come close. We, therefore, believe firmly, applying the balancing test drawn from Keith , that FISA as amended is constitutional because the surveillances it authorizes are reasonable. The latter statement was made in support of the Court of Review's conclusion that the procedures for electronic surveillance to gather foreign intelligence information under FISA, as amended by the USA PATRIOT Act, P.L. 107-56 , were constitutionally sufficient under Fourth Amendment standards, whether the court orders under FISA were viewed as warrants for Fourth Amendment purposes or not. While not an explicit recognition of presidential inherent constitutional authority, it might be argued that, when viewed in light of the earlier statement, some level of recognition of that authority might also be inferred from this reference. Both statements were made in a case in which the Court of Review upheld the constitutionality of FISA, an act which, in express legislative language in its conforming amendments to Title III and in its legislative history, was clearly intended to cabin any inherent presidential authority over electronic surveillance within its sweep, and to provide an exclusive structure for the conduct of such electronic surveillance. It might be argued that the adoption of one of two possible interpretations of the statement would avoid internal inconsistency within the court's decision. One approach would be to interpret these statements by the Court of Review as referring to the President's inherent authority to conduct such surveillances outside the scope of "electronic surveillance" under FISA. In essence, the court's statements would then be seen as a reference to presidential authority over those areas of NSA activities which were intentionally excluded from FISA when it was enacted. Alternatively, it might be argued that the court's statements may refer to continuing exercise of inherent presidential authority within the FISA structure, which the Court of Review found to be constitutional. In light of the exclusivity language in Title III, 18 U.S.C. § 2511(2)(f) and the legislative history of FISA, it might be argued that electronic surveillance pursuant to FISA is subject to the statutory framework, and does not rely upon an assertion of Presidential inherent authority to support it. Alternatively, it might be contended that, in enacting FISA, the Congress circumscribed the manner in which the President might exercise his inherent constitutional authority with respect to foreign intelligence electronic surveillance, rather than eliminating the President's authority. As this discussion suggests, while the congressional intent to cabin the President's exercise of any inherent constitutional authority to engage in foreign intelligence electronic surveillance may be clear from the exclusivity provision in FISA and from the legislative history of the measure, some support may be drawn from the Court of Review's decision in In re Sealed Case for the position that the President continues to have the power to authorize warrantless electronic surveillance to gather foreign intelligence outside the FISA framework. Whether such authority may exist only as to those areas which were not addressed by FISA in its definition of "electronic surveillance" or is of broader sweep appears to be a matter with respect to which there are differing views. The Authorization to Use Military Force In the aftermath of the September 11, 2001, attacks, Congress passed a joint resolution authorizing the President to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons. Pursuant to that authority, the President ordered U.S. armed forces to invade Afghanistan for the purpose of rooting out Al Qaeda terrorists and toppling the Taliban government that had provided them safe harbor. The Administration regards the AUMF as providing the authority to conduct electronic surveillance of the type reported in the press. This conclusion, it argues, is supported by the 2004 Supreme Court decision in Hamdi v. Rumsfeld, in which the Supreme Court issued its most thorough interpretation of the AUMF to date. In Hamdi , a plurality of the Court affirmed the President's power to detain a U.S. citizen as an "enemy combatant" as part of the necessary force authorized by Congress in the AUMF, despite an earlier statute which provides that no U.S. citizen may be detained except pursuant to an act of Congress. However, the Court appears to have relied on a more limited interpretation of the scope of the AUMF than that which the Administration had asserted in its briefs, and, declaring that a "state of war is not a blank check for the President when it comes to the rights of the Nation's citizens," the Court clarified that notwithstanding the authorization, such detainees have some due process rights under the U.S. Constitution. The Administration's position would seem to rely on at least two assumptions. First, it appears to require that the power to conduct electronic surveillance for intelligence purposes is an essential aspect of the use of military force in the same way that the capture of enemy combatants on the battlefield is a necessary incident to the conduct of military operations. Second, it appears to consider the "battlefield" in the war on terrorism to extend beyond the area of traditional military operations to include U.S. territory. Both assumptions have been the subject of debate. The Use of Force The government finds support in the Hamdi decision for its assertion that the AUMF implies authority to conduct electronic surveillance operations as a necessary incident to the use of force. This implied authority, it is urged, provides the statutory authority required to dispense with FISA requirements in the same way the Hamdi court found the requirement in the Non-Detention Act (18 U.S.C. § 4001(a)), which prohibits the detention of U.S. citizens except pursuant to an act of Congress, to be satisfied by the AUMF. There is reason, however, to limit Hamdi to actual military operations on the battlefield as that concept is traditionally understood. Justice O'Connor wrote for the plurality that we understand Congress' grant of authority for the use of 'necessary and appropriate force' to include the authority to detain for the duration of the relevant conflict, and our understanding is based on longstanding law-of-war principles. If the practical circumstances of a given conflict are entirely unlike those of the conflicts that informed the development of the law of war, that understanding may unravel. Hamdi may be limited to a confirmation that the authorization to employ military force against an enemy army necessarily encompasses the authority to capture battlefield enemies, because such captures are an essential aspect of fighting a battle. International law does not permit the intentional killing of civilians or soldiers who are hors de combat, preferring capture as the method of neutralizing enemies on the battlefield. The capture of an enemy combatant is arguably as much a use of force as killing or wounding one. Justice O'Connor wrote for the plurality There can be no doubt that individuals who fought against the United States in Afghanistan as part of the Taliban, an organization known to have supported the al Qaeda terrorist network responsible for those attacks, are individuals Congress sought to target in passing the AUMF. We conclude that detention of individuals falling into the limited category we are considering, for the duration of the particular conflict in which they were captured, is so fundamental and accepted an incident to war as to be an exercise of the "necessary and appropriate force" Congress has authorized the President to use. While the collection of intelligence is also an important facet of fighting a battle, it is not clear that the collection of intelligence constitutes a use of force. The Hamdi plurality cited the Geneva Conventions and multiple authorities on the law of war to reach its conclusion that the capture of combatants is an essential part of warfare. The Administration has not pointed to any authority similar to those cited by the Hamdi plurality to support its proposition that signals intelligence is a fundamental aspect of combat. To be sure, there can be little doubt that Congress, in enacting the AUMF, contemplated that the armed forces would deploy their military intelligence assets in Afghanistan or wherever else the conventional aspect of the conflict might spread, but a presumption that the authorization extends to less conventional aspects of the conflict could unravel the fabric of Hamdi , especially where measures are taken within the United States. While five Justices were willing to accept the government's argument that the detention of enemy combatants captured on the battlefield is a vital aspect of war-fighting, Justice Thomas alone indicated his agreement with the government's argument that wartime detention is also necessary for intelligence purposes. Justice O'Connor agreed that the law of war supports detention of enemy combatants to prevent their return to the battlefield, but agreed with the petitioner that "indefinite detention for the purpose of interrogation is not authorized." The boundaries of the authority available under this argument are difficult to discern. May any statutory prohibition arguably touching on national security that applies "unless otherwise authorized by statute" be set aside based on the AUMF? Presidential assertions of wartime power have faltered for lack of express congressional approval, especially where civil liberties are implicated. A less expansive interpretation of the AUMF might dictate that "necessary and appropriate force" must be read, if possible, to conform to the Constitution and Congress's understanding of what activity constitutes a use of force as opposed to an exercise of authority within the domestic sphere. The Domestic Sphere versus Military Operations Although the lack of a formal declaration of war is not relevant to the existence of an armed conflict and is arguably unnecessary for the President to invoke some war powers, it may be argued that a formal declaration makes a difference in determining what law applies within the United States, whether to aliens or citizens. For example, the Alien Enemy Act and the Trading with the Enemy Act (TWEA), both of which regulate the domestic conduct of persons during a war, expressly require a declared war and are not triggered simply by an authorization to use force. The Supreme Court long ago held that the President has no implied authority to promulgate regulations permitting the capture of enemy property located in the United States during hostilities short of a declared war, even where Congress had authorized a "limited" war. More pertinently, FISA contains an exception to its requirements for 15 days after a congressional declaration of war. The inclusion of this exception strongly suggests that Congress intended for FISA to apply even during wartime, unless Congress were to pass new legislation. The fact that Congress amended FISA subsequent to September 11, 2001, in order to maximize its effectiveness against the terrorist threat further bolsters the notion that FISA is intended to remain fully applicable. To conclude otherwise would appear to require an assumption that Congress intended the AUMF to authorize the President to conduct electronic surveillance, even against American citizens not involved in combat, under fewer restrictions than would apply during a declared war, notwithstanding FISA provisions strengthened to take such circumstances into account. Even assuming, for argument's sake, that the NSA operations are necessary to prevent another terrorist attack, a presumption that Congress intended to authorize them does not necessarily follow. It might be argued that the United States is part of the battlefield in the war against terrorism in more than just a metaphorical sense. Proponents of this point of view would argue that the AUMF to authorizes the use of force anywhere in the world, including the territory of the United States, against any persons determined by the President to have "planned, authorized, committed, or aided the terrorist attacks" or "harbored such organizations or persons." Under this view, the United States is under actual and continuing enemy attack, and the President has the authority to conduct electronic surveillance in the same way the armed forces gather intelligence about the military operations of enemy forces, even if no actual combat is taking place. After all, intelligence efforts are aimed at identifying an attack before it occurs. If electronic surveillance is considered to be a use of force, the AUMF would seem to limit it to those who "planned, authorized, committed, aided" the Sept. 11 attacks or who "harbored such ... persons." To the extent that the President's executive order authorizes surveillance of persons who are suspected of merely supporting Al Qaeda or affiliated terrorist organizations, it may be seen as being overly broad. Are the NSA Electronic Surveillances Consistent with FISA and Title III? Having concluded that the AUMF authorizes the NSA activity, the Administration finds that the activity meets FISA requirements as well. Although the Administration appears to accept the premise that the surveillance is "electronic surveillance" within the meaning of FISA, it argues that it is excused from following the required procedures because section 109 of FISA exempts from criminal liability those who conduct electronic surveillance without following the FISA procedures where such surveillance is "authorized by statute." Subsection (a) of section 109 of FISA provides criminal sanctions for a person who intentionally "engages in electronic surveillance under color of law except as authorized by statute;" or who "discloses or uses information obtained under color of law by electronic surveillance, knowing or having reason to know that the information was obtained through electronic surveillance not authorized by statute." Under subsection (b), it is a defense to a prosecution under subsection (a) that the defendant was a law enforcement or investigative officer engaged in the course of his official duties and the electronic surveillance was authorized by and conducted pursuant to a search warrant or court order of a court of competent jurisdiction. Under subsection (d), there is federal jurisdiction over an offense under this section if the person committing the offense was an officer or employee of the United States at the time the offense was committed. The language of this section was drawn by the conferees from the House version of the measure, with modifications taken from the Senate version. The House Conference Report, H. Conf. Rep. 95-1720, at 33, 1978 U.S.C.C.A.N. at 4062, adopted the House version of these provisions, with amendments to include the Senate provision regarding disclosure or use of information obtained under color of law by electronic surveillance, knowing or having reason to know that the information was obtained through electronic surveillance not authorized by statute. The House Conference Committee described its actions as follows: The Senate bill provided, by conforming amendment to title 18, United States Code, for criminal penalties for any person who, under color of law, willfully engages in electronic surveillance except as provided in this bill; for any person who willfully discloses, or endeavors to disclose to any other person information obtained under color of law by electronic surveillance, knowing or having reason to know that the information was obtained through unlawful electronic surveillance; and for any person who willfully uses, or endeavors to use, information obtained through unlawful electronic surveillance. The House amendments provided for separate criminal penalties in this act, rather than by conforming amendment to title 18, for any person who intentionally engages in electronic surveillance under color of law except as authorized by statute. A defense was provided for a defendant who was a law enforcement or investigative officer engaged in the course of his official duties and the electronic surveillance was authorized by and conducted pursuant to a search warrant or court order of a court of competent jurisdiction. The conference substitute adopts the House provision modified to add the Senate criminal penalty for any person who discloses or uses information obtained under color of law by electronic surveillance, knowing or having reason to know that the information was obtained through electronic surveillance not authorized by statute. The conferees agree that the criminal penalties for intelligence agents under this Act should be essentially the same as for law enforcement officers under title 18. The Administration appears to rely upon the Authorization to Use Military Force (AUMF), P.L. 107-40 , 115 Stat. 224 (2001), in arguing that the NSA electronic surveillances at issue are "authorized by statute," as that phrase is used in 50 U.S.C. § 1809(a). The FISA bill as passed included the House version of Section 109(a)(1) of the measure, while Section 109(a)(2) was drawn from the Senate passed bill. The House Permanent Select Committee's Report, H. Rep. No. 95-1283(I), at 96 (June 8, 1978), sheds some light on the intended meaning of Section 109(a)(1) of H.R. 7308 (95 th Cong.) which became 50 U.S.C. § 1809(a)(1): Section 109(a)(1) carries forward the criminal provisions of chapter 119 [of Title 18, U.S.C.] and makes it a criminal offense for officers or employees of the United States to intentionally engage in electronic surveillance under color of law except as specifically authorized in chapter 119 of title III [of the Omnibus Crime Control and Safe Streets Act of 1968] and this title. Since certain technical activities—such as the use of a pen register—fall within the definition of electronic surveillance under this title, but not within the definition of wire or oral communications under chapter 119 [of Title 18, U.S.C.], the bill provides an affirmative defense to a law enforcement or investigative officer who engages in such an activity for law enforcement purposes in the course of his official duties, pursuant to a search warrant or court order. The House Permanent Select Committee on Intelligence also noted that, "[o]ne of the important purposes of the bill is to afford security to intelligence personnel so that if they act in accordance with the statute and the court order, they will be insulated from liability; it is not to afford them immunity when they intentionally violate the law." Thus, the legislative history appears to reflect an intention that the phrase "authorized by statute" was a reference to chapter 119 of Title 18 of the U.S. Code (Title III) and to FISA itself, rather than having a broader meaning, in which case a clear indication of Congress's intent to amend or repeal it might be necessary before a court would interpret a later statute as superceding it. Nevertheless, without taking into account the legislative history, the phrase might be seen as having a more expansive application. This broader view appears to have been taken by the Administration in its position regarding the authority provided by the AUMF. Next, the Administration turns to the wiretap prohibition contained in Title III, which contains an exception for surveillance carried out pursuant to FISA. Pointing out that the exception in section 109 is broad in comparison to the exception in 18 U.S.C. § 2511, whose prohibition applies "except as otherwise specifically provided in this chapter ," the Administration appears to conclude that the broader FISA exception subsumes the narrower exception in Title III, at least with respect to national security wiretaps. It cites two of the specific exceptions in Title III. First, 18 U.S.C. 2511(2)(e) provides a defense to criminal liability to government agents who "conduct electronic surveillance, as defined in section 101 of [FISA], as authorized by that Act." The Administration appears to interpret "as authorized by [FISA]" to include activity exempt from the FISA prohibition by virtue of its being authorized by other statute. Under this interpretation, subsection 2511(2)(e) should be read to exempt electronic surveillance "as authorized by FISA or any other statute ." Similar analysis leads the Administration to conclude that the Title III exclusivity provision in 18 U.S.C. § 2511(2)(f) poses no impediment. Section 2511(2)(f), which exempts U.S. foreign intelligence activities not covered by FISA, also provides that the procedures in Title III and FISA "shall be the exclusive means by which electronic surveillance, as defined in section 101 of [FISA], and the interception of domestic wire, oral, and electronic communications may be conducted." The Administration argues that By expressly and broadly excepting from its prohibition electronic surveillance undertaken "as authorized by statute," section 109 of FISA permits an exception to the "procedures" of FISA referred to in 18 U.S.C. § 2511(2)(f) where authorized by another statute, even if the other authorizing statute does not specifically amend section 2511(2)(f). In other words, it appears, the FISA "procedures" described in Title III (in 18 U.S.C. § 2511(2)(f)) can include any other procedures authorized, expressly or implicitly, by any other statute, because these would not be prohibited by FISA section 109. This reading would seem to make the exclusivity provision meaningless, a construction not ordinarily favored by courts. It may be questioned whether Congress actually intended for the exception to the criminal prohibition in FISA to negate the more specific requirements in Title III and its exclusivity provision. The Administration continues Some might suggest that FISA could be read to require that a subsequent statutory authorization must come in the form of an amendment to FISA itself. But under established principles of statutory construction, the AUMF and FISA must be construed in harmony to avoid any potential conflict between FISA and the President's Article II authority as Commander in Chief. Accordingly, any ambiguity as to whether the AUMF is a statute that satisfies the requirements of FISA and allows electronic surveillance in the conflict with al Qaeda without complying with FISA procedures must be resolved in favor of an interpretation that is consistent with the President's long-recognized authority. It is unclear how FISA and the AUMF are seen to collide. Principles of statutory construction generally provide guidance for interpreting Congress's intent with respect to a statute where the text is ambiguous or a plain reading leads to anomalous results; and where possible, a statute that might be read in such a way as to violate the Constitution is to be construed to avoid the violation. However, such principles are only to be applied where there is a genuine ambiguity or conflict between two statutes, and where there is some possible reading that might avoid a conflict. While the Court has been known to read into a statute language that does not appear, it would be unusual for the Court to read express statutory language out of a statute, except by declaring at least that portion of the statute to be unconstitutional. It would not ordinarily be presumed that Congress meant the opposite of what it said, merely because its words are constitutionally problematic. It appears that the Administration's views regarding the statutory authorization supporting the NSA activity also rely on an assumption that FISA, at least to the extent that its provisions apply to activity conducted in the war against terrorism, may be an unconstitutional encroachment into presidential powers. Its argument, partly based on the exigencies of the post-9/11 period, seems to imply such a view of FISA: As explained above. the President determined that it was necessary following September 11 to create an early warning detection system. FISA could not have provided the speed and agility required for the early warning detection system. In addition, any legislative change, other than the AUMF, that the President might have sought specifically to create such an early warning system would have been public and would have tipped off our enemies concerning our intelligence limitations and capabilities. Insofar as the Administration's position is founded upon a concern that FISA was not adequate to the needs of the moment, it might be considered whether 50 U.S.C. §§ 1802 (Attorney General certification that certain conditions are met) and 1805(f) (72-hour emergency order), where applicable, may have provided some of the flexibility that the President considered warranted under the circumstances. To the extent that a lack of speed and agility is a function of internal Department of Justice procedures and practices under FISA, it may be argued that the President and the Attorney General could review those procedures and practices in order to introduce more streamlined procedures to address such needs. Where FISA's current statutory framework proved inadequate to the task, legislative changes might be pursued. The Administration argues that, "any legislative change, other than the AUMF, that the President might have sought specifically to create such an early warning system would have been public and would have tipped off our enemies concerning our intelligence limitations and capabilities." However, some of these concerns may be minimized or addressed by virtue of the fact that, where appropriate, oversight may be conducted in executive session; and access to classified information, including information relating to sensitive intelligence sources and methods, may be limited by statute, by House and Senate procedures, or both. Nevertheless, to some degree, the federal legislative process is, by its very nature, public. Depending upon how such legislation was structured, an argument may be made that it might give rise to some inferences as to present or future intelligence practices or capabilities. On the other hand, the legislative vehicle chosen and the legislative language used might minimize some of those concerns. In addition, no legal precedent appears to have been presented that would support the President's authority to bypass the statutory route when legislation is required, based an asserted need for secrecy. Conclusion Whether an NSA activity is permissible under the Fourth Amendment and the statutory scheme outlined above is impossible to determine without an understanding of the specific facts involved and the nature of the President's authorization, which are for the most part classified. If the NSA operations at issue are encompassed in the definition of "electronic surveillance" set forth under FISA, it would seem consistent with Congress's intent that such surveillance must be carried out in accordance with FISA procedures. Although section 109(a) of FISA does not explicitly limit the language "as authorized by statute" to refer only to Title III and to FISA, the legislative history suggests that such a result was intended. The exceptions to the criminal prohibition under Title III, however, are specifically limited to those mentioned within Title III. Even if the AUMF is read to provide the statutory authorization necessary to avoid criminal culpability under FISA, it does not necessarily follow that the AUMF provides a substitute authority under FISA to satisfy the more specific language in Title III. To the extent that any of the electronic surveillance at issue may be outside the sweep of FISA or Title III, Congress does not appear to have legislated specifically on the subject, nor, by the absence of legislation, to have authorized or acquiesced in such surveillance. Whether such electronic surveillances are contemplated by the term "all necessary and appropriate force" as authorized by the AUMF turns on whether they are, under the Hamdi analysis, an essential element of waging war. Even assuming that the President's role as Commander in Chief of the Armed Forces is implicated in the field of electronic surveillance for the collection of foreign intelligence information within the United States, it should not be accepted as a foregone conclusion that Congress has no role to play. By including the emergency authorization for electronic surveillance without a court order for fifteen days following a declaration of war, Congress seems clearly to have contemplated that FISA would continue to operate during war, although such conditions might necessitate amendments. Amendments to FISA in the USA PATRIOT Act and subsequent legislation further demonstrate Congress's willingness to make adjustments. The history of Congress's active involvement in regulating electronic surveillance within the United States leaves little room for arguing that Congress has accepted by acquiescence the NSA operations here at issue. To the extent that the Administration seems to base its interpretation of the AUMF and FISA on the assumption that a reading contrary to the one they rely upon would be an unconstitutional violation of separation-of-powers principles, it appears to regard the matter as deserving the highest level of deference under Youngstown's first category simply by virtue of the assumption that it would survive scrutiny under the third category. To conclude that Congress's enactments are unconstitutional and therefore could not reflect Congress's intent seems to beg the question. Court cases evaluating the legality of warrantless wiretaps for foreign intelligence purposes provide some support for the assertion that the President possesses inherent authority to conduct such surveillance. The Court of Review, the only appellate court to have addressed the issue since the passage of FISA, "took for granted" that the President has inherent authority to conduct foreign intelligence electronic surveillance under his Article II powers, stating that, "assuming that was so, FISA could not encroach on that authority." However, much of the other lower courts' discussions of inherent presidential authority occurred prior to the enactment of FISA, and no court has ruled on the question of Congress's authority to regulate the collection of foreign intelligence information. From the foregoing analysis, it appears unlikely that a court would hold that Congress has expressly or impliedly authorized the NSA electronic surveillance operations here under discussion, and it would likewise appear that, to the extent that those surveillances fall within the definition of "electronic surveillance" within the meaning of FISA or any activity regulated under Title III, Congress intended to cover the entire field with these statutes. To the extent that the NSA activity is not permitted by some reading of Title III or FISA, it may represent an exercise of presidential power at its lowest ebb, in which case exclusive presidential control is sustainable only by "disabling Congress from acting upon the subject." While courts have generally accepted that the President has the power to conduct domestic electronic surveillance within the United States inside the constraints of the Fourth Amendment, no court has held squarely that the Constitution disables the Congress from endeavoring to set limits on that power. To the contrary, the Supreme Court has stated that Congress does indeed have power to regulate domestic surveillance, and has not ruled on the extent to which Congress can act with respect to electronic surveillance to collect foreign intelligence information. Given such uncertainty, the Administration's legal justification, as presented in the summary analysis from the Office of Legislative Affairs, does not seem to be as well-grounded as the tenor of that letter suggests.

The Revelations in December 2005 that President Bush had authorized the National Security Agency (NSA) to collect signals intelligence from communications involving U.S. persons within the United States, without obtaining a warrant or court order, raised numerous questions regarding the President's authority to order warrantless electronic surveillance. President Bush stated that he believes his order to be fully supported by the Constitution and the laws of the United States, and Attorney General Gonzales clarified that the Administration based its authority both on inherent presidential powers and the joint resolution authorizing the use of "all necessary and appropriate force" to engage militarily those responsible for the terrorist attacks of September 11, 2001 ("AUMF"). Although the resolution does not expressly specify what it authorizes as "necessary and appropriate force," the Administration discerned the intent of Congress to provide the statutory authority necessary to take virtually any action reasonably calculated to prevent a terrorist attack, including by overriding at least some statutory prohibitions that contain exceptions for conduct that is "otherwise authorized by statute." Specifically, the Administration asserts that a part of the Foreign Intelligence Surveillance Act (FISA) that punishes those who conduct "electronic surveillance under color of law except as authorized by statute" does not bar the NSA surveillance at issue because the AUMF is just such a statute. On December 22, 2005, the Department of Justice Office of Legislative Affairs released a letter to certain members of the House and Senate intelligence committees setting forth in somewhat greater detail the Administration's position with regard to the legal authority supporting the NSA activities described by the President. This report lays out a general framework for analyzing the constitutional and statutory issues raised by the NSA electronic surveillance activity. It then outlines the legal framework regulating electronic surveillance by the government, explores ambiguities in those statutes that could provide exceptions for the NSA intelligence-gathering operation at issue, and addresses the arguments that the President possesses inherent authority to order the operations or that Congress has provided such authority. This report supersedes CRS memorandum product WD00002, Presidential Authority to Conduct Warrantless Electronic Surveillance to Gather Foreign Intelligence Information, by [author name scrubbed] and [author name scrubbed].

Introduction Hundreds of thousands of businesses and other entities provide supplies, equipment, and services to federal agencies each year through procurement contracts (contracts). Accurate identification of prospective and incumbent government contractors (or vendors) facilitates the federal government's procurement process, helping to ensure contractors are paid, supporting contract administration activities, enabling the identification of corporate families (e.g., a corporation and its subsidiaries), and, generally, contributing to the transparency of federal government procurement. To aid in accurately identifying the entities with which it does business, the federal government relies on a proprietary system, Dun & Bradstreet's (D&B's) Data Universal Numbering System (DUNS). Dun & Bradstreet assigns unique identification codes known as "DUNS numbers" to prospective federal government contractors. The federal government has used DUNS since at least the early 1990s to meet its needs for an identification system and related services. Whereas the government's continued use of DUNS was supported by the executive branch as recently as 2006, as documented in a Federal Register notice, the federal government has begun exploring alternatives to DUNS and DUNS numbers again. Congress and the executive branch share an interest in containing costs; acquiring, or possibly developing, a nonproprietary identification system; ensuring continued access to, if not outright ownership of, data contained in the identification system; and transparency. Notable legislative initiatives in this area have included passage of the Federal Funding Accountability and Transparency Act (FFATA; P.L. 109-282 ) and the Digital Accountability and Transparency Act (DATA Act; P.L. 113-101 ). The government's change in perspective is reflected in separate, though possibly coordinated, efforts by the General Services Administration (GSA), and the Office of Management and Budget (OMB) and the Department of the Treasury, to examine possible alternatives to DUNS. The Treasury Department-OMB effort is related, as discussed below, to implementation of the DATA Act. The following two sections, " Data Universal Numbering System " and " Commercial and Government Entity (CAGE) System and Codes ," provide basic information about these two systems, respectively. The final section discusses the federal government's reliance on DUNS, interest in and exploration of alternatives to DUNS, and government actions that possibly could pave the way for the adoption of an alternative system, or a hybrid system that includes DUNS. The CAGE system, which is an existing, federal government identification system, may be a candidate for either option. This report focuses on identification numbers for acquisition and acquisition-related purposes that government contractors, generally, are required to have. It does not address taxpayer identification numbers (TINs), which government contractors also are required to have and which are used by the Internal Revenue Service (IRS) in the administration of tax laws. This report also does not cover other types of recipients of federal money (e.g., grant award recipients) who are required to obtain DUNS numbers. Data Universal Numbering System Created by Dun & Bradstreet in 1963, DUNS is "a unique global business identification system." The system includes DUNS numbers, which are "nine-digit non-indicative numbering sequence[s] and [are] assigned at the lowest organizational level." As a non-indicative numbering sequence, a nine-digit DUNS number does not in and of itself have any meaning. The lowest organizational level means a "business location[] with a unique, separate and distinct operation." That is, each business location that is a unique, separate, and distinct operation is assigned its own DUNS number. However, some entities have the same, or similar, names. See Figure 1 for an illustrative list of companies and their respective DUNS numbers. A business retains its DUNS number throughout its lifecycle: DUNS numbers do not have an expiration date and D&B neither reissues nor reassigns DUNS numbers. Generally, prospective government contractors are required to register in the federal government's System for Award Management (SAM) prior to the award of a contract, and an entity must have a DUNS number in order to register in SAM. SAM is "the primary Government repository for prospective Federal awardee and Federal awardee information and the centralized Government system for certain contracting, grants, and other assistance-related process." A prospective government contractor may request a DUNS number through an online portal. A company or organization that is required by the federal government to obtain a DUNS number for the purpose of competing for a contract does not pay a fee for its DUNS number. D&B's system, in addition to providing the means for uniquely identifying contractor entities, may be used to "roll-up Government procurements to the ultimate parent organization to show the corporate family receiving U.S. obligations" and contains business-related information. Examples of the types of information contained in the Data Universal Numbering System include number of employees , sales volume, line of business, net worth amount, foreign ownership, liens, history of business, criminal activity indicator, business name change, legal structure, judgments, bankruptcy indicator, credit rating, and parent relationship. DUNS information and services used by the federal government include the names, addresses, and parental linkages of businesses and "logic, corporate research, and corporate business linkage maintenance." Commercial and Government Entity (CAGE) System and Codes The Department of Defense (DOD) created the CAGE system between 1945 and 1950; its original purpose was to catalog various items (e.g., part numbers, National Stock Number, and drawings). Subsequently, other purposes were added, such as using CAGE codes to identify vendors. The CAGE Branch of the Defense Logistics Agency (DLA), which is the only authorized source of these codes, assigns CAGE codes to entities located in the United States or its outlying areas. A CAGE code is a five-character alpha-numeric identifier that belongs to a nonproprietary system created by DOD. Similar to DUNS numbers, some contractors may have the same, or similar, names. See Figure 2 for an illustrative list of companies and their respective CAGE codes. DLA assigns CAGE codes "per legal entity at individual physical addresses (i.e., the same entity at the same physical address will not be assigned two or more CAGE codes)." There is no cost for obtaining a CAGE code. Brief Comparison of DUNS and the CAGE System Table 1 compares selected features of DUNS and the CAGE system. The Federal Government's Reliance on DUNS and Efforts to Explore Alternatives DUNS numbers, and the information associated with them, facilitate the smooth, efficient operation of the government's acquisition system. The related products and services that the government obtains from D&B are also integral to the functioning of various procurement processes and activities. (See Appendix A for brief descriptions of the software and data products the federal government purchases from D&B.) Using DUNS, the federal government is able, for example, to uniquely identify the entities that perform work for, or provide supplies or equipment to, agencies; verify contract awardees' information; and track the amount of funds obligated to corporate families. In addition to GSA, which is responsible for many of the federal government's acquisition systems that include or use DUNS numbers and which awards contracts to D&B for the use of DUNS, various federal agencies purchase a variety of D&B services. On June 29, 2010, GSA awarded a sole source contract, under the authority of FAR §6.302-1(a)(2), to Dun & Bradstreet for the use of its Data Universal Numbering System. The contract consists of a three-year base period and five one-year option periods. The effective date of the contract was June 30, 2010; the completion date for the base period was June 29, 2013; and the estimated ultimate completion date (if all five option periods are exercised) is June 29, 2018. The present value of the contract, including the base period and all option periods, if exercised by GSA, is $135,111,119.67. Concerns regarding the cost of using a proprietary service and related issues were publicized in a 2012 Government Accountability Office (GAO) report, which also examined possible alternatives to DUNS and anticipated challenges in replacing DUNS with a different identification system. (See below for a discussion of the GAO report.) GSA explains, in a special notice it posted on the government's Federal Business Opportunities website, why the federal government relies on DUNS numbers and D&B services. The Federal Government, GSA, and Integrated Acquisition Environment have a regulatory mandate to identify and report on corporate relationships and linkages using the DUNS Number as the Contractor Identification Number for Federal Contractors, as set forth in FAR 4.605(b). D&B is the only source that can provide the required identification and reporting services. The DUNS number is proprietary to and controlled by D&B and there is no other source for this information.... No other authoritative sources of corporate enterprises exist today to provide [the] product and services which are uniquely available from the D&B world base files. The logic, corporate research, and corporate business linkage maintenance are all critical services not licensed by D&B to third parties. In the same notice, GSA also describes the extent of the federal government's reliance on D&B services and products. The Government is fully leveraging [the] proprietary commercial product services uniquely offered by D&B to enhance data standards, quality, and reliability in such critical areas as contract award and management (back office Contract Writing Systems), advertising and delivery of solicitation and specifications data (Federal Business Opportunities and Federal Technical Documentation System), management and public reports (Federal Procurement Data System, Federal Funding and Accountability Transparency Act, American Recovery and Reinvestment Act (Recovery.gov and Federalreporting.gov) and USAspending.gov), debarred and suspended bidders (Excluded Parties List System), vendor submissions of subcontracting accomplishments (Electronic Subcontract Reporting System), past performance collection (Past Performance Information Retrieval System), for payment and invoicing (back office Financial Writing Systems and the Grants Community (Grants.Gov) and the Loans Community because the research has shown that D&B is uniquely positioned as the sole source to provide this capability. The written documentation for this procurement lists 7 software products and 14 data products that are required by GSA and that can be purchased only from D&B. These products enable the government to, for example, transfer files, integrate information residing on diverse systems using DUNS numbers, and verify a business's DUNS number and related information. A list of these products is available in Appendix A . GAO Examination of the Issue In its 2012 report that examined alternatives to using DUNS, GAO described several issues related to the government's reliance on the Data Universal Numbering System. GSA believes that, in effect, D&B has a monopoly, which stems from, at least in part, the regulatory requirement that companies and other entities seeking to do business with the federal government obtain a DUNS number. The lack of competition for an identification system has, according to GSA, led to higher costs. Dun & Bradstreet has placed proprietary restrictions on GSA's use of DUNS numbers, which limit "how and where Dun & Bradstreet data can be used." GSA's contract with Dun & Bradstreet contains other restrictions "that could cause challenges for the government if it were to change to an alternative numbering system." GSA has indicated that its contract with D&B "specifies that the government would have to delete certain Dun & Bradstreet provided data [e.g., business name and address] from its databases at the end of the GSA contract." As reported by GAO, GSA initially considered four options: (1) continue to use DUNS and related services; (2) if acquisition planning identified potential competitors to D&B, conduct a procurement to select a contractor; (3) "[c]hange to a non-proprietary solution"; or (4) switch to government-owned system coupled with vendor-provided data services. Eventually, GSA winnowed its options: continue to use D&B's DUNS numbers, or replace it with a government-owned numbering system. However, GAO also reported that GSA had begun another effort to identify options and was expected to issue a report by September 2012. The status and content of this report is not known, as GSA "never intended [it] to be a public document." Anticipated benefits from replacing DUNS with a government-owned, nonproprietary system include "long-term cost savings, unlimited data rights, and greater transparency." Switching from one set of identification codes to another, however, most likely would trigger a series of changes. Anticipated changes, as described by GAO, could include the following: "[C]hanging to a government-owned number would require GSA to establish a registration process and add the ability to provide corporate linkage information and add data verification and monitoring capabilities." "To accommodate a new number, GSA and other agencies would have to change the names of data fields and possibly add new data fields or modify the format of the existing DUNS field in their data systems. For example, DUNS numbers are numeric whereas SAM numbers are alpha-numeric and therefore may not be compatible with current DUNS data fields." "Changing numbering systems could require agencies to delete DUNS information, including contractor name and address, from their data systems and replace it with information from the new numbering system. This process could be complicated by the data restrictions in GSA's contract with Dun & Bradstreet." "GSA would have to modify the FAR to remove the DUNS requirement and agencies would have to update their FAR supplements. Agencies would also have to update acquisition-related policies, procedures, and documents that refer to DUNS numbers." Potentially compounding the challenges involved in replacing DUNS with another unique identification system is the extent to which the federal government relies on D&B's products. "[A]pproximately 80 data systems [within the federal government contain] DUNS information," according to GSA, and "would therefore have to be modified in the event of a transition to a new numbering system." The DATA Act and Unique Identifiers Enacted on May 9, 2014, the DATA Act gave the Director of OMB and the Secretary of the Treasury responsibility for operating the USAspending.gov website, including the development, or adoption, of data elements. The DATA Act mentions "unique identifiers … for entities receiving Federal awards [including contract awards] that can be consistently applied Government-wide." The Department of the Treasury and OMB have named this data element the awardee/recipient unique identifier . The discussion of this data element by the Treasury and OMB (1) noted that the federal government continues to use the Data Universal Numbering System; (2) described relevant regulatory changes (i.e., the removal of references to DUNS in Title 2 of the Code of Federal Regulations , which involves grants, and the addition of provisions regarding an existing government-owned nonproprietary identification system to the FAR); (3) alluded to possible challenges if the government opts to implement a new identification system; and (4) confirmed that the federal government is exploring alternatives to DUNS. In their discussion of the awardee/recipient unique identifier data element, which is provided below, the Department of the Treasury and OMB describe the ongoing effort to identify and select an identification system that will meet the needs of the federal government. Going forward, the Federal government will establish a transparent process for exploring potential alternatives to existing entity identifiers. OMB and Treasury, in collaboration with the General Services Administration and the Award Committee for E-Government will establish a process for considering options, including soliciting information about viable alternatives from and reaching out about nonproprietary alternatives to all sectors, including private companies, nonprofits, and Federal government providers. This process will result in an analysis of alternatives for the unique identification of entities working with the Federal government while maintaining the statutory and regulatory integrity protections for the needs of the various awarding communities (loans, financial assistance, procurement, etc.) as well as transparency communities. The analysis of alternatives will include consideration of costs, implementation considerations, and protections for Federal taxpayers. The analysis of alternatives is anticipated to be complete in FY2017. Individual Agencies That Use Dun & Bradstreet's Products and Services Whereas DUNS numbers and certain D&B-provided services are necessary for the functioning of federal acquisition processes, D&B also provides products and services to individual federal agencies that serve their (nonacquisition) needs. Company literature states that D&B has worked with the Federal Bureau of Investigation (FBI) for over 20 years and has provided services to the Defense Security Service (DSS), which is a component of the DOD. D&B notes that "[n]early all three letter agencies, multiple intelligence task forces, and National Labs use D&B Solutions to monitor foreign and domestic businesses and supply chains." For example, D&B's products may aid in (1) tracking "the activities of all businesses and commercial organizations related to the nuclear, chemical and biological industries"; (2) "navigat[ing] the enormously complex chains of ownership and association used by international businesses and trade organizations that finance terrorism or other activities that are harmful to the U.S."; or (3) "unveiling potential vulnerabilities and threats posed to the global supply chain or within the U.S. government national security apparatus." During the period FY2011-FY2015, 39 agencies submitted data to FPDS that indicate they were doing business with Dun & Bradstreet. The list of agencies is in the following table. The effect, if any, on other agencies if GSA were to opt for an alternative to DUNS is unknown. Changes to the FAR As noted above, one of the barriers to changing to a new system was text in the FAR that referenced DUNS and DUNS numbers. A final rule, which was issued on September 30, 2016, revised the FAR by removing references to DUNS and DUNS numbers and inserting the term unique entity identifier . A unique entity identifier is "a number or other identifier used to identify a specific commercial, nonprofit, or government entity." The rationale for this change, which was provided in the preface to the proposed rule, is as follows: [E]limination of regulatory references to a proprietary entity identifier will provide opportunities for future competition that can reduce costs to taxpayers. The current requirement limits competition by using a proprietary number and organization to meet the identification need as well as the need for other business information associated with that number. GSA Explores Alternatives In February 2017, GSA posted a request for information (RFI) for "government-wide entity identification and validation services" on the federal government's Federal Business Opportunities (FedBizOpps) website. The RFI stated that the government "is exploring all viable means of continuing to meet its ongoing need for entity identification and validation services after the ... expiration [of its contract with Dun & Bradstreet in June 2018]." GSA noted, in a May 2017 update, that it had received "an impressive number and variety of responses" from industry and other stakeholders and that it had begun reviewing the responses "to determine the viability of proposed alternatives." GSA's tentative schedule is to issue a solicitation for identity identification and validation services in summer 2017 and to award a contract prior to June 2018. New Requirement to Use CAGE Codes Although DOD, and perhaps other agencies, have used CAGE codes for some time, it was not until 2014 that an executive branch-wide requirement for prospective contractors to obtain a CAGE code was established. Effective November 1, 2014, an offeror for a procurement with a value greater than the micro-purchase threshold is required to have a CAGE code prior to contract award when "there is a requirement to be registered in SAM or a requirement to have a DUNS Number in the solicitation." For entities that are required to register in SAM but do not already have a CAGE code, one will be assigned when they register in SAM. An entity that is required to be registered in SAM, or to have a DUNS number, must also provide, if applicable, the names and CAGE codes of its immediate owner and its highest-level owner in the applicable solicitation provision (i.e., FAR §52.204-17). The immediate owner is "an entity, other than the offeror, that has direct control of the offeror. Indicators of control include, but are not limited to, one or more of the following: Ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees." The highest-level owner "is the entity that owns or controls an immediate owner of the offeror, or that owns or controls one or more entities that control an immediate owner of the offeror. No entity owns or exercises control of the highest level owner." The rule that was adopted in May 2014 and its preface include language that explains how CAGE codes might be used, describes their anticipated utility, and compares the CAGE system with DUNS. The policy statement for CAGE codes, which appears in the FAR, identifies how this system could be used to facilitate the procurement process. CAGE codes may be used to "Exchange data with another contracting activity, including contract administration activities and contract payment activities"; "Exchange data with another system that requires the unique identification of a contractor entity"; "Identify when offerors are owned or controlled by another entity." The preface notes that the use of CAGE codes may facilitate transparency and "support successful implementation of business tools that provide insight into ... [f]ederal spending patterns across corporations ... [c]ontractor personnel outside the United States" and traceability in supply chains and performance issues. Also included in the preface is language that distinguishes between DUNS and the CAGE system. The following text was provided in response to a comment on the proposed rule. There is some corporate linkage in SAM provided by the commercial entity, Dun & Bradstreet (D&B); however, the methodology by which D&B establishes ownership is proprietary and does not necessarily conform to the definitions in this case. The final rule instead establishes the use of a Government-managed unique identifier governed by established international rules (under NATO). Additionally, the rule provides the contractor the opportunity to provide what it believes is the correct information, rather than relying on information from an outside commercial source. Appendix A. Dun & Bradstreet Subscription Services Purchased by GSA Citing FAR §6.302-1(a)(2), GSA awarded a sole source contract to Dun & Bradstreet on June 29, 2010, for the use of its Data Universal Numbering System. As required by FAR §6.303, GSA provided written justification and approval (J&A) for using noncompetitive procedures for this procurement. GSA listed the D&B software and data products required to meet its needs in the J&A. Software 1. " Data Integration Toolkit (DITK) : The Data Integration Toolkit will allow the Government the ability for real-time access to integrate D&B global data into the IAE [GSA's Integrated Award Environment] applications and solutions described in this contract and allow the Government to build an interface with D&B, deliver data via the Internet." 2. " Data Integration Batch (DIB) : The Data Integration Batch will provide an automated infrastructure that electronically transmits files of customer records or transactions for correction and updating, and for matching and updating with the D&B Database. The same infrastructure is used to return matching results and appended information to the customer." 3. " Integration Manager (IM ): The Integration Manager is the onsite software system that will be used to integrate government business customer information from diverse systems using the D-U-N-S Number® and is designed to allow the Government the ability to harmonize its data across many systems." 4. " Toolkit Address Standardization (TAS ): The Data Integration Toolkit and Toolkit Address Standardization (TAS) Module will be used to accomplish the task of standardizing BV [business verification] data packet before presenting to a vendor during CCR registration." 5. " ValiCert : ValiCert Secure Transport (ST) Client is the secure download and upload manager to securely transport data within the DIB across systems." 6. " DITK Monitoring Module : The Monitoring Module will be used as an add-on function to the Data Integration Toolkit, to enable the monitoring of changes to the data within monitoring data packet products automatically." 7. " Bulk Data Exchange (BDE ): The Bulk Data Exchange will use file transfer protocol to transfer files for DIB processing to and from its Bulk Data Exchange (BDE) system." Data Products 8. " Business Verification (BV) Packet: D&B's Data packet used to verify a DUNS Number and the associated business information about a business." 9. " BV Monitoring: Monitoring and notification of DUNS Numbers that have been retrieved or registered using the BV packet." 10. " WorldBase Marketing Plus with Linkage Packet: The Corporate Linkage data packet used to retrieve corporate linkage information as well as address information of headquarters, Domestic Ultimate Parent, and Global Ultimate Parent Linkage data." 11. " Family Tree Enhanced Linkage Packet: The Corporate Linkage packet that is utilized to create the linkage monitoring function in CCR." 12. " US Corporate Linkage Monitoring: Monitoring and notification of DUNS Numbers that have been retrieved or registered using the Family Tree Enhanced Linkage Packet." 13. " CCR Corporate Linkage File : Upward linkage file that is provided for all records that have been registered in CCR." 14. " Prior DUNS file : File of prior DUNS Numbers for records in CCR that (may have) had a prior DUNS Number." 15. " Executive Branch File: File of all linked locations of the Executive Branch, and their DUNS Numbers to be used in the FedReg [Federal Agency Registration] system." 16. " Legislative/ Judicial File: File of all legislative or judicial locations that have been registered in the FedReg System." 17. " IM Reference File: Append file used by IM to perform matching for the Government." 18. " IM Append File : Append file in IM to return additional data beyond matching to a DUNS Number." 19. " IM Linkage Webservice: Allows parent linkage data to be retrieved via the IM environment through a webservice call." 20. " American Recovery and Reinvestment Act (ARRA ) Reference F ile: File which resides behind federalreporting.gov and enables companies, who are not already registered in CCR, to look-up, retrieve, and register their DUNS Number at federalreporting.gov." 21. " ARRA Batch & Exception File: Batch file process for entities that are new to the D&B database that enables their data to be pulled from the most recent D&B dataset and provided to federalreporting.gov for registration purposes." Appendix B. Generic Entity Identifiers Under certain circumstances, as specified in the Federal Acquisition Regulation , a generic entity identifier may be used for the purpose of reporting contract award data to the Federal Procurement Data System. The various circumstances under which a generic entity identifier may be authorized are as follows: Contracts valued at $30,000 or less awarded to a contractor that is A student; "A dependent of either a veteran, foreign service officer, or military member assigned outside the United States and its outlying areas (as defined in [FAR §] 2.101)"; or "Located outside the United States and its outlying areas and the contractor does not otherwise have a unique entity identifier." Contracts valued at more than $30,000 that are awarded to "individuals located outside the United States and its outlying areas for work to be performed outside the United States and its outlying areas." "[W]hen specific public identification of the contracted party could endanger the mission, contractor, or recipients of the acquired goods or services. The contracting officer must include a written determination in the contract file of a decision applicable to authority under [FAR §4.605(c)(2)(iii)]." The General Services Administration's Integrated Award Environment (IAE) program office maintains and assigns authorized generic entity identifiers. The use of a generic entity identifier helps to mask the identity of a particular contractor while ensuring the accounting of the obligations associated with the contractor. On the other hand, the use of generic identifiers limits transparency and precludes a contractor from being able to "access and perform its own reporting requirements ..., because the contract is not associated with the contractor in Federal-wide processes. As such, the use of a generic DUNS number [generic entity identifier] should be limited to those actions where it is truly necessary." A CAGE code is not required for acquisitions that involve a generic DUNS number (or a generic entity identifier) and that are funded by some agency other than DOD or the National Aeronautics and Space Administration.

An essential element of the federal government's acquisition system is the capability to identify the businesses, and other types of entities, that do work for the government. Accurate identification of potential contractors and incumbent contractors facilitates a host of procurement processes while contributing to the transparency of federal government procurement. The federal government uses a proprietary system, Dun & Bradstreet's (D&B's) Data Universal Numbering System (DUNS), to uniquely identify the entities with which it does business. At no cost to the applicant, D&B assigns a DUNS number—a nine-digit unique identification code—to prospective government contractors. (Businesses that are not would-be government contractors also may apply for a DUNS number.) The federal government's use of DUNS, however, is not limited to the identification numbers. D&B provides, pursuant to its contract with the General Services Administration (GSA), 7 types of software products and 14 data products that enable the government to use DUNS for a variety of acquisition-related functions, such as paying contractors. Furthermore, approximately 80 data systems within the federal government contain DUNS information. Congress may have concerns regarding the continued use of DUNS numbers and has expressed interest in exploring other options. At the request of a Senate subcommittee, the Government Accountability Office (GAO) examined the costs and data restrictions involved with using a proprietary identification system and studied alternatives for identification numbers for government contractors. The implementation of the Digital Accountability and Transparency Act (DATA Act; P.L. 113-101) is accompanied by similar, significant interest within Congress—and within the agencies charged with implementing the act—for exploring options for a nonproprietary contractor identification system. One or more possible options might involve using an existing, nonproprietary identification system created and maintained by the federal government: the commercial and government entity (CAGE) code system. CAGE codes could be used as a stand-alone system, or incorporated into a hybrid system (e.g., combine CAGE codes with vendor-provided business products and services). The CAGE Branch of the Defense Logistics Agency (DLA) assigns the five-character alpha-numeric identifiers to entities located in the United States and outlying areas. Regulatory changes in 2014 and 2016 potentially pave the way for the government to adopt a new system. First, in 2014, a rule was adopted in the Federal Acquisition Regulation (FAR) requiring prospective contractors to obtain CAGE codes. This rule also requires the contractor to provide to the government, if applicable, the name and CAGE codes of its immediate owner and its highest-level owner. Second, a final rule issued in 2016 removed all references to the Data Universal Numbering System and DUNS numbers from the FAR and inserted the terms unique entity identifier. The preface to the proposed rule noted that the government is not ready to eliminate DUNS numbers at this time, but that removing references to a proprietary system and identifier "will provide opportunities for future competition that can reduce costs to taxpayers." In early 2017, GSA initiated a process for exploring alternatives to DUNS by posting a request for information (RFI) for entity identification and validation services on the Federal Business Opportunities (FedBizOpps) website. GSA's tentative schedule is to issue a solicitation in summer 2017 and award a contract prior to the expiration of its contract with Dun & Bradstreet, which will occur in June 2018.

Background The U.S. Generalized System of Preferences (GSP) was established by the Trade Act of 1974 (19 U.S.C. 2461, et seq.) and now provides preferential duty-free entry of up to 5,000 agricultural and non-agricultural products for 120 designated beneficiary countries and territories. Agricultural products under the program totaled $2.6 billion in 2015, accounting for 15% of the total value of annual GSP imports. Some in Congress have called for changes to the program that could limit or curtail benefits to certain countries. The program was most recently extended until December 31, 2017 (Title II of P.L. 114-27 ). Expiration of the program in 2017 means that GSP renewal could be a legislative issue in the 115 th Congress. In recent years, GSP has been reauthorized through a series of short-term extensions. GSP Agricultural Imports In 2015, U.S. imports under GSP totaled $17.7 billion, accounting for roughly 1% of all commodity imports. Leading U.S. imports under the program are manufactured products and parts, chemicals, plastics, minerals, and forestry products. Agricultural products accounted for 15% of all imports under GSP, totaling $2.6 billion in 2015. Compared to 2010, the value of agricultural imports under the program has nearly doubled. Imports under the program account for about 2% of total U.S. agricultural imports. Table 1 shows the leading agricultural products (ranked by value) imported into the United States under the program. Leading agricultural imports (based on value) include processed foods and food processing inputs; beverages and drinking waters; processed and fresh fruits and vegetables; sugar and sugar confectionery; olive oil; and miscellaneous food preparations and inputs for further processing. More than one-third of agricultural imports under GSP (based on value) include food processing inputs, such as miscellaneous processed foods, processed oils and fats, fruit and vegetable preparations, and ag-based chemicals and byproducts ( Table 1 ). About 15% of GSP agricultural imports consist of sugar and sugar-based products, and cocoa and cocoa-containing products. Mineral waters and other types of beverages account for about 12%, while olive oil accounts for about 8% of the value of GSP agricultural imports. Fresh fruits and vegetables account for another 11%, with roughly half of that consisting of bananas and other tropical produce imports. Most GSP agricultural imports are supplied by beneficiary countries that have been identified for possible graduation from the program. In 2015, five beneficiary countries ranked by import value—Thailand, Brazil, India, Indonesia, and Turkey—accounted for roughly two-thirds of the value of agricultural imports under the GSP program (see Table 2 ). Thailand and Brazil alone accounted for 40% of agricultural imports under the program. Legislative and Administrative Changes GSP was most recently extended until December 31, 2017 (Title II of P.L. 114-27 ). Over the past decade, GSP renewal has been somewhat controversial. Some in Congress have continued to call for changes to the program, including tightening the program's requirements on products that can be imported under the program and limiting GSP benefits for certain eligible countries. Leaders of the House Ways and Means Committee and the Senate Finance Committee have continued to express an interest in evaluating the effectiveness of U.S. trade preference programs, including GSP, and broader reform of these programs might be possible. Both committees have conducted a series of oversight hearings in recent years, focused on determining the effectiveness of U.S. trade preference programs and discussing ways to reform them. Others have continued to call for meaningful reforms to GSP. The Government Accountability Office (GAO) has published a series of reports highlighting the perceived benefits and shortcomings of U.S. preference programs, including GSP. Amendments to GSP followed extensive debate about the program during the 109 th Congress. Specifically, some in Congress questioned the inclusion of certain more advanced "beneficiary developing countries" (BDCs) under GSP and also commented that certain countries had contributed to the ongoing impasse in multilateral trade talks in the WTO Doha Development Agenda. In response to these concerns, both Congress and the previous Administrations have made changes to the program regarding product coverage (e.g., the type of products that can be imported under the program) and country eligibility (e.g., limiting GSP benefits to certain countries). Changes Regarding Product Coverage Congress enacted a number of amendments to GSP as part of its annual review in 2006 by tightening the program's rules on "competitive need limits" (CNL) waivers that allow imports from beneficiary countries in excess of GSP statutory thresholds for some products ( P.L. 109-432 ). CNLs are quantitative ceilings on GSP benefits for a particular product from a particular BDC. CNL waivers allow for certain products to be imported from a country duty-free under GSP despite the statutory import thresholds. Periodically USTR has revoked a country's CNL waiver, as part of the agency's program review. For example, as part of USTR's 2006 review, Côte d'Ivoire lost its CNL waivers for fresh or dried shelled kola nuts (HTS 0802.90.94). In 2006, the statute was amended to allow for the revocation of any waiver that has been in effect for at least five years, if a GSP eligible product from a specific country has an annual trade level in the previous calendar year that exceeds 150% of the annual dollar value limit or exceeds 75% of all U.S. imports. In July 2015, USTR granted a CNL waiver for coconut products (HTS 2008.19.15) from Thailand. USTR further granted CNL waivers, in July 2016, for the following products: (1) certain pitted dates (HTS 0804.10.60) from Tunisia; (2) certain inactive yeasts (HTS 2102.20.60) from Brazil; and (3) certain nonalcoholic beverages (HTS 2202.90.90) from Thailand. Other existing waivers include sugar and preserved bananas (Philippines); sugar, carnations, figs, yams, and gelatin derivatives (Colombia); and animal hides (South Africa and Thailand). A listing of all current CNL waivers, including for agricultural products under GSP, is available in USTR's GSP Guidebook . In addition, the most recent GSP extension in 2015 broadly designated five new cotton products as eligible for GSP status (for least-developed beneficiary developing countries only), along with some other non-agricultural products ( Table 3 ). Some African cotton-producing nations, such as Benin, Burkino Faso, Chad, and Mali, are among the current list of eligible countries. To date, no cotton imports have been reported under these new import categories. Changes Regarding Country Eligibility In early 2012, the Obama Administration implemented a number of actions affecting certain countries' eligibility under the GSP program. Included was the suspension of GSP eligibility of Argentina. Argentina was among the program's top beneficiary countries, accounting for more than 10% of all agricultural imports under the GSP (ranked by import value). The President suspended GSP benefits for Argentina because "it has not acted in good faith in enforcing arbitral awards in favor of United States citizens or a corporation, partnership, or association that is 50 percent or more beneficially owned by United States citizens." (In October 2016, the Government of Argentina requested designation as a beneficiary of the GSP, which is under review by USTR.) In 2012, Gibraltar and the Turks and Caicos were graduated from the program after they were determined to have become "high income" countries, while the Republic of South Sudan and Senegal were designated as "least-developed beneficiary developing countries" (LDBDCs), becoming eligible under GSP. Other countries have since been suspended from GSP. The Administration announced the suspension of GSP benefits for Bangladesh in June 2013. To date, USTR has not reinstated Bangladesh's GSP status. In 2014, following Russia's invasion of Crimea, many in Congress became critical of Russia's status as a GSP beneficiary. Russia's GSP status was officially terminated in October 2014. Under GSP, Russia had exported nearly $20 million of agricultural products in 2012, duty-free, including grain-based products, cocoa preparations, sugar and molasses-based confectionary, tree nuts, and other products. In September 2015, President Obama announced, among other things, that Seychelles, Uruguay, and Venezuela had become "high income" countries and were no longer eligible to receive GSP benefits, effective January 1, 2017. In September 2016, USTR reinstated Burma's (Myanmar's) eligibility for GSP benefits as an LDBDC, effective November 13, 2016. For more information and for a discussion of possible legislative options, see CRS Report RL33663, Generalized System of Preferences: Overview and Issues for Congress . Implications of Possible Program Changes Changes made to GSP in the past decade have affected the overall distribution and volume of both agricultural and non-agricultural product imports under the program. The suspension from GSP of some countries, such as Argentina, likely has had an impact on agricultural trade under the program. Argentina had been among the main beneficiary countries under GSP and in earlier years accounted for more than one-tenth of all agricultural imports under GSP (ranked by import value). In 2012, Argentina had exported $116 million of agricultural products under the program, accounting for nearly 5% of the total value of GSP agricultural imports. Products imported from Argentina under GSP included casein, olive oil, prepared meats, gelatin derivatives, cheese and curd, sugar confectionery, wine, and other food products. Other countries whose GSP beneficiary status has been suspended or who have graduated out of the program had not been major suppliers of U.S. agricultural imports under the program. Aside from changes made to the list of eligible GSP countries, other statutory changes to GSP tightening rules for CNL waivers may not have greatly affected U.S. agricultural imports under the program. Historically, there have been few CNL waivers for agricultural products imported duty-free under GSP. Other types of program changes, however, could affect U.S. agricultural imports under the program, including additional limits on CNL waivers from certain countries or graduation of some beneficiary countries. Some African cotton-producing nations are now eligible to supply certain cotton products to the United States, but data are not yet available to determine whether imports will consequently increase under these new categories. Although USTR has continued to conduct annual reviews of the program, it has not conducted a broad review that has solicited extensive stakeholder comment. However, previous comments submitted to USTR as part of its 2006 review from U.S. agricultural industry groups indicate that opinions vary among U.S. agricultural groups regarding the program. For example, the American Farm Bureau Federation (AFBF) expressed its general opposition to the GSP program, stating that products imported duty-free under the program compete with U.S.-produced goods without granting a commensurate level of opportunity for U.S. producers in foreign markets. AFBF further supported withdrawal of CNL waivers for the Philippines, Argentina, and Colombia. The Grocery Manufacturers Association (GMA) expressed support for the current GSP program and identified certain agricultural products of importance to GMA under the program, including sugar confections, spices, and certain processed foods and inputs from Brazil, India, and Argentina. GMA's position was generally supported by comments from the American Spice Trade Association, the National Confectioners Association, and the Chocolate Manufacturers Association. GMA has previously supported congressional efforts to extend GSP. What remains unclear is whether duty-free access for most agricultural imports under the GSP greatly influences a country's willingness to export these products to the United States. In most cases, costs associated with import tariffs are borne by the importer. These costs may be passed on to the BDCs in terms of lower import prices. However, import tariffs to the United States for most of these products tend to be low. As calculated by CRS, ad valorem equivalent tariffs range from 3% to 4% for sugar, 2% to 10% for cocoa-containing products, 5% to 12% for confectionery, 1% to 2% for most processed meats, about 2% for olive oil, less than 1% for mineral water, and about 5% for agriculture-based organic chemicals. In general, any additional costs that might be incurred by the BDCs as a result of the proposed changes could be more than offset by the generally higher U.S. prices for most products compared to prices in other world markets. Nevertheless, the imposition of even relatively low import tariffs could represent an increase in input costs to some U.S. food processors and industrial users. These costs could be passed on to consumers through higher prices for these and other finished agricultural or manufactured products. As shown in Table 1 , most GSP agricultural imports are intermediate goods and inputs, such as raw sugar, miscellaneous processed foods, preparations, and byproducts, and agriculture-based organic chemicals.

The Generalized System of Preferences (GSP) provides duty-free tariff treatment for certain products from designated developing countries. Agricultural imports under GSP totaled $2.6 billion in 2015, nearly 15% of the value of all U.S. GSP imports. Leading agricultural imports (based on value) include processed foods and food processing inputs; beverages and drinking waters; processed and fresh fruits and vegetables; sugar and sugar confectionery; olive oil; and miscellaneous food preparations and inputs for further processing. The majority of these imports are from Thailand, Brazil, India, Indonesia, and Turkey, which combined account for roughly two-thirds of total agricultural GSP imports. GSP was most recently extended until December 31, 2017 (Title II of P.L. 114-27). Expiration of the program in 2017 means that GSP renewal could be a legislative issue in the 115th Congress. Additional background information on such legislation is available in CRS Report RL33663, Generalized System of Preferences: Overview and Issues for Congress. Over the past decade, GSP renewal has been somewhat controversial. Some in Congress have continued to call for changes to the program. Both Congress and the previous Administrations have made changes to the program regarding product coverage (e.g., the type of products that can be imported under the program) and country eligibility (e.g., limiting GSP benefits to certain countries). Both Congress and the previous Administrations have tightened and/or expanded the program's requirements on imports under certain circumstances. In recent years, a number of countries have had their GSP status revoked, including Argentina and Russia, among others. In September 2015, President Obama announced, among other things, that Seychelles, Uruguay, and Venezuela had become "high income" countries and were no longer eligible to receive GSP benefits, effective January 1, 2017. Also, as part of the most recent GSP extension, Congress designated a few new product categories as eligible for GSP status, including some cotton products (for least-developed beneficiaries only) and other non-agricultural products. Congressional leaders have continued to express an interest in evaluating the effectiveness of U.S. trade preference programs, including GSP, and broader reform of these programs might be possible. Opinion within the U.S. agriculture industry is mixed, reflecting both support for and opposition to the current program.

Introduction About 1.7 million children in the United States have parents who are currently incarcerated and more than 10 million U.S. children are separated from one of their parents during a portion of their childhood because of the parent's incarceration. According to the Bureau of Justice Statistics, of the 1.5 million inmates held in the nation's prisons (federal and state) in mid-2007, approximately 809,800 of them (53%) were parents of minor children. Of the estimated 700,000 persons who are released from prison each year, about 400,000 of them are fathers and mothers. For the last 30 years, states have locked up more persons (many for longer periods of time) and have built more prisons to hold them. Now many states faced with reduced resources and huge prison costs are reevaluating their prison policies and practices. The current economic crisis together with overcrowded prisons and state budget shortfalls may lead to thousands of parents convicted of nonviolent offenses (e.g., persons with drug offenses, burglary, check fraud, or theft convictions) getting out of prison months (in some cases, a year or more) earlier than they were sentenced. How former inmates reconnect to their families impacts not only the children involved but society at large and is of great interest to Congress and the nation. More now than in the past, corrections institutions are acknowledging that most of their population will eventually be released, and probably sooner than the maximum time allowed by their sentence. Thus, they are moving toward a position that will allow them to effectively help inmates successfully transition back into local communities. Successful re-entry means lower recidivism and thereby reduced costs for penal institutions. It also means safer communities. A broad array of research indicates that the two most important factors in successful re-entry are employment and a healthy connection to one's family. The Child Support Enforcement (CSE) program is a federal-state program whose mission is to enhance the well-being of children by helping custodial parents and children obtain financial support from the noncustodial parents, including those in prison or who were formerly in prison. Child support payments enable parents who do not live with their children to fulfill their financial responsibility to their children by contributing to the payment of childrearing costs. There is a growing consensus that the CSE program is one of the financial keys to helping families remain self-sufficient. According to the most recently available data, on average, child support constitutes about 17% of family income for households who receive it. Among poor households who receive it, child support constitutes about 30% of family income. Parents who make regular child support payments are more likely than those who do not to have better family relationships. Research indicates that positive family relationships increase family stability and can help reduce recidivism. The intersection of the mission of state and federal correction facilities (i.e., successful re-entry of former prisoners into local communities) and the mission of the CSE program (i.e., consistent payment of child support obligations) provides both systems with an opportunity to marshal their efforts in a way that results in positive outcomes for children. Both Congress and the Obama Administration are examining federal programs in an effort to reduce waste in the federal budget. Although programs are often evaluated in isolation, the likelihood of reduced federal and state funding may promote more innovative thinking and collaboration among agencies involved in administering the criminal justice system and CSE program. This report examines the CSE program within the context of large numbers of former inmates re-entering communities. It provides a brief review of the CSE program and data related to parents who are in state or federal prisons. Next, it analyzes several issues that relate to the payment of child support by incarcerated or formerly incarcerated parents. Then it presents policy options that address the problem of nonpayment of child support. For example, it discusses ways in which the CSE program can help ex-offenders who are parents reconnect with their children and communities. It also suggests strategies that may lead to both lower recidivism and more parents making child support payments. Background This report focuses on the CSE program to explore ways to deal with nonpayment of child support by noncustodial parents who are or were in prison. As higher numbers of inmates are released, the CSE program will face more pressure to perform better in the area of increasing child support collections and reducing child support debt. If it is successful, a positive consequence may be fewer parents returning to prison. It is thought that even under current economic conditions, a positive family life will encourage formerly incarcerated noncustodial parents to keep looking for legitimate employment and to steadfastly maintain law-abiding behaviors. This section provides a brief overview of the CSE program. It also presents information and data related to noncustodial parents who are incarcerated or who were formerly incarcerated. The Child Support Enforcement (CSE) Program The CSE program was enacted in 1975 as a federal-state program (Title IV-D of the Social Security Act) to help strengthen families by securing financial support for children from their noncustodial parent on a consistent and continuing basis and by helping some families to remain self-sufficient and off public assistance. The CSE program provides seven major services on behalf of children: (1) parent location, (2) paternity establishment, (3) establishment of child support orders, (4) review and modification of child support orders, (5) collection of child support payments, (6) distribution of child support payments, and (7) establishment and enforcement of medical support. The CSE program serves both families that receive Temporary Assistance for Needy Families (TANF) benefits and those who do not. All 50 states and four jurisdictions (the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands) operate CSE programs. The CSE program is administered by the federal Office of Child Support Enforcement (OCSE) which is in the Administration on Children and Families (ACF) within the Department of Health and Human Services (HHS). Most child support collections on behalf of families receiving TANF benefits are used to reimburse state and federal governments for TANF payments made to the family. Child support collected on behalf of nonwelfare families goes to the family, usually through the state disbursement unit. The federal government and the states share program costs at the rate of 66% and 34%, respectively. The federal government also pays states an incentive payment to encourage them to operate effective CSE programs. Federal law requires states to reinvest CSE incentive payments back into the CSE program or related activities. In FY2007, the CSE program collected $24.9 billion in child support payments from noncustodial parents and served nearly 15.8 million child support cases. On average, the program collected $4.73 in child support payments for each $1 spent on the program. In that year, CSE expenditures amounted to nearly $5.6 billion. Although there is a general consensus that the CSE program is performing well, in FY2007, the CSE program only made collections for about 55% of its caseload and collected only 19% of child support obligations for which it had responsibility. Part of the reason for these low performance figures is that the CSE program cannot enforce a child support obligation until one is formally established either through an administrative process (via the state CSE system), a judicial process (via the state court system), or a combination of the two (i.e., via a quasi-judicial system). Moreover, a child support order can only be established if the issue of paternity has been settled. In FY2006, approximately 5 million of the 17 million children in the CSE program (i.e., 29%) had not been issued child support orders on their behalf. Another reason for the poor performance figures is that many of those who owe child support have low incomes. A 2007 Urban Institute survey of three states—Florida, Illinois, and Pennsylvania—indicated that " Across these three states, the average monthly earnings of non-custodial parents were only $23 higher than the average monthly earnings of custodial parents. Employed non-custodial parents in Illinois had the highest monthly earnings at $2,765 per month, and those in Pennsylvania had the lowest, at $1,297 per month. " Although there are no recent data that provide a good estimate of how many low-income parents do not pay child support because they are financially unable to pay, most policymakers agree that the number is significant. Incarcerated Parents and Child Support Obligations According to the Bureau of Justice Statistics, in mid-2007, about 53% of 1.5 million U.S. prisoners held in the nation's prisons were parents of minor children. (See Figure 1 .) These parents (52% of state inmates and 63% of federal inmates) reported having 1.7 million minor children. There are no national data that differentiate inmates from other noncustodial parents in terms of percentage with child support orders, average monthly amount of child support owed, average amount paid, and amount of arrearages (i.e., past-due payments) owed, but it is widely held that inmates and former inmates pay the lowest amount of child support. Moreover, there is some anecdotal information that indicates that child support arrearages of inmates and former inmates are very high. According to one study, about 25% of inmates have open child support cases. Incarcerated noncustodial parents generally owe between $225 to $313 per month in child support; and on average they enter prison owing about $10,000 in child support arrearages and leave prison owing more then $23,000 in arrearage payments. Issues Given the high cost of state and federal prison systems and the high recidivism rates, it is not surprising that policymakers at all levels of government are interested in promoting policies and strategies that help former inmates successfully reunite with their children and families and effectively reintegrate into their communities. Research suggests that family support and employment are the two most important predictors of an ex-offender's successful re-entry into his or her community. During this time of reduced resources at both the state and national level, policymakers and program administrators are interested in ensuring that programs are effective and efficient. The Obama Administration has stated that there will be increased scrutiny of federal programs in an effort to reduce waste in the federal budget. Also, Congress, as part of its budget duties and oversight authority, will be reviewing programs for their effectiveness. This section examines the CSE program within the analytic framework of addressing the impact of huge numbers of inmates that may be released back into local communities sooner than expected because of state and federal budget shortfalls and overcrowded prisons. It begins with a discussion of how unrealistic child support orders and high child support debt may be adversely affecting overall CSE program results and public perceptions about the program. Although most CSE data cannot be disaggregated to isolate inmates or former inmates who owe child support, many ex-offenders are low-income noncustodial parents. Thus, any of the proposals that would help resolve child support issues related to the low income levels of noncustodial parents would also impact a significant percentage of inmates and former inmates who are parents. This section also discusses how the increase of mothers in prisons may impact the CSE program. Further, it looks at federal law that permits the termination of parental rights of ex-offenders. Unrealistic Child Support Orders A child support order legally obligates noncustodial parents to provide financial support for their children and stipulates the amount of the obligation (monthly obligation plus arrearages, if any) and how it is to be paid. Brief History of Child Support Order Establishment Before October 1989, the decision of how much a parent should pay for child support was left primarily to the discretion of the courts. Typically, judges examined financial statements from mothers and fathers and established awards based on children's needs. The resulting awards varied greatly. In an attempt to increase the use of objective criteria, the Child Support Enforcement Amendments of 1984 ( P.L. 98-378 ) required each state to establish guidelines for determining child support award amounts. However, the 1984 provision did not make the guidelines binding on judges and other officials who had the authority to establish child support obligations. It was the Family Support Act of 1988 ( P.L. 100-485 ) which required that the state-established child support award guidelines be considered the appropriate child support amount unless the court or CSE agency determined (i.e., successfully made the case) that a different amount would be in the best interest of the child. By requiring the states to establish child support guidelines, the federal government hoped to accomplish four main goals: (1) increase the adequacy of child support awards; (2) increase the consistency and predictability of child support awards; (3) increase compliance through perceived fairness of child support awards; and (4) increase the ease of administration of child support cases. States generally use one of three basic types of guidelines to determine child support award amounts: "Income shares," which is based on the combined income of both parents (37 jurisdictions); "percentage of income," in which the number of eligible children is used to determine a percentage of the noncustodial parent's income to be paid in child support (13 jurisdictions); and "Melson-Delaware," which provides a minimum self-support reserve for parents before the cost of rearing the children is prorated between the parents to determine the award amount (3 states). One jurisdiction, Puerto Rico, did not specify which guideline it follows. Current Problems Associated With Child Support Orders There is a lot of variation among the states with regard to the amount of the child support obligation established by the state-established child support guidelines, particularly at the lower end of the income spectrum. The variance in child support orders widens further because many states specify an income threshold below which child support orders are established differently than under the state's regular guideline rules. Moreover, there are several controversial issues associated with child support awards that also increase the range in child support awards among states. These issues include whether child care costs, extraordinary medical expenses, and college costs are taken into account in determining the child support order; how the income of stepparents is treated; how the income of the noncustodial parent is allocated between first and subsequent families; whether a minimum child support award level regardless of age or circumstance of the noncustodial parent should be imposed; and the duration of the support order (i.e., does the support obligation end when the child reaches age 18; what happens to arrearages once the child reaches the age of majority). The bottom line is that in many cases current levels of child support exceed what many middle and lower income noncustodial parents can afford to pay. Also, there is much acrimony between noncustodial parents and the CSE system because noncustodial parents contend that the CSE program does not consider "affordability" as a legitimate factor in calculating child support award amounts. They point to the fact that in many states the basic living expenses of the noncustodial parent such as rent, food, and car payments are often not taken into account in determining the child support order. In addition to the guidelines, the child support obligation is dependent on the way in which the state determines the amount of income to which the guidelines should be applied. When information about actual income is not available, considered unreliable, or when a decision-maker contends that the noncustodial parent's low income is the result of voluntary unemployment or underemployment, income may be attributed to the noncustodial parent and the child support award guideline calculation is then based on that imputed income even if the imputed income is based on incorrect assumptions. Setting child support orders at a level that exceeds a noncustodial parent's ability to pay may in some cases decrease the amount of child support received by the custodial parent because of the noncustodial parent's low income and/or because of the noncustodial parent's contention that the CSE system is unfair. In contrast, CSE policies that result in realistic child support orders, especially for persons at the lower end of the income scale, may result in more child support from low-income noncustodial parents, many of whom are former inmates. High Child Support Arrearages Despite record collections by state CSE programs, considerable sums of child support go unpaid every year. In FY2007, $138.0 billion in child support obligations ($30.8 billion in current support and $107.2 billion in past-due support) was owed to families receiving CSE services, but only $26.1 billion was paid ($18.8 billion in current support and $7.3 billion in past-due support). This meant that the CSE program only collected 19% of the child support obligations for which it had responsibility. If current collections are examined separately, the data indicate that the CSE program collected 61% of all current child support payments in FY2007. If collections on past-due support (i.e., arrearages) are examined separately, the data show that the CSE program collected less than 7% of arrearage payments in FY2007. In other words, the total amount of arrearages reported in FY2007 for all fiscal years (i.e., FY2007 and all previous years) was $107.2 billion; but only $7.3 billion was collected in FY2007. Child Support Debt Accumulation Child support arrearages can be accumulated in several ways, depending upon the guidelines established by the state. The first and most prevalent way is through nonpayment of child support. For each month that a noncustodial parent fails to meet the full child support obligation, the unpaid support (i.e., this is generally referred to as past-due payments or arrearages) is added to the amount the noncustodial parent owes. Another way that arrearages accumulate is of special importance to ex-offenders. The arrearages mount because in most states and localities child support orders remain payable and in effect even when the noncustodial parent is unemployed or incarcerated. CSE law recognizes that a child support order, which can be in effect for 18 years or longer, may not be appropriate for the duration of the order. Nevertheless, child support orders are not automatically changed when the child's or the parent's circumstances change. In order for a noncustodial parent to have his or her child support order lowered, the CSE program and the courts generally require that there be a change in the financial circumstances of the noncustodial parent. Next, the noncustodial parent must petition the CSE agency or the court to have his or her child support order modified. Although no state automatically modifies child support orders whenever there is a change in financial circumstances, CSE law now requires (pursuant to P.L. 109-171 ) states to review and, if necessary, adjust child support orders on behalf of children who receive TANF benefits at least once every three years. Nevertheless, in many states, being in prison is not a basis for child support modification. To the contrary, some states (courts and CSE agencies) view incarceration as voluntary unemployment. They hold that, because imprisonment is the result of an intentional criminal act, incarceration and the loss of income are voluntary acts. In some states, incarceration is just one among many factors that that are examined in determining whether or not to lower the child support order. In other states, incarcerated parents who petition the state (court or CSE agency) are usually determined eligible to have their child support order modified to a lower amount. Unlike in earlier times (pre-1996), the CSE program has a vast array of enforcement methods that it can use to collect child support arrearages. A premise of the CSE program is that having and using such enforcement tools encourages parents to meet their obligations regularly and on time and also sends the message that there are serious consequences for nonpayment of child support. Current Problems Associated With High Child Support Arrearages Many noncustodial parents mistakenly believe that if they fall behind in their child support payments at a time when they are legitimately unable to make the payments, the amount they owe can later be reduced or discounted by a court when an explanation for nonpayment is given. In fact, if a noncustodial parent waits to explain his or her changed financial circumstances, the court will not be able to retroactively reduce the back payments (i.e., arrearages) that the noncustodial parent owes. The large accumulation of child support arrearages is a major concern for several reasons. If these arrearages could be collected, the additional income would help the children and families who are owed this child support. Also, large balances of arrearages give the impression that state CSE programs are not performing competently. People tend to assume that if the child support debt is growing, it means that locate and enforcement tools are not working and that child support workers are not effective. However, this perception may be overly simplistic because not all of the arrearage problems are within the control of the CSE program or its workers. An Urban Institute report states: "The reason we estimate that less than half of the arrears will be collected over 10 years is because so much of the arrears are owed by obligors with no or low reported income. It is very difficult to collect from obligors who have no or low reported income." The CSE program provides services to both welfare and nonwelfare families. Child support collected on behalf of nonwelfare families goes to the family (via the state disbursement unit). Collections on behalf of families receiving benefits from the TANF block grant are in part used to reimburse state and federal governments for TANF payments made to the family. The CSE strategic plan for the period FY2005-FY2009 states the following: "Child support is no longer primarily a welfare reimbursement, revenue-producing device for the federal and state governments; it is a family-first program, intended to ensure families' self-sufficiency by making child support a more reliable source of income." One of the goals of the 1996 welfare reform law ( P.L. 104-193 , which established TANF) with regard to CSE distribution provisions was to create a distribution priority that favored families once they leave the TANF rolls. This "family first" policy was further advanced by P.L. 109-171 (the Deficit Reduction Act of 2005). In 2007, 92% of child support collections went to families, nearly half of whom had previously received TANF benefits, and the remaining 8% went to reimburse the state and federal governments for TANF payments made to families. It is estimated that about 50% of the uncollected $107.2 billion in past-due payments (i.e., arrearages) is still owed to state and federal governments. Even though the CSE program is collecting billions of dollars in arrearages each year, it does not seem to be making much progress in reducing the problem, and the overall child support debt continues to grow. In some cases, high arrearages may deter noncustodial parents from paying any child support. According to research on arrearages, when noncustodial parents perceive that the system is unfair or that the debt is too great to be overcome, the likelihood that they will pay any support decreases. Many noncustodial fathers maintain that the CSE system is dismissive of their financial condition and continues to pursue child support payments (current as well as arrearages) even when it knows that many of them can barely support themselves. They argue that for welfare families, the CSE program generally does not improve their child's well-being because their child support payments are used to benefit the state and federal government (i.e., welfare reimbursement) rather than their child. They contend that the CSE program causes conflicts between them and their child's mother because the women often use it as leverage by threatening to report them to CSE authorities, take them back to court, have more of their wages garnished, or have them arrested. Incarcerated Mothers The female prison population has increased dramatically since the early 1990s. According to the Bureau of Justice Statistics, data from 2007 indicate that about 57% of the 114,420 women in a state or federal prison are mothers. Between 1991 and 2007, the number of mothers in prison (state and federal) increased 122%, from 29,500 in 1991 to 65,600 in 2007. In 2007, 8.1% of the parents in prison were mothers compared to 6.5% in 1991. The rising share of female inmates has been attributed to mandatory sentencing laws for drug offenses. While there is a growing consensus that father-child bonds are just as important as mother-child bonds, many analysts contend that the short-term social impacts on children may be greater and more detrimental when mothers are imprisoned. In part, this is because mothers are still the primary caretakers of children. Generally, children of incarcerated fathers continue to live with their mothers and usually do not experience a change in their living arrangements. However, children of incarcerated mothers typically have more varied and uncertain living arrangements. The increase in mothers in prison is very significant because children are more likely to be removed from the home when mothers are incarcerated than they are when fathers are incarcerated. Although women with children comprise only 8% of state or federal inmates who are parents (2007 data), their absence from their children as the principal caretaker greatly impacts children, many of whom have to go live with grandparents or other relatives and some of whom are placed in foster care. Data from 2004 show that 61% of female inmates of state prisons lived with their children just prior to incarceration compared to 42% of male inmates. With respect to federal prisons, 78% of female inmates lived with their children just prior to incarceration compared to 51% of male inmates. Some commentators have argued that it is almost impossible to punish women for their crimes without ruining their children's lives. As indicated above, most but not all mothers in prison were living with their children before they went to prison. They were the caretaker parent. Although father absence is associated with a myriad of negative economic, social, and psychological outcomes for children, the stigma, trauma, and shame associated with the incarceration of their mothers may be more complex and difficult to address. It has been suggested that alternatives to prison be considered for "low-risk" women who are mothers of dependent children. Such alternatives could include court diversion programs such as community-based half-way houses, community-based drug rehabilitation programs, home detention programs, or electronic monitoring programs. Termination of Parental Rights Due to Criminal Offenses It is the intention of most incarcerated parents to reunite with their children and families after they are released from prison. However, reunification is often a difficult process and in some cases incarceration can lead to permanent severance of parental rights. In some cases, dissolution of parental rights results from criminal convictions (even those unrelated to the parent's ability to care for the child). According to a report by the Children's Bureau (in the U.S. Department of Health and Human Services), a felony conviction or incarceration was grounds for termination of parental rights in 27 states. Moreover, the Adoption and Safe Families Act of 1997 ( P.L. 105-89 ), among other things, required as a condition of receiving federal funds, that child welfare agencies file for termination of parental rights if a child had been in foster care for 15 of the last 22 months. One consequence of P.L. 105-89 is that the mandatory time limit in the law makes termination of parental rights a more likely outcome for incarcerated parents who have children in foster care. According to Bureau of Justice Statistics data, 26% of inmates in state prisons and 32% of inmates in federal prisons had already served five or more years in prison in 2004. One of the three exceptions to the mandatory time limit in the foster care rule pertains to children being cared for by a relative. If a parent is serving a long prison sentence but has relatives available to care for the child (or children), the child welfare agency may place the child with a relative of the inmate and thereby avoid the strict, adoption-oriented requirement of the federal statute. Some critics of the federal mandatory time limit in foster care provision argue that women in prison who were the primary caretaker of their children are at greater risk than imprisoned fathers of losing all legal ties to their children if the children are placed in foster care while they are serving their sentences. In other words, incarcerated fathers are less likely to be subjected to the federal provision because the children in question are already living with their mothers. In contrast, incarcerated mothers are more likely to be subjected to the federal provision because most of their children have absent fathers. Most incarcerated fathers (88%) report that at least one of their children is in the care of the child's other parent; whereas, only 37% of incarcerated mothers make that claim. Some observers contend that it is important for family members to become involved in the care of children with incarcerated parents as soon as they learn of the parent's arrest if they want to keep the children out of the foster care system and preserve parental ties to the children. They also maintain that it is important for child welfare agencies to recruit relatives as caregivers for children with incarcerated parents. A recently enacted law ( P.L. 110-351 , the Fostering Connections to Success and Increasing Adoptions Act of 2008) authorizes funding for states to locate relatives of children and to reimburse the relative caretakers of children who are placed with them. However, in most cases the child welfare agencies do not have information on whether a child in their caseload has an incarcerated parent. Some analysts assert that the prisons should have a database on parents who are inmates and transmit such information to CSE agencies and child welfare agencies. A second exception to the mandatory time limit in foster care rule occurs when the state child welfare agency has documented in its state plan a compelling case that filing a termination of parental rights petition would not be in the best interest of the child. The third exception occurs when a case can be made that the parent has not been provided with the services required by the service plan for the reunification of the parent with the child. As noted previously, it is generally agreed that (1) parents in prison are less likely to recidivate if they have family support and maintain connections to their children and (2) children who have a positive relationship with their incarcerated or formerly incarcerated parent are more likely to have successful outcomes than children who are legally cut off from parents. Thus, many analysts and observers maintain that termination of parental rights because of the parent's incarceration should be a last resort that is rarely used. In addition to the emotional and psychological costs on children and parents, the termination of parental rights by definition means that the parent is no longer legally obligated to provide financial support to his or her child. In fact, the parent is legally obligated to stay away from the child and to have no contact (financial or otherwise) with the child. Policy Options This section looks at ways in which some of the problems discussed above might be resolved. Continuing a historical precedent, many of the proposals or suggestions for the CSE program that are presented below originated with the states. The future success of the CSE program is tied to its ability to continue to be proactive in finding and implementing services and/or approaches that resolve the many problems that the program now faces. The competition for scarce state and federal dollars makes this challenge more difficult and more imperative. This section discusses three policy options: establishment of realistic child support orders, modification of child support obligations, and program coordination. Establishment of Realistic Child Support Orders Many policymakers and analysts maintain that parents should share in the cost of supporting their children according to their ability to pay. They assert that the best way to do this is to set initial child support orders at appropriate levels, modify orders promptly when family circumstances change, and immediately intervene when child support is not paid. This policy option may be particularly important given the current economic downturn, and the change in many families' economic circumstances. Although some policymakers recognize that establishing child support orders that are "too low" may deprive many children of the financial support they need, they also realize that setting child support orders "too high" may lead some noncustodial parents to seek to escape their child support obligations by opting to work in the underground economy, thereby hiding income and assets. Others caution that noncustodial parents' failure to pay onerous child support orders may increase the likelihood of incarceration, further diminishing the prospects for increasing financial support to the child and raising questions about fairness. They also note that stringent CSE efforts may also alienate noncustodial parents from their children. There is a general consensus among advocates for low-income mothers and advocates for low-income fathers that economic realities must be taken into account in the determination of child support obligations. They agree that for some low-income noncustodial parents there should be a low presumptive child support award, but not zero. They emphasize the positive difference that even small amounts of child support can add to children's well-being. They also view the establishment of some monetary obligation as an affirmation that noncustodial parents, however poor, must recognize their responsibility to provide economic support to their children. Finally, they agree that having the child support award guidelines establish presumptive minimum orders could protect the poorest noncustodial parents, if decision-makers set awards at the minimum level instead of basing them on unrealistically high levels of imputed income. In a strategy referred to as the Project to Avoid Increasing Delinquencies (PAID), the federal Office of Child Support Enforcement (OCSE) and state CSE agencies have put forth several suggestions for improving the way in which child support orders are established. They include: Directing state CSE agencies to use income data (e.g., quarterly wage reports from the national and state directories of new hires; state income tax data; Social Security Administration information related to retirement, survivors, and disability benefits) to help determine child support orders that more accurately reflect the noncustodial parent's true income. Instructing state CSE agencies and courts to presume income at a reasonable level when no income information is available (e.g., presuming state minimum wage income rather than state average earner income). Revising child support guidelines to account for a self-support reserve amount to accommodate the basic needs of low-income noncustodial parents. Limiting the use of retroactive support amounts and other add-on amounts (such as court costs and birthing costs). Reducing the number of default orders by encouraging noncustodial parents to participate in child support hearings. Allowing default orders to remain open for a specified period of time to allow for easy amendment if the noncustodial parent provides new and/or contrary information. Many of the PAID suggestions from CSE administrators could perhaps be implemented administratively. But, having the Congress pass legislation that would require all states to implement such changes might be quicker and more efficient. Moreover, given the new impetus to release hundreds, if not thousands, of inmates before their prison sentences are completed, Congress may want to direct the CSE program to find ways of encouraging these ex-offenders, many of whom are noncustodial parents, to fulfill their child support responsibilities by setting child support orders at levels that might be considered more "realistic" from the perspective of noncustodial parents. Modification of Child Support Obligations Although only a relatively small percentage of arrearage payments were collected in FY2007, 61% of obligors continued to make payments on their child support arrearages. One interpretation of this information is that many noncustodial parents simply have too many financial obligations (e.g., food and shelter for themselves) to cover with their limited incomes; thereby, they may always be a little or a lot behind in meeting their child support obligations. An Urban Institute study revealed the following findings: (1) high debtors were expected to pay a larger percentage of their income for current child support orders—the median child support order for high debtors was 55% of their income compared to 13% for non-debtors and 22% for those who owed less than $30,000 in child support arrearages; (2) high debtors with a current support order tended to have older orders than other obligors; (3) high debtors were more likely to have multiple current child support orders than non-debtors: (4) high debtors were less likely to pay support than non-debtors; (5) high debtors were less likely to have a known address; and (6) high debtors were twice as likely to have an interstate child support case as a non-debtor. Under the CSE program, states are given significant latitude regarding modifications and reviews of child support orders. Federal law requires that states give both parents the opportunity to request a review of their child support order at least once every three years, and states are required to notify the parents of this right. In order to prevent child support arrearages, especially for noncustodial parents who are unemployed or in prison, many analysts have recommended that child support modification laws be changed so that they are more sensitive to periods of incarceration, unemployment, or injury/illness during which the noncustodial parent's ability to pay child support decreases. They note that it is virtually impossible for most incarcerated parents to stay current in meeting their monthly child support payments. Some observers argue that if states are not inclined to waive or reduce the child support obligations of noncustodial parents who are in prison, the states could at least prohibit interest charges on overdue child support payments of these parents. They claim that interest and other charges just add to the original debt which the inmate does not have the money to pay. They argue that charging interest on uncollectible child support arrearages does not encourage noncustodial parents to make timely payments but rather alienates them and may encourage them to make no payments. In contrast, others assert that charging interest is the correct approach because children need whatever support can be collected, and because paying interest on debts is something all Americans understand. They say that charging interest sends the message that if a person does not keep current with payments, he will owe more. They assert that charging interest is a fairness issue in that the custodial parent is due a child support payment at a certain time and if the money is not paid on time, the custodial parent should be further compensated. Also, as noted earlier, about 50% of the uncollected past-due child support payments (arrearages that totaled $107.2 billion in FY2007) are owed to state and federal governments. Some program analysts and other interested parties contend that child support arrearages owed to state governments should be leveraged in a way that encourages the payment of current child support. They caution that it should be done in a way that avoids sending the message that noncustodial parents can ignore child support obligations because of the possibility that the state may eventually accept less than the full amount owed. They recommend that certain groups of low-income noncustodial parents who are most likely to accumulate child support debt be targeted for interest amnesty or debt compromise programs. The current OCSE Strategic Plan proposes the following procedures for reducing high child support arrearages. Update child support guidelines regularly and simplify child support order modification; Modify orders to ensure that child support obligations stay consistent with the noncustodial parents' ability to pay; Use automation to detect non-compliance as early as possible and contact noncustodial parents soon after a scheduled child support payment is missed; Update child support guidelines to recognize modern family dynamics and realities (e.g., shared custody, incomes of custodial parents, etc.); and Consider creative ways to promote regular payment of current support, even if it means "compromising" uncollected child support arrearages to bring the noncustodial parent back into consistently paying current child support payments. With regard to the last proposal, in an effort to reduce or eliminate child support debt, some states use debt compromise, a process whereby a state forgives a portion or all of the child support debt owed to the state by the noncustodial parent. It is important to note that the federal share of such debt is still owed to the federal government. In order for the federal portion of the child support debt to be compromised or eliminated, Congress would have to pass legislation to that effect and such legislation would have to be enacted. It has also been recommended that Congress revise consumer protection limits with respect to garnishment of child support. CSE officials can garnish as much as 65% of a noncustodial parent's wages toward the payment of child support debt. For parents released from prisons and jails, this practice may increase the difficulty of securing and maintaining housing, transportation, and employment that are necessary for making future child support payments. Other recommendations of policymakers and observers include (1) enabling courts to consider an individual's obligations to his or her children at the time of sentencing; (2) prohibiting incarceration from being defined as "voluntary unemployment" (a term used to describe someone who has chosen not to work), thereby allowing a noncustodial parent's child support order to be modified when he or she enters prison; and (3) requiring states to automatically modify (or forgive) child support orders of noncustodial parents who are in prison (during the prison-intake process—only for the length of their prison sentence) unless the custodial parent objects because the inmate has income and/or assets that can be used to pay child support. Although many custodial parents to a certain extent agree that some noncustodial parents are "dead broke" rather than "deadbeats," they contend that the states and the federal government need to proceed with caution in lowering child support orders for low-income noncustodial parents. They argue that child support is a source of income that could mean the difference between poverty and self-sufficiency for some families. They emphasize that lowering the child support order is likely to result in lower income for the child. They argue that even if a noncustodial parent is in dire financial straits, he or she should not be totally released from financial responsibility for their children. Others agree, and argue that policymakers, when considering policies related to reducing the child support obligations of prisoners, must also consider equity issues related to the treatment of low-income noncustodial parents who may be unemployed as opposed to in prison. They assert that it is sending the wrong message to unilaterally lower payments of persons who have broken the law and not make similar allowances for law-abiding citizens who are unemployed. Large child support arrearages result in millions of children receiving less than they are owed in child support, reduced cost-effectiveness of the CSE program, and a perception that the CSE program does not consider the financial situation of low-income noncustodial parents, many of whom may be in dire economic situations. There is widespread agreement that preventing the build-up of unpaid child support through early intervention rather than traditional enforcement methods is essential to the future success of the CSE program. Some commentators point out that such a proactive approach to addressing the huge accumulation of child support arrearages may help many children whose parents were former inmates. Some fathers' rights group would like Congress to pass legislation that would repeal the federal provision that prohibits the retroactive modification of child support obligations. It also has been suggested that it may be easier for Congress to mandate some of the child support arrearage remedies outlined in the CSE FY2005-2009 Strategic Plan and elsewhere, rather than wait for states to develop individual remedies that only apply to the state that implements the policy. Program Coordination Given the current economic crisis, states are looking to find creative ways to maximize the use of their resources. State and federal prison officials and CSE officials may find that it is mutually beneficial to work together on behalf of inmates who are parents. Some analysts have suggested that state and federal prisons can strengthen their re-entry programs by incorporating information on CSE obligations and services. Further, CSE programs can make their programs more successful by identifying parents with child support obligations while they are in prison so that parents are more able to avoid the accumulation of excessive child support arrearages and also provide information to prisoners that highlight the benefits of including child support payments in their post-release plans. Several strategies have been suggested that would involve both the criminal justice system and the CSE program to proactively address the advent of more ex-offenders being released back into local communities. They include (1) making inquiries about a prisoner's parental status and whether or not he or she is required to pay child support during the prison intake process; (2) encouraging prisoners to contact the CSE agency regarding questions about the paternity and child support order establishment rules, due process procedures, collection methods, and other concerns; (3) informing inmates about how to have their child support orders modified so that they do not incur high child support debt while in prison; (4) encouraging inmates to maintain contact with their children while they are in prison; and (5) helping former inmates develop a plan to pay their child support obligations. It has also been suggested that prison intake procedures include an automated data match or weekly population list exchange among corrections and CSE agencies and that policies be implemented that assist with the child support modification process, such as providing noncustodial parents with forms, addressed envelopes, and postage. Although CSE funds may not be used to pay for criminal justice functions or employment and training activities, states are permitted to use CSE funds for child support case identification, tracking, referral, and development of payment plans. Also, Special Improvement Project (SIP) grants and Section 1115 demonstration grants provide funding for projects that are designed to help families achieve self-sufficiency and promote stability for children, mothers, and fathers. Both the SIP grants and the Section 1115 grants have funded projects that focus on helping incarcerated parents. In addition, federal law (pursuant to the 1996 welfare reform law—P.L. 104-193) gives CSE agencies and courts the authority to require unemployed noncustodial parents who owe child support to a child receiving TANF benefits to participate in appropriate work activities. Thus, judges can remand nonpaying noncustodial parents to a TANF work program, with the mandate to participate in the program, pay the child support owed, or be confined in jail. This obligation can be monitored, so that the noncustodial parent cannot evade it. If the parent is in fact working surreptitiously, the work program will conflict with his or her other job, forcing the parent to admit to having earnings and thereby to paying child support. If the noncustodial parent really is jobless, the program can help him or her get a job. Moreover, state CSE agencies may use their federal performance incentive payments and federal parental access and visitation grants to fund child-support case management services for incarcerated and formerly incarcerated parents. Some observers contend that responsible fatherhood programs and ex-offender re-entry programs/services together with the CSE program could do more to help former inmates successfully reconnect to their children and communities if they worked in tandem, or at least formally recognized the potential contributions that they each make or could make to the ultimate well-being of children. Given that an overall goal of the aforementioned programs is to increase opportunities for families to stay connected even if a parent is or was incarcerated, some observers assert that children should not be disadvantaged because they do not live in states with innovative policies that increase child support collections. They contend that some state-established policies and/or proposals may need to be mandated by Congress so that children, regardless of where they live, may benefit from the most positive CSE developments and innovative prisoner re-entry strategies. Below are brief descriptions of responsible fatherhood programs and ex-offender re-entry programs/services. Responsible Fatherhood Programs Responsible fatherhood programs seek to promote the financial and personal responsibility of noncustodial parents to their children and increase the participation of fathers in their children's lives. Responsible fatherhood programs, in affirming the importance of fathers to their children's well-being, have to a certain extent reduced the animosity between noncustodial parents and the CSE program. It is sometimes the case that positive, constructive communication between noncustodial parents and CSE agencies leads to more child support for children. Responsible fatherhood programs have been debated in Congress since the 106 th Congress (1999), but it was not until the Deficit Reduction Act of 2005 ( P.L. 109-171 ) that specific funding was provided for these programs. P.L. 109-171 included a provision that provides up to $50 million per year (for each of the five fiscal years 2006-2010) in competitive grants to states, territories, Indian tribes and tribal organizations, and public and nonprofit community organizations (including religious organizations) for responsible fatherhood programs. Most responsible fatherhood programs include parenting education; training in responsible decision-making, conflict resolution, and coping with stress; mediation services for both parents; problem-solving skills; peer support; and job-training opportunities. According to data from the Administration for Children and Families (ACF) in the U.S. Department of Health and Human Services (HHS), grantees were awarded five-year contracts to implement responsible fatherhood programs. The contracts (in aggregate) amounted to $41 million per year. Historically, there has been tension between noncustodial parents and the CSE program. Noncustodial parents often claimed that by exclusively focusing on financial support, the CSE system devalued their role as nurturer, disciplinarian, and mentor. Most responsible fatherhood programs clearly explain the goals and duties of the CSE program and encourage noncustodial parents to interact with CSE agencies in a proactive manner. Many responsible fatherhood programs recognize that a substantial proportion of noncustodial parents are inmates or former inmates. According to HHS data, responsible fatherhood programs in 16 states and the District of Columbia include inmates and/or former inmates as part of their target population. In fact, in two states, Indiana and New Jersey, one of the responsible fatherhood program operators/grantees is the State Department of Correction. There are also a number of healthy marriage demonstration programs that support the provision of services to promote or sustain healthy relationships for couples with children, where one of the parents is incarcerated or otherwise involved with the criminal justice system (e.g., recently released from incarceration or under parole or probation). Re-entry of Former Inmates Back into Communities It is generally agreed that programs that promote personal responsibility also are likely to promote parental responsibility which may translate into consistent payment of child support obligations. Thus, successful prisoner re-entry programs may increase the effectiveness of the CSE program along with reducing recidivism and promoting safer communities. Most children who grow up in mother-only families, father-only families, step-parent families, or families in which the mother is cohabiting with a male partner become well-adjusted, productive adults. Nonetheless, a large body of research indicates that children who grow up with only one biological parent in the home are more likely to be financially worse off and have worse socioeconomic outcomes (even after income differences are taken into account) compared to children who grow up with both biological parents in the home. It has been stated that nothing frays family ties like prison. According to some observers, supporting programs that help fathers, mothers, and children to maintain positive family bonds despite incarceration of one of the child's parents is likely to improve child well-being and may also help reduce recidivism. According to some data, with the exception of health care, spending on corrections has increased faster than any other item in state budgets. Supporting approaches that result in successful re-entry of ex-offenders back into society means both safer communities and the improved use of tax dollars. The federal government's involvement in ex-offender re-entry programs usually occurs through grant funding, which is available through a wide array of federal programs at the Departments of Justice, Labor, Education, and Health and Human Services. However, only a few of these grant programs explicitly specify funds for offender re-entry purposes. Re-entry programs vary widely in content and scope. Re-entry generally includes all the activities and programming conducted to help former inmates live as law-abiding citizens. Re-entry programs are typically divided into three phases: programs that prepare ex-offenders to reenter society while they are in prison, programs that connect ex-offenders with services immediately after they are released from prison, and programs that provide long-term support and supervision for ex-offenders as they settle into communities permanently. Some inmates use their time in prison to reflect on their lives and come to realize the importance of their children and other family relationships. They have the time and the desire to improve themselves and are thereby amenable to participating in whatever programs, classes, and activities that the prison offers. According to Bureau of Justice Statistics data for 2004, 85% of mothers and 78% of fathers in state prisons reported having telephone, mail, or person visits with their children while in prison. Similarly, 96% of mothers and 91% of fathers in federal prisons reported having some type of contact with their children while in prison. Moreover, 12% of parents in state prisons and 26% of parents in federal prisons reported that they had attended parenting or childrearing classes in the prison. Both of these activities, contact with children and participation in parenting classes, are good preparation for reconnecting ex-offenders with their children and families upon their release from prison. Some observers have suggested that state and federal prisons routinely include information on responsible fatherhood and healthy marriage programs in the packets of information for persons who are soon to be released. Concluding Remarks Ex-offenders re-entering communities face a host of problems, a major one being barriers to employment because of their criminal records. Most employers now conduct background checks, with the result that people are often denied employment or even fired from jobs because of their criminal records. Research indicates that employment and family support are important predictors of an ex-offender's successful re-entry into his or her community. Given that employment opportunities are scarce and may become more limited in the current economy, formerly incarcerated parents may want to strengthen positive connections to their children, family, and community. The inability of many people released from prisons and jails to meet their financial obligations can contribute to their being incarcerated again. CSE policies that are receptive to noncustodial parents with a recent history of incarceration, unemployment, or low-wage jobs have been shown to increase the prospects that such individuals will maintain steady employment, regular child support payments, and contact with their children. It probably would benefit both entities if the staff of CSE agencies collaborated with the staff of corrections facilities to develop policies that promote positive child support outcomes as well as successful reintegration of individuals released from prison or jail. As noted earlier, about 53% of the 1.5 million inmates in state or federal prisons are parents with dependent children. About 57% of ex-offenders who are released from state or federal prisons each year are parents. The current economic situation is likely to increase the number of persons released from prison. According to a 2009 news report, federal judges in California ruled that California may have to reduce the number of inmates in its overcrowded prison system by up to 40%. The judges reported that the state's prison system was at about 200% of capacity. The judges suggested a two- to three-year time frame for reducing the number of inmates in the prison system. Although it is true that a child's needs for financial support do not diminish just because a parent is incarcerated, most custodial parents realize that they probably will not receive any child support while the noncustodial parent is in prison, but they do expect to receive child support payments after the noncustodial parent is released from prison. However, this is not what usually happens. Instead of resuming their child support payment schedules, many newly released noncustodial parents have little or no income or assets available to them, and therefore do not make their payments. Moreover, most former inmates have difficulty finding employment after they are released from prison and they often have to rely on family members for food and shelter. Also, when they leave prison, many parents find they have accumulated significant child support debt that they are expected to begin paying off as soon as they become employed (or sooner). Without intervention, they may face wage attachments of up to 65% of their disposable earnings to cover their child support obligations. They may also face CSE remedies such as driver's license suspension, which could limit their work options. Advocates for incarcerated parents are concerned that unrealistically high child support orders or arrearages may discourage ex-offenders from finding a regular job because regular employment allows a person's paycheck to be subject to income withholding procedures. Some advocates argue that policies and practices that allow for up to 65% of a person's disposable earnings to be garnished tempts many former inmates to find jobs in the underground economy which may lessen their chances of successfully establishing ties with their children, families, and communities and may contribute to recidivism. There are several evaluations and studies underway that will provide evidence of the effectiveness or ineffectiveness of various re-entry programs, but results from those studies are not yet available. Evaluation findings are very important because the current economic situation is causing many states to quickly reduce their prison populations, and successful re-entry of ex-offenders can reduce recidivism and thereby save both state and federal dollars. Evaluations also are underway, but not yet available, with respect to healthy marriage and responsible fatherhood programs that are focusing their services on incarcerated parents or formerly incarcerated parents. Evaluation findings will provide some insights about the delivery and effectiveness of marriage and family-strengthening programs for populations involved with the criminal justice system. Extreme poverty sometimes means that a person cannot take advantage of opportunities that make good financial sense. In some cases, noncustodial parents who are former inmates may be so disadvantaged that even programs that attempt to help them deal with huge child support debts (e.g., child support arrearage forgiveness or reduction programs) are of no benefit to them because they simply do not have any funds to give to their children (thus preventing them from participating in such programs). Custodial parents warn that the precarious financial situation of children must be a primary concern of policymakers in their efforts to help low-income noncustodial parents who often have only a high school education (or less), low skills, and little work experience, and may be unemployed or recently released from prison. Some policymakers contend that progress must be made in making the CSE program fair for noncustodial parents at every income level while simultaneously ensuring that children are not short-changed. It has periodically been suggested that in some cases in which the child support obligation cannot be met, in-kind assistance (such as providing child care) may be one way in which society can steadfastly adhere to the tenet that both parents are responsible for the well-being of their children while recognizing the reality of the dire financial situation in which many ex-offenders find themselves. Connecting and/or reconnecting children to their noncustodial parents has become a goal of federal social policy. Promoting coordination among federal and states programs may help programs optimize their funds and resources. Some prisons and local communities are helping noncustodial parents meet and/or acknowledge their child support responsibilities by offering parenting programs, informational sessions on how to deal with the CSE agency, conflict-resolution classes, and job readiness preparation. Research highlights the common ground between the prison system and the CSE system. For example, studies show that family support is one of the key factors in lowering the probability that ex-offenders will return to prison and research further indicates that being involved in the lives of one's children promotes responsible behavior, such as making regular child support payments and being productive citizens. Federally-mandated program coordination in certain areas may be one way to increase child support collections and simultaneously reduce recidivism. Incarceration has high costs not only for the inmate but for his or her children and family as well as society in general. Incarceration, health care, education, and other important programs, including the CSE program, are now competing with one another for state and federal funding. Given the current economic downturn state and federal agencies may start to work together to further the goals that they have in common.

According to recent estimates, about 1.7 million children in the United States have parents who are currently incarcerated in state or federal prisons. Among the approximately 700,000 persons who are released from prison each year about 400,000 of them are fathers and mothers. The current economic crisis together with overcrowded prisons and state budget shortfalls are likely to result in a significant number of inmates convicted of nonviolent offenses getting early release dispensations. How these former inmates reconnect to their families impacts not only the children involved but society at large and is of great interest to Congress and the nation. Ex-offenders re-entering communities face a host of problems, a major one being barriers to employment because of their criminal records. Most employers now conduct background checks, with the result that people are often denied employment or even fired from jobs because of their criminal records. Research indicates that employment and family support are important predictors of an ex-offender's successful re-entry into his or her community. Given that employment opportunities are scarce and may become more limited in the current economy, family support is even more important for formerly incarcerated parents. The Child Support Enforcement (CSE) program is a federal-state program whose mission is to enhance the well-being of children by helping custodial parents and children obtain financial support from the noncustodial parents, including those in prison or who were formerly incarcerated. Child support payments enable parents who do not live with their children to fulfill their financial responsibility to their children by contributing to the payment of childrearing costs. Parents who make regular child support payments are more likely than those who do not to have better family relationships. Also, prisoner re-entry programs and responsible fatherhood programs sometimes help noncustodial parents establish positive, productive connections to their children. Research indicates that positive family relationships increase family stability and can help reduce recidivism. Connecting children to their noncustodial parents has become a goal of federal social policy. Promoting coordination among federal and state programs may help programs optimize their resources. Some prisons and local communities are helping noncustodial parents acknowledge their child support responsibilities by offering parenting programs, informational sessions on how to deal with the CSE agency, conflict-resolution classes, and job readiness preparation. Research highlights the common ground between the prison system and the CSE system. For example, studies show that family support is one of the key factors in lowering the probability that ex-offenders will return to prison and research further indicates that being involved in the lives of one's children promotes responsible behavior, such as making regular child support payments and being productive citizens. Federally-mandated program coordination in certain areas may be one way to increase child support collections and simultaneously reduce recidivism. This report focuses on the CSE program. It examines the CSE program within the context of large numbers of former inmates re-entering local communities. It raises several issues related to noncustodial parents who are ex-offenders (i.e., former inmates). The report also presents policy options that could help increase child support collections from low-income noncustodial parents, some of whom are former inmates. A by-product of increased child support collections could be a positive, productive relationship between ex-offenders and their children, which could result in lower recidivism rates among inmates who are noncustodial parents. This report will not be updated.

Footnotes 1. (back) Ahmad, Mahmood. "Agricultural PolicyIssues and Challenges in Iraq" Short- and Medium-term Options," from Iraq's Economic Predicament ,Kamil Mahdi, Editor. Exeter Arab and Islamic Studies Series, Ithaca Press,copyright©Kamil Mahdi, 2002, pp. 179-180. 2. (back) FAOSTAT, Food and AgriculturalOrganization, United Nations, http://apps.fao.org/ Note: A hectare equals about 2.47 acres. 3. (back) PECAD, FAS, USDA. "Iraq CropProduction." January 16, 2003. http://www.fas.usda.gov/pecad/highlights/2003/01/iraq_update/index.htm 4. (back) FAOSTAT, FAO, U.N. 5. (back) In the early 1990s, cultivated areatemporarily expanded to nearly 5.5 million hectares before returning to under 4 million. 6. (back) The Iraq government reported an expansionof irrigated area to 3.525 million hectares in 1990, but this appears unlikely and is inconsistent with anecdotalreports. This reported new irrigated area could be a "euphemistic"reclassification of the government program of draining the southeast marshlands. 7. (back) Springborg, Robert. "Infitah, AgrarianTransformation, and Elite Consolidation in Contemporary Iraq," The Middle East Journal , Vol. 40, No.1, Winter 1986, pp. 33-52. 8. (back) Ibid., p. 37. 9. (back) Springborg (1986), p. 40-41. 10. (back) FAOSTAT, FAO, U.N. 11. (back) Ibid. 12. (back) U.S. General Accounting Office. Iraq's Participation in U.S. Agricultural Export Programs , NSIAD-91-76, November 1990, http://161.203.16.4/d22t8/142766.pdf Note: under GSM-102 USDA's Commodity Credit Corporation (CCC) guarantees repayment for credit salesof 3 years or less; under GSM-103, CCC guarantees repayment for credit sales of more than 3 years but less than10 years. 13. (back) Ibid, p. 22-23. 14. (back) United Nations, Office of the IraqProgram -- Oil for Food; "About the Program: In Brief." http://www.un.org/depts/oip/background/inbrief.html 15. (back) Country Factsheet, The EconomistIntelligence Unit, http://www.economist.com/countries/Iraq . 16. (back) The Economist , "Diggingfor defeat: Iraq," May 2, 1998, Vol. 348, No. 8066, p.44. 17. (back) U.S. Bureau of the Census,International Data Base (IDB), Iraq, Oct. 10, 2002; http://www.census.gov/ipc/www/idbacc.html 18. (back) FAOSTAT, FAO, U.N. 19. (back) UNDP, Iraq Country Office,1999-2000 Report, June 2000. 20. (back) USDA, PSD database, April 2003. Note: during 1960-69 annual cereal production per capita averaged 249 kilograms, this fell to 177 in the 1970s, and130 in the 1980s, but had regained ground to 155 kilograms during the1990-94 period.

Iraq's agricultural sector represents a small, but vital component of Iraq's economy.Over the past several decades agriculture's role in the economy has been heavily influenced by Iraq'sinvolvement in military conflicts, particularly the 1980-88 Iran-Iraq War and the 1991 Gulf War, and by varyingdegrees of government efforts to promote and/or control agricultural production. In the mid-1980s, agricultureaccounted for only about 14% of the national GDP. After the imposition of U.N. sanctions and the Iraqigovernment's non-compliance with a proposed U.N. Oil-for-Food program in 1991, agriculture's share of GDP isestimatedto have risen to 35% by 1992. (1) Rapid population growth during the past three decades, coupled with limited arable land and a generalstagnation in agricultural productivity, has steadily increased dependence on imports to meet domestic food needssince themid-1960s. By 1980 Iraq was importing about half of its food supply. By 2002, between 80% and 100% of manybasic staples -- wheat, rice, sugar, vegetable oil, and protein meals -- were imported. This report will be updated if events warrant.

Introduction The United States is considering fundamental changes in its natural gas supply policy. Facedwith rising natural gas demand and perceived limitations in North American gas production, manyin government and industry are encouraging greater U.S. imports of liquefied natural gas (LNG). Recent activities by Congress, the Federal Energy Regulatory Commission, the Department ofEnergy, and other federal agencies to promote greater LNG supplies have included changingregulations, clarifying regulatory authorities, and streamlining the approval process for new LNGimport terminals. While forecasts vary, many analysts expect LNG to account for 12% to 21% oftotal U.S. gas supply by 2025, up from approximately 3% in 2005. If these forecasts are correct, U.S.natural gas consumers will become increasingly dependent upon LNG imports to supplement NorthAmerican pipeline gas supplies. Recent measures before Congress seek to encourage both domestic gas supply and newLNG terminal construction. The Alaska Natural Gas Pipeline Act of 2004 (15 U.S.C. § 720, et seq .)provides loan guarantees (Sec. 116) and other incentives for an Alaska gas pipeline. The EnergyPolicy Act of 2005 ( P.L. 109-58 ) includes various incentives for domestic natural gas producers(Title III, Subtitle E). The act also amends Section 3 of the Natural Gas Act of 1938, granting theFederal Energy Regulatory Commission (FERC) explicit and "exclusive" authority to approveonshore LNG terminal siting applications (Sec. 311c) among other provisions. Other proposals inthe 109th Congress, including H.R. 4318 , H.R. 3918 , and H.R. 3811 would lift federal restrictions on natural gas exploration and production on federal submergedlands of the Outer Continental Shelf. S. 1310 would authorize the expansion of a naturalgas transmission pipeline on federal lands in the Northeast. While an increase in LNG imports is already underway, federal officials and Members ofCongress have been debating the merits and risks of U.S. LNG dependency. In April, 2005, forexample, President Bush stated that "One of the great sources of energy for the future is liquefiednatural gas.... We need more terminals to receive liquefied natural gas...." (1) In June, 2005 Department ofEnergy Secretary Samuel Bodman remarked that "LNG seems to offer a solution to ... the growingdemand for natural gas that we will see all around the globe." (2) In November, 2005 FederalReserve Chairman Alan Greenspan testified before Congress that "severe reaction of natural gasprices to the production setbacks that have occurred in the Gulf highlights again the need to ... importlarge quantities of far cheaper, liquefied natural gas (LNG) from other parts of the world." (3) Some in Congress havequestioned the implications of such a policy, however, drawing analogies to the consequences ofU.S. dependency on foreign oil and citing potential instability among foreign LNG suppliers. (4) Others have expressedconcern about LNG safety and vulnerability to terrorism. (5) Specific questions are emerging about the implications of greater LNG imports to the UnitedStates. LNG has substantial physical infrastructure requirements and there are uncertainties abouthow this infrastructure would be integrated into North America's existing gas network. The potentialeffects of larger LNG imports on U.S. natural gas prices will be driven by the global LNG marketstructure, although that market structure is still evolving. Political relationships among countries inthe LNG trade may also change as LNG becomes increasingly important to their economies. This report will review the status of U.S. LNG imports, including projections of future U.S.LNG demand within the growing international LNG market. The report will summarize recentpolicy activities related to LNG among U.S. federal agencies, as well as private sector plans for LNGinfrastructure development. The report also will introduce key policy considerations in LNGinfrastructure and market structure, highlighting current market information and key uncertainties. Finally, the report will identify key questions in LNG import policy development. Background Natural gas is widely used in the United States for heating, electricity generation, industrialprocesses, and other applications. In 2005, U.S. natural gas consumption was 22 trillion cubic feet(Tcf), accounting for 23% of total U.S. energy consumption. (6) Until recently, nearly all U.S.natural gas was supplied from North American wells and transported through the continent's vastpipeline network to regional markets. In 2003, however, due to constraints in North Americannatural gas production, the United States sharply increased imports of natural gas from overseas inthe form of liquefied natural gas (LNG). While absolute levels remain limited today, growth in LNGimports to the United States is expected by many analysts to accelerate over the next 20 years,reflecting growing domestic demand and expectations for a global expansion in LNG trade. What Is LNG? When natural gas is cooled to temperatures below minus 260°F it condenses into liquefiednatural gas, or "LNG." As a liquid, natural gas occupies only 1/600th the volume of its gaseous state,so it is stored more effectively in a limited space and is more readily transported by tanker ship. Atypical tanker, for example, can carry 138,000 cubic meters of LNG -- enough to supply the dailyenergy needs of over 10 million homes. (7) When LNG is warmed, it "regasifies" and can be used for the samepurposes as conventional natural gas. The physical infrastructure of LNG includes several interconnected elements as illustratedin Figure 1 . In producing countries, natural gas is extracted from gas fields and transported bypipeline to central liquefaction plants where it is converted to LNG and stored. Liquefaction plantsare built at marine terminals so the LNG can be loaded onto special tanker ships for transportoverseas. Tankers deliver their LNG cargo to import terminals in other countries where the LNGcan again be stored or regasified and injected into pipeline systems for delivery to end users. ThisLNG infrastructure requires large capital investments. In addition to gas field development costs,a new liquefaction plant costs approximately $2-$3 billion, and an import terminal costs $500million to $1 billion. One LNG tanker costs $150-$200 million. (8) Figure 1: LNG Supply Chain Source: Oil & Gas Journal. Nov. 10, 2003. p64. Due to the high capital costs of LNG infrastructure, LNG trade has traditionally relied uponlong-term fuel purchase agreements in order to secure project financing for the entire supply chain. Of over 160 major LNG supply contracts in force around the world as of June 2005, well over 90%had a contract term of 15 years or longer. (9) While these contracts have increasingly incorporated someflexibility by accommodating extra LNG deliveries, for example, or allowing shipments to bediverted, they have only allowed for a limited supply-demand response compared to other globalcommodities markets. U.S. LNG Import Experience and Projections The United States has used LNG commercially since the1940s. Initially, LNG facilitiesstored domestically produced natural gas to supplement pipeline supplies during times of high gasdemand. In the 1970's LNG imports began to supplement domestic gas production. Between 1971and 1981, developers built four U.S. import terminals: in Massachusetts, Maryland, Georgia, andLouisiana. (10) Dueprimarily to a drop in domestic gas prices, however, two of these terminals quickly closed. Importsto the other two terminals remained small for the next 30 years. In 2002, U.S. LNG imports wereonly 0.17 Tcf, less than 1% of U.S. natural gas supply. (11) Figure 2: U.S. Natural Gas Wellhead Price ($/Mcf) Source: Energy Information Administration. Natural Gas Weekly Update . Jan. 19, 2006. United States demand for LNG has been increasing dramatically since 2003. This growthin LNG demand has been occurring in part because North American natural gas production appearsto have plateaued, so it has not been able to keep pace with growth in demand. As a result, U.S.natural gas prices have become higher and more volatile. As Figure 2 shows, gas prices at thewellhead have risen from around $2.00/Mcf through most of the 1990s to an average above$6.00/Mcf and a peak above $10.00/Mcf in 2005. (12) At the same time, international prices for LNG have fallenbecause of increased supplies and lower production and transportation costs, making LNG morecompetitive with domestic natural gas. (13) While cost estimation is speculative, some industry analystsbelieve that LNG can be economically delivered to U.S. pipelines for approximately $2.50 to$3.50/Mcf. (14) Forecasts by the Energy Information Administration (EIA), National Petroleum Council, andother groups project expansion in U.S. LNG imports over the next 20 years. Specific LNG forecastsvary based on methodology and market assumptions, but most expect LNG to account for 12% to21% of U.S. natural gas supplies by 2025. (15) EIA's reference forecast projects U.S. LNG imports to reach 4.13Tcf in 2025, which equates to approximately 16% of total U.S. gas supply for that year, upsubstantially from the 2005 market share of about 3%. (16) Figure 3 details projected U.S. LNG imports relative to othernatural gas supplies in EIA's forecast. Figure 3: Projected U.S. Natural Gas Production and Imports (Tcf) Source: Energy Information Administration. Annual Energy Outlook 2006. Dec. 2005. Table A13. Global LNG Market Development Projections of accelerated growth in U.S. LNG demand reflect a general expansion in theglobal natural gas market. According to the EIA's most recent international forecast "natural gas isexpected to be the fastest growing component of world primary energy consumption." (17) EIA projects global naturalgas demand to rise by an average 2.3 percent annually for the next 20 years, with "the largestincreases ... projected for the transitional economies of Eastern Europe and the former Soviet Union... and for emerging Asia," much of it to fuel electricity generation. (18) A significant part of thisglobal gas demand growth is expected to be met by new supplies of LNG. Long-term projectionsof global LNG growth vary, but most major energy companies and industry analysts expect globalLNG demand to roughly triple by 2020, from 6 Tcf in 2003, to 18 Tcf or more in 2020. (19) According to EIAprojections, 18 Tcf would account for approximately 13% of global natural gas consumption in2020. (20) LNG Safety and Security Natural gas is combustible, so an uncontrolled release of LNG poses a hazard of fire or, inconfined spaces, explosion. LNG also poses hazards because it is so cold. Because LNG tankersand terminals are highly visible and easily identified, they may also be vulnerable to terrorist attack. Assessing the potential risk from LNG releases is controversial. A 1944 accident at one of thenation's first LNG facilities, for example, killed 128 people and initiated public fears about LNGhazards which persist today. (21) But technology improvements and standards since the 1940'sappear to have made LNG facilities safer. Between 1944 and 2006, LNG terminals experiencedapproximately 13 serious accidents, with two fatalities, directly caused by LNG. (22) Since international LNGshipping began in 1959, tankers have carried 40,000 LNG cargoes without a serious accident at seaor in port. (23) In January2004, however, a fire at an LNG processing facility in Algeria killed an estimated 27 workers andinjured 74 others. (24) The Algeria accident raised new questions about LNG facility safety and security. A number of technical studies since the terror attacks of September 11, 2001, have beencommissioned to reevaluate the safety hazards of LNG terminals and associated shipping. Thesestudies have caused controversy because, due to differences in analytic assumptions, some havereached inconsistent conclusions about the potential public hazard of LNG terminal accidents orterror attacks. In an effort to resolve these inconsistencies, the Department of Energy commissioneda comprehensive LNG hazard study from Sandia National Laboratories. The Sandia report, releasedin December 2004, determined that a worst-case, "credible" LNG tanker fire could emit harmfulthermal radiation up 2,118 meters (1.3 miles) away. (25) Although, the report concluded that "risks from accidental LNGspills ... are small and manageable," it also concluded that "the consequences from an intentional[tanker] breach can be more severe than those from accidental breaches." (26) Both proponents andopponents of new LNG terminals have cited the Sandia findings to support their positions. Thecontroversy continues. LNG Policy Activities of the Federal Government The federal government has been actively promoting increased LNG imports. Through newregulation, administrative actions, and legislation, federal agencies and Congress have tried to fosterLNG capital investment, streamline the LNG terminal approval process, and promote global LNGtrade. FERC Regulations. The Federal EnergyRegulatory Commission (FERC) grants federal approval for the siting of new onshore LNG facilitiesand interstate gas pipelines, and also regulates prices for interstate gas transmission. (27) In December, 2002, theFERC exempted LNG import terminals from rate regulation and open access requirements. Thisregulatory action, commonly called the "Hackberry decision" allowed import terminal owners to setmarket-based rates for terminal services, and allowed terminal developers to secure proprietaryterminal access for corporate affiliates with investments in LNG supply. (28) These regulatory changesgreatly reduced investment uncertainty for potential LNG developers, and assured access to theirown terminals. (29) InFebruary 2004, FERC streamlined the LNG siting approval process through an agreement with theU.S. Coast Guard and the Department of Transportation to coordinate review of LNG terminal safetyand security. The agreement "stipulates that the agencies identify issues early and quickly resolvethem." (30) FERC alsoannounced a new branch devoted to LNG within its Office of Energy Projects. (31) Between 1999 and 2005, FERC approved the reactivation of the two idled U.S. LNGterminals, and subsequently approved the expansion of the four existing import terminals in thecontinental United States. In September, 2003, FERC approved the Cameron LNG project inHackberry, LA, the first new LNG import terminal to be sited in the continental United States in over25 years. (32) Thecommission has since approved eight additional terminals (in Texas, Louisiana, and Massachusetts),and as of January, 2006 has received 12 additional terminal siting applications. (33) In 2004, FERC alsoapproved the construction of two new gas pipelines connecting Florida to proposed LNG importterminals in the Bahamas. (34) The terminals and pipelines approved to date by FERC couldincrease total U.S. LNG import capacity to approximately 7.0 Tcf per year. Offshore Terminal Regulations. In November,2002, Congress passed the Maritime Transportation Security Act of 2002 ( P.L. 107-295 ), whichtransferred jurisdiction for offshore LNG terminal siting approval from the FERC to the MaritimeAdministration (MARAD) and the U.S. Coast Guard (USCG). According to the Department ofEnergy, the act ... streamlined the permitting process and relaxedregulatory requirements. Owners of offshore LNG terminals are allowed proprietary access to theirown terminal capacity, removing what had once been a major stumbling block for potentialdevelopers of new LNG facilities.... The streamlined application process ... promises a decisionwithin 365 days.... (35) The proprietary access provisions for offshore terminals are similar to those set by FERC for onshoreterminals to ensure equal treatment for both kinds of facilities. In November, 2003, the MARADand USCG approved the Port Pelican project, the first offshore LNG terminal ever to be sited in U.S.waters. The agencies have subsequently approved Energy Bridge (January, 2004) and Gulf Landing(February, 2005), two additional offshore LNG projects. All three terminals would be located in theGulf of Mexico. Their combined annual capacity would be approximately 1.2 Tcf. As of January,2006, the agencies were reviewing seven additional offshore terminal applications, two off theCalifornia coast, four in the Gulf of Mexico, and two off the coast of Massachusetts. Congressional Activities. In 2005, Congresspassed and President Bush signed the Energy Policy Act of 2005 ( P.L. 109-58 ). The Energy PolicyAct is generally seen as promoting new LNG terminal development in several ways. As noted earlierin this report, the act resolved certain state-federal jurisdictional disputes by granting the FERCexplicit and "exclusive" authority to approve onshore LNG terminal siting applications (Sec. 311c).The act also codifies the "Hackberry decision"discussed above (Sec. 311c). The act designates theFERC as the "lead agency for the purposes of coordinating all applicable Federal authorizations" andfor complying with federal environmental requirements (Sec. 313a). It also establishes the FERC'sauthority to set schedules for federal authorizations and establishes provisions for judicial review ofFERC's siting decisions in the U.S. Court of Appeals, among other administrative provisions (Sec.313b). The act also requires FERC to promulgate regulations for pre-filing of LNG import terminalsiting applications and directs FERC to consult with designated state agencies regarding safetyconsiderations in considering such applications. It permits states to conduct safety inspections ofLNG terminals in conformance with federal regulations, although it retains enforcement authorityat the federal level. The act also requires LNG terminal operators to develop emergency responseplans including cost-sharing to reimburse state and local governments for safety and security costs(Sec. 311d). Key Issues in U.S. LNG Import Policy Federal actions are facilitating greater U.S. LNG imports, and the private sector is respondingwith plans for new LNG facilities. Nonetheless, concerns are emerging about the infrastructureneeds of LNG, the future structure of global LNG trade, and the relationship between the UnitedStates and other LNG market participants. Physical Infrastructure Requirements To meet U.S. LNG imports of 4.13 Tcf in 2025 as projected by the EIA would requiresignificant additions to North American import terminal capacity. Along with expansions at fourexisting terminals, six to ten new import terminals would be needed. LNG developers haveproposed over 30 new terminals with a combined import capacity far exceeding what would likelybe needed the meet the projections ( Figure 4 ). (36) These developers include multi-national corporations with thefinancial resources and project experience to develop such facilities. At issue is where theseterminals would be built, how they would be integrated into the nation's existing gas infrastructure,and how they might be secured against accident or terrorist attack. Figure 4: Existing and Proposed LNG Import Terminals in North America Source: Federal Energy Regulatory Commission (FERC). "Existing and Proposed North American LNG Terminals." Office of Energy Projects. Washington, DC. Jan. 23, 2006. http://www.ferc.gov/industries/lng/indus-act/terminals/exist-prop-lng.pdf Terminal Siting. Choosing acceptable sites fornew LNG terminals has proven controversial. As noted earlier in this report, federal agencies haveapproved the siting of ten new terminals in the Gulf of Mexico as well as two new Florida pipelinesfor proposed terminals in the Bahamas. But many developers have sought to build terminals nearerto major consuming markets in California and the Northeast, as Figure 4 shows. Developers haveproposed terminals near consuming markets to avoid pipeline bottlenecks and to minimizetransportation costs. In 2003, soon after LNG deliveries to the Cove Point resumed, natural gas forthe local Maryland market was priced well below conventional gas supplies transported by pipelinefrom the Gulf of Mexico. (37) If new terminals are built far from key consumer markets,delivered gas might cost more than if LNG terminals were built locally. As of January, 2006, federal agencies have approved only one new LNG import terminaloutside the Gulf of Mexico, in Massachusetts. Such near-to-market terminal proposals havestruggled for approval due to community concerns about LNG safety, effects on local commerce, andother potential negative impacts. LNG terminal opposition is not unlike that experienced by someother types of industrial and utility facilities. Due to local community opposition, LNG developershave already withdrawn terminal projects recently proposed in California, Maine, North Carolina,Florida, and Mexico. Other terminal proposals in Rhode Island, New York, New Jersey and Canadaare facing stiff community opposition. In Alabama, a state assumed by many to be friendly to LNGdevelopment, community groups have effectively blocked two onshore terminal proposals and havecalled for LNG import terminals to be built only offshore. (38) In some cases state and local agencies are at odds with federal agencies over LNG terminalsiting approval. For example, Delaware's environmental secretary has blocked the development ofan LNG terminal on the Delaware-New Jersey border ruling that part of the terminal would extendinto Delaware's waters and violate Delaware's Coastal Zone Act. (39) The United StatesSupreme Court has appointed a special master to resolve the dispute. (40) In January, 2005,Massachusetts and Rhode Island filed petitions in federal court to reverse FERC's approval of anLNG import terminal to be sited in Fall River, Massachusetts. (41) In 2004, the CaliforniaPublic Utilities Commission (CPUC) sued FERC in federal court over FERC's assertion of solejurisdiction over the siting of an LNG terminal in Long Beach. The CPUC dropped its suit, however,after the passage of P.L. 109-58 mooted its arguments. Local opposition for LNG terminals has been strong in the Northeast, which has aconstrained gas transmission infrastructure. Northeast gas prices are higher than in other parts of thecountry. In Maine, for example, the monthly average wholesale price of gas delivered betweenOctober, 2004 and October, 2005 was $12.09/Mcf, compared to $8.27/Mcf in Louisiana. (42) Were the same pricedifferential to hold in the future, Maine consumers would have to pay $3.81/Mcf, or 46 percent, morefor LNG delivered to Louisiana rather than the Maine coast. Many factors like weather, pipelinetariffs, and new natural gas supplies from Canada could significantly change relative prices. Nonetheless, if recent regional pricing patterns persist, displacing a handful of proposed LNGterminals from consumer markets to the Gulf of Mexico could cost regional gas consumers billionsof dollars in extra pipeline transportation charges. On the other hand, siting new terminals in morereceptive locations could help bring them into service more quickly, and could still exert downwardpressure on gas prices while alleviating community safety concerns. Pipeline Infrastructure. LNG supplies to theUnited States have been such a small share of the total market that they have had little discernibleinfluence on the development of North America's gas pipeline network. If projections of U.S. LNGgrowth prove correct, however, LNG terminals may have more impact on pipeline infrastructure inthe future. As additional LNG import capacity is approved, how new terminals will be physicallyintegrated into the existing pipeline network becomes a consideration. LNG terminals may affect pipeline infrastructure in two ways. First, new terminals andterminal expansions must be connected to the interstate pipeline network through sufficient"takeaway" pipeline capacity to handle the large volumes of imported natural gas. Depending uponthe size, location and proximity of a new terminal to existing pipelines, ensuring adequate takeawaycapacity may require new pipeline construction. For example, the owner of the Elba Island, GAterminal intends to build a 191-mile pipeline to transport additional gas volume from the terminal'splanned expansion. (43) Energy experts have expressed concern, however, that interstate pipeline capacity may not besufficient to handle future LNG supplies without substantial new pipeline additions. (44) The availability of pipelinecapacity directly affects pipeline transportation costs, so it is an important consideration in evaluatingthe economics of LNG versus traditional pipeline supplies in specific markets. Second, if gas imported as LNG cannot move freely through interstate pipeline systems,consumers may not realize the lower prices that result from additional gas availability. One industryobserver remarked, "without more infrastructure, gas may face the kind of glut plaguing the electricutility industry, with too much generating capacity and too few connections." (45) For this reason, some LNGdevelopers advocate building LNG terminals in traditional gas producing regions, where pipelinenodes are located. According to one industry executive, "it doesn't make a lot of sense to build aterminal and then have to build a huge pipeline." (46) Others argue that the most costly constraints in the gas pipelinenetwork are at the ends of the pipelines, not the beginnings. Gas is expensive in Boston, forexample, because there are few pipelines supplying the region -- a transportation constraint thatwould not be alleviated by pumping more gas into pipelines in the Gulf of Mexico. As one seniorFERC official has reportedly remarked, "putting more and more LNG plants in the Gulf, while itmay be good for the overall gas supply situation in this country, won't do a whole lot for the regionalgas needs of New England." (47) It is not clear, therefore, whether adding LNG supplies totraditional producing regions would be less costly for consumers than building in-market terminalsand adding to regional pipeline capacity. In addition to requiring sufficient takeaway capacity, LNG terminals likely will influencepipeline network flows. Major U.S. pipeline systems were designed primarily to move gas fromtraditional producing regions (e.g., Gulf Coast, Appalachia, Western Canada) to consuming regions(e.g, Northeast, Midwest). If most new LNG capacity is built in the Gulf of Mexico, then traditionalgas flows would be maintained. If a number of new terminals are built in consuming regions,however, they may change historical gas transportation patterns, potentially displacing traditionalproduction and changing infrastructure constraints. Among other potential impacts, some analystshave suggested that new LNG terminals will result in "less market leverage and probably lower cashflows" for some existing pipelines because new LNG supplies may be able to reach consumermarkets by alternate routes. (48) Predicting the overall effects of long term changes in gas flowsis a complex problem, although such changes may have important implications for current pipelineutilization and for future pipeline investments. Interchangeability. LNG consists primarily ofmethane, but it may also contain significant quantities of other hydrocarbon fuels, such as ethane,propane and butane. The quantity of these other fuels in LNG affects the overall heat content in theLNG and varies depending upon its source. In markets outside the United States, LNG containsmore non-methane fuels and, therefore, has a higher heat content than traditional U.S. natural gassupplies. LNG with a high heat content can cause problems when imported into the United Statesbecause it may damage pipelines and natural gas-fired equipment (e.g., electric power turbines)which are designed for a lower heat content. There are a number of potential technical solutions toLNG interchangeability problems, such as stripping out the non-methane fuels, blending the LNGwith domestic natural gas, and "diluting" the LNG with nitrogen. (49) These solutions mayinvolve significant added expense to LNG processing, however, which could be reflected in highernatural gas prices. The FERC has been working with natural gas trade associations to establishappropriate national policies for natural gas interchangeability and quality. The FERC has addressedsome interchangeability issues on a case by case basis, and has proposed more general regulationson natural gas quality and interchangeability, but the commission's expressed preference is that thegas industry and gas quality stakeholders reach their own consensus on interchangeability. (50) Safety and Physical Security. To protect thepublic from an LNG accident or terrorist attack, the federal government imposes numerous safetyand security requirements on LNG infrastructure. The nature and level of risk associated with LNGis the subject of ongoing debate among industry, government agencies, researchers and localcommunities. (51) Whatever the specific risk levels are determined to be, they could multiply as the number of LNGterminals and associated tanker shipments grows. Likewise, the costs associated with mitigatingthese risks are also likely to increase. To the extent these costs are not borne by the LNG industry,they may represent an ongoing burden to public agencies such as the Coast Guard, law enforcement,and emergency response agencies. Securing tanker shipments against terrorist attacks may be the most significant publicexpense associated with LNG. CRS has estimated the public cost of security for an LNG deliveryto the Everett terminal to be on the order of $80,000, excluding costs incurred by the terminalowner. (52) Marinesecurity costs at other LNG terminals could be lower than for Everett because they are farther fromdense populations and may face fewer vulnerabilities, but could still be on the order of $20,000 to$40,000 per shipment. If LNG imports increase as projected, the number of vessels calling at LNGterminals serving the United States would increase from 99 (0.17 Tcf) in 2002 to over 2300 (4.13Tcf) in 2025. (53) Atcurrent levels of protection, marine security costs would then be in the range of $46 million to $92million annually. (54) Recognizing the added security needs associated with the LNG trade, the Coast Guard's FY2006budget includes an additional $11 million in general maritime security funding over FY2005 levels. These resources are for new small response boats and associated crew to increase the Coast Guard'soperational presence and response posture, enforce security zones, and escort LNG tankers and otherhigh interest vessels. (55) Congress included provisions in P.L. 109-58 requiring new LNG terminal applicants toinclude plans for security cost-sharing with state and local government agencies (Sec. 311d). Thepublic costs of LNG security also may decline as federally mandated security systems and plans areimplemented. Nonetheless, because the accounting of security costs is ambiguous and may be tiedto uncertain sources of federal funding, such as Department of Homeland Security grants, somepolicy makers remain concerned about LNG security costs and the potential diversion of CoastGuard and safety agency resources from other activities. Supply Bottlenecks. Because U.S. LNG terminalsprocess large volumes of LNG, the potential for one facility to bottleneck supply might not berecognized. A disruption at a U.S. import terminal (or at an associated supplier's export terminal)could effect regional gas availability. Hurricanes Katrina and Rita, which struck the Gulf of Mexico in 2005, forced the temporaryclosure of the Lake Charles LNG terminal and raised questions about the vulnerability to futurehurricanes of multiple new LNG import terminals in the same region. (56) In March, 2004, strikingworkers at an export terminal in Trinidad stopped all LNG operations -- interrupting shipments fromthe largest U.S. supplier and the sole supplier to the Everett terminal. Although the strike endedquickly and U.S. gas demand at the time was moderate, one gas trader stated that if the strike hadoccurred during the heart of winter it might have exacerbated already high Northeast gas prices. (57) Similarly, when LNGshipments to the Everett LNG terminal were suspended after the terror attacks of September 11,2001, markets analysts feared shortages of gas for heating and curtailments of gas deliveries toregional power plants in New England. (58) Some industry analysts view the Gulf hurricanes, Trinidad strike, and September 11, 2001events as new supply risks the United States could face as LNG becomes a larger share of gas supply. Others view these kinds of events as ordinary supply uncertainties readily managed in other fuelmarkets. As one consultant stated, they are not problems that should make the industry shyaway from developing LNG trade ... they are just problems that should make you consider how youare going to structure long-term LNG contracts and estimate what kind of premiums you are goingto pay over indigenous pipeline supply. (59) The future sensitivity of U.S. natural gas markets to LNG terminal disruptions is difficult to forecastand will be driven by factors such as supply diversity and pipeline development. Nonetheless, theconcentration of incremental gas supplies among perhaps a dozen major import facilities may raisenew concerns about the security of U.S. natural gas supply. Global LNG Market Structure In his 2003 congressional testimony, Federal Reserve Chairman Alan Greenspan asserted thatincreasing LNG import capacity would create "a price-pressure safety valve" for North Americannatural gas markets which would be "likely to notably damp the levels and volatility of Americannatural gas prices." (60) Basic market economics suggest that increasing marginal gas supplies from any source would tendto lower gas prices. But the long-term effectiveness of LNG in moderating gas prices will besignificantly influenced by global LNG supply, the development of an LNG spot market, andpotential market concentration. Global LNG Supply. The belief that LNG canserve as a "price-pressure safety valve" by setting a price ceiling on natural gas assumes thatsufficient LNG would be available at that price to satisfy all incremental gas demand. Otherwise, gas prices would be capped by potentially more costly North American production alternatives. Thequestion, then, is whether there will be sufficient LNG production abroad to supply incremental U.S.demand and sufficient global infrastructure to distribute it. Table 1 summarizes basic characteristics of existing or potential LNG exporters. As thetable shows, 2005 global LNG production capacity currently operating totaled approximately 9.1 Tcfper year. Table 1 also shows an additional 15.8 Tcf of global capacity proposed for service by2015, with more proposals likely in the future. If all these proposed facilities were constructed, totalglobal production capacity could exceed 24 Tcf annually, exceeding EIA's projected global LNGdemand of 18 Tcf in 2020. Global tanker capacity also appears to be keeping up with LNG demand growth. Currenttanker orders will add 130 ships to the current operating fleet of 191, increasing the overall numberof LNG vessels 250% from the fleet size of 127 tankers in 2001. (61) Based on these figures,there appears to be sufficient interest among existing and potential exporters to meet both short-termand long-term global LNG demand projections. It remains to be seen which of these export projectswill be constructed and how they will be integrated into the global LNG trade. Table 1: Global Natural Gas Reserves and LNG ProductionCapacity Sources: "World LNG Map: 2005 Edition." Petroleum Economist . 2005; "Major LNG Gas Projectsto 2015." Reuter's News . Jan. 5, 2006; Oil & Gas Journal , Vol. 103, No. 47. Dec. 19, 2005. EnergyInformation Administration; Trade press. Spot Market Growth. Some gas market analystsbelieve that a robust short-term or "spot" market for LNG is essential for U.S. importers to manageprice and supply risk, and to do business cost-effectively. An LNG spot market could allow forshort-term balancing of physical supply and demand. It could also offer greater LNG price discoveryand transparency, benefitting companies negotiating long-term LNG contracts and potentially servingas a more relevant index for LNG contract price escalators than traditional petroleum indexes. (62) A spot market might alsosupport financial trading and derivatives, important tools for managing price risk, especially duringperiods of volatile prices. (63) In recent years, the global LNG market has seen limited, but increasing short-term trade.Short-term contracts accounted for 11% of global LNG transactions in 2005, up from less than 2%in 1998, and have already enabled physical market balancing. In 2005, for example, just afterHurricanes Katrina and Rita struck the Gulf of Mexico, Suez Energy (owner of the Everett LNGterminal) purchased a spot LNG cargo to meet its obligations to its New England customers. (64) In 2003-2004, SouthKorea purchased 36 spot cargoes of LNG to meet extra residential heating demand duringwinter. (65) In December, 2003, Indonesia sought four LNG cargoes from rival producers to meet delivery contractsfollowing production problems at its Bontang plant. (66) Unlike petroleum markets where all prices are essentially short-term, analysts believe LNGtrade will stabilize with some mix of long and short-term contracts since infrastructure costs are sohigh. No new LNG liquefaction project yet has been launched without a long term contract. Thelikely size of an LNG spot market is difficult to predict, however at least one major exporter expects30% of global LNG capacity will ultimately trade on the spot market. (67) Coupled with projectionsof overall LNG demand growth, a 30% spot market share implies a tripling in spot market volumesby 2020. It is an open question, however, whether this volume of spot trade in LNG will materializeand if it will offer the full range of benefits realized in comparable commodity markets. A concern related to LNG spot market development is the potential role of marketintermediaries. In the late 1990's, independent marketers like Enron and Dynegy emerged toparticipate in trading of natural gas, electricity, and other energy commodities. These marketparticipants increased market liquidity, selling risk management services to both producers andconsumers. Many marketers fell into bankruptcy, however, following the California electricity crisisin 2001 and subsequent scandals. A handful of major banks are beginning to pursue newpartnerships with LNG terminal companies (e.g., Morgan Stanley - Cheniere Energy) to facilitateLNG trading and marketing, but such partnerships have yet to fully develop. (68) It is unclear, therefore,which entities may ultimately succeed in providing the LNG industry with the capabilities neededfor a fully functioning market. Market Concentration. Some industry analystsbelieve the future LNG market may be susceptible to concentration-related inefficiencies. They notethat only a limited number of buyers and sellers can effectively participate in LNG trade because thecapital requirements are so great. (69) Many analysts also believe that a relatively small number ofexporting countries are likely to account for the majority of LNG trade in the foreseeable future. Based on LNG's similarity to the world oil trade, some observers are concerned about thepossible emergence of a natural gas export cartel analogous to the Organization of PetroleumExporting Countries (OPEC). One analyst remarked: Might a few countries come to dominate the supply ofLNG and adopt policies harking back to the confrontational OPEC of the 1970's? An association ofsome kind among LNG exporters is likely. Many of them are also oil exporters, and the desire tocompare fiscal terms will be irresistible. (70) In March, 2004, at the Fourth Annual Gas Exporting Countries Forum, 15 major natural gasexporters established an "executive bureau" to develop common policies and joint initiativesregarding natural gas exports. According to press accounts, some forum members viewed the bureauas "a major step toward creating an OPEC-like organization to regulate gas production." (71) Some analysts have alsopointed to apparent efforts by Russian gas company, Gazprom, "to sketch out the basic terms forbroad cooperation in the gas sector between Russia and Iran" the two countries controlling the largestnatural gas reserves in the world. (72) Other analysts are more skeptical of a potential natural gas cartel,citing the predominance of long-term contracts for LNG trade, divergent national interests, and otherfactors as barriers to collaboration. (73) The ability of a cartel to play a similar role in gas as OPEC does in oil is debatable. OPECmember countries currently control over 75% of the world's proven oil reserves and approximately40% of global oil supply. (74) By comparison, OPEC members control approximately 50% ofproven world gas reserves and approximately 59% of global LNG production capacity projected for2015 (Table 1 ). When non-LNG sources are accounted for, however, OPEC countries' share ofglobal gas supply would be approximately 5% in 2015. Based on these figures alone, it is difficultto draw conclusions about the potential market power of an association of LNG exporters. It ispossible, however, that the diversity of LNG suppliers, and the competitive relationship betweenLNG and traditional pipeline gas could make the world LNG market somewhat different than thatof oil. Global Trade and Politics. Continued growth ofUnited States demand in an integrated global LNG market may affect trading and politicalrelationships with key market participants. According to one estimate, by 2015 the United Statesmay be the world's largest LNG importer, accounting for 22% of global volumes ( Figure 5 ). SouthKorea, Spain, and the UK will also be importing large quantities of LNG, and may be joined bydeveloping nations including India and China, seeking greater imports for rapidly growingeconomies. Figure 5: Global LNG Import Market Shares Projected for 2015 Source: Deutsche Bank Securities, Inc. "Global LNG: Exploding the Myths." July 22. 2004. p2. In an integrated global LNG market, individual country energy polices may significantlyaffect LNG price and availability worldwide. In 2001 and 2002, for example, after the Japanesegovernment forced Tokyo Electric Power to shut down over a dozen nuclear plants for safetyreasons, Japanese utilities relied more heavily on fossil fuels for electricity generation. Accordingto the EIA: the result was a significant increase in Japan's demandfor LNG, so that the majority of world spot cargoes were delivered to the Japanese market. Japan'sincreased reliance on LNG probably contributed to the reduction in short-term deliveries of LNG tothe United States... (75) Japan's nuclear energy policies also affected South Korea, which depends on flexible spot LNGsupplies to meet winter heating demand. With LNG supplies in Asia suddenly scarce, South Koreahad to pay a substantial premium to attract spot cargoes originally destined for Spain. (76) In 2004-2005, Spainattracted numerous LNG spot cargoes "at the expense of the US" in response to record cold weatherand inadequate hydroelectric power supplies. (77) Despite record cold temperatures and record high natural gasprices after the Gulf hurricanes, U.S. LNG terminals were operating at less than 50% capacity inDecember, 2005. (78) Trade with LNG exporters such as Iran, Nigeria, and Venezuela may also raise geopoliticalconcerns. According to one analyst, "question remains on the merits of increasing reliance onimported energy ... if supply sources are from a region perceived as politically unstable orinhospitable to U.S. interests." (79) In part to mitigate such risks, the DOE has been encouraging thedevelopment of LNG supplies in South America and West Africa rather than the Middle East. According to the former DOE Assistant Secretary for Policy and International Affairs, "DOE istrying to make countries like Equatorial Guinea as attractive as possible to investors while aimingto limit the countries' potential political instability through contract and regulatory reform." (80) LNG trade may also be linked to broader trading and political relationships among key LNGpartners. For example, in the fall of 2004, China's interest in securing LNG supplies from Iran "putit in direct conflict with U.S. efforts to force Iran to renounce its ambitions to become a nuclearweapons state." (81) Ina 2004 meeting with U.S. Energy Secretary Spencer Abraham, the Prime Minister of Trinidadreportedly used his country's status as the largest U.S. LNG supplier to seek most favored nationstatus for Trinidad's energy exports, duty free U.S. access for all Trinidadian-packaged products, andU.S. aid to offset gas exploration costs. (82) Russia's brief withholding of natural gas supplies to Ukraine andparts of the European Union in January, 2006 in what was widely perceived as both an economic andpolitical dispute have raised additional concerns about political linkages among future natural gasmarket participants. (83) It is interesting to note that several European countries, including Italy, Ukraine, Poland, Hungary,Croatia, have since proposed the construction of new LNG imports terminals to reduce theirdependence on Russian pipeline natural gas supplies. Russia's plans to become a major LNGexporter may further complicate the global natural gas trade. It is difficult to predict the nature of trading and political relationships either among LNGimporters, or between specific LNG importing and exporting countries over a 20-year time frame. Nonetheless, experience suggests that global LNG trade may introduce new risks and opportunitiesamong trading countries that warrant consideration in LNG policy debate. Conclusions As long as domestic demand outpaces North American natural gas production, the option ofdeveloping LNG import capacity appears economically attractive. Currently, LNG supplies 3% ofU.S. natural gas, but both industry and government project this figure to rise to as much as 21% by2025. Such an increase would pose a number of practical, immediate challenges, such as ensuringadequate production and import capacity, integrating LNG efficiently into the existing natural gassupply network, and securing LNG infrastructure against accident or terrorist attack. Publicopposition to LNG-related facilities and new trading relationships in an increasingly integratedglobal gas market will also bear upon the expansion of the industry. As the practical challenges to LNG import expansion are addressed, the policy discussionturns to the long-term implications of increased LNG imports in the nation's energy supply. Intentionally or not, the United States may be starting down a path of dependency on LNG importssimilar to its current dependency on foreign oil. Such a dependency would represent a major shiftin the nation's energy policy, and may have far-reaching economic impact. Because U.S. naturalgas markets are regional, major consuming areas such as California and the Northeast might beparticularly affected. Some energy analysts believe that U.S. dependency on imported LNG is inevitable; the onlyuncertainty is how quickly it will occur. Others disagree, promoting instead familiar alternativessuch as greater domestic gas production, switching to oil or other energy sources, and conservation. Recent measures before Congress affect LNG imports by providing incentives for domestic gasproduction and for new LNG terminal construction. If Congress considers the relative merits of LNGand other energy supply alternatives, three overarching policy questions may emerge. Is expanding LNG imports the best option for meeting long-term natural gasdemand in the United States? What future role, if any, should the federal government play in facilitating theongoing development of LNG infrastructure in the United States and abroad? How might Congress mitigate the risks of the global LNG trade within thecontext of national energy policy? The answers to these questions may flow from enhanced understanding of the infrastructure andmarket structure issues discussed in this report. With incomplete information and limited policyanalysis, LNG imports may look unrealistically attractive to some, but unreasonably risky to others. The reality probably lies somewhere in between. It may not be possible to predict the LNG future20 years from now, but choices made now can substantially affect that future.

Liquefied natural gas (LNG) imports to the United States are increasing to supplementdomestic gas production. Recent actions by Congress and federal agencies have promoted greaterLNG supplies by changing regulations, clarifying siting authorities, and streamlining the approvalprocess for LNG import terminals. Were these policies to continue and gas demand to grow, LNGmight account for as much as 21% of U.S. gas supply by 2025, up from 3% in 2005. Congress isexamining the infrastructure and market implications of greater U.S. LNG demand. There are concerns about how LNG capacity additions would be integrated into the nation'sgas infrastructure. Meeting projected U.S. LNG demand would require six to ten new importterminals in addition to expanding existing terminals. Twelve new terminals, most in the Gulf ofMexico, are approved, but public opposition has blocked many near-to-market terminals whichmight save billions of dollars in gas transportation costs. New LNG terminals can also require moreregional pipeline capacity to transport their supply, although this capacity may not be available inkey markets. Securing LNG infrastructure against accidents and terrorist attacks may also be achallenge to public agencies. Since import terminals process large volumes of LNG, a breakdownat any facility has the potential to bottleneck supply. LNG's effectiveness in moderating U.S. gas prices will be determined by global LNG supply,the development of a "spot" market, potential market concentration, and evolving tradingrelationships. There appears to be sufficient interest among LNG exporters to meet global demandprojections, although some new export projects may not be built. An LNG spot market, which mayhelp U.S. companies import LNG cost-effectively, is also growing. Although some analysts believea cartel may influence the future LNG market, the potential effectiveness of a such a cartel is unclear. Whether exporters cooperate or not, an integrated global LNG market may change trading andpolitical relationships. Individual country energy polices may affect LNG price and supplyworldwide. Trade with LNG exporters perceived as unstable or inhospitable to U.S. interests mayraise concerns about supply reliability. Recent measures before Congress seek to encourage both domestic gas supply and new LNGterminal construction. The Energy Policy Act of 2005 ( P.L. 109-58 ) includes incentives for domesticgas producers and grants the Federal Energy Regulatory Commission "exclusive" authority toapprove onshore LNG terminal siting applications, among other provisions. Other proposals in the109th Congress, including H.R. 4318 , H.R. 3918 , and H.R. 3811 would lift federal restrictions on natural gas development on the Outer Continental Shelf. AsCongress debates U.S. natural gas policy, three questions emerge: (1) Is expanding LNG imports thebest option for meeting natural gas demand in the United States? (2) What future role, if any, shouldthe federal government play in facilitating the development of LNG infrastructure domestically andabroad? (3) How might Congress mitigate the risks of the global LNG trade within the context ofnational energy policy? This report will be updated as events warrant.

I. Introduction The debate over the need to establish a constitutional limit on spending or debt is nearly as old as the nation itself. Thomas Jefferson is often cited as an intellectual forefather in the current debate because of his distrust of government debt. He once wrote that the way to cure what he felt was extravagant spending by the Administration of John Adams was a constitutional amendment that took away the power of the federal government to incur debt. Support for such an idea has waxed and waned continuously since that time. Support was echoed in the "Contract With America" advanced by Republican House candidates during the 1994 congressional campaign, and by the wide consensus on a balanced budget as a political ideal, especially since the late 1970s. The current call for a constitutional amendment to require a balanced budget reflects its status as one of the most persistent political issues of recent decades. In the current Congress, the House Judiciary Committee has reported a proposal, H.J.Res. 1 , that includes provisions that would require a super majority to allow a budget with outlays in excess of receipts, to allow outlays to exceed 18% of the "economic output" of the United States regardless of whether the budget were balanced, to increase the debt limit, or to increase revenues. Generally the term balanced budget simply refers to a situation wherein the annual expenditures made by the government are equal to its receipts. Disagreement about just exactly how these key components should be defined and measured has been one of the chief stumbling blocks in the consideration of balanced budget proposals. Although these sound like straightforward concepts, this definitional problem is far from trivial; any sound definition must say what is to be included and, at least by inference, who is to be responsible for insuring that its provisions are carried out. When coupled with additional provisions, as with H.J.Res. 1 , the debate takes on even greater complexity. The Deficit as an Issue The goal of balancing the budget was rarely controversial during the 18 th and 19 th centuries, and budget deficits were considered abnormalities to be tolerated only in extraordinary circumstances such as war. Prolonged deficits in the aftermath of the Civil War and the depression of 1893 had an impact on the way in which budgeting was done, but did not alter this objective. As late as the 1920s, adherence to this ideal meant congressional commitment to a policy of surpluses throughout the decade to retire some of the huge debt accumulated due to the First World War. The unprecedented magnitude of the deficits incurred during the Great Depression of the 1930s and World War II seem a watershed in American fiscal history, but those deficits did not represent a revolution in fiscal policy. Although the New Deal and the "new economics" ascribed to John Maynard Keynes are intertwined in the minds of many, there was likely no direct and substantial influence of Keynes on President Roosevelt's fiscal policies. Indeed, Keynes' General Theory of Employment, Interest and Money , the work that spurred the transformation of economic thought, was not published until 1936. The Roosevelt Administration's fiscal policy in the 1930s accepted deficits as a consequence of "providing relief," but not as part of a deliberate policy to bring about recovery or full employment. The transformation of economic thought that followed Keynes had a growing impact on fiscal policy after World War II, demonstrated by such legislation as the Employment Act of 1946. Even President Dwight Eisenhower, who was sometimes criticized for making a "fetish" of balancing the budget, had some degree of flexibility on this question. He stated that, "it has sometimes seemed a little bit odd that we have to make our whole ... economic cycle coincide with the time it takes the earth to get around the sun." By the time of the Kennedy Administration, the ideal of budget balancing had lost its primacy as an influence on fiscal decisions. Advocates of Keynesian economic theories supported the concepts of counter-cyclical spending and "full employment" budgeting. These concepts implied increased government spending and tax cuts to offset downswings of the economy even if a deficit resulted, and decreased spending, tax increases, or both in order to run surpluses during upswings. This idea was based on the premise that governments should balance the economy, not simply the budget. Although there is no generally accepted Keynesian orthodoxy, even among economists, and there is much debate on the impact of government in the economy and on the economics of budget balancing. The Call for a Balanced Budget Amendment The declining significance of balanced budgets as the singular goal of fiscal policy prompted opposition efforts to establish formal legal underpinnings for the principle of a balanced budget. Perhaps the first example of this occurred in 1935 when Senator Millard Tydings introduced the first measure designed effectively to require the federal budget to be balanced (S.J.Res. 36, 74 th Congress). This resolution unsuccessfully sought to prohibit appropriations in excess of revenues in the absence of new debt authorization, and require that any new debt be liquidated over a 15-year period. The following year Representative Harold Knutson introduced the first proposed constitutional amendment that would have required a balanced budget (H.J.Res. 579, 74 th Congress). That proposal would have allowed for the possibility of deficits, but would have established a per capita limitation on the federal public debt during peacetime. Since the limit suggested was lower than the outstanding debt at the time, it would have effectively mandated budgetary surpluses. The first congressional action beyond the introduction and referral of proposals occurred in 1947. By special arrangement, the Senate Appropriations Committee had a balanced budget amendment jointly referred to itself as well as the Senate Judiciary Committee. The Appropriations Committee reported the measure on May 5, 1947. However, the Judiciary Committee did not take any subsequent action, and no further formal consideration occurred. Since the 1930s, dozens of proposals have been made to require a balanced budget, to limit the size or growth of the federal budget or of the public debt, or some combination of these ideas, including several notable recent efforts. These have come in the form both of bills and proposed constitutional amendments. The Debate in Recent Decades Possibly reinforced by previous experience that many Members of Congress have had at the state level, where balanced operating budgets commonly are required, the issue has remained alive. For a period, some observers feared that the goal of a balanced budget, or even the Keynesian ideal of using budget policy to balance the economy, had been totally abandoned. This was particularly so in the 1990s because until FY1999, no President had proposed a budget in balance since FY1971. Further, before FY1998, the federal government had not ended a fiscal year in surplus since FY1969 (see Appendix A ). During that period the size of annual deficits had increased, both in terms of dollars and as a percentage of Gross Domestic Product (GDP). The increasing level of both the federal deficit and debt (see Table 1 ) increased the popularity of the idea of mandating a balanced budget. In particular, it generated strong interest in the idea of using constitutional change as a remedy for seemingly intractable current budgetary problems. Indeed, Presidents Ronald Reagan and George H. W. Bush supported this position. President Bill Clinton also expressed support for a balanced budget, although he opposed using a constitutional amendment to require one. Popularity for a balanced budget amendment arguably waned during the late 1990s as the budget came into balance. Between 1985 and 2002, other statutory budget controls were in effect as part of the Balanced Budget and Emergency Deficit Control Act of 1985 and the Budget Enforcement Act of 1990. Further, a combination of spending decreases, revenue increases, and a thriving economy brought the budget into balance, and a surplus existed from FY1998 through FY2001. Concern has recently spiked once again over an increasing deficit and its potential effect on the nation's fiscal and economic health. The budget deficit each year from 2009 to 2011 has been the highest ever in dollar terms, and significantly higher as a share of GDP, than at any time since World War II. Under current policies, the federal debt is projected to grow more quickly than GDP, leading observers to term it unsustainable. While there has been no difficulty financing the deficit to date, it has been argued that at some point, investors could refuse to continue to finance deficits that they believe are unsustainable. According to some observers, the deficit problem is due to a budget process that permits the government to run persistent substantial deficits and to a political system wherein deficit spending may be rewarded. The fact that responsibility for deficits cannot be indisputably assigned to any one action or actor, or even to either undertaxing or overspending alone, leaves balancing the budget as a visible, but unrealized, priority. This has meant a surge of recent support for measures guaranteeing a balanced budget, while deficits have grown to unprecedented size. Despite fiscal and budgetary policies that doubled the national debt in the first five years of his Administration, President Ronald Reagan was an outspoken advocate of the ideal of a balanced budget. Even before the beginning of his tenure as President, during his 1980 campaign, he wrote "Excessive Federal spending and deficits have become so engrained in government today that a constitutional amendment is necessary to limit spending." In his first inaugural address, Mr. Reagan spoke against public spending that had "piled deficit upon deficit," and had "mortgag[ed] our future and our children's future for the temporary convenience of the present." Later, during his second term, he spoke of an "economic bill of rights" with a balanced budget amendment as its centerpiece, and suggested that it was long overdue. In his first budget submission (FY1991) President George Bush reiterated these themes, stating that a balanced budget amendment should be adopted to "halt the steady build-up of national debt," in order to "protect the interest of future generations." President Clinton's approach was more guarded: supportive of the idea of a balanced budget, but generally opposed to a constitutional requirement. In a 1993 letter to congressional leaders, Clinton characterized the proposed constitutional amendment approach as a "budget gimmick" whose vagueness would result in "appointed judges with life tenure" making budget decisions that he felt should be made by elected lawmakers. On March 16, 1994, President Clinton sent a letter to Congress in which he stated his opposition to a constitutiona l amendment, despite his overall support for deficit reduction. This opposition was more subdued in his 1995 State of the Union Address, when he reiterated his support for deficit reduction. In his 1997 State of the Union Address, however, President Clinton made his opposition to a constitutional amendment plain. Balancing the budget, he stated, did not require rewriting the Constitution. He further stated that "I believe it is unnecessary and unwise to adopt a balanced budget amendment that could cripple our country in time of crisis later on and force unwanted results such as judges halting Social Security checks or increasing taxes." During the 1994 congressional election campaign the Republican Party (as well as a number of Democratic candidates) continued to champion the cause of a balanced budget constitutional amendment. Included in the "Contract With America" signed by many Republican House candidates in 1994, and a central part of the agenda for the Republican majority elected to both Houses that year, was support for a balanced budget amendment. The version included in the "Contract With America" also incorporated a provision to require a three-fifths vote of both houses of Congress to increase revenues. Viewing the prospect that Congress might adopt a balanced budget amendment, the governors of a number of states urged caution in embracing specific amendment language, further complicating the debate. Many of those attending the 1994 Republican Governors' Conference, while supporting the concept of a balanced budget amendment, expressed concern that it could increase the financial burden of the states by encouraging Congress to pass laws imposing mandates and requirements without providing funding to carry them out. The chairman of the National Governors' Association, Howard Dean, characterized the proposal for a balanced budget amendment a "political show," and said that no state legislature "in its right mind" would approve an amendment that didn't also include safeguards against unfunded mandates. While lawmakers continued to introduce legislation proposing a balanced budget amendment, popularity waned until relatively recently. Just six months into the 112 th Congress, more proposals have been introduced for a balanced budget amendment than in any Congress since the 105 th . The House Judiciary Committee considered and reported H.J.Res. 1 (112 th ) on June 23, 2011. All 47 Senate Republicans have said they favor a balanced budget amendment. Further, a Balanced Budget Amendment Caucus was founded last year by a bipartisan group of Members of Congress with a membership of over 60 Members. On the other hand, there has also been recent objection to the idea of a balanced budget amendment. When asked in a press briefing about President Obama's support for a balanced budget amendment, Press Secretary Jay Carney stated, What we don't think is necessary is to amend the Constitution or to pass a across-the-board spending reduction measure that will, for example, in both cases, seriously under-fund Medicare and Social Security, and does the exact opposite in many ways of what the President has said is necessary, which is take a balanced approach to our long-term deficit and debt problems. Prominent former lawmakers from both political parties who were present during the last significant push for a balanced budget amendment, have recently voiced objection to the idea of a balanced budget amendment, particularly if its passage is coupled with legislation to increase the federal debt limit as a way to make the debt limit increase more tolerable. Former GOP appropriator and Senate Budget Chairman Judd Gregg stated, Conservatives should not tolerate those who would condition their willingness to make the tough, important votes that will address our fiscal chaos on unrealistic and impractical ideas that will have no impact on the problem. They will not come to pass in time to stop the government from spending us into oblivion. It is not uncommon for representatives and senators to propose amendments to controversial legislation that have no viability. This tactic gives them the excuse to avoid the difficult votes that might actually have an impact on a critical issue. This approach is the political equivalent of "hiding in the corners." The debt ceiling is an opportunity for real action. It can be used to force immediate action to adjust the nation's present course, which is headed towards fiscal disaster. Former Democratic Senate Majority Leader Tom Daschle stated, I was once a supporter of a constitutional balanced budget amendment that was proposed by my friend and former colleague Sen. Paul Simon in the early 1990s. We both believed that the gravity of a constitutional requirement coupled with lawmakers' sworn fidelity to the Constitution would be powerful enough to successfully overcome this political inertia. It won't. The answer will not come with just the constitutional requirement. It comes from members of Congress who are willing to work together to find real solutions, make difficult choices and achieve real results. It has been done before and can be done again. It was not easy to reduce spending or to raise taxes, but we did it. We made the unpopular choices in 1990, 1993 and 1997.We did not try to dodge the bullet. We bit the bullet, multiple times. We made steady progress reducing the deficit beginning in 1990 and ultimately turned it into a budget surplus from 1998 through 2001. We did it without undermining the sanctity of our Constitution or degrading it to push an ideological agenda. In July of 2011, the House passed H.R. 2560 , titled Cut, Cap, and Balance, which included a provision stating that the public debt limit could be raised from $14.29 trillion to $16.7 trillion, but only if Congress agreed to a balanced budget amendment. The Senate voted to table the measure by a vote of 51-46 on July 22, 2011. After extended negotiations between Congress and President Obama, a different measure to increase the public debt limit, S. 365 , the Budget Control Act of 2011 ( P.L. 112-25 ), was enacted on August 2, 2011, with a provision stating that the House and Senate shall vote on a balanced budget amendment. A balanced budget has become a central objective of many recent efforts to reform the way the federal government operates, and is mentioned as a possible benefit in others. Achieving this goal is far from a simple matter, however. Despite significant support for the concept of a balanced budget amendment, the failure to achieve a two-thirds vote of approval in both houses of Congress has been a reflection of the complexity of the issue, as well as unsettled questions concerning potential difficulties involved in implementing it. Historically, public opinion studies have routinely shown broad support for a balanced budget. These same polls have also indicated that a majority of those interviewed generally favors spending increases in most policy areas and reductions in taxes. These incompatible public attitudes convey to the President and Congress contradictory policy mandates. Such inconsistencies augment the quandary reflected by more than 50 years of congressional consideration of a balanced budget amendment. There have often been two almost separate debates occurring simultaneously on the subject of a balanced budget requirement: whether there should be a balanced budget and whether there should be a constitutional amendment. The pros and cons of a balanced budget may be related to the pros and cons of a constitutional requirement, but they are not identical. II. The Constitutional Amendment Approach Probably the most popular method advocated for ensuring that the federal budget is balanced has been a constitutional amendment. Although it would require a two-thirds vote of approval in both houses of Congress as well as ratification by three-fourths of the states before it could become effective, most of the debate has focused on the constitutional amendment approach. Arguments of Proponents Arguments for and against a balanced budget amendment include economic, symbolic, and political appeals. Those advanced most prominently by proponents have focused on three things: the morality of balanced budgets, and the impact of current deficits on future generations of taxpayers; the economic benefits of reducing the deficit, particularly in the form of lower interest rates, enhanced savings rates and overall economic growth; and the expectation of improved public attitudes towards political institutions and politicians if balanced budgets are achieved. Proponents of a constitutional amendment also cite the failure of past statutory attempts to compel a balanced budget. In their view, a constitutional amendment would be more binding by its nature and thus act as a surer means of achieving the desired result. A constitutional amendment, unlike a statute or rule, could only be superseded by another constitutional amendment. Without this discipline, proponents believe, the goal of a balanced budget would not be attained because of the conflicting pressure to spend. Most proposed amendments have assumed that enforcement mechanisms could be separately enacted as statutes, but that a constitutional provision would be primarily self-enforcing. For example, in a 1985 report accompanying a proposed amendment, the Senate Judiciary Committee stated that The Committee expects the Congress and the President to carry out their responsibilities under the proposed amendment through both (a) the authority presently available to Congress and the President to affect and influence the fiscal process; and (b) any new authority created by Congress under its Article I enforcement authority, and otherwise consistent with the Constitution by which the Congress and the President can affect and influence the fiscal process. In 1993, the Senate Judiciary Committee stated that Flagrant disregard of the proposed amendment's clear and simple provisions would constitute nothing less than a betrayal of the public trust. In their campaigns for reelection, elected officials who flout their responsibilities under this amendment will find that the political process will provide the ultimate enforcement mechanism. The question of judicial involvement has been a persistent concern of opponents, but advocates of a balanced budget amendment reject the argument that a constitutional amendment would provoke rampant judicial interference with federal budgeting. They suggest that most parties would lack the standing to bring suit, and that most issues arising under an amendment would not be justiciable because they would not present a case or controversy as mandated under Article III, and thus would likely be limited. For example, it would appear that standing is lacking when a third-party litigant attempts to sue to contest governmental action that he claims injures him as a taxpayer. In Frothingham v. Mellon the Court denied standing to a taxpayer suing to restrain disbursements of federal money to those states that chose to participate in a program to reduce maternal and infant mortality; her claim was that Congress lacked power to appropriate funds for those purposes and that the appropriations would increase her taxes in future years in an unconstitutional manner. The Court, noting that a federal taxpayer's "interest in the moneys of the Treasury ... is comparatively minute and indeterminate" and that "the effect upon future taxation, of any payment out of the funds ... [is] remote, fluctuating and uncertain," held that plaintiffs had failed to allege the type of "direct injury" necessary to confer standing. They also suggest that even if the courts did hear such cases, the political question doctrine enunciated in Baker v. Carr would place most cases outside the realm of judicial resolution. Some have also proposed that the judiciary could be limited by including specific language in an amendment that would explicitly define their role (see section on judicial review in chapter VI of this report). Arguments of Opponents The constitutional amendment approach is not, however, without controversy. Practical difficulties in enforcement, and the potential for judicial involvement have been among the most salient arguments of opponents. Concern over possible judicial involvement with the power of the purse is as old as the Constitution. Alexander Hamilton in The Federalist (number 78) reassured his readers that the judiciary was designed to have "no influence over either the sword or the purse." During previous congressional consideration of balanced budget amendments, questions of standing and judicial authority have been raised and debated, but no conclusive answers have been reached. Despite any expectation of self-enforcement, opponents argue that such an amendment would inevitably lead to involvement by federal judges, and ultimately by the Supreme Court, in the budget making process. Indeed, this possibility was what caused Robert Bork, then a federal judge and formerly Solicitor General during the Nixon Administration, to write, The results of such an amendment would be hundreds, if not thousands, of lawsuits around the country, many of them on inconsistent theories and providing inconsistent results. By the time the Supreme Court straightened the whole matter out the budget in question would be at least four years out of date and lawsuits involving the next three fiscal years would be climbing toward the Supreme Court. Additionally, Senator George Mitchell stated during the debate on S.J.Res. 58 in 1982: Although its sponsors have expressed faith that the courts would not intervene in the budget-writing operations of the Congress, it is difficult to find any justification for that faith.... I believe that it is impossible for anyone to predict, with any degree of certainty, what the courts may do at some future time. Opponents respond to assertions that judicial involvement would be minimal by suggesting that standing to bring suit may well exist in numerous circumstances. The Supreme Court has previously expressed a standard for determining standing in terms of whether the litigant has alleged injury-in-fact, that is "distinct and palpable" and not abstract, conjectural, or hypothetical, or personal injury that is "fairly traceable to the ... allegedly unlawful conduct ... likely to be redressed by the requested relief." Even an inability to show standing, however, would not necessarily limit the number of suits. Numerous suits could be brought (to gain publicity, for instance) without regard to their merit. The question of what would be precluded from judicial review is not something that can be predicted with certainty. For example, the Origination Clause of the Constitution, which mandates that all bills for raising revenue shall originate in the House of Representatives, has traditionally been regarded as a matter entirely internal to Congress, and left for the House to decide as a matter of its prerogatives. However, in United States v. Munoz-Flores , the Supreme Court rejected a claim that a case based on the Origination Clause was nonjusticiable. This, and other recent cases, would seem to narrow the bounds of what is nonjusticiable. The experience of state governments indicates that concern over judicial involvement in budgeting is realistic. In some states the judiciary has become involved with the operation of various aspects of budgeting to impose budget balancing remedies (e.g., requiring tax increases, limiting expenditures generally or preventing implementation of specific spending laws). The possibility that federal courts could invoke such remedies prompts concern about the potential such actions would have for causing a significant shift in the balance of power among the branches of the federal government. Opponents also counter the arguments of the amendment's advocates that such a requirement would result in benefit to the economy generally. Although most opponents do not argue that a smaller deficit would be inherently harmful to the economy, they do argue that mandating a balanced budget can produce harmful results. Specifically, they suggest that a balanced budget amendment would require Congress to counteract the budget's automatic countercyclical stabilizers in the event of a recession. That is, such a requirement would force the government to raise taxes or cut spending (or both) at a time when it would be most likely to have a negative impact on the economy. Concerns an Amendment Would Need To Address A number of difficult questions would be posed if a balanced budget amendment were adopted. These difficulties do not necessarily establish any inherent barrier to a constitutional amendment, but they do raise concerns about how an amendment would operate in practice. One of the chief concerns, and one that would affect a statutory approach as well, is the question of predictability. According to former Senator Howard Metzenbaum, there is a high degree of inherent uncertainty in spending and revenue projections. It is impossible to guarantee congressional budget decisions at the beginning of a fiscal year will lead to a balanced budget at the end of the year. Although some proposed amendments do not explicitly require a fiscal year to end in balance, most would measure compliance against a standard of actual outlays or receipts. Because of the sensitivity of both tax receipts and many expenditures to economic conditions, achievement of a balanced budget would be dependent upon the accuracy of predictions for performance of the economy in a given year, and not solely on congressional good faith efforts to enact budgetary legislation that would result in projected compliance. It could also be difficult to prevent policy choices at the federal level that could have the effect of circumventing or systematically evading a balanced budget requirement. The Congressional Budget Office has suggested that this would be a real possibility, or even a probability, if the advocates of the need for a constitutional amendment are correct about a bias toward increasing federal spending. Several types of actions might in effect avoid the restraints imposed by a balanced budget amendment: increased use of regulatory, rather than budgetary, action. In applicable areas this would impose costs on state or local governments or the private sector. increased use of loan guarantees. As contingent liabilities they would not necessarily be included in the budget. Current budget rules require only the projected subsidy cost of such guarantees to be recorded as a budget item. increased scope for activities by Government-Sponsored Enterprises (GSEs) or other non-governmental agents. Because a balanced budget amendment would apply only to the government, debt issued or activities undertaken by such entities would be exempt from its requirements. An additional concern raised by people in several state governments is that a federal balanced budget requirement would cause additional burdens to fall on state governments. Congress attempted to answer this in 1995 through the Unfunded Mandates Reform Act. This act generally limits the ability of the federal government to consider legislation that would impose mandates on state or local officials without providing the funds to implement them. Congress may, however, waive this prohibition. There is also some concern that if a federal balanced budget requirement caused significant cuts in federal programs, that at least some states would find it necessary to make compensatory increases in their own spending, regardless of whether such expenditures were mandated by the federal government. These problems are not beyond remedy or substantial mitigation, but experience in the states, as well as in the federal government, suggest that they are fundamental and bear careful attention. III. Congressional Consideration of Proposed Constitutional Amendments For more than six decades, Congress has shown an interest in a balanced budget requirement. Because balanced budget proposals are often in the form of proposed constitutional amendments, which are under the jurisdiction of the House and Senate Judiciary Committees, these committees have been in the forefront of the debate. As indicated in Table 2 and Table 3 below, the Senate Committee on the Judiciary has conducted hearings on balanced budget amendments on at least 23 days extending back to the 84 th Congress. It also reported nine joint resolutions between the 97 th and 105 th Congresses. The House has held hearings less often, but its Members have considered balanced budget constitutional amendments on seven separate occasions: in the 97 th , 101 st , 102 nd , 103 rd , 104 th , 105 th and 112 th Congresses. This section summarizes congressional hearings and floor action in consideration of balanced budget amendments. Hearings on a Balanced Budget Amendment In addition to the hearings held by the Senate Judiciary Committee listed in Table 2 , there have been hearings conducted by several other committees, including House Judiciary Committee —October 15, November 17, and 18, 1987 (serial no. 85), July 10 and 11, 1990 (serial no. 143), January 9 and 10, 1995 (serial no. 5), and February 3, 1997 (serial no. 1); March 6, 2003 (serial no.1); May 13, 2011 (not yet printed); House Budget Committee —April 28, May 6, 11, 12, 13, and 19, and June 3, 1992 (serial nos. 102-42 and 102-43), and February 5, 1997 (not printed); Senate Budget Committee —June 4 and 10, 1992 (S.Hrg. 102-693); Senate Appropriations Committee —February 15, 16, 17, and 18, 1994 (S.Hrg. 103-423); Joint Economic Committee —September 11, 1984 (S.Hrg. 98-1260), January 20 and 23, and February 16, 1995 (S.Hrg. 104-74, parts 1, 2, and 3 respectively). Besides the hearings conducted by these committees on balanced budget proposals, a number of other hearings on budget process reform generally have touched upon balanced budget initiatives. Floor Consideration of Amendment Proposals Between 1981 and 1997, the Senate Judiciary Committee has approved nine balanced budget proposals and reported them to the full Senate (see Table 3 ). Five of these measures were considered on the Senate floor, one in each of the 97 th , 99 th , 103 rd , 104 th , and 105 th Congresses. Additionally, in the House proposed constitutional amendments to require a balanced federal budget have advanced to floor consideration without committee support on four occasions, in the 97 th , 101 st , 102 nd , and 103 rd Congresses. The House Judiciary Committee also reported a proposed amendment that was considered on the floor in the 104 th Congress. The first floor consideration was in 1982 when both the Senate and House debated such measures. The House Judiciary recently reported a proposed amendment on January 23, 2011, which has not yet been considered on the House floor. 97th Congress In the Senate, consideration of S.J.Res. 58 during the 97 th Congress produced the first approval of such a measure when the Senate adopted the resolution 69-31 on August 4, 1982, following 11 days of floor deliberation. Later that year, following a successful discharge petition effort led by Representatives Barber Conable and Ed Jenkins, the House considered a similar proposal. H.J.Res. 350 was considered under the terms of a king-of-the-hill rule ( H.Res. 604 ) on October 1, 1982. A substitute offered by Representative Bill Alexander that would have required the President to submit a balanced budget, and for Congress to adopt a statement of receipts and outlays in which "total outlays are no greater than total receipts", but not require the year to end with the budget actually balanced was defeated 77-346 prior to the vote on final passage. Although the measure was approved by a majority, the vote provided less than the necessary two-thirds, and the effort for a balanced budget amendment failed, 236-187. 99th Congress During the 99 th Congress, the Senate Judiciary Committee reported two proposed balanced budget amendments for consideration on the floor. One of these measures, S.J.Res. 13 , also included tax limitation provisions. It was placed on the Senate Legislative Calendar under General Orders, but it did not receive further consideration. The second proposal, S.J.Res. 225 , was debated extensively over eight days. On March 25, 1986, the Senate rejected S.J.Res. 225 , failing to achieve the necessary two-thirds majority by a single vote, 66-34. 101st Congress In 1990, again following a successful discharge effort, this time led by Representative Charles Stenholm, the House considered a balanced budget amendment. Like its predecessor, H.J.Res. 268 was considered under the terms of a king-of-the-hill rule ( H.Res. 434 ) on July 17, 1990. A substitute with a tax growth limitation provision offered by Representative Joe Barton was rejected 184-244, but a modified version of the measure offered by Representative Charles Stenholm was adopted as a substitute, 276-152, before the vote on final passage. However, the measure failed to achieve the necessary two-thirds majority, 279-150, and was defeated. 102nd Congress Two House proposals in the 102 nd Congress calling for a balanced budget constitutional amendment gathered over 100 cosponsors ( H.J.Res. 290 introduced by Representative Charles Stenholm, and H.J.Res. 248 introduced by Representative Joe Barton). In response to the increased possibility that the House would consider a balanced budget measure, the House Budget Committee began a series of six days of hearings on the subject of a balanced budget on April 29, 1992. The hearings continued on May 6, 11, 12, 13, and 19. On May 20, 1992 a petition was filed to discharge the Rules Committee from further consideration of H.Res. 450 , a special rule to extract H.J.Res. 290 from further consideration by the House Judiciary Committee and provide for its consideration by the House. The petition received the requisite 218 signatures the same day and was entered on the Discharge Calendar. A unanimous consent agreement was reached on June 4, 1992, to allow the resolution to be called up for consideration on June 10, under the same terms as if discharged, but modifying its provisions to increase general debate time on the proposed amendment to nine hours. After agreeing to H.Res. 450 , debate on the proposed amendment was begun on June 10. On June 11, the House considered a series of substitutes under a king-of-the-hill procedure. A substitute version offered by Representative Jon Kyl included provisions to limit expenditures to 19% of GNP and to grant item veto authority to the President, but was defeated, 170-258. A second substitute, offered by Representative Joe Barton, consisted of the text of H.J.Res. 248 and included a provision to limit the rate of growth of federal taxes to the rate of growth of national income. It was defeated, 200-227. The third substitute, offered by Representative Richard Gephardt, consisted of the text of H.J.Res. 496 and included a provision to exempt the Social Security trust fund from the provisions of the amendment. It was defeated, 103-327. The final substitute was offered by Representative Charles Stenholm as a minor modification of the original text of H.J.Res. 290 . It was agreed to 279-153; however, the measure then failed to achieve the necessary two-thirds majority for final passage, 280-153, and was defeated. Senate consideration in the 102 nd Congress was complex, but likewise did not result in passage of a balanced budget constitutional amendment. The Judiciary Committee reported a measure ( S.J.Res. 18 ) on July 9, 1991, with an amendment (S.Rept. 102-103). This proposal gained heightened significance when the Senate adopted an amendment to the FY1993 Budget Resolution ( H.Con.Res. 287 ) proposed by Senator Don Nickles on April 9, 1992. The Nickles amendment expressed the sense of the Senate that it should adopt a balanced budget amendment on or before June 5. The Senate agreed to an amendment to the Nickles amendment, offered by Senator Robert Byrd, which added that a balanced budget amendment should included a requirement that the President submit a balanced budget. On May 21, 1992, the House and Senate reached final agreement on H.Con.Res. 287 . The resolution retained a modified version of the Nickles amendment in Section 14, expressing the sense of the Senate that it should vote by July 2 on a balanced budget amendment that included a requirement that the President submit a balanced budget, but that any amendment should be drafted or amended so as not to exacerbate any economic recession. In addition, the Senate Budget Committee held hearings on the subject of a balanced budget amendment on June 4 and 10, 1992. After the House rejected H.J.Res. 290 , Senator Paul Simon, the chief sponsor of S.J.Res. 18 , announced that he would defer attempting to bring the proposed amendment to the floor of the Senate until the 103 rd Congress. However, a group of Senators, led by Senators Phil Gramm, Don Nickles, and John Seymour, endeavored to keep the issue on the agenda in the Senate. On June 24, 1992, Senator Seymour (for Senator Nickles) offered an amendment to an unrelated bill ( S. 2733 , concerning regulation of Government Sponsored Enterprises) that would strike that measure's language and substitute the text of a balanced budget constitutional amendment. An amendment offered by Senator Robert Kasten that would have added a tax limitation provision was rejected, 33-63, on June 30. Senator Robert Byrd offered an amendment to replace the constitutional requirement in the Seymour amendment with a statutory requirement that the President submit a balanced budget proposal by September 2. This amendment, as amended by a second degree amendment also offered by Senator Byrd, was rejected on June 30, 39-57. After declining to amend the language of the proposed constitutional amendment, however, supporters failed by the same 56-39 margin on both June 30 and July 1 to gather the 60 votes necessary to invoke cloture in the face of a threatened filibuster, and the amendment was withdrawn on July 1. 103rd Congress In the 103 rd Congress, a balanced budget constitutional amendment was once again a significant issue on the agenda of both the House and Senate. The Senate Judiciary Committee reported S.J.Res. 41 on October 21, 1993, and the Senate began consideration of the measure on February 22, 1994, under the terms of a unanimous consent agreement. Consideration continued on February 23, and on February 24 a further unanimous consent agreement provided for Senator Simon to modify S.J.Res. 41 by incorporating language proposed by Senator John Danforth limiting the authority of the judiciary to enforce a balanced budget amendment, as well as allowing Senator Harry Reid to offer a substitute amendment. Senator Reid's amendment would have exempted Social Security and capital expenditures from the balanced budget requirement, and provided for its suspension in times of economic recession. Consideration continued on February 25, and 28, and March 1. The Senate voted first on the Reid substitute, which failed, 22-78, and then on S.J.Res. 41 , as modified, which failed to achieve the necessary two-thirds majority, 63-37. Meanwhile, in the House proponents of a balanced budget amendment let it be known that they would use the discharge procedure, if necessary, as they had in the past, to bring the issue to the floor. On February 24, 1994, a petition was filed to discharge the Rules Committee from further consideration of H.Res. 331 , a resolution to extract H.J.Res. 103 from the Judiciary Committee and provide for its consideration. It received the requisite 218 signatures that same day, and was placed on the Discharge Calendar. Despite the failure of a balanced budget amendment in the Senate, on March 11 the House agreed to a unanimous consent request to allow H.Res. 331 to be called up on March 16 under the same terms and conditions as would govern its consideration under the discharge rule, but modifying its provisions to decrease general debate time on the proposed amendment to six hours. On March 16, 1994, the House approved H.Res. 331 by a vote of 387-22, making it in order to consider H.J.Res. 103 as well as a series of substitute proposals under a king-of-the-hill rule. A substitute proposed by Representative Kyl, which would have limited federal outlays to 19% of GNP and provided for Presidential item veto authority, was subsequently rejected in Committee of the Whole, 179-242. On March 17, the House also rejected in Committee of the Whole a proposed substitute offered by Representative Robert Wise that would have provided a separate capital budget and exempted Social Security, by a vote of 111-318. Earlier that same day, the Committee of the Whole rejected a substitute proposed by Representative Barton that would have limited the growth of federal revenues as well as required a balanced budget, by a vote of 213-215. Because the votes of the Delegates and the Resident Commissioner had been decisive in the outcome, the vote was taken again in the House pursuant to Rule XXIII and the amendment was this time adopted, 211-204. This substitute was later superseded, however, when the Committee of the Whole agreed by voice vote to a final substitute offered by Representative Stenholm that would have moved back the effective date of H.J.Res. 103 to 2001 or two years after ratification. As thus amended, H.J.Res. 103 was voted on in the House but failed to achieve the necessary two-thirds majority, 271-153. 104th Congress In the 104 th Congress, the new Republican majority leadership in the House placed a balanced budget constitutional amendment on the agenda as part of its "Contract With America." On January 4, 1995, Representative Joe Barton (and others) introduced H.J.Res. 1 , a proposed balanced budget constitutional amendment with a tax limitation provision. Following two days of hearings, the House Judiciary Committee reported the measure with amendments on January 11 ( H.Rept. 104-3 ). On January 24, the House Rules Committee reported H.Res. 44 ( H.Rept. 104-4 ) providing consideration for H.J.Res. 1 as well as H.Con.Res. 17 , outlining an understanding concerning the treatment of Social Security under any balanced budget constitutional amendment. After adopting H.Res. 44 on January 25, the House took up H.Con.Res. 17 , a measure that its chief sponsor, Representative Michael Flanagan, described as requiring Congress to "leave the Federal Old Age and Survivors Insurance trust fund and the Federal Disability trust fund alone when it is forced to comply with the balanced budget amendment." H.Con.Res. 17 was adopted by a vote of 412-18. In addition to H.J.Res. 1 , H.Res. 44 made in order consideration of six substitutes for it. These amendments were selected from 44 amendments inserted in the Congressional Record between on January 13 and 20, pursuant to a notice issued by the House Rules Committee on January 11. Unlike previous years, these substitutes were not considered under a king-of-the-hill rule. Instead, H.Res. 44 provided that the House would consider and vote on each of the alternatives, and the one that received the most votes would be considered as the one that was finally adopted. After completing general debate on January 25, the House considered each of the six substitutes on the following day: A substitute offered by Representative Barton, identical to the version approved by the Judiciary Committee, which required a three-fifths vote to increase tax revenues. This version was adopted, 253-171. A substitute offered by Representative Major Owens that provided for the waiver of the Article when the national unemployment rate exceeds 4%, and deleted the requirement for a three-fifths vote to increase revenues. This version was rejected, 64-363. A substitute offered by Representative Robert Wise that would have placed capital investments in physical infrastructure and Social Security transactions off budget, and required the operating budget to be balanced. In addition, this version did not include special vote requirements for approval of a deficit or increases in the debt limit or taxes. It was rejected 138-291. An amendment offered by Representative John Conyers that would have placed Social Security transactions off budget and required congressional action on a budget plan detailing how a balanced budget would be achieved before the Article could take effect. It was rejected 112-317. A substitute sponsored by Representative Richard Gephardt and offered by Representative David Bonior (D-MI) would have placed Social Security transactions off budget and required an absolute majority of the membership in each House of Congress for approval of a deficit. This version also deleted any special vote requirements for increases in the debt limit or taxes. It was rejected 135-296. The final substitute, offered by Representative Dan Schaefer, was similar to the version reported by the House Judiciary Committee (and offered as an amendment by Representative Barton) except that it required a majority of the membership of each House to approve a measure to increase revenues rather than a super-majority. It was approved 293-139. Approval of the Schaefer substitute superseded the prior approval of the Barton substitute because it had more affirmative votes. As thus amended, H.J.Res. 1 was adopted by the House 300-132, becoming the first proposed balanced budget constitutional amendment to be approved in the House. According to news reports, following the successful passage of H.J.Res. 1 in the House, several Democratic Senators voiced concern about passage in the Senate without also producing a detailed plan for deficit reduction. A letter sent to Majority Leader Robert Dole to that effect was signed by 42 Democratic Senators. The Senate had already begun to address some of the issues raised during House consideration prior to formal consideration of a balanced budget amendment. In particular, the subject of the treatment of Social Security under a balanced budget constitutional amendment was debated during consideration of S. 1 , the Unfunded Mandates Reform Act. The Senate version of the balanced budget amendment, S.J.Res. 1 , was introduced by Majority Leader Dole and others on January 4 and referred to the Senate Judiciary Committee. The committee held one day of hearings on January 5 and then reported S.J.Res. 1 without amendment on January 23 ( S.Rept. 104-5 ). On January 27, the Senate agreed by unanimous consent to begin consideration of H.J.Res. 1 the following Monday, January 30. The Senate considered the proposal for four days (January 30, 31, February 1, 2) before the first amendments were offered. On Friday, February 3, the so-called "right-to-know" amendment was offered by Senator Daschle. It would have required that a blueprint be established showing how the deficit would be reduced and eliminated prior to the proposed constitutional amendment becoming effective. After debating the amendment on February 3, 6, and 7, the Senate voted on February 8 to table a motion by Senator Daschle to commit H.J.Res. 1 to the Judiciary Committee with instructions that the Daschle amendment ( S.Amdt. 231 ) be incorporated into the resolution and reported back. The Daschle motion and amendment were effectively killed when the motion to table was agreed to by the Senate, 56-44. The second major issue to be addressed by the Senate was the budgetary status and treatment of Social Security under a balanced budget amendment. The issue was formally raised when Senator Reid offered an amendment on February 8 to exclude the receipts and outlays of Social Security from a balanced budget requirement. The Reid amendment ( S.Amdt. 236 ) was debated on February 8, 9, 10, 13, and 14, before being tabled by the Senate, 57-41. Previously, the Senate had agreed by voice vote to a motion by Majority Leader Dole to commit the measure to the Budget Committee with instructions that the committee report back the resolution forthwith, and to report to the Senate as soon as possible a plan for achieving a balanced budget without affecting Social Security receipts or payments. A Dole amendment to that motion ( S.Amdt. 238 ) that established its final language was agreed to, 87-10. After the Reid amendment was disposed of, the Senate considered and rejected several other amendments on February 14 and 15. On February 16, the Senate voted on a motion entered by Majority Leader Dole to invoke cloture and limit further consideration of the resolution. That motion failed to achieve the necessary three-fifths majority, 57-42. Later that same day, however, the Senate did agree by unanimous consent to limit further consideration and provide for a final vote on the measure on February 28. In addition, two cloture votes scheduled for February 22 were vitiated. Consideration of amendments and motions to refer with instructions continued on February 22, 23, 24, 27, and 28. On February 28 the Senate agreed to an amendment offered by Senator Nunn. The Nunn amendment ( S.Amdt. 300 , as modified) added language limiting judicial authority to interpret or enforce the proposed constitutional amendment to situations specifically authorized by law. The provision was agreed to, 92-8. After finishing consideration of all amendments and motions, the Senate recessed on February 28 and March 1 without taking a final vote on adopting the proposed constitutional amendment. On March 2 the Senate fell short of achieving the necessary two-thirds majority, 65-35. Majority Leader Dole changed his vote to the prevailing side (against the amendment) for the final tally in order to take advantage of Senate Rule XIII and enter a motion to reconsider the vote at a later time. On June 4, 1996, the Senate agreed by unanimous consent to the motion to reconsider its earlier vote. After debating the proposal on June 5 and 6, H.J.Res. 1 again failed to achieve the necessary two-thirds majority 64-35. 105th Congress On January 17, 1997, the Senate Judiciary Committee held a hearing addressing the balanced budget constitutional amendment issue. Four days later, on January 21, Senator Orrin G. Hatch introduced S.J.Res. 1 , a proposed amendment to the Constitution to require a balanced budget beginning with FY2002. A second hearing was held on January 22 and the measure was reported without amendment on January 30 ( S.Rept. 105-3 ). Six amendments, including two substitutes, were offered during the committee's deliberations, but all were rejected. On February 4, a unanimous consent agreement was propounded to begin consideration of S.J.Res. 1 on the Senate floor beginning the following day. On February 5, the Senate began debate on the measure and began consideration of amendments on February 6. As in the 104 th Congress, the issue of the budgetary treatment of Social Security proved to be pivotal, and no fewer than three of the amendments considered would have excluded it from the amendment's provisions. Other issues raised included allowing waivers of the amendment's provisions for national emergencies other than actual armed conflict (such as economic emergencies or natural disasters), and provision for excluding a capital budget from the amendment's requirements. In all, 15 amendments (plus one motion to refer with instructions) were considered during deliberation on the floor, but all were rejected, tabled, or withdrawn. On February 27, a unanimous consent agreement was reached to provide for a final vote on March 4. On that day, the measure was defeated by a vote of 66-34, having failed to achieve the necessary two-thirds. A House companion measure, H.J.Res. 1 , was considered by the House Judiciary Committee at a hearing on February 3. The committee began a markup of the measure on February 5 but recessed without reaching any conclusion. Also on February 5, the House Budget Committee held a hearing on the issue of a balanced budget amendment. 108th Congress In February of 2003, H.J.Res. 22 was introduced by Representative Earnest J. Istook with 133 cosponsors. It was referred to the House Committee on the Judiciary and then to the Subcommittee on the Constitution. On March 6, 2003, the subcommittee held a hearing and on May 1, 2003, a subcommittee mark-up was held and the measure was subsequently forwarded to the full committee by a vote of 5-3. On September 22, 2004, the full committee considered the measure, but it was not reported to the House. 112th Congress In January of 2011, Representative Bob Goodlatte introduced H.J.Res. 1 , which was referred to the House Committee on the Judiciary and then to the Subcommittee on the Constitution. On May 13, the subcommittee held one day of hearings on proposed amendments to the Constitution to control the federal budget deficit. On June 15, a full committee mark-up was held and the committee voted to report the bill with an amendment by a vote of 20-12. As reported by the committee, H.J.Res. 1 includes provisions that would require three-fifths of each chamber to agree to allow a budget with outlays in excess of receipts, or to agree to increase the debt limit. The measure also requires two-thirds of each chamber to agree to increases in revenue or to allow outlays to exceed 18% of the "economic output" of the United States regardless of whether the budget were balanced. On July 19, 2011, the House passed (by a vote of 234-190) H.R. 2560 , titled Cut, Cap, and Balance. Although the bill itself was not a balanced budget amendment, it included a provision stating that the public debt limit could be raised from $14.29 trillion to $16.7 trillion only if Congress agreed to a balanced budget amendment. Specifically, it stated that the Secretary of the Treasury could not exercise additional borrowing authority as specified elsewhere in the measure, until one of the following joint resolutions were agreed to by Congress and submitted to the states for ratification: H.J.Res. 1 , S.J.Res. 10 , H.J.Res. 56 , or another balanced budget amendment that "requires that total outlays not exceed total receipts, that contains a spending limitation as a percentage of GDP, and requires that tax increases be approved by a two-thirds vote" in each chamber. The Senate voted to table the measure by a vote of 51-46 on July 22, 2011. After extended negotiations between Congress and President Obama, a different bill to increase the public debt limit, S. 365 , the Budget Control Act of 2011 ( P.L. 112-25 ), was enacted on August 2, 2011. Title II of the bill states that the House and Senate shall vote on passage of a "Joint resolution proposing a balanced budget amendment to the Constitution of the Untied States" between September 20, 2011, and December 31, 2011. Title II also includes expedited procedures for House and Senate consideration of a balanced budget amendment. On November 15, 2011, the House agreed to H.Res. 466 , a special rule authorizing the Speaker to entertain motions to suspend the rules through the legislative day of Friday, November 18, 2011, relating to the consideration of H.J.Res. 2 , Proposing a balanced budget amendment to the Constitution of the United States , sponsored by Representative Bob Goodlatte. Under the suspension of the rules procedure, no floor amendments are permitted, and debate time is limited to 40 minutes. The special rule, however, provided for debate time for H.J.Res. 2 to be lengthened to five hours. Unlike several other proposed balanced budget amendments (including H.J.Res. 1 as reported from the House Committee on the Judiciary), H.J.Res. 2 requires only a majority of each chamber to agree to a revenue increase, and it does not include a provision creating a specified limit on spending. H.J.Res. 2 would require three-fifths of each chamber to agree to increase the debt limit or to allow outlays to exceed receipts. On November 17, 2011, Representative Lamar Smith moved to suspend the rules and pass H.J.Res. 2 . On November 18, 2011, the House concluded the specified five hours of debate and voted on H.J.Res. 2 . By a vote of 260 to 165, the House failed to achieve the two-thirds vote required for passage. On December 14, 2011, the Senate voted on S.J.Res. 10 and S.J.Res. 24 under the terms of a unanimous consent agreement discharging the Senate Judiciary from further consideration of the measures, and providing for a total of eight hours of floor debate for the two measures. S.J.Res. 10 , introduced by Senator Orrin Hatch, includes provisions that would require three-fifths of each chamber to agree to increase the debt limit. The measure also includes provisions that would require two-thirds of each chamber to agree to increases in revenue, to allow outlays to exceed 18% of the "economic output" of the United States, or to allow outlays in excess of receipts. The measure also includes a provision stating that no court of the United States or any state shall increase revenue to enforce the amendment. The Senate rejected S.J.Res. 10 by a vote of 47 to 53. S.J.Res. 24 , introduced by Senator Mark Udall, includes provisions requiring three-fifths of each chamber to allow outlays in excess of receipts but includes no such requirements on debt limit or revenue increases. The measure includes a provision excluding all receipts and outlays related to Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund for the purposes of the constitutional amendment, and stating that no court of the United States or any state shall enforce the article by ordering any reduction in Social Security benefits. In addition, the measure includes a provision that would prohibit Congress from passing any measure that would provide a net reduction in income taxes for those individuals with annual incomes over one million dollars, if the measures' enactment would result in a deficit in the years affected by the bill. The Senate rejected S.J.Res. 24 by a vote of 21 to 79. IV. A Constitutional Convention Article V of the Constitution describes two methods by which the Constitution can be changed. To date, constitutional amendments have always been proposed to the states by congressional action, but Article V of Constitution also provides that "on the application of two-thirds of the several states Congress shall call a convention for proposing amendments." Because this method for proposing a constitutional amendment is untried, there are many unanswered questions about such a convention. A convention would not have the power to amend the Constitution directly, only to propose an amendment, and any proposed amendment would subsequently need to be ratified by three-fourths of the states in the same manner as an amendment proposed by Congress. Between the mid-1970s and early 1980s, various interest groups lobbied state legislatures to petition Congress to call a constitutional convention to propose an amendment to limit the power of the federal government to incur budget deficits. The National Taxpayers Union and the National Tax Limitation Committee, for example, were active in these efforts to lobby for the proposal in the state legislatures. A number of other groups, including Citizens to Protect the Constitution (formerly known as Citizens for the Constitution), the Committee to Preserve the Constitution, and People for the Constitution, have been active in their opposition to a convention. These petitions have typically requested that Congress convene a constitutional convention for the purpose of considering a balanced budget amendment and proposing it to the states for ratification. Frequently such requests have sought a convention for the "specific and exclusive" purpose of considering a balanced budget amendment, although some constitutional scholars suggest that the work of a constitutional convention could not be limited to specific subjects. As a consequence, some opposition to a constitutional convention is based on concern regarding the scope of other possible amendments that might also be proposed for ratification as well as opposition to a balanced budget amendment in particular. Other related questions have been raised regarding state applications or petitions for a constitutional convention. Some of these include (1) whether there is a specific procedure that states must follow for enacting and submitting petitions, (2) whether all the petitions must be in the same form, and (3) whether they must all be contemporaneous. The Senate has on two occasions passed constitutional convention procedures bills, in 1971 (S. 215, 92 nd Congress, S.Rept. 92-336), and 1973 ( S. 1272 , 93 rd Congress, S.Rept. 93-293). Neither bill was considered in the House. The Senate Judiciary Committee also reported a bill in 1985 ( S. 40 , 99 th Congress, S.Rept. 99-135), but it was not considered further. Although the House has not considered a similar measure, the Subcommittee on Civil and Constitutional Rights of the House Judiciary Committee held hearings on the issue in 1985. In 1983, at the beginning of the 100 th Congress, 32 of the required 34 states had passed resolutions requesting a constitutional convention for proposing a balanced budget amendment. In addition to those states listed in Table 4 , at least four states (California, Illinois, Kentucky, and Montana) had adopted resolutions requesting that Congress propose a deficit spending amendment, but had not asked for a constitutional convention to do so. By the end of the 100 th Congress, however, two states had rescinded their applications for a constitutional convention, at least in part due to the influence of the Balanced Budget and Emergency Deficit Control Act in late 1985. Coupled with the possibility that other states would follow suit, this made the prospect of such a convention less imminent. Left unresolved, however, was the legal standing of rescissions, and the question of whether or not a state has the power to rescind such an application once it has been made. Although Alabama and Florida were the only states to rescind their applications for a constitutional convention in the 100 th Congress, similar measures were subsequently passed in Nevada (1989), Louisiana (1991), Colorado (1992), Oregon (1999), Idaho (2000), Utah, (2001), North Dakota (2001) Wyoming (2001), Arizona (2003) and Georgia (2004). V. The Statutory Approach An alternative for regulating the government's spending and taxing policies is the enactment of a statute requiring a balanced budget. Proponents of a statutory approach argue that it would be more flexible than a constitutional amendment, since the law itself could be modified more easily by enacting amendments to deal with changing circumstances. Advocates also argue that it could become effective quickly, in contrast to a constitutional amendment that would require a lengthy and ultimately uncertain ratification process. Significant opposition to the statutory approach has come from those who consider it a poor substitute for a constitutional amendment. These critics contend that the adoption of a law offers no binding constraint on the actions of future Congresses; in their view the very flexibility of the approach destroys its utility. They argue that Congress can always waive or reject the rules of a previous Congress, or can overturn or supersede a statute. Critics offer the past decade's experience with attempts to mandate balanced budgets by statutory means as evidence that the political context makes circumvention virtually certain. Previous Legislation There have been many attempts to employ a statutory approach. The first such example is the amendment proposed by Senator Harry F. Byrd, Jr., in 1978, which became Section 7 of P.L. 95-435 , a measure otherwise dealing with U.S. participation in the International Monetary Fund. The amendment stated simply that, "Beginning with fiscal year 1981, the total budget outlays of the federal government shall not exceed its receipts." With almost no debate the amendment was adopted by the Senate by a vote of 58-28. Without any mechanism for enforcement this commitment proved to be ineffectual, and FY1981 ended with a deficit of $79 billion. Subsequent modifications of this law have changed it from a specific commitment for FY1981 to a general affirmation of balanced budgets as a goal. A similar provision was included in P.L. 96-5 , a measure to provide an increase in the debt limit. Like the Byrd amendment, the law was superseded by subsequent legislation. Late in the 98 th Congress, the House considered H.R. 6300 , a bill to require the President to submit a balanced budget proposal or, alternately, to explain the reasons why one would be inappropriate. Although the measure passed under suspension of the rules, 411-11, support was qualified for the measure's statutory approach because, as Representative Barber Conable said, "Until we elevate this issue to a constitutional level and create a procedure whereby this Congress will have to face up to its fiscal responsibilities, things are not going to change." Because the Congress adjourned shortly thereafter, the Senate did not consider this proposal on the floor. After it failed to achieve the two-thirds vote necessary for a constitutional amendment in 1990, the House considered H.R. 5258 , a bill to require the President to submit a balanced budget to Congress each year, for the Budget Committees to report, and for Congress to consider, a budget resolution that was balanced. However, it did not require Congress to adopt a budget resolution in balance, nor did it require the fiscal year to end in balance. This measure was criticized by some as less than a serious attempt to attain balance and one that would merely provide "one more set of rules to waive." Nevertheless, a majority of the House agreed with Representative Leon Panetta who said that the measure would require the President and Congress to "lay out in specific terms how ... to [achieve] a balanced budget" rather than simply establish a balanced budget as a general goal. After a vote to recommit the bill to the Government Operations Committee with instructions that it hold hearings on its implications failed 181-244, the bill was passed by a vote of 282-144. The Senate took no subsequent action on the measure. Gramm-Rudman-Hollings The most prominent attempt by Congress in to use the statutory approach as a means of achieving a balanced budget was the Balanced Budget and Emergency Deficit Control Act of 1985 (also known as the Gramm-Rudman-Hollings Act) and its 1987 Reaffirmation. At the heart of this law was a timetable with mandated annual reductions in budget deficits intended to produce a balanced budget. In addition to the specific deficit targets included in the text of the law, the act differed from the earlier Byrd amendment because it included a specific enforcement mechanism. Based on the assumption that institutional forces made it difficult, if not impossible, to achieve a balanced budget, the new law established the sequestration process. This process required the President to issue an order canceling budget authority to reduce the projected deficit to the level mandated by law. Although the original automatic sequestration mechanism was struck down by the Supreme Court in Bowsher v. Synar , the 1985 law contained a fallback procedure that, lacking the automatic provision, was felt to be inadequate by Congress. The subsequent enactment of an amendment to the law in 1987 reinstated a modified procedure for an automatic trigger for the sequestration process and reaffirmed the desire of Congress to come to grips with the budget deficit. The act was amended, and effectively supplanted, in 1990 by the Budget Enforcement Act of 1990 ( P.L. 101-508 , 104 Stat . 1388-573 through 1388-630). These changes shifted the focus of congressional budgetary control from achieving a specific deficit target to limiting congressional actions that would increase the deficit. The new act retained a series of deficit targets, but these targets would be adjusted for changing economic and other conditions rather than fixed as they had been under the 1985 and 1987 acts. The 1990 act established deficit targets through FY1995, but these did not require or project a balanced budget at that time. In 1993, the enforcement provisions of the Budget Enforcement Act were extended through FY1998 ( P.L. 103-66 , 107 Stat . 683-685), and in 1997, the enforcement provisions were extended through 2002 ( P.L. 105-33 ) but again a balanced budget was not required. VI. Analysis of Typical Provisions of Proposed Balanced Budget Amendments What follows is a general discussion of language commonly used in proposals for a balanced budget amendment. In particular, the discussion addresses provisions that have been included in balanced budget proposals, and how some of these provisions could be subject to varying interpretations. Many of the points addressed in this analysis have been raised during previous consideration of balanced budget amendments, particularly on the floor of the House in 1982, 1990, 1992, 1994, and 1995, and in the Senate in 1982, 1986, 1994, 1995, and 1997. A number of these interpretations might have achieved some measure of consensus among Members of Congress concerning their general meaning. However, no determinative judgments have yet been made on the vast majority of the issues discussed here, and parts of a proposed amendments' language may well be subject to interpretation. Especially in the absence of any extensive legislative history, these unresolved issues would presumably need to be treated by statute, or interpreted by the courts, or both. Because it would be by its nature new to the federal government with far reaching consequences, even in its most basic form, a balanced budget amendment would raise some questions concerning its meaning and enforcement. All of the proposed amendments have as their central purpose a limitation on the budgetary freedom of Congress, although they pursue this objective in a number of different ways. Each of the measures proposes to require a balanced budget, but they display great variety regarding how to achieve this end and about the nature of the budgetary process and the roles that should be played in it by the President and Congress. Use of Estimates In their most direct form, balanced budget proposals require that "total outlays shall not exceed total receipts for a fiscal year." This is most often coupled with a proviso to allow an excess of outlays if they are approved by a vote of three-fifths in each chamber. Most proposals, either explicitly or implicitly, would allow any enforcing or implementing legislation to be based on estimates, but these would generally not supersede the requirement that actual balance at the end of a fiscal year be measured in absolute terms. A common alternative approach would permit estimates to be used to measure compliance with the amendment's requirements. One common formulation of this is to require that Congress adopt a statement of receipts and outlays prior to a fiscal year, in which total outlays are not greater than total receipts. This is sometimes coupled with a provision that "Congress and the President shall ensure that actual outlays do not exceed the outlays set forth in such statement." This type of amendment would thus not require that at the end of the fiscal year the budget be in balance. Actual outlays could not exceed projected outlays, but the relation between projected and actual receipts is not explicitly addressed. Receipts less than the projected level would produce a deficit, but not be a violation of this type of amendment language. Using estimates to measure compliance could also be applied to both outlays and receipts. This approach would prohibit estimated outlays from exceeding estimated receipts, but not prohibit end of the year actual outlays from exceeding end of the year actual receipts. In one form that has previously been introduced this would simply require a two-thirds vote to approve a budget resolution that recommends an excess of outlays. Because the amounts in budget resolutions are projections, such a proposal would not impose any requirement for actual end-of-year balances. Such an approach is not inconsistent with the practices of some states. According to a General Accounting Office report (now called the Government Accountability Office), at least nine states with balanced budget requirements do not require a year-end balance, and several others allow a deficit to be carried over to the next fiscal year if necessary. The reliability of estimates is crucial, especially in cases where the proposed amendment would require adherence to a standard of balance based on actual outlays rather than projected outlays. Under a variety of circumstances either the President, or Congress, or both would have an incentive to skew estimates of receipts in the same or opposite directions. If one branch favored spending cuts, it would have an incentive to estimate receipts at a relatively lower level (and thus restrain spending). Alternately, if one branch favored relatively higher spending, it would have an incentive to estimate receipts at a correspondingly higher level. These incentives could have profound implications for enforcement. The prohibition on excess outlays in the absence of a three-fifths vote would in most cases be absolute and require adjustments to compensate for inaccurate estimates of outlays. The inability to estimate accurately the outlays that will result from entitlements is demonstrated with regularity. In recent years, supplemental appropriations have been necessary to cover the mandatory outlays associated with such programs as veterans' benefits and agricultural subsidies. There are a number of open questions about the impact of this type of provision on mandatory spending, especially that which is provided in annual appropriations and supplemental appropriations acts. Would it have the effect of requiring supplemental appropriations to achieve three-fifths support in each chamber to provide necessary funds for entitlement programs? Would it require three-fifths support to allow the release of funds already appropriated but not yet converted to outlays? If spending must be cut or deferred to keep actual outlays in balance with receipts during a fiscal year, how would such restrictions be applied to entitlements? Would this amendment implicitly establish a constitutional power to delay outlays for entitlements, or even to cancel such payments? Some proposals, while considered as proposed balanced budget amendments, would not actually prohibit deficit spending. For example, they could simply require that either the President's budget or Congress's concurrent budget resolution be balanced, but not necessarily bar appropriations or outlays in excess of revenues. Another possibility would mandate that the budget be balanced only with respect to expected revenues or outlays so that an economic downturn that decreased revenues and increased outlays would not put the government in violation of the Constitution. These proposals could pose problems because they contain an obvious incentive favoring "rosy" forecasting of the economy and of revenues. Many proposals also provide that the requirement for balance could be waived in certain circumstances. Various proposals allow for these waivers in the case of a national emergency, low economic growth, a declaration of war or by congressional passage of a resolution by a super-majority, such as three-fifths or two-thirds. Conversely, some proposals seek to prohibit Congress from making appropriations in excess of anticipated revenues for a fiscal year. These could be narrowly construed so that, to the extent that deficits result from actions other than those taken by Congress in the appropriations process itself, the amendment would not be an obstacle to deficits. If this interpretation were to prevail, the executive departments might be permitted to spend in excess of revenues, provided they had the budget authority to do so. Super-Majority Requirements The requirement for a super-majority to approve a "specific excess" of outlays over receipts, while seemingly straightforward, could present issues in implementation. It could simply apply to a concurrent or joint resolution encompassing the entire budget, but there are other possibilities. Because no mechanism is provided for identifying the "specific excess" it is not clear what this means. Conceivably it could be applied to either the amount of money, to the recipient program or agency, or to both. It is unsettled how the provision would be applied in four different scenarios that could arise. Could the requirement be applied so that each specific program or agency would need to have a separate three-fifths majority to receive a specific amount of funds in excess of the overall ceiling? Could the three-fifths requirement be applied to a specific total to fund program shortfalls, which could subsequently be distributed through some mechanism that did not require a further three-fifths vote? Could the three-fifths requirement be applied to the release of funds for mandatory spending programs or interest on the debt in circumstances where outlays threaten to exceed receipts after all budgetary legislation has been enacted? Could the requirement be applied to a specific program or agency rather than a specific dollar amount, so that the agency or program could later receive some unspecified amount of funding above the outlay ceiling? This ambiguity might give the majority party in either chamber of Congress, through their power to control the legislative agenda, power to subject the programs least popular with its leadership to the super-majority threshold. Considering such programs as separate matters could increase the likelihood of their being unfunded or discontinued. Conversely, the application of this requirement could also allow the majority leadership to circumvent the amendment and ensure deficit spending, excluding the most popular programs from any balanced budget regimen. Some programs might be popular enough to secure funding regardless of the deficit. If such programs were left unfunded until the ceiling was reached, they could then be funded subject to the requirement that they have three-fifths support in each chamber. Such a provision also leaves it unclear of the claims of mandatory outlays, including interest on the debt, in relation to other outlays in the absence of a balanced budget or a super-majority waiver. Presidential Responsibility More basic questions regarding the ultimate responsibility for maintaining a balanced budget are raised by proposals that establish the seemingly simple mandate that "total outlays of Government funds during any fiscal year shall not exceed the total revenue of the Government." Since outlays (that is, the actual expenditure of funds) are primarily an executive function, such language could be interpreted as a qualification on presidential spending powers, but not on Congress's ability to appropriate funds in excess of revenues. If the President's spending powers were thus the primary focus for enforcement, how would this be accomplished? Would it be necessary to statutorily increase presidential rescission or deferral powers? More significantly, would an amendment assigning responsibility to the President, either solely or jointly with Congress, to "ensure that outlays not exceed receipts" imply enhanced impoundment authority? This possibility suggests that any workable constitutional prohibition on deficit spending take into account the workings of the federal budget process and expenditure practices, as well as the division of responsibility between the executive and legislative branches. Most measures requiring a balanced budget also include a requirement that the President submit a proposed budget with total outlays not in excess of total receipts. In addition to the requirement that his budget proposal balance estimated outlays and receipts, such a provision would also effectively make the President's role in the budget process a part of the Constitution. The President's formal involvement in the budget process currently has a statutory, rather than constitutional, basis. It stems from the Budget and Accounting Act of 1921 (codified at 31 U.S.C. 1105(a)). Historically, the budget-making process has been the constitutional preserve of Congress, requiring only the President's concurrence or passage over his veto. Although such presidential requirements are generally included in proposals as a way to preserve symmetry between the executive and legislative branches, this is not precisely the same requirement that Congress would have to adhere to. Because of the timing of the President's budget submission , the estimates of receipts and outlays used in this proposal would not necessarily be the same as those used by Congress. This could mean that the President would be able to use a unilateral estimate to fashion his proposal, while Congress might have to base its spending actions on an estimate more agreeable to both branches. Also, the President's proposal would have to balance estimated outlays against estimated receipts, while under most proposed amendments Congress would ultimately have to balance actual outlays against actual receipts. This distinction is likely to revive a problem highlighted during the Reagan Administration and especially under the Balanced Budget and Emergency Deficit Reduction Act. Differing estimates and projections of the economy and the budget by Congress and the President could make it difficult to achieve budgetary goals. Coverage and Exemptions A concern addressed in many proposals is the issue of coverage. Lengthy debates on which activities or agencies (if any) should be exempted from the effects of sequestration under the Balanced Budget and Emergency Deficit Control Act have amply demonstrated the difficulty in reaching agreement on the issue, as well as the problems associated with exempting certain activities. Off-Budget Activities It is not clear whether the term "off-budget" would continue to have any meaning if a balanced budget proposal were added to the Constitution. Would the federal government be able to exclude specific entities from its presentation of the budget? Would an amendment have the effect of nullifying the current off-budget status of the Postal Service and Social Security? If the terms "all receipts" and "all outlays" used in many such proposals removed the option to create off-budget entities, it would also remove the option to consider such entities without regard to their impact on the remainder of the budget. The debate on the budgetary status of Social Security, for example, would become moot, and surplus Social Security receipts would constitutionally be treated in the same way as other government receipts as they are today. Conversely, if federal agencies or programs could be excluded from the amendment's coverage by statute, it might open a channel for manipulating the scope of the "budget" to insure that it was balanced. Various proposals have sought to anticipate problems that could be brought about by attempts at circumvention, and have either included or excluded a variety of specific expenses or activities. These have sought to exempt such things as net interest on the public debt, Social Security, or federal credit programs. Other measures would be coupled with a capital budget, which would separate federal expenditures into one budget for current operating expenses and a second one for net investment in assets that have a useful life of several years. Even so, the question of what would be included or excluded would have to be addressed. Generally, the more inclusive the coverage, the more restrictive will be any constitutional limitation (although the reverse is true for the case of Social Security during the period from now until about 2010). In contrast to the experiences of states, most proposals at the federal level are planned as inclusive. They are almost always defined as applying to "all receipts of the United States Government except those derived from borrowing" and "all outlays of the United States Government except those for repayment of debt principal." State governments are typically required to balance their operating, or general fund, budget, but other major fund groups (such as capital, enterprise, trust, and other special funds) may not necessarily be required to balance on an annual basis. The Senate Judiciary Committee's 1993 report accompanying S.J.Res. 41 expressed the intent of the committee that "total receipts" and "total outlays" include "all moneys received by the Treasury of the United States, either directly or indirectly through Federal or quasi-Federal agencies created under the authority of acts of Congress." The report further stated that some programs, such as the electric power program of the Tennessee Valley Authority (TVA), are not intended to be covered by this definition. The only explanation given is that the program is self-financing. It is unclear to what extent this interpretation by the Judiciary Committee would be binding. If it were, it could potentially allow the federal government to follow the state example and create other special authorities that would not be covered by the amendment's definitions of outlays and receipts. In 1995, one of the chief sources of public opposition to a balanced budget amendment was the status of Social Security funds. Proposals to exclude the receipts and outlays of the Social Security Trust Funds (specifically the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund) from the requirement for a balanced budget were among the chief topics for debate. Supporters of such an exemption argued that because Social Security operates with funds that are counted separate from the general fund of the federal government, and currently operates at a surplus, it should not be subjected to potential benefit reductions resulting from a deficit in the general fund. Further, they argue, because the accumulated surplus of the Social Security Trust Funds is held in the form of government securities, under a balanced budget amendment redemption of these securities, and thus any expenditure of these funds, would effectively require a budgetary surplus. Opponents counter that removing such a massive portion of federal transactions, whatever the source, from the discipline of a balanced budget amendment would undercut the amendment's effectiveness. In addition, they believe that an exemption for a specific trust fund could establish a channel for broad circumvention of an amendment, because it would not necessarily limit the activities that could be encompassed within the trust fund's budget. Non-Budgetary Activities Government-Sponsored Enterprises (GSEs) are not now considered to be a part of the federal government, and their transactions are considered to be non-budgetary rather than off-budget. These are entities established and chartered by the federal government and typically act as financial intermediaries to influence the allocation of credit in large sectors of the economy. Examples include the Student Loan Marketing Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. They are not included in the federal budget totals because they are classified as private, although most derive special benefits from their sponsorship by the federal government. Their budgetary treatment and the range of their activities are not specifically addressed in the language or legislative history of balanced budget amendments, and it may well be assumed that they would not be included. Waivers The most common exception to the requirement for a balanced budget is a waiver in cases of declared war. Some proposals would also allow a waiver for military emergencies declared by law. Other provisions in proposed amendments would trigger exemptions or allow waivers. A proposal considered by the Senate in 1994 would have suspended the requirement for a balanced budget for any fiscal year, and the following fiscal year as well, if the Congressional Budget Office (CBO) estimates that real economic growth has been or will be less than one percent for two consecutive quarters during the period of those two fiscal years. Other proposals would allow a waiver of the balanced budget requirement for any fiscal year in which a declaration of national emergency were in effect. With the term "national emergency" left undefined, such a provision might well be applicable to economic as well as military emergencies. It should be noted that the duration of such a national emergency, or how its end should be determined, is left unstated. Debt An issue closely related to balanced budgets is federal debt and the debt limit. Indeed, a number of proposed balanced budget amendments have included provisions that would make it more difficult to increase the public debt of the United States by requiring a super majority in each House to enact legislation to do so. The apparent intent is to reinforce the balanced budget requirement by making it difficult for the amount of federal debt to be increased. Without the authority to borrow funds, the government could not operate with a deficit. Indeed, some proposals deal only with debt and require a balanced budget solely by implication. At least one proposal made in the House would go further and require surpluses in order to pay down the debt. Of particular importance is the debt to be included in such a limitation. Some proposals would apply a limitation to increases in the debt "held by the public." Others would apply the limitation to the gross public debt (e.g., all federal government debt including that held by the government's own trust funds). Another approach has been to apply a limitation to public debt with certain specified exceptions, such as for trust funds or debt for capital expenditures. These are more than minor semantic differences, and such provisions could affect aspects of federal finances beyond the balance of the annual budget. H.J.Res. 1 in the 112 th Congress would require a super majority of three-fifths to increase the limit on the debt held by the public. As defined in current law and practice, the debt subject to statutory limit includes more than just the debt held by the public. Debt held by the public involves only money borrowed by the Treasury from the public, including domestic and foreign individuals and institutions. The debt subject to statutory limit, however, includes both the debt held by the public and debt held by the federal government (or intragovernmental debt). Intragovernmental debt includes primarily debt held by trust funds. Debt held by the public represents a financial claim by the public on the federal government in the form of bonds and other debt instruments, and is the measure of debt used in most economic analyses. The intragovernmental debt held by trust funds does not result in borrowing from world credit markets or represent a direct financial claim of the public on the government. A trust fund program itself may entitle recipients to claim present or future program benefits, and securities are held by the funds as a reserve against future benefits in excess of receipts expected in the future, but beneficiaries do not have any direct claim on the accumulated debt held by trust funds. An increase in trust fund holdings also increases the reported gross public debt of the federal government. Generally such an increase is generated when receipts into trust funds exceed payments. Excess trust fund receipts are invested in federal government debt instruments. The portion of the gross public debt held by trust funds or other intragovernmental accounts in 2010 was approximately 33%. The distinction between gross public debt and debt held by the public could have significant implications, particularly with regard to the budgetary status of Social Security. Because it is currently accumulating a surplus for future use, the Social Security trust funds increase the amount of gross debt. Accordingly, a balanced budget amendment that requires a three-fifths vote in order to increase the gross public debt could mean that a super-majority was necessary to allow the surplus held by a trust fund to increase. Even in cases where the trust fund was in balance, the accumulation of interest on outstanding debt held by the trust fund could itself have the effect of requiring an increase in the gross public debt. On the other hand, a balanced budget amendment requiring action to increase the amount of "publically held federal debt" could make it difficult for Social Security to liquidate its accumulated reserves to pay benefits after about 2020. Distinctions between classes of federal debt could cause the federal government to operate with separate statutory debt limits for intragovernmental debt (requiring only a majority vote for increases) and for debt held by the public. The division of federal debt instruments into a number of different classes to secure technical compliance with an amendment could have wider implications as well. Such a phenomenon would be roughly analogous to state experience, where different debt instruments, including some not backed by the "full faith and credit" of the government, are routinely issued and separately rated by financial markets. By many accounts, state experience suggests that constitutional limitations on debt have been less than wholly effective. State legislatures have devised a wide variety of financing techniques to comply technically with constitutional limitations on the issuance of debt, including special fund financing, creation of public authorities and lease arrangements. It is not implausible that the federal government would have occasion to resort to one or more of these devices if limits were placed on its issuance of new debt. Tax or Expenditure Limitations Another broad category of proposals includes those that place a limit on the ability of the federal government to tax or spend. Some would hold total outlays to a set percentage of some economic indicator, such as Gross Domestic Product (GDP) or Gross National Product (GNP), while others would limit increases in spending to a percentage of the growth of a particular economic indicator. Support for such provisions is derived from two chief premises: (1) the part played by the federal government in the economy has grown too large in recent decades, and (2) efforts to balance the budget should be biased in favor of spending cuts rather than tax increases. H.J.Res. 1 in the 112 th Congress, for example, would limit the level of outlays to 18% of the "economic output" of the United States, regardless of whether the budget is balanced, unless there were a two-thirds super majority to support the increase. One significant question is how a provision to limit increases in revenues might be interpreted. The term "revenue" appears in the Constitution, in this context, in Article I, Section 7, the so-called origination clause. As interpreted by the Supreme Court, the phrase "all bills raising revenue" has typically meant measures raising revenue to support government generally, but not those that raise funds to support a specific governmental program. This constitutional understanding of the term "revenue" therefore may differ from that used, for example, in relation to the jurisdiction of congressional committees or under budgetary statutes (such as the Congressional Budget Act of 1974). Also it could restrict the application of a tax limitation to measures that affect money raised for the general fund of the federal government, but exclude funds raised for specific programs. Another potential difficulty with the definition of revenue is that not all receipts to the federal government are currently treated equally in the budget process. Collections from the public based on the government's exercise of its sovereign powers are treated as revenues (e.g., personal income taxes). Collections by the government as a result of business-type or market oriented activities are generally treated as offsets to outlays (e.g., various royalties and licensing fees). Offsetting collections can be applied either to the outlays of a specific agency or program or to the government generally. Without further direction, through more explicit language in a proposed amendment, it is unclear how it might be interpreted. Conversely, the phrase "increasing revenue" as used in these proposals could be interpreted to apply these requirements broadly to a wide variety of measures. Such a provision might apply not only to measures that would increase revenues by increasing the rate of taxation, but also to those that would increase revenues by lowering the rate of taxation while increasing either the taxable base or the volume of taxable activity, or both. This interpretation could have an impact on a large portion of the legislation considered by Congress. Indeed, any legislation that has the direct or indirect, effect of stimulating economic (hence taxable) activity and thereby increasing revenues might be covered by a tax limitation provision. One example of increasing revenues by increasing taxable activity would be a reduction in the tax rate on capital gains income. Although estimates differ sharply as to the longer-term effect of reducing the capital gains tax rate, the short-term effect is generally projected to increase revenues as a result of increased realization of capital gains. It is not clear whether a limitation on increasing revenues could also be applied to measures, such as an excise tax on tobacco products, which increase tax rates to a level intended to inhibit a taxable activity. The intended effect in such a case would be a reduction in revenues, due to the inhibitory effect, rather than an increase in revenues due to the higher rate. The question remains as to whether the provision would be interpreted such that the intended effect would exempt such a measure from the restrictions of a tax limitation provision or such that the increased rate would be sufficient to place the measure in contravention of the provision. Typically, these provisions would limit the rate of increase in revenues to "the rate of increase in national income in the second prior fiscal year, unless a three-fifths majority of the whole number of each House of Congress shall have passed a bill directed solely to approving specific additional receipts and such bill has become law." This form of limitation is the most common in recent proposals. Variations have previously been considered in both the Senate and the House. National income (or any other measure or index) is dependent on a meaning defined either in a statute or in practice. Proponents argue that such a provision would preserve the current ratio of federal revenues to the economy as a whole. Detractors of this approach suggest that the definition of any index would be subject to manipulation, and tax policies would thus hinge on who controlled the definition. For example, in 1980 the Commerce Department revised the definition of national income to include most forms of overseas earnings, resulting in a significant increase in national income. In this case, the action taken did not directly affect the size of the economy, but did have a significant impact on the calculation of national income. Under a formula limitation, such actions could make it permissible to increase revenues regardless of the state of the economy. In theory, this type of provision could require the government to reduce taxes if revenues were to increase at a rate faster than the economy because of changing economic conditions. For example, inflation in the late 1970s caused personal incomes to increase at a greater rate than the economy as a whole. This resulted in increased federal revenues due to higher income taxes ("bracket creep"). Although the income tax rate structure is now indexed for inflation, its progressive structure means that increases in personal income due to economic growth can still result in revenues increasing at a more rapid rate than the economy. Such a provision could also require a tax cut following a recession because of an associated downturn in national income. More importantly, there is a two year lag between when change in national income is measured and when fiscal policy is enacted. This delay could force the federal government to adopt a counter-productive fiscal policy. Another approach would require that measures to increase revenues be passed by a super-majority of three-fifths or two-thirds of the total membership of each House. This would allow increases in taxes beyond the rate of growth of national income, but only under one of two circumstances. First, tax revenues could increase under existing tax laws as a result of economic upturns. Alternately, they could increase as a result of any new law, if it were passed by super-majority. This type of tax limitation was endorsed in the "Contract with America" signed by many Republican candidates for the House of Representatives during the 1994 congressional election. H.J.Res. 1 in the 112 th Congress includes such a provision to require a two-thirds super majority. Alternately, some proposals might limit taxes indirectly by limiting the level of expenditures. While this method would not actually prohibit the federal government from taking action to increase revenues, it would inhibit such increases by removing the primary incentive for doing so. Even in the 19 th century, the federal government did not historically operate with a sustained budgetary surplus, and it seems unlikely that a mandatory balanced budget would create an incentive to do so. If expenditures were limited, any increases in revenues beyond the level necessary for balance could be applied only towards repayment of debt principal. Because the repayment of debt principal, and particularly its scheduling, is dependent on the terms under which such funds were originally borrowed, it seems unlikely that this would provide a significant incentive for the federal government to operate at a sustained surplus. Without such an incentive, the indirect effect of an expenditure limit would be to limit taxation. The levels of the expenditure limits commonly associated with such proposals generally has been in the range of 18% to 20% of Gross Domestic Product. However, as shown in Table 6 , the current level of expenditures is higher than that. Therefore, such a limitation would require significant cuts in spending as well as an overall balance of expenditures and revenues. In any form, a limitation on revenues or outlays could create a bias in favor of tax expenditures. Because in most cases these are receipts foregone by the government, rather than actual outlays, they would likely be largely exempt from any limitations on spending. Proposals to limit the growth or level of federal taxation would also favor tax expenditures over outlays. Although increasing receipts and reducing outlays are budgetarily equivalent, a limitation on increases in receipts would limit Congress's ability to eliminate tax expenditures to achieve a balanced budget. This is because eliminating tax expenditures would increase receipts rather than reduce outlays, and thus increase the risk of running afoul of such a limitation. Judicial Review Although H.J.Res. 1 in the 112 th Congress does not include such a provision, when the Senate considered a balanced budget amendment during the 103 rd Congress, the issue of judicial review was prominently debated. In particular, the Senate considered a provision to establish that the power of "any court to order relief pursuant to any case or controversy arising under this article shall not extend to ordering any remedies other than declaratory judgment or such remedies as are specifically authorized in implementing legislation." Such a provision would leave the judiciary with the authority to issue decisions concerning the meaning of the amendment or any implementing legislation, but judicial remedies of violations could only be ordered in circumstances specifically provided by law. Although such declaratory judgments would be binding, courts would lack the enforcement remedies of injunctive relief or writs of mandamus. Enforcement would be left to the elected branches unless the Courts were specifically provided with authority to use these or other remedies. Limiting the judiciary to declaratory judgments might not be an entirely empty authority, but its effectiveness would depend on the parties involved respecting and following the terms of the judgment. Such a limitation on judicial remedies would represent a significant shift in the balance of power among the three branches of the federal government, and a departure from the accepted practice that allows courts to interpret constitutional disputes and determine the appropriate remedy. Appendix A. Comparison of Deficit Projected in Presidential Budget Submissions and Actual Amounts, FY1965-FY2010 Appendix B. Legislative History of the Balanced Budget Provision in 31 U.S.C. 1103 (formerly 31 U.S.C. 27) "Byrd Amendment" (named after its sponsor Senator Harry F. Byrd, Jr. (D-VA)) Passed Senate 58-28 (vote no. 270, July 31, 1978), as an amendment to a bill to amend the Bretton Woods Agreement pertaining to the International Monetary Fund. The House adopted nonbinding instructions to its conferees on the bill that included agreeing to this provision, by a vote of 286-91 (roll no. 778, September 14, 1978). It was subsequently incorporated in the final version of the measure during conference. The provision has been amended twice although there has been no separate vote in either chamber on these changes. P.L. 95-435 , 92 Stat . 1051, October 10, 1978 To amend the Bretton Woods Agreement (IMF). (92 Stat. 1053) "Section 7. Beginning with fiscal year 1981, the total budget outlays of the Federal Government shall not exceed its receipts." P.L. 96-389 , 94 Stat . 1551, October 7, 1980 To amend the Bretton Woods Agreement (IMF). (94 Stat. 1553) "Section 3. Strike section 7 of P.L. 95-435 , the Bretton Woods Agreements Act Am endments of 1978, which reads: ' Beginning with Fiscal Year 1981, the total budget outlays of the Federal Government shall not exceed its receipts. ', and insert in lieu thereof: ' The Congress reaffirms its commitment that beginning with Fiscal Year 1981, the total budget outlays of the Federal Government shall not exceed its receipts.'" P.L. 97-258 , 96 Stat . 877, September 13, 1982 To revise, codify and enact without substantive change certain general and permanent laws, related to money and finance, as title 31, United States Code, "Money and Finance." (96 Stat. 908) "Section 1103. Budget ceiling. Congress reaffirms its commitment that budget outlays of the United States Government for a fiscal year may not be more than the receipts of the Government for that year."

One of the most persistent political issues facing Congress in recent decades is whether to require that the budget of the United States be in balance. Although a balanced federal budget has long been held as a political ideal, the accumulation of large deficits in recent years has heightened concern that some action to require a balance between revenues and expenditures may be necessary. The debate over a balanced budget measure actually consists of several interrelated debates. Most prominently, the arguments of proponents have focused on the economy and the possible harm resulting from consistently large deficits and a growing federal debt. Another issue involves whether such a requirement should be statutory or made part of the Constitution. Some proponents of balanced budgets oppose a constitutional amendment, fearing that it would prove to be too inflexible for dealing with future circumstances. Opponents of a constitutional amendment often focus on the difficulties of implementing or enforcing any amendment. Their concerns have been numerous and varied. How would such a requirement affect the balance of power between the President and Congress? Between the federal courts and Congress? Although most proponents would prefer to establish a balanced budget requirement as part of the Constitution, some advocates have suggested using the untried process provided under Article V of the Constitution for a constitutional convention as an alternative to a joint resolution passed by two-thirds vote in both houses of Congress. Although the inclusion of a balanced budget amendment as part of the congressional agenda has muted this debate in recent years, proposals for a convention are still possible, and raise concerns that one might open the way to an unpredictable series of reforms. The last American constitutional convention convened in May 1787 and produced the current Constitution. These are also questions that will be raised and considered by Congress concerning the provisions that should be included in such a measure as it sifts through its options. Congress ultimately will decide whether consideration should be given to a constitutional requirement for a balanced budget; and if it decides to proceed, it will need to decide whether there should be exceptions to the requirement, or if it should include provisions such as a separate capital budget or a limitation on expenditures or revenues. For example, as reported from the House Judiciary Committee, H.J.Res. 1 in the 112th Congress includes provisions that would require a super majority to allow a budget with outlays in excess of receipts, to allow outlays to exceed 18% of the "economic output" of the United States regardless of whether the budget were balanced, to increase the debt limit, or to increase revenues. S. 365, enacted August 2, 2011 (P.L. 112-25), provides that the House and Senate vote on a balanced budget amendment between September 30, 2011, and December 31, 2011, and includes expedited procedures for its consideration. On November 18, 2011, the House voted on H.J.Res. 2, but did not achieve the two-thirds vote required for passage. On December 14, 2011, the Senate voted on S.J.Res. 10 and S.J.Res. 24, but neither measure achieved a majority vote. This report provides an overview of the issues and options that have been raised during prior consideration of proposals for a balanced budget constitutional amendment. It will be updated as events warrant.

Historical Development Origins of the 8(a) Program The current 8(a) Program resulted from the merger of two distinct types of federal programs: those seeking to assist small businesses in general and those seeking to assist racial and ethnic minorities. This merger first occurred, as a matter of executive branch practice, in 1967 and was given a statutory basis in 1978. Federal Programs for Small Businesses Congress first authorized a federal agency to enter into prime contracts with other agencies and subcontract with small businesses for the performance of these contracts in 1942. The agency was the Smaller War Plants Corporation (SWPC), which was created partly for this purpose, and Congress gave it these powers in order to ameliorate small businesses' financial difficulties while also "mobiliz[ing] the productive facilities of small business in the interest of successful prosecution of the war." The SWPC's subcontracting authority expired along with the SWPC at the end of the World War II. However, in 1951, at the start of the Korean War, Congress created the Small Defense Plants Administration (SDPA), which was generally given the same powers that the SWPC had exercised. Two years later, in 1953, Congress transferred the SDPA's subcontracting authorities, among others, to the newly created Small Business Administration, with the intent that the SBA would exercise these powers in peacetime, as well as in wartime. When the Small Business Act of 1958 transformed the SBA into a permanent independent agency, this subcontracting authority was included in Section 8(a) of the act. At its inception, the SBA's subcontracting authority was not limited to small businesses owned and controlled by the socially and economically disadvantaged. Under the original Section 8(a), the SBA could contract with any "small-business concerns or others," but the SBA seldom, if ever, employed this subcontracting authority, focusing instead upon its loan and other programs. Federal Programs for Racial and Ethnic Minorities Federal programs for racial and ethnic minorities began developing at approximately the same time as those for small businesses, although there was initially no explicit overlap between them. The earliest programs were created by executive orders, beginning with President Franklin Roosevelt's order on June 25, 1941, requiring that all federal agencies include a clause in defense-related contracts prohibiting contractors from discriminating on the basis of "race, creed, color, or national origin." Subsequent Presidents followed Roosevelt's example, issuing a number of executive orders seeking to improve the employment opportunities of members of various racial and ethnic groups. These executive branch initiatives took on new importance after the Kerner Commission's report on the causes of the urban riots of 1966 concluded that African Americans would need "special encouragement" to enter the economic mainstream. Presidents Lyndon Johnson and Richard Nixon laid the foundations for the present 8(a) Program in the hope of providing such "encouragement." Johnson created the President's Test Cities Program (PTCP), which involved a small-scale use of the SBA's authority under Section 8(a) to award contracts to firms willing to locate in urban areas and hire unemployed individuals, largely African Americans, or sponsor minority-owned businesses by providing capital or management assistance. However, under the PTCP, small businesses did not have to be minority-owned to receive subcontracts under Section 8(a). Nixon's program was larger and focused more specifically on minority-owned small businesses. During the Nixon Administration, the SBA promulgated its earliest regulations for the 8(a) Program. In 1970, the first of these regulations articulated the SBA's policy of using Section 8(a) to "assist small concerns owned by disadvantaged persons to become self-sufficient, viable businesses capable of competing effectively in the market place." A later regulation, promulgated in 1973, defined "disadvantaged persons" as including, but not limited to, "black Americans, Spanish-Americans, oriental Americans, Eskimos, and Aleuts." However, the SBA lacked explicit statutory authority for focusing its 8(a) Program on minority-owned businesses until 1978, although courts generally rejected challenges alleging that SBA's implementation of the program was unauthorized because it was "not specifically mentioned in statute." 1978 Amendments to the Small Business Act and Subsequent Regulations In 1978, Congress amended the Small Business Act to give the SBA statutory authority for its 8(a) Program for minority-owned businesses. Under the 1978 amendments, SBA can only subcontract under Section 8(a) with "socially and economically disadvantaged small business concerns," or businesses which are least 51% owned by one or more socially and economically disadvantaged individuals and whose management and daily operations are controlled by such individual(s). The 1978 amendments established a basic definition of "socially disadvantaged individuals," which included those who have been "subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities." They also included congressional findings that "Black Americans, Hispanic Americans, Native Americans, and other minorities" are socially disadvantaged. Thus, if an individual was a member of one of these groups, he or she was presumed to be socially disadvantaged. Otherwise, the amendments were generally seen to grant the SBA discretion to recognize additional groups or individuals as socially disadvantaged based upon criteria promulgated in regulations. Under these regulations, which include a three-part test for determining whether minority groups not mentioned in the amendment's findings are disadvantaged, the SBA recognized the racial or ethnic groups listed in Table 1 as socially disadvantaged for purposes of the 8(a) Program. The regulations also established standards of evidence to be met by individuals demonstrating personal disadvantage and procedures for rebutting the presumption of social disadvantage accorded to members of recognized minority groups. The 1978 amendments also defined "economically disadvantaged individuals," for purposes of the 8(a) Program, as "those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged." Later, the SBA established by regulation that personal net worth of less than $250,000 at the time of entry into the 8(a) Program ($750,000 for continuing eligibility) constitutes economic disadvantage. Expansion of the 8(a) Program to Include "Disadvantaged" Groups Although the 8(a) Program was originally established for the benefit of disadvantaged individuals , in the 1980s, Congress expanded the program to include small businesses owned by four "disadvantaged" groups . The first owner-group to be included was Community Development Corporations (CDCs). A CDC is a nonprofit organization responsible to residents of the area it serves which is receiving financial assistance under part A of this subchapter [42 U.S.C. §§9805 et seq .] and any organization more than 50 percent of which is owned by such an organization, or otherwise controlled by such an organization, or designated by such an organization for the purpose of this subchapter [42 U.S.C. §§9801 et seq .]. Congress created CDCs with the Community Development Act of 1981 and instructed the SBA to issue regulations ensuring that CDCs could participate in the 8(a) Program. In 1986, two additional owner-groups—Indian tribes and Alaska Native Corporations (ANCs)—became eligible for the 8(a) Program when Congress passed legislation providing that firms owned by Indian tribes—which include ANCs —were to be deemed "socially disadvantaged" for purposes of the 8(a) Program. In 1992, ANCs were further deemed to be "economically disadvantaged." The final owner-group, that of Native Hawaiian Organizations (NHOs), was recognized in 1988. An NHO is defined as any community service organization serving Native Hawaiians in the State of Hawaii which (A) is a nonprofit corporation that has filed articles of incorporation with the director (or the designee thereof) of the Hawaii Department of Commerce and Consumer Affairs, or any successor agency, (B) is controlled by Native Hawaiians, and (C) whose business activities will principally benefit such Native Hawaiians. Current Requirements Under the current 8(a) Program, participating firms are eligible for set-asides or sole-source awards of federal contracts, as well as training and technical assistance from SBA. Detailed statutory and regulatory requirements govern eligibility for the Program; set-asides and sole-source awards to 8(a) firms; and related issues. These requirements are generally the same for all participants in the 8(a) Program, although there are instances where there are "special rules" for 8(a) firms owned by groups. An Appendix to this report compares the requirements applicable to individual owners of 8(a) firms to those applicable to groups owning 8(a) firms (i.e., ANCs, CDCs, NHOs, and Indian tribes). Requirements In General Eligibility for the 8(a) Program Eligibility for the 8(a) Program is limited to "small business[es] which [are] unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States, and which demonstrate[] potential for success." Each of these terms is further defined by the Small Business Act; regulations that the SBA has promulgated to implement Section 8(a); and judicial and administrative decisions. The eligibility requirements are the same at the time of entry into the 8(a) Program and throughout the Program unless otherwise noted. "Business" Except for small agricultural cooperatives, a "business" is a for-profit entity that has a place of business located in the United States and operates primarily within the United States or makes a significant contribution to the U.S. economy by paying taxes or using American products, materials, or labor. For purposes of the 8(a) Program, businesses may take the form of individual proprietorships, partnerships, limited liability companies, corporations, joint ventures, associations, trusts, or cooperatives. "Small" A business is "small" if it is independently owned and operated; is not dominant in its field of operations; and meets any definitions or standards established by the Administrator of the SBA. These standards focus primarily upon the size of the business as measured by the number of employees or its gross income, but they also take into account the size of other businesses within the same industry. For example, businesses in the field of "scheduled passenger air transportation" are "small" if they have fewer than 1,500 employees, while those in the data processing field are "small" if they have a gross income of less than $32.5 million. Affiliations between businesses, or relationships allowing one party control or the power of control over another, generally count in size determinations, with the SBA considering "the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates, regardless of whether the affiliates are organized for profit." Businesses can thus be determined to be other than small because of their involvement in joint ventures, subcontracting arrangements, or franchise or license agreements, among other things, provided that their income or personnel numbers, plus those of their affiliate(s), are over the pertinent size threshold. "Unconditionally owned and controlled" Participants in the 8(a) Program must be "at least 51% unconditionally and directly owned by one or more socially and economically disadvantaged individuals who are citizens of the United States" unless they are owned by an ANC, CDC, NHO, or Indian tribe. Ownership is "unconditional" when it is not subject to any conditions precedent or subsequent, executory agreements, voting trusts, restrictions on or assignments of voting rights, or other arrangements that could cause the benefits of ownership to go to another entity. Ownership is "direct" when the disadvantaged individuals own the business in their own right and not through an intermediary (e.g., ownership by another business entity or by a trust that is owned and controlled by one or more disadvantaged individuals). Non-disadvantaged individuals and non-participant businesses that own at least 10% of an 8(a) business may generally own no more than 10 to 20% of any other 8(a) firm. Non-participant businesses that earn the majority of their revenue in the same or similar line of business are likewise barred from owning more than 10% (increasing to 20%-30% in certain circumstances) of another 8(a) firm. Participants must also be controlled by one or more disadvantaged individuals. "Control is not the same as ownership" and includes both strategic policy setting and day-to-day management and administration of business operations. Management and daily business operations must also be conducted by one or more disadvantaged individuals unless the 8(a) business is owned by an ANC, CDC, NHO, or Indian tribe. These individuals must have managerial experience "of the extent and complexity needed to run the concern" and generally must devote themselves full-time to the business "during the normal working hours of firms in the same or similar line of business." A disadvantaged individual must hold the highest officer position within the business. Non-disadvantaged individuals may otherwise be involved in the management of an 8(a) business, or may be stockholders, partners, limited liability members, officers, or directors of an 8(a) business. However, they may not exercise actual control or have the power to control the firm or its disadvantaged owner(s), or receive compensation greater than that of the highest-paid officer (usually the CEO or President) without SBA approval. "Socially disadvantaged individual" Socially disadvantaged individuals are "those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities." Members of designated groups, listed in Table 1 , are entitled to a rebuttable presumption of social disadvantage for purposes of the 8(a) Program, although this presumption can be overcome with "credible evidence to the contrary." Individuals who are not members of designated groups must prove they are socially disadvantaged by a preponderance of the evidence. Such individuals must show (1) at least one objective distinguishing feature that has contributed to social disadvantage (e.g., race, ethnic origin, gender, physical handicap, long-term residence in an environment isolated from mainstream American society); (2) personal experiences of substantial and chronic social disadvantage in American society; and (3) negative impact on entry into or advancement in the business world. In assessing the third factor, the SBA will consider all relevant evidence produced by the applicant, but must consider the applicant's education, employment, and business history to see if the totality of the circumstances shows disadvantage. Groups not included in Table 1 may obtain listing by demonstrating disadvantage by a preponderance of the evidence. "Economically disadvantaged individual" Economically disadvantaged individuals are "socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business who are not socially disadvantaged." Individuals claiming economic disadvantage must describe it in a personal statement and submit financial documentation. The SBA will examine their personal income for the past three years, their personal net worth, and the fair market value of the assets they own. However, principal ownership in a prospective or current 8(a) business is generally excluded when calculating net worth, as is equity in individuals' primary residence. For initial eligibility, applicants to the 8(a) Program must have a net worth of less than $250,000. For continued eligibility, net worth must be less than $750,000. "Good character" In determining whether an applicant to, or participant in, the 8(a) Program possesses "good character," the SBA looks for criminal conduct; violations of SBA regulations; current debarment or suspension from government contracting; managers or key employees who lack business integrity; and the knowing submission of false information to the SBA. "Demonstrated potential for success" For a firm to have demonstrated potential for success, it generally must have been in business in the field of its primary industry classification for at least two full years immediately prior to the date of its application to the 8(a) Program. However, the SBA may grant a waiver allowing firms that have been in business for less than two years to enter the 8(a) Program when (1) the disadvantaged individuals upon whom eligibility is based have substantial business management experience; (2) the business has demonstrated the technical experience necessary to carry out its business plan with a substantial likelihood of success; (3) the firm has adequate capital to sustain its operations and carry out its business plan; (4) the firm has a record of successful performance on contracts in its primary field of operations; and (5) the firm presently has, or can demonstrate its ability to timely obtain, the personnel, facilities, equipment, and other resources necessary to perform contracts under Section 8(a). Set-Asides and Sole-Source Awards Under Section 8(a) Section 8(a) of the Small Business Act authorizes agencies to award contracts for goods or services, or to perform construction work, to the SBA for subcontracting to small businesses participating in the 8(a) Program. A "set-aside" is an acquisition in which only certain contractors may compete, while a sole-source award is a contract awarded, or proposed for award, without competition. Although the Competition in Contracting Act (CICA) generally requires that agencies obtain "full and open competition through the use of competitive procedures" when procuring goods or services, set-asides and sole-source awards are both permissible under CICA. In fact, an 8(a) set-aside is a recognized competitive procedure. Agencies are effectively encouraged to subcontract through the 8(a) Program because there are government-wide and agency-specific goals regarding the percentage of procurement dollars awarded to "small disadvantaged businesses," among others. Awards made via set-asides or on a sole-source basis count toward these goals, and businesses participating in the 8(a) Program are considered small disadvantaged businesses. Discretion to Subcontract Through the 8(a) Program There are few limits on agency discretion to subcontract through the 8(a) Program. However, the SBA is prohibited by regulation from accepting procurements for award under Section 8(a) when 1. the procuring agency issued a solicitation for or otherwise expressed publicly a clear intent to reserve the procurement as a set-aside for small businesses not participating in the 8(a) Program prior to offering the requirement to SBA for award as an 8(a) contract; 2. the procuring agency competed the requirement among 8(a) firms prior to offering the requirement to SBA and receiving SBA's acceptance of it; or 3. the SBA makes a written determination that "acceptance of the procurement for 8(a) award would have an adverse impact on an individual small business, a group of small businesses located in a specific geographical location, or other small business programs." Additionally, SBA is barred from awarding an 8(a) contract, either via a set-aside or on a sole-source basis, "if the price of the contract results in a cost to the contracting agency which exceeds a fair market price." Otherwise, agency officials may offer contracts to the SBA "in [their] discretion," and the SBA may accept requirements for the 8(a) Program "whenever it determines such action is necessary or appropriate." The courts and the Government Accountability Office (GAO) will generally not hear protests of agencies' determinations regarding whether to procure specific requirements through the 8(a) Program unless it can be shown that government officials acted in bad faith or contrary to federal law. Monetary Thresholds and Subcontracting Mechanism Under 8(a) Once the SBA has accepted a contract for the 8(a) Program, the contract is awarded either through a set-aside or on a sole-source basis, with the amount of the contract generally determining the acquisition method used. When the anticipated total value of the contract, including any options, is less than $4 million ($7 million for manufacturing contracts), the contract is normally awarded without competition. In contrast, when the anticipated value of the contract exceeds $4 million ($7 million for manufacturing contracts), the contract generally must be awarded via a set-aside with competition limited to 8(a) firms so long as there is a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price. Sole-source awards of contracts valued at $4 million ($7 million or more for manufacturing contracts) may only be made when (1) there is not a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers at a fair market price, or (2) the SBA accepts the requirement on behalf of an 8(a) firm owned by an Indian tribe, an ANC or, in the case of Department of Defense contracts, an NHO. Requirements valued at more than $4 million ($7 million for manufacturing contracts) cannot be divided into several acquisitions at lesser amounts in order to make sole-source awards. Other Requirements Other key requirements of the 8(a) Program include the following: Inability to protest an 8(a) firm's eligibility for an award : When the SBA makes or proposes an award to an 8(a) firm, that firm's eligibility for the award cannot be challenged or protested as part of the solicitation or proposed contract award. Instead, information concerning a firm's eligibility for the 8(a) Program must be submitted to SBA in accordance with separate requirements contained in Section 124.517 of Title 13 of the Code of Federal Regulations . Maximum of nine years in the 8(a) Program : Firms may participate in the 8(a) Program for no more than nine years from the date of their admission into the Program, although they may be terminated or graduate from the program before nine years have passed. One-time eligibility for the 8(a) Program : Once a firm or a disadvantaged individual upon whom a firm's eligibility was based has exited the 8(a) Program after participating in it for any length of time, neither the firm nor the individual is generally eligible to participate in the 8(a) Program again. When at least 50% of the assets of one firm are the same as those of another firm, the firms are considered identical for purposes of eligibility for the 8(a) Program. Limits on ownership of 8(a) firms by family members of current or former 8(a) firm owners : Individuals generally may not use their disadvantaged status to qualify a firm for the 8(a) Program if the individual has an immediate family member who is using, or has used, his or her disadvantaged status to qualify a firm for the 8(a) Program. Limits on the amount of 8(a) contracts that a firm may receive : 8(a) firms may generally not receive additional sole-source awards once they have received a combined total of competitive and sole-source awards in excess of $100 million, in the case of firms whose size is based on their number of employees, or in excess of an amount equivalent to the lesser of (1) $100 million or (2) five times the size standard for the industry, in the case of firms whose size is based on their revenues. Additionally, 8(a) firms in the "transitional stage," or the last five years of participation, must achieve annual targets for the amount of revenues they receive from non-8(a) sources. These targets increase over time, with firms required to attain 15% of their revenue from non-8(a) sources in the fifth year; 25% in the sixth year; 35% in the seventh year; 45% in the eight year; and 55% in the ninth year. Firms that do not display the relevant percentages of revenue from non-8(a) sources are ineligible for sole-source 8(a) contracts "unless and until" they correct the situation. Limitations on subcontracting : Although not only under the authority of Section 8(a) of the Small Business Act or applicable only to 8(a) businesses, limitations on subcontracting require that small businesses receiving contracts under a set-aside perform an amount of work that equals certain minimum percentages of the amount paid under the contract. Specifically, small businesses must generally perform at least 50% of the costs of the contract incurred for personnel with its own employees, in the case of service contracts; and at least 50% of the cost of manufacturing supplies or products (excluding the cost of materials), in the case of manufacturing contracts. Requirements for Tribally, ANC-, NHO-, and CDC-Owned Firms Tribes, ANCs, NHOs or CDCs themselves generally do not participate in the 8(a) Program. Rather, businesses that are at least 51% owned by such entities participate in the 8(a) Program, although the rules governing their participation are somewhat different from those for the 8(a) Program generally. Eligibility for the 8(a) Program "Small" Firms owned by Indian tribes, ANCs, NHOs, and CDCs must be "small" under the SBA's size standards. However, certain affiliations with the owning entity or other business enterprises of that entity are excluded in size determinations unless the Administrator of Small Business determines that a small business owned by an ANC, CDC, NHO, or Indian tribe "[has] obtained, or [is] likely to obtain, a substantial unfair competitive advantage within an industry category" because of such exclusions. Other affiliations of small businesses owned by ANCs, CDCs, NHOs, and Indian tribes can count in size determinations, and ANC-owned firms, in particular, have been subjected to early graduation from the 8(a) Program because they exceeded the size standards. "Business" Firms owned by ANCs, CDCs, NHOs, and Indian tribes must be "businesses" under the SBA's definition. Although ANCs themselves may be for-profit or nonprofit, ANC-owned businesses must be for-profit to participate in the 8(a) Program. "Unconditionally owned and controlled" Firms owned by ANCs, CDCs, NHOs, or Indian tribes must be unconditionally owned and substantially controlled by the ANC, CDC, NHO, or Indian tribe, respectively. However, under SBA regulations, tribally or ANC-owned firms may be managed by individuals who are not members of the tribe or Alaska Natives if the firm can demonstrate: that the Tribe [or ANC] can hire and fire those individuals, that it will retain control of all management decisions common to boards of directors, including strategic planning, budget approval, and the employment and compensation of officers, and that a written management development plan exists which shows how Tribal members will develop managerial skills sufficient to manage the concern or similar Tribally-owned concerns in the future. NHO-owned firms must demonstrate that the NHO controls the board of directors. However, the individual who is responsible for the NHO-owned firm's day-to-day management need not establish personal social and economic disadvantage. CDCs are to be managed and have their daily operations conducted by individuals with "managerial experience of an extent and complexity needed to run the [firm]." "Socially disadvantaged" As owners of prospective or current 8(a) firms, Indian tribes, ANCs, NHOs, and CDCs are all presumed to be socially disadvantaged. "Economically disadvantaged" By statute, ANCs are deemed to be economically disadvantaged, and CDCs are similarly treated as economically disadvantaged. Indian tribes and NHOs, in contrast, must establish economic disadvantage at least once. Indian tribes must present data on, among other things, the number of tribe members; the tribal unemployment rate; the per capita income of tribe members; the percentage of the local Indian population above the poverty level; the tribe's access to capital; the tribe's assets as disclosed in current financial statements; and all businesses wholly or partially owned by tribal enterprises or affiliates, as well as their primary industry classification. However, once a tribe has established that it is economically disadvantaged for purposes of one 8(a) business, it need not reestablish economic disadvantage in order to have other businesses certified for the 8(a) Program unless the Director of the Office of Business Development requires it to do so. When determining whether an NHO is economically disadvantaged, SBA will consider "the individual economic status of NHO's members," the majority of whom "must qualify as economically disadvantaged" under the same standards as individual applicants to the 8(a) Program. Specifically: For the first 8(a) applicant owned by a particular NHO, individual NHO members must meet the same initial eligibility economic disadvantage thresholds as individually-owned 8(a) applicants. For any additional 8(a) applicant owned by the NHO, individual NHO members must meet the economic disadvantage thresholds for continued 8(a) eligibility. "Good character" When an organization owns an actual or prospective 8(a) firm, all members, officers, or employees of that organization are generally not required to show good character. The regulations governing tribally and ANC-owned firms explicitly address the issue, stating that the "good character" requirement applies only to officers or directors of the firm, or shareholders owning more than a 20% interest. NHO-owned firms may be subject to the same requirements in practice. With CDC-owned firms, the firm itself and "all of its principals" must have good character. "Demonstrated potential for success" Firms owned by ANCs, CDCs, NHOs, and Indian tribes may provide evidence of "potential for success" in several ways, including by demonstrating that 1. the firm has been in business for at least two years, as shown by individual or consolidated income tax returns for each of the two previous tax years showing operating revenues in the primary industry in which the firm seeks certification; 2. the individuals who will manage and control the daily operations of the firm have substantial technical and management experience; the firm has a record of successful performance on government or other contracts in its primary industry category; and the firm has adequate capital to sustain its operations and carry out its business plan; or 3. the owner-group has made a firm written commitment to support the operations of the firm and has the financial ability to do so. The first of these ways for demonstrating potential for success is the same for individually owned firms, and the second arguably corresponds to the circumstances in which SBA may waive the requirement that individually owned firms have been in business for at least two years. There is no equivalent to the third way for individually owned firms, and some commentators have suggested that this provision could "benefit ANCs [and other owner groups] by allowing more expeditious and effortless access to 8(a) contracts for new concerns without having to staff new subsidiaries with experienced management." Report of Benefits for Firms Owned By ANCs, Indian Tribes, NHOs, and CDCs Although implementation of this requirement has been delayed, 8(a) firms owned by ANCs, CDCs, NHOs, and Indian tribes must submit information annually to the SBA showing how the Tribe, ANC, NHO or CDC has provided benefits to the Tribal or native members and/or the Tribal, native or other community due to the Tribe's/ANC's/NHO's/CDC's participation in the 8(a) … program through one or more firms. This data includes information relating to funding cultural programs, employment assistance, jobs, scholarships, internships, subsistence activities, and other services provided by the Tribe, ANC, NHO or CDC to the affected community. Set-Asides and Sole-Source Awards Like other participants in the 8(a) Program, firms owned by ANCs, CDCs, NHOs, and Indian tribes are eligible for 8(a) set-asides and may receive sole-source awards valued at less than $4 million ($7 million for manufacturing contracts). However, firms owned by ANCs and Indian tribes can also receive sole-source awards in excess of $4 million ($7 million for manufacturing contracts) even when contracting officers reasonably expect that that at least two eligible and responsible 8(a) firms will submit offers and the award can be made at fair market price. NHO-owned firms may receive sole-source awards from the Department of Defense under the same conditions. Other Requirements Firms owned by ANCs, CDCs, NHOs, and Indian tribes are governed by the same regulations as other 8(a) firms where certain of the "other requirements" are involved, including (1) inability to protest an 8(a) firm's eligibility for an award; (2) maximum of nine years in the 8(a) Program (for individual firms); and (3) limits on subcontracting. However, the requirements for such firms differ somewhat from those for other 8(a) firms where one-time eligibility for the 8(a) Program; limits on majority ownership of 8(a) firms; and limits on the amount of 8(a) contracts that a firm may receive are involved. Firms owned by ANCs, CDCs, NHOs, and Indian tribes may participate in the 8(a) Program only one time. However, unlike the disadvantaged individuals upon whom other firms' eligibility for the 8(a) Program is based, ANCs, CDCs, NHOs, and Indian tribes may confer eligibility for the 8(a) Program upon firms on multiple occasions and for an indefinite period. Additionally, although ANCs, CDCs, NHOs, and Indian tribes may not own 51% or more of a firm obtaining the majority of its revenues from the same "primary" industry in which another firm they own or owned currently operates or has operated within the past two years, there are no limits on the number of firms they may own that operate in other primary industries. Moreover, ANCs, CDCs, NHOs, and Indian tribes may own multiple firms that earn less than 50% of their revenue in the same "secondary" industries. Finally, firms owned by ANCs, CDCs, NHOs, and Indian tribes may continue to receive additional sole-source awards even after they have received a combined total of competitive and sole-source 8(a) contracts in excess of the dollar amount set forth in Section 124.519 of Title 13 of the Code of Federal Regulations , while individually owned firms may not. However, firms owned by any of these four types of entities are subject to the same requirements regarding the percentages of revenue received from non-8(a) sources at various stages of their participation in the 8(a) Program as other 8(a) firms. Constitutionality of the 8(a) Program The 8(a) Program has periodically been challenged on the grounds that the presumption that members of certain racial and ethnic groups are disadvantaged violates the constitutional guarantee of equal protection. The outcomes in early challenges to the program varied, with some courts finding that the plaintiffs lacked standing to bring such challenges because they were not economically disadvantaged, or were otherwise ineligible for the program; and other courts finding that the program was unconstitutional as applied in specific cases. More recently, in its 2012 decision in DynaLantic Corporation v. U.S. Department of Defense , the U.S. District Court for the District of Columbia found that the 8(a) Program was not unconstitutional on its face because (1) "breaking down barriers to minority business development created by discrimination and its lingering effects" constitutes a compelling government interest; (2) the government had a strong basis in evidence for concluding that race-based action was necessary to further this interest; and (3) the 8(a) Program is narrowly tailored to "minimize the burden on non-minority firms." However, the court found that the program was unconstitutional as applied in the military simulation and training industry because the Department of Defense (DOD) conceded it had "no evidence of discrimination, either in the public or private sector, in the simulation and training industry." Particularly in its rejection of the facial challenge to the 8(a) Program, the court emphasized certain aspects of the program's history and requirements when finding that the government had articulated a compelling interest for the program and had a strong basis in evidence for its actions. Specifically, the court rejected the plaintiff's assertion that the 8(a) Program was "not truly remedial," but rather favored "virtually all minority groups … over the larger pool of citizens," because non-minority individuals may qualify for the program, and all 8(a) applicants must demonstrate economic disadvantage. The court also noted that the history of the 8(a) program prior to 1978 (when Congress expressly authorized set-asides for disadvantaged small businesses) had evidenced that race-neutral methods were insufficient to promote contracting with minority-owned small businesses. The court further noted that the 8(a) Program was intended to be a business development program, not a means to "channel contracts" to minority firms; that Section 8(a) of the Small Business Act expressly provides that awards may be made through the 8(a) Program only when SBA determines that "such action is necessary and appropriate"; and that the act requires the President and SBA to report annually to Congress on the program, thereby ensuring that Congress has evidence as to whether there is a "continuing compelling need for the program." Similarly, in finding that the program was narrowly tailored to meet the government's interests, the court noted (1) that goals for contracting with small disadvantaged businesses are purely aspirational, and there are no penalties for failing to meet them; (2) the nine-year limits on program participation for individual owners and firms; and (3) that SBA may not accept a requirement for the 8(a) Program if it determines that doing so will have a adverse effect on another small business or group of small businesses. The court emphasized that the last two factors, in particular, helped ensure that race-conscious remedies do not "last longer than the discriminatory effects [they are] designed to eliminate," and "work the least harm possible to other innocent persons competing for the benefit." A 2015 decision by the U.S. District Court for the District of Columbia in Rothe Development, Inc. v. Department of Defense subsequently adopted the reasoning of the DynaLantic court in finding that the 8(a) Program is not unconstitutional on its face. In so doing, the court noted the same attributes of the 8(a) Program that the DynaLantic court had emphasized. In particular, in its brief discussion, the court noted the following six factors: 1. alternative, race-neutral remedies had proved unsuccessful in addressing the discrimination targeted here; 2. the 8(a) Program is "appropriately flexible" because it imposes no quotas and prescribes no consequences for failure to meet the aspirational goals as to the percentage of federal contract dollars awarded to small disadvantaged businesses; 3. the program is neither under- nor over-inclusive, since it "does not provide that every member of a minority group is disadvantaged"; 4. the program imposes temporal limits on individuals' participation in the program, and SBA continuously monitors participants' eligibility; 5. the aspirational goals for contracting with small disadvantaged businesses are "numerically proportionate" to the evidence regarding the availability of minority firms that are ready, able, and willing to perform government contracts; and 6. various aspects of the 8(a) Program minimize the program's burden on non-minority firms (e.g., SBA cannot accept a contract for award through the 8(a) Program if it determines that doing so would have an "adverse impact" on other small businesses). The decision in Rothe has been appealed to the U.S. Court of Appeals for the District of Columbia Circuit. The litigation in DynaLantic , however, was reportedly settled by the parties while their appeals to the D.C. Circuit were pending. Comparison of the Requirements Pertaining to Different Types of 8(a) Firms

Commonly known as the "8(a) Program," the Minority Small Business and Capital Ownership Development Program is one of several federal contracting programs for small businesses. The 8(a) Program provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-asides and sole-source awards. A "set-aside" is an acquisition in which only certain contractors may compete, while a sole-source award is a contract awarded, or proposed for award, without competition. In FY2014, the federal government spent over $16 billion on contracts and subcontracts with 8(a) firms. Other programs provide similar assistance to other types of small businesses (e.g., women-owned, HUBZone). Eligibility for the 8(a) Program is generally limited to small businesses "unconditionally owned and controlled by one or more socially and economically disadvantaged individuals who are of good character and citizens of and residing in the United States" that demonstrate "potential for success." Each of these terms is further defined by the Small Business Act, regulations promulgated by the Small Business Administration (SBA), and judicial and administrative decisions. A "business" is generally a for-profit entity that has a place of business located in the United States and operates primarily within the United States or makes a significant contribution to the U.S. economy by paying taxes or using American products, materials, or labor. A business is "small" if it is independently owned and operated; is not dominant in its field of operations; and meets any definitions or standards established by the Administrator of Small Business. Ownership is "unconditional" when it is not subject to any conditions precedent or subsequent, executory agreements, or similar limitations. "Control" is not the same as ownership and includes both strategic policy setting and day-to-day administration of business operations. Members of certain racial and ethnic groups are presumed to be socially disadvantaged, although individuals who do not belong to these groups may prove they are also socially disadvantaged. To be economically disadvantaged, an individual must have a net worth of less than $250,000 (excluding ownership in the 8(a) firm and equity in one's primary residence) at the time of entry into the program. This amount increases to $750,000 for continuing eligibility. In determining whether an applicant has good character, SBA looks for criminal conduct, violations of SBA regulations, or debarment or suspension from federal contracting. For a firm to have "potential for success," it generally must have been in business in the field of its primary industry classification for two years immediately prior to applying to the program. However, small businesses owned by Alaska Native Corporations, Community Development Corporations, Indian tribes, and Native Hawaiian Organizations are eligible for the 8(a) Program under somewhat different terms. The 8(a) Program has periodically been challenged on the grounds that the presumption that members of certain racial and ethnic groups are disadvantaged violates the constitutional guarantee of equal protection. The outcomes in early challenges to the program varied, with some courts finding that the plaintiffs lacked standing because they were not economically disadvantaged. Most recently, two federal district court decisions found that the program is not unconstitutional on its face because (1) "breaking down barriers to minority business development created by discrimination and its lingering effects" constitutes a compelling government interest; (2) the government had a strong basis in evidence for concluding that race-based action was necessary to further this interest; and (3) the 8(a) Program is narrowly tailored to "minimize the burden on non-minority firms." However, in one of these cases, the court did find that the program was unconstitutional as applied in the military simulation and training industry because the government conceded it had no evidence of discrimination in this industry. The decision in one case was appealed. The litigation in the other has reportedly been settled.

Introduction During 2007, both the House and the Senate established new earmark transparency procedures for their respective chambers. They provide for public disclosure of approved earmarks and the identification of their congressional sponsors, among other requirements. These procedures currently are contained in House Rule XXI, clause 9, and Senate Rule XLIV. While the House rule requires disclosure of "congressional earmarks" and the Senate rule requires disclosure of "congressionally directed spending items," the terms are defined in the same way. Thus, this report uses the term "earmark" to encompass both a "congressional earmark" as used in the House rule and a "congressionally directed spending item" as used in the Senate rule. Under both chambers' rules, an earmark is a provision in legislation or report language that meets certain criteria. First, it is included primarily at the request of a Member. Second, it provides, authorizes, or recommends a specific amount of discretionary budget authority, credit authority, or other spending authority (1) to an entity, or (2) to a specific state, locality, or congressional district. However, the rules exclude funding set-asides that are selected through a statutory or administrative formula-driven or competitive award process. This report provides information on the earmarks disclosed by the House and Senate for the 12 regular, annual appropriations bills for each of FY2008, FY2009, and FY2010. For these bills, a list of earmarks was typically included in the explanatory statement accompanying the final version of the bill, under the heading "Disclosure of Earmarks and Congressionally Directed Spending Items." The abbreviations in Table 1 are used to reference the bills. The appropriations committees began publishing these disclosure lists in FY2008, the first year under the new rules. This report analyzes the data in the lists directly, without additions or deletions, as explained below. The disclosures typically identify the federal agency, project name, amount, and requester. In some cases, other information also has been included, such as an account within an agency, or the recipient, purpose, or location of the earmark. For FY2008-FY2010, the explanatory statement for the State-Foreign Operations appropriations bill states that neither the bill text nor the accompanying explanatory statement contain earmarks as defined in House and Senate rules. Consequently, most of the discussion in this report focuses on the other 11 appropriations bills, for which Congress disclosed earmarks for each fiscal year. This report does not address earmarks disclosed for bills other than the 12 regular, annual appropriations bills for FY2008-FY2010. For example, it does not pertain to any earmarks disclosed for supplemental appropriations bills or for authorizing legislation. Tabulations in this report reflect all earmarks in the FY2008-FY2010 disclosure lists for the 11 appropriations bills, regardless of what information is provided for each entry. For instance, no distinctions are drawn based on the indicated requester. Some of the items identify the requester as one or more Members, others note only the President, while still others indicate the President and Members. Similarly, the counts of earmarks include those items in the disclosure lists for which no funding level was indicated. Observers of the budget process frequently focus on earmarks that were originated by Congress. However, earmarking is not solely a congressional activity. Observers also have identified earmarking conducted by the President and others in the executive branch during budget formulation and execution, both at their discretion and through interactions with Congress. There is no source that defines and comprehensively identifies executive branch earmarks. Nevertheless, some of the FY2008-FY2010 congressional disclosure lists identify earmarks as requested solely by the President, or by the President and one or more Members. A discussion of these earmarks disclosed for FY2010 is presented below in the section on " Congressionally Disclosed Earmarks Requested by the President ," and for FY2008-FY2010 in the section on " Recent Earmark Trends: FY2008 to FY2010 ." The tabulations in this report reflect the value of the earmarks in the disclosure lists, although subsequent actions could have altered them. For instance, rescissions of funds might have reduced the amounts identified as earmarked. Additionally, some of the earmarks may not have been provided to recipients who did not comply with conditions or requirements. The balance of this report provides data on the earmarks disclosed by Congress for the FY2008-FY2010 regular annual appropriations bills. First, a series of tables and graphs depicts data for FY2010, the most recent fiscal year for which data are available for all enacted appropriations bills. Second, another series of tables and graphs compares earmarks for FY2010 with earmarks for prior years back to FY2008, the first year for which Congress published earmark disclosure lists under chamber rules. The tables and graphs contain data on the number and dollar value of the earmarks disclosed for each appropriations bill. They also identify the portion of each bill's total appropriation and non-mandatory funding that was earmarked. Data on Congressional Disclosure of Earmarks Distribution of Earmarks in FY2010 In FY2010, Congress identified 11,320 earmarks worth $32.0 billion. About 1.5% of the total regular FY2010 appropriation was earmarked, 2.4% if mandatory appropriations are excluded ( Table 2 ). Some appropriations bills account for more earmarks than others. About four-fifths (79%) of the 11,320 earmarks in FY2010 are in five of the 12 appropriations bills (8,896 earmarks in Energy-Water, Labor-HHS-Education, Defense, Transportation-HUD, and Commerce-Justice-Science). The Energy-Water bill contains the greatest number of FY2010 earmarks (2,293, about 20% of all earmarks; Figure 1 ). The distribution of the value of earmarks is more concentrated, with about $27.5 billion, or 86%, of the value of earmarks in four of the appropriations bills (Military Construction-VA, Energy-Water, Defense, and Transportation-HUD). The Military Construction-VA bill contains the greatest value of FY2010 earmarks ($14.5 billion, about 45% of the combined value of earmarks; Figure 2 ). Some appropriations bills account for fewer earmarks but have a greater share of the value, or vice versa. For example, Military Construction-VA is ranked sixth in the number of earmarks (with 7%), but is ranked first by the value of earmarks (with 45%). In contrast, five bills are ranked lower by the value of earmarks than their rank by number. Energy-Water is ranked first by number but second by value; Labor-HHS-Education is ranked second by number but sixth by value; Commerce-Justice-Science is ranked fifth by number but seventh by value; Interior is seventh by number but eighth by value, and Agriculture is eighth by number but tenth by value ( Figure 1 and Figure 2 ). Earmarks as a Percentage of Appropriations in FY2010 Another measure of the magnitude of earmarks is the percentage of the appropriation that is earmarked. There are various types of appropriations totals, but perhaps the two most relevant for this comparison are the grand total and the total of non-mandatory appropriations ( Table 2 ). Earmarks are predominantly, if not exclusively, found in discretionary accounts. All appropriations bills include discretionary spending, and some include mandatory spending. Discretionary spending supports a wide variety of activities. It is controlled by the appropriations acts, which are under the jurisdiction of the House and Senate Committees on Appropriations. Mandatory spending primarily funds entitlement programs. It is controlled by the authorization (or legislative) acts, which are under the jurisdiction of the authorizing committees. In addition, the Transportation-HUD bill separately identifies contract authority, which is included in these tables as non-mandatory appropriations. The difference between the total and non-mandatory appropriations can be large for some bills, such as Labor-HHS-Education (which has mandatory funds for Medicare and Medicaid, among other programs) and Agriculture (which has mandatory funds for food stamps and the farm commodity programs). For all 12 FY2010 appropriations bills combined, 1.5% of the total value of regular appropriation is earmarked, and 2.4% of the non-mandatory appropriation is earmarked. The percentages of regular FY2010 total appropriations that were earmarked ranged from 0% for the State-Foreign Operations appropriations bill to 16.9% for the Energy-Water appropriations bill ( Table 2 , Figure 3 ). However, for all of the bills except two (Energy-Water, and Military Construction-VA), the percentages of total appropriations that were earmarked are less than 3%. When mandatory funds are excluded, the percentages earmarked can change significantly. For example, the percentage of the FY2010 total appropriation earmarked for Military Construction-VA is 7.9%, but it increases to 11.5% of the non-mandatory appropriation ( Table 2 , Figure 3 ). For Financial Services, the respective percentages are 2.4% and 4.3%; for Agriculture, 0.3% and 1.5%; and for Labor-HHS-Education, 0.1% and 0.6%. Congressionally Disclosed Earmarks Requested by the President House and Senate rules do not require congressional disclosure of presidentially requested earmarks. The disclosure lists for some bills, however, include the "President" as a requester. Table 3 presents the number and value of FY2010 earmarks in the disclosure lists that were requested by the President. It is not clear that Administration earmarks are defined or disclosed consistently across all appropriations bills. Thus, it is possible that there may be more presidentially requested earmarks than are reflected in Table 3 . The disclosure list for the FY2010 Financial Services bill also identified the Judiciary as a requester for five earmarks. Nine of the 11 FY2010 appropriations bills with congressionally disclosed earmarks list the "President" (or the "Judiciary") as a requester of some earmarks, alone or with Members of Congress. The total across all appropriations bills in FY2010 is 2,039 earmarks worth $21.8 billion (18% of the total number and 68% of the total value). Only the Defense and Legislative Branch appropriations bills did not identify earmarks as requested by the President in FY2010. The President is disclosed as the only requester (no Members of Congress are listed) for a subset of earmarks. The 12-bill total is 1,265 earmarks worth $9.5 billion (11% of the 11,320 total number and 30% of the $32.0 billion total value). The Energy-Water bill had 768 of these earmarks worth $2.0 billion; Military Construction-VA is next with 320 earmarks for $6.4 billion ( Figure 4 , Figure 5 ). The President (or the Judiciary) and Members of Congress jointly requested another subset of earmarks. The 12-bill total is 774 earmarks worth $12.4 billion (7% of the 11,320 total number and 39% of the $32.0 billion total value). The Energy-Water bill has 409 of these earmarks worth $2.7 billion, and the Military Construction-VA bill had 243 earmarks worth $7.0 billion ( Figure 4 , Figure 5 ). The final subset of earmarks are those requested solely by Members of Congress. The total across all appropriations bills in FY2010 is 9,281 earmarks worth $10.2 billion (82% of the 11,320 total number and 32% of the $32.0 billion total value; Table 3 ). The Labor-HHS-Education, Defense, Transportation-HUD, and Commerce-Justice-Science appropriations bills each had between 1,500 and 1,800 Member-only earmarks ( Figure 4 ). Among these, Defense accounted for $4.2 billion of the earmarks, followed next by Transportation-HUD with $1.2 billion of Member-only earmarks ( Figure 5 ). As implied above, the vast majority of earmarks (82%) are Member-only earmarks, while the value of earmarks is more evenly split among the three categories of requesters. Specifically, the earmarks requested jointly by the President and Members accounted for 39% of the total earmark value, followed by Member-only requests with 32% of the value and President-only requests at 30% of the value. The relatively large number and dollar value of presidentially requested earmarks for Military Construction-VA and Energy-Water reflect the practices of some agencies within these bills of requesting and managing funds at the project level. Specifically, the Department of Defense typically requests funds for individual military construction projects, and such requests are among those disclosed for the Military Construction-VA bill. Similarly, the Corps of Engineers and the Bureau of Reclamation typically request funds for specific agency projects, and these requests are among the earmarks disclosed for the Energy-Water bill. Recent Earmark Trends: FY2008 to FY2010 From FY2008 to FY2010, the three years with disclosure lists, the number of appropriations earmarks decreased 12% to 11,320 (1,490 fewer earmarks). However, the value increased 11% to $32.0 billion (+$3.1 billion, Table 4 ). Over the same period, total appropriations increased by 31%. Thus, the percentage of the appropriations that was earmarked decreased in FY2010: 1.5% of the total appropriation (down from 1.8% in both FY2008 and FY2009) and 2.4% of the non-mandatory appropriation (down from 2.9% in both FY2008 and FY2009, Table 5 ). Seven of the 11 bills with earmarks had a decrease in number, including the five bills accounting for 79% of the earmarks (Energy-Water, Labor-HHS-Education, Defense, Transportation-HUD, and Commerce-Justice-Science; Figure 6 ). Two of these bills (Transportation-HUD and Labor-HHS-Education) accounted for 68% of the decline in number (1,019 fewer earmarks). Four bills (Military Construction-VA, Interior-Environment, Homeland Security, and Financial Services) had an increase in the number (372 more earmarks). Six of 11 bills had a decrease in the value of earmarks, subtotaling a $1.7 billion decline. Five bills (Military Construction-VA, Transportation-HUD, Financial Services, Interior-Environment, and Labor-HHS-Education) had an increase in the value of earmarks. The Military Construction-VA bill accounts for the magnitude of the increase in the value of earmarks, with a $4.5 billion (+45%) increase over two years ( Figure 7 ). Excluding Military Construction-VA, the value of earmarks for the remaining bills is down 7% (-$1.4 billion) in the two years since FY2008. Trends in Earmarks as a Percentage of Appropriations Table 5 is a multi-year version of Table 2 that contains data on the earmarked percentage of appropriations from FY2008 to FY2010, as well as the number and value of earmarks. For each appropriations bill, the percentage of non-mandatory appropriations that was earmarked fell from FY2008 to FY2010 ( Figure 8 ). This result occurred despite growth in the value of earmarks in some bills, as discussed earlier, because total appropriations increased by over 30%. For most bills the decline in the percentage earmarked was consistent over the three years, but for three bills the highest percentage was in the middle year. Over all 12 appropriations bills, the percentage of non-mandatory appropriations that was earmarked fell from 2.9% in FY2008 to 2.4% in FY2010 ( Table 5 ). Trends in Congressionally Disclosed Earmarks Requested by the President Table 6 is a multi-year version of Table 3 that contains data on the number, value, and percentage of presidential earmarks in appropriations bills from FY2008 to FY2010. Figure 9 and Figure 10 are multi-year versions of the earlier figures ( Figure 4 and Figure 5 ) on presidential earmarks. Both the number and value of earmarks requested solely by the President increased since FY2008. The number of such earmarks increased 54%, from 819 to 1,265, while the value increased 126%, from $4.2 billion to $9.5 billion. The increase in the number of President-only earmarks is counter to the decrease in the total number of earmarks over the FY2008-FY2010 period (discussed in Table 4 ). The 126% increase in the value of President-only earmarks notably exceeds the 11% increase in the total value of earmarks since FY2008. Conversely, the number and value of earmarks requested solely by Members have decreased, by 17% and 19% respectively, from 11,117 earmarks worth $12.5 billion in FY2008 to 9,281 earmarks worth $10.2 billion in FY2010. This 17% decrease in the number of Member-only earmarks is a larger decrease than the 12% overall decrease in the number of earmarks from FY2008 to FY2010 ( Table 4 ). The 19% decrease in the value of Member-only earmarks is counter to the 11% increase in the total value of earmarks since FY2008. The number and value of earmarks requested jointly by the President and Members of Congress were relatively more steady. The number of such earmarks fell 11% from 874 in FY2008 to 774 in FY2010, while the value of those earmarks rose 1% from $12.2 billion to $12.4 billion. Even if Military Construction-VA earmarks are excluded, the trends are still similar. For the rest of the appropriations bills excluding Military Construction, the total number of earmarks requested solely by the President increased 36%, while the number of Member-only earmarks decreased 17%. In terms of the value of earmarks, the total value of earmarks requested solely by the President increased 70%, while the value of Member-only earmarks decreased 20%.

In 2007, both the House and the Senate established new earmark transparency procedures. They provide for public disclosure of approved earmarks and the identification of their congressional sponsors. These procedures currently are contained in House Rule XXI, clause 9, and Senate Rule XLIV. Under both chambers' rules, an earmark is a provision in legislation or report language that is included primarily at the request of a Member, and provides, authorizes, or recommends a specific amount to an entity or to a specific state, locality, or congressional district. This report summarizes the earmarks disclosed for the 12 regular, annual appropriations bills for each of FY2008, FY2009, and FY2010. For these bills, a list of earmarks was typically included in the explanatory statement accompanying the final version of the bill under the heading "Disclosure of Earmarks and Congressionally Directed Spending Items." This report does not pertain to any earmarks disclosed in supplemental appropriations or authorizing legislation. This report directly analyzes the data in the earmark disclosure lists, without additions or deletions. For individual earmarks, the disclosures typically identify the federal agency, project name, amount, and requester. In some cases, other information also has been included, such as an account within an agency, or the purpose or location of the earmark. In FY2010, Congress identified 11,320 earmarks with a total value of $32.0 billion. Some appropriations bills account for more earmarks than others (Table 2). For instance, about four-fifths of the 11,320 earmarks in FY2010 are in five of the 12 appropriations bills. The Energy and Water Development and Related Agencies appropriations bill contains the greatest number of FY2010 earmarks—2,293, about 20% of the total number of earmarks. The distribution of the value of earmarks is more concentrated, with about $27.5 billion, or 86%, of the value of earmarks in four of the appropriations bills. The Military Construction and Veterans Affairs and Related Agencies appropriations bill contains the greatest value of FY2010 earmarks—$14.5 billion, about 45% of the total value. Some appropriations bills account for fewer earmarks but have a greater share of the value, or vice versa. House and Senate rules do not require congressional disclosure of presidentially requested earmarks. However, nine appropriations bills in FY2010 list the President as a requester, either solely or with a Member of Congress, for 2,039 earmarks worth $21.8 billion (18% of the total number and 68% of the total value of earmarks in the disclosure lists). It is possible that there are more presidential earmarks than those disclosed by Congress. There were 9,281 Member-only earmarks worth $10.2 billion (82% of the total number and 32% of the total value, Table 3). From FY2008 to FY2010, the total number of appropriations earmarks in all 12 bills decreased 12%, from 12,810 to 11,320. However, the total value of earmarks increased 11%, from $28.9 billion to $32.0 billion (Table 5). The percentage of the total appropriation that was earmarked decreased from 1.8% in FY2008 to 1.5% in FY2010. Excluding mandatory spending, the percentage of non-mandatory appropriations that were earmarked fell from 2.9% to 2.4%. Both the number and value of President-only earmarks increased since FY2008 (from 819 earmarks worth $4.2 billion in FY2008, to 1,265 earmarks worth $9.5 billion in FY2010; up 54% by number and 126% by value). Conversely, the number and value of Member-only earmarks decreased since FY2008, from 11,117 earmarks worth $12.5 billion in FY2008, to 9,281 earmarks worth $10.2 billion in FY2010, down 17% by number and 19% by value (Table 6).

Introduction The American Clean Energy Leadership Act of 2009 (ACELA, S. 1462 ), an energy policy bill reported out of the Senate Committee on Energy and Natural Resources on July 16, 2009, would expand the deployment of clean energy technologies, improve energy efficiency and energy security, encourage innovation and workforce development, and strengthen the monitoring functions over energy markets, according to the Committee ( S.Rept. 111-48 ). This report provides a summary of the provisions under each of the titles and subtitles in the bill, and compares them with other relevant legislation. In particular, the report relates the provisions of S. 1462 to similar or identical provisions contained in the House-passed version of H.R. 2454 , the American Clean Energy and Security Act of 2009 (ACES), and to spending or tax provisions contained in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). Although this bill is compared with certain energy provisions in H.R. 2454 , substantial differences exist between the provisions of this bill and the energy provisions of the combined energy-climate change bill in the House. H.R. 2454 is a broader bill that includes a greenhouse gas cap-and-trade system not found in the Senate Committee bill. Instead, separate climate legislation is to be developed in the Senate Committee on Environment and Public Works and in the Senate Finance Committee. Climate change legislation developed in the Senate may or may not be combined with these energy provisions in S. 1462 to produce a package that might be conferenced with H.R. 2454 . (For more details on the House bill, see CRS Report R40643, Greenhouse Gas Legislation: Summary and Analysis of H.R. 2454 as Passed by the House of Representatives , coordinated by [author name scrubbed] and [author name scrubbed].) Several CRS analysts contributed to this summary and analysis of S. 1462 ; their names and contact information are located at the back of the report. Key Provisions The six titles of S. 1462 focus on clean energy technologies, energy efficiency, domestic energy resources, energy innovation and energy workforce development, the stability of U.S. energy markets, and a series of studies related to future energy strategies. Some of these provisions build on similar or related provisions in the Energy Policy Act of 2005 (EPACT05, P.L. 109-58 ), the Energy Independence and Security Act of 2007 (EISA07, P.L. 110-140 ), and appropriations under ARRA. Title I would promote the commercial deployment of clean energy technologies by modifying the Loan Guarantee Program and increasing Department of Energy's (DOE's) authority to offer additional financial incentives. It would establish a Clean Energy Deployment Administration (CEDA), which would be a quasi-independent agency under the DOE. CEDA would use a Clean Energy Investment Fund to operate a broad program of lending and other incentives to stimulate the deployment of innovative and commercial clean energy technologies. In addition, the Federal Energy Regulatory Commission (FERC) would be given an expanded role and authority to coordinate the implementation of a national transmission infrastructure policy through regional plans, and to exercise federal eminent domain authority to ensure that land is available for siting transmission lines. This title would also establish a federal Renewable Energy and Energy Efficiency requirement for electric utilities that sell electricity to end users. Such utilities would have to obtain a percentage of their annual power supply from renewable energy or energy efficiency starting at 3% in 2011 and rising incrementally to 15% by 2021. It would provide for research and analysis of the impact of energy production on U.S. water resources, and of the use of energy in the water sector. This provision is motivated by increasing awareness in Congress of the relationship between energy and water (the energy-water "nexus") whereby changes affecting one resource may directly influence the cost, availability, or quality of the other. Finally, this title would promote the deployment of advanced technology vehicles, especially electric and plug-in hybrid vehicles that reduce petroleum consumption and greenhouse gas emissions. Title II promotes enhanced energy efficiency through a combination of policies that target manufacturing, appliances, buildings, and the electric grid. By providing government-backed loans to developers of energy-efficient technologies, the bill would accelerate the implementation of industrial and commercial applications of technologies or processes to enhance efficiency and U.S. industrial competitiveness, and would establish research and innovation programs to develop new energy-efficient manufacturing technologies. Energy and water efficiency of consumer products, industrial equipment, and lighting is promoted through improved testing processes and a more sophisticated application of the EnergyStar Program. Energy efficiency in buildings is addressed through improved model building codes and standards, a grant program for multifamily and manufactured housing efficiency improvements, establishment of training centers for development of building efficiency expertise, weatherization assistance for low-income persons, energy-efficiency retrofit programs, and mechanisms for encouraging energy efficiency in federal agencies. The efficiency of the electric grid would be enhanced by using smart grid technologies to reduce peak demand, according to an interagency plan, and directing the Federal Energy Regulatory Commission to establish a national interconnection standard. According to the Senate Committee, Title III is intended to enhance U.S. energy security by addressing critical electric infrastructure, nuclear waste disposal, additional petroleum storage, expansion of oil and gas leasing in certain offshore areas, development of renewable energy resources on public lands, large-scale and long-term geologic storage of CO 2 , and reduction of the reliance of U.S. island territories on imported fossil fuels. This portion of the bill provides for expedited procedures and mechanisms to mitigate a cyber threat to the nation's electric infrastructure. A National Commission on Nuclear Waste would be established to study alternative means of managing or disposing of spent nuclear fuel and waste from civilian nuclear plants; alternatives would include reprocessing of spent fuel. Preparations for physical or economic disruptions in petroleum supply would be enhanced by the establishment of a strategic reserve of refined petroleum products to complement the existing strategic reserve of crude oil. This section also expedites the conduct of an inventory of Outer Continental Shelf oil and gas resources, as directed in EPACT05, and would open portions of the eastern Gulf of Mexico to leasing. Title III also promotes the development of renewable energy resources on federal lands by modifying the permitting process, requiring a programmatic environmental impact statement for wind and solar development and establishing a series of field offices to manage the program. Provisions in this title provide for establishment of partnerships for 10 large-scale demonstration projects for geologic storage of CO 2 and would provide $10 billion per project for indemnification. Finally, Title III would establish the Affiliated Island Energy Independence Team to provide technical, programmatic, and financial assistance to the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Federated States of Micronesia, the Republic of the Marshall Islands, the Republic of Palau, and the United States Virgin Islands to reduce reliance on imported fossil fuels through increased efficiency and the use of indigenous clean-energy resources. Title IV contains provisions for advancing energy innovation and workforce development. Provisions include authorizing funds for a variety of energy research, development, demonstration, and commercial application activities; establishing a Grand Energy Challenges Research Initiative to integrate basic and applied energy research programs; improving a collection of energy programs, including the Advanced Research Projects Agency—Energy, domestic vehicle battery manufacturing research, lightweight materials research and development, methane hydrate research and development, low-Btu gas and helium resources conservation, Arctic energy research, development, and deployment, and ultra-deepwater and unconventional natural gas and other petroleum resources R&D. This title would provide a training program to build expertise for an energy workforce, and would support subsurface geosciences and engineering education and training programs. Title V contains several measures designed to stabilize the oil, natural gas, and electricity markets and to enhance energy security. It would enhance the ability of the Energy Information Administration (EIA) to collect data about product ownership and inventories for oil and natural gas in the United States. This title would establish an office within EIA, along with an interagency working group on energy markets, to monitor prices of crude oil and refined petroleum product and to recommend any statutory authority that may be needed to oversee and regulate energy markets. The Federal Energy Regulatory Commission would be authorized to issue temporary emergency orders to suspend or modify tariff rates, terms, or conditions if necessary to protect electric consumers, and to issue cease-and-desist orders to prevent the manipulation of the electric or natural gas markets. Title VI would provide direction and authorization for a number of studies and reports that would include assessing helium and potash resources, improving energy policy planning, addressing climate change in China and India, assessing the risk of international carbon leakage resulting from a cap-and-trade program, examining foreign fuel subsidies, assessing biofuel energy resources, reviewing the efficiency of electric generation facilities, evaluating the emissions of alternative transportation fuels, and identifying options for reaching specific goals in the reduction of U.S. dependence on foreign oil. Brief Legislative History of S. 1462 The following legislative history is taken verbatim from the report of July 16, 2009, by the Committee on Energy and Natural Resources ( S.Rept. 111-48 ): The text of the American Clean Energy Leadership Act was drawn from 6 bills introduced by the Chairman, 3 of which were cosponsored by the Ranking Republican Member, and 9 chairman's marks. The 6 bills introduced were: S. 531 , the Energy and Water Integration Act of 2009, introduced by Mr. Bingaman for himself and Ms. Murkowski on March 5, 2009, which became subtitle D of title I; S. 598 , the Appliance Standards Improvement Act of 2009, introduced by Mr. Bingaman for himself and Ms. Murkowski on March 16, 2009, which became subtitle B of title II; S. 661 , the Restoring America's Manufacturing Leadership through Energy Efficiency Act of 2009, introduced by Mr. Bingaman for himself, Ms. Collins, Ms. Stabenow, Ms. Snowe, Mr. Bayh, Mr. Brown, and Mr. Pryor on March 19, 2009, which became subtitle A of title II; S. 949 , 21 st Century Energy Technology Development Act, introduced by Mr. Bingaman for himself, Ms. Murkowski, Mr. Dorgan, Mr. Voinovich, Ms. Stabenow, Mr. Lugar, and Ms. Shaheen on April 30, 2009, which became subtitle A of title I; S. 967 , the Strategic Petroleum Reserve Modernization Act of 2009, introduced by Mr. Bingaman on May 4, 2009, which became subtitle C of title III; and S. 1013 , the Department of Energy Carbon Capture and Sequestration Program Amendments Act of 2009, introduced by Mr. Bingaman for himself, Mr. Barrasso, Mr. Dorgan, Mr. Tester, Mr. Bayh, Ms. Landrieu, Mr. Casey, and Mr. Voinovich on May 7, 2009, which became subtitle F of title III. The nine chairman's marks were on: energy innovation and workforce; siting of interstate electric transmission facilities; nuclear waste management; cyber security; building efficiency; federal oil and natural gas development; renewable energy development on public lands; energy markets; and policy studies and reports. The Committee marked up the bill in 11 open business meetings on March 31, May 6, May 13, May 14, May 19, May 21, June 4, June 9, June 11, June 16, and June 17, 2009. The Committee considered 219 filed amendments (or divisions thereof), adopted 100, rejected 33, and 86 were either withdrawn or not offered. On June 17, the Committee ordered the legislation, as amended, favorably reported as an original bill. Title I—Clean Energy Technology Deployment Subtitle A—Clean Energy Financing1 Summary and Analysis of This Subtitle A Clean Energy Deployment Administration (CEDA) would be established as a quasi-independent agency under the Department of Energy (DOE). CEDA would use a Clean Energy Investment Fund to operate a broad program of lending and other incentives aimed at stimulating the deployment of both "innovative" and "commercial" clean energy technologies. Over a transitional period of 18 months, CEDA would absorb the existing DOE Loan Guarantee Program, which was established by Title XVII of the Energy Policy Act of 2005 to support "innovative" energy technologies and was later expanded by ARRA to allow support for certain "commercial" energy technologies and transmission equipment. Under the EPACT05 provisions, from August 2006 through September 2008, DOE issued five solicitations for loan guarantee projects. In July 2009, DOE issued two more solicitations, funded mainly by ARRA, for fast track (by the end of FY2011) renewable energy, electric power transmission, and leading edge biofuel projects. DOE noted that it had "streamlined its processes to accelerate these new loan solicitations." The first loan guarantee under the program was issued September 4, 2009, to a solar panel manufacturer. In August 2009, Congress voted to use $2.0 billion of the ARRA appropriation to extend the "cash-for-clunkers" program, which encourages consumers to scrap old, inefficient cars and to buy new, efficient ones. S. 1462 would modify the Loan Guarantee Program and increase DOE's flexibility to offer additional financial incentives. Two of the proposed changes have been particular subjects of debate. First, the bill addresses a limitation set by the Federal Credit Reform Act (FCRA). Under the current Loan Guarantee Program, FCRA Sec. 504(b) requires new budget authority or other funding limits to cover the subsidy costs (the present value of estimated long-term costs to the government) that might result from any expansion of the portfolio of projects. The Senate bill would exempt CEDA from the requirement for new budgetary authority to support loan guarantees, and instead would allow balances in the fund to cover the cost of loan guarantees. Opponents of the provision argue that it "would circumvent the appropriations process," would likely lead to an underestimate of costs, and could also "allow for potentially unlimited loan guarantees, disproportionately benefit more expensive and risky technologies, and fail to ensure that the cleanest technologies are prioritized." Proponents counter-argue that "simply being in an appropriations process does not change the risk calculation," and that the bill "continues to require full accounting of risks and costs of CEDA loans and loan guarantees in exactly the same way that all loan and loan guarantee programs are currently handled." They emphasize that FCRA Sec. 503(d) would still apply, requiring annual reviews of "the performance of outstanding direct loans and loan guarantees to improve estimates of costs." Second, an issue affecting the debt financing structure surfaced in 2007 during DOE's rulemaking process for the current Loan Guarantee Program. The rule has been criticized for prohibiting a shared priority (pari passu) collateral structure for project debt. Under present DOE rules, the Department's guaranteed portion of the debt would have a first claim (lien position) on all assets of a project and any additional collateral pledged by the borrower. This means that any co-lenders of the unguaranteed portion of the project debt would be subordinated to the government-guaranteed debt. This situation has posed a deterrent to potential private sector co-lenders, according to industry groups. The Senate bill proposes to allow "pari passu" financing, wherein DOE would take an equal lien position with other lenders in making claim to collateral for the debt. CEDA Goals, Structure, and Operations The Secretary of Energy would be required to develop goals for clean energy technology deployment and provide short- and long-term numerical targets. CEDA would be operated by an administrator and a board of directors that would have "substantial independence" within DOE. The Administrator would be directed to "enhance, but not displace, private markets, and to promote a self-sustaining portfolio of investments." A "direct support unit" would be created to issue loans, loan guarantees, letters of credit, insurance products, or other financial instruments. A loan loss reserve would be established to provide an internal mechanism for balancing risks and returns in the portfolio. An "indirect support unit" would aim to create financial products designed to leverage private sector participation and to aggregate private debt into more marketable products. Classifications and pricing structures may be created to provide transparency and efficiency. CEDA would be allowed to issue securities based on the debt it holds. Clean Energy Investment Fund A Clean Energy Investment Fund would be established as a revolving fund in the Treasury for expenses needed to conduct the loan guarantee program. The purpose of the fund would be to "make the program stable over the long term and limit the need for annual appropriations." Fund resources would be available "without fiscal year limitation." Any combination of balances in the revolving fund, or payments by the borrower, could be used to cover the subsidy cost of a loan guarantee. CEDA would be allowed to share the collateral risk by spreading it out in equal amounts with other lenders. Fees collected for administrative expenses would be required to be deposited in the Fund. The existing functions and authorities of the DOE Loan Guarantee Program would be transferred to CEDA within 18 months after enactment. At the same time, a direct appropriation of $10 billion would be transferred to the Fund. Fee payments could be retained in the fund for further use. To encourage the development of "breakthrough" technologies, CEDA would be directed to reduce fees, to "the extent compatible with sound business practices." All activities would be required to yield "an appropriate rate of return." Comparison to Similar Provisions in H.R. 2454 There are three key differences between the two proposals: organizational structure, funding, and potential effect on technology. First, the House bill would establish CEDA as an independent corporation wholly owned by the federal government, and it would modify the existing DOE Loan Guarantee Program but otherwise leave it in place. In contrast, the Senate Energy Committee proposed that CEDA be established as an agency within DOE and that CEDA and the Clean Energy Investment Fund absorb the entire DOE Loan Guarantee Program. Second, there are differences in how the fund would be structured and funded. Given CEDA's proposed status as an independent corporation, the House proposed that the Department of the Treasury would issue $7.5 billion in new authority for CEDA to issue "green" bonds to support the fund. Raising funds from bond sales would not be consistent with the FCRA concept that funds be obtained through the appropriations process. In contrast, the Senate panel proposed that $10.0 billion be transferred from the Treasury and that subsidy costs be treated outside FCRA requirements. Further, the Senate proposal would eliminate the FCRA requirement for new budgetary authority to support loan guarantees. In a case where the project sponsors pay the subsidy cost, no appropriations would be required and, thus, there would be no cap on these loan guarantees. Third, in comparison with the House bill, the Senate Energy proposal would allow greater support for nuclear power project development. The House proposal would prohibit any single category of energy technology (including nuclear power) from receiving more than 30% of CEDA's total financial support. That restriction is expected to affect nuclear power projects more than others because those projects generally require a much larger capital investment and there are more nuclear projects currently proposed than other technology projects. There is no similar constraint in the Senate Energy bill. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA (§406) provided $6.0 billion for a "temporary program for rapid deployment of renewable energy and electric power transmission projects." Also, up to $500 million of that total may be appropriated for "leading edge biofuels projects." The $6.0 billion appropriation was expected to leverage more than $60 billion in loan guarantees, mainly to support renewable energy projects. In July 2009, DOE issued two solicitations, funded mainly by ARRA, to fast track (by the end of FY2011) those renewable energy, electric power transmission, and biofuel projects. DOE noted that it had "streamlined its processes to accelerate these new loan solicitations." In August 2009, Congress voted to use $2.0 billion of the ARRA appropriation for loan guarantees to extend the "cash-for-clunkers" program, which encourages consumers to scrap old, inefficient cars and to buy new, more-efficient ones. In House floor debate over the measure, the House Speaker stated: I am concerned about the fact that that money [$2.0 billion] is taken from that [loan guarantee program] account, but it has not cost any opportunities for the program, because the timing is such that that [loan guarantee] money would be spent next year. I do hope, whether it's in the continuing resolution or some other step along the way, that those funds will be restored. The $2.0 billion transfer represents one-third of the total ARRA funding for the Loan Guarantee Program. Subtitle B—Improved Transmission Siting28 Summary and Analysis of This Subtitle The provisions of Title B relate to transmission policy, planning, and siting. The bill would establish a multi-faceted national transmission policy. The first principle listed is "support for the development of new renewable energy generation capacity," but there are numerous other objectives, including cost savings, reliability enhancement, reduced power plant emissions, and maximizing "the contribution of demand side management (including energy efficiency and demand response), energy storage, distributed generation resources, and smart grid investments." Transmission planning would be required to reflect these policy objectives. The bill would direct FERC to "coordinate regional [transmission] planning to ensure that regional plans are integrated into an Interconnection-wide transmission plan with respect to high-priority national transmission projects." "High-priority national transmission projects" are high-voltage lines or renewable feeder lines that are part of a regional transmission plan. The siting provisions would give FERC the authority to site and permit "high-priority national transmission projects" that have been rejected or not timely acted on by state regulators. FERC's authority would extend to the Eastern and Western Interconnections, but not to the Texas Interconnection. If a federally authorized project involves federal land, the Department of the Interior (DOI) would act as the lead agency for coordinating federal environmental and other reviews. These provisions would constitute a substantial departure from historic transmission regulation, which has centered on state control of construction decisions. Although the states would retain transmission project permitting authority in the first instance, FERC's backstop siting authority would be broadened compared to the authority granted by the Energy Policy Act of 2005. Planning would be given a regional and national focus under the aegis of FERC. And transmission planning would be defined as a kind of integrated electric power planning, required to consider a range of alternatives to traditional central station power plant and transmission line construction. In respect to planning and construction, development of renewable energy projects would be a policy objective, but not the sole or even necessarily the primary objective. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 Title I, Subtitle F of the House bill (ACES), "Transmission Planning," includes policy, planning and siting provisions. The policy goals and planning processes are directed to focus primarily on facilitating the "deployment of renewable and other zero-carbon and low carbon" power sources. Other objectives are noted, such as power system reliability and cost effective service, but these are to be met in the context of the overarching goal of facilitating renewable/zero-carbon power deployment. FERC's role in the planning process is to be more one of facilitator than the directive role outlined in ACELA. FERC is given the authority to supersede state authority over transmission siting only in the Western Interconnection, and then only for projects that meet certain criteria, including "identified as needed in significant measure to meet demand for renewable energy." Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) Title IV of Division A of ARRA appropriates $80 million to be used by DOE to support regional transmission planning. Sec. 406 of this title creates a "temporary [loan guarantee] program for rapid deployment of renewable energy and electric power transmission." Qualifying projects must be able to start construction no later than September 30, 2011. Subtitle C—Federal Renewable Electricity Standard30 Summary and Analysis of This Subtitle Sec. 132 of the Senate Committee bill would establish a federal renewable electricity standard (RES) for electric utilities that sell electricity to consumers (for purposes other than resale). Such utilities must obtain a percentage of their annual electricity supply from renewable energy sources or energy efficiency, starting at 3% in 2011 and rising incrementally to 15% by 2021. Renewable sources are defined as wind, solar, geothermal, and ocean energy; biomass, landfill gas, qualified hydropower (i.e., incremental additions since 1992), marine and hydrokinetic energy, coal-bed methane, and qualified waste-to-energy. Other types of renewable energy resulting from innovative technologies may be qualified by the Secretary of Energy via a rulemaking. The requirements are to be met by the annual submission of federal renewable energy credits (RECs), but up to 26.67% of the requirement may be met by energy-efficiency credits (EECs) in any one year (following a petition by a state's governor). Alternative compliance payments (ACPs) of 2.1 cents per kilowatt-hour are permitted in lieu of meeting the renewable electricity standard, with these payments going directly to the state in which the electric utility is located. Trading of RECs is permitted, and banking of RECs is allowed for up to three years; RECs are retired when submitted for compliance. EECs are awarded for electricity savings verifiably achieved by the electric utility's actions. The Secretary of Energy will provide guidelines and regulations for measurements and baseline definitions in the award of EECs. No EECs will be awarded for compliance with conservation or energy-efficiency standard programs. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 The structure and definitions of the Renewable Electricity and Energy Efficiency provisions in H.R. 2454 and S. 1462 are essentially the same with regard to eligible renewable energy technologies. Incremental hydropower added after 1992 can be considered renewable energy under the Senate version, as opposed to 1988 in the House version. S. 1462 requires compliance with its renewable electricity standard to begin in 2011, one year earlier than the House version. The state of Hawaii is exempted from compliance in the Senate bill. The Senate requirement advances to a maximum of 15% renewable electricity (of which energy efficiency may constitute as much as 26.67%); the House requirement has a maximum of 20% renewable electricity, of which up to 25% may come from energy efficiency. The implementing agency is designated as DOE in the Senate bill, while the House version has FERC implementing the provision. Retail electric suppliers may receive RECs for complying with a state RES by generating or buying renewable electricity under the Senate bill, but not in the House bill. The Senate Energy bill has no parallel provision to the House bill's recognition of renewable energy programs implemented by states that centrally purchase renewable energy. The alternative compliance payment is 2.1 cents per kilowatt-hour (kwh) in the Senate Energy bill, compared with 2.5 cents per kwh in the House version. ACP funds can be used for non-renewable energy deployment or energy efficiency under the Senate Energy bill, with generation from nuclear, coal with carbon sequestration and storage, and electric vehicle deployment being eligible. Direct grants to customers to offset higher costs from the RES are also allowed by the Senate bill from ACP funds. The House does not allow for a waiver of RES requirements, while the Senate Energy bill allows for deferment due to extremes of weather or nature, to avoid utility rate incremental impacts of more than 4% in any year, or because of transmission constraints preventing delivery of service. There is no provision in the House bill for loans to help electric utilities comply with the RES. The House bill increases the federal renewable energy purchase requirement beginning in 2012 to 6%, raising it to 20% by 2020, where it remains to 2039. The Senate Energy version stays with the lesser requirements in the Energy Policy Act 2005. The House bill defines one renewable energy credit as representing one megawatt-hour of renewable electricity; a similar definition is assumed (but not specified) in the Senate Energy version. Both renewable energy and energy-efficiency credits can be traded in the Senate bill, while only renewable electricity credits can be traded in the House legislation. Triple credits are granted when electricity is provided through distributed generation (DG). Definitions of distributed generation eligible for triple RECs differ between the two bills. The Senate Energy bill defines DG systems as being at or near a customer site, providing electric energy to one or more customers for purposes other than resale to a utility through a net metering arrangement. The House version defines DG as a facility that generates renewable electricity, primarily serving one or more electric consumers at or near the facility site, which is no larger than 2 megawatts at the time of enactment (or 4 megawatts after enactment), generating electricity without combustion. This rules out biomass or municipal solid waste combustion as eligible sources of DG. Both provisions require electricity generation, thus ruling out thermal applications (for example, hot water or steam systems). While not specifying a size limit on DG systems, the Senate only gives triple RECs to DG systems less than 1 MW; the House gives triple RECs to all eligible DG systems. The two bills differ in the exclusions that would be allowed from the calculation of a utility's total annual electricity supply, called the "base quantity of electricity." This is the amount of annual electricity supply that the renewable energy and efficiency percentages would be applied to. By reducing the annual base quantity, the exclusions would also reduce the total amount of renewable energy and efficiency that would be required. Both bills exclude existing hydro (except qualified hydro), nuclear capacity placed in service after the date of enactment, and the quantity of electricity in a CCS facility proportional to the amount of greenhouse gases (GHGs) sequestered. The Senate Energy bill additionally excludes capacity of a municipal solid waste facility owned by, or sold under contract/rate order to, an electric utility, and nuclear power plant efficiency improvements and capacity additions made after the date of enactment. Subtitle D—Energy and Water Integration31 Summary and Analysis of This Subtitle Subtitle D provides for research and analysis of the impact of energy production on U.S. water resources, and of the use of energy in the water sector. The subtitle is motivated by increasing awareness in Congress of the relationship between energy and water (the energy-water "nexus"), whereby changes affecting one resource may directly influence the cost, availability, or quality of the other. To date, energy-water data collection and analysis have been mostly fragmented, anecdotal, or incomplete. In general, Congress has been seeking more information about energy-water relationships as an aid to developing more integrated energy and water policies. Sec. 141 calls for a National Academy of Sciences study of the "energy-water nexus," which refers to the impacts on water resources of energy production, defined broadly to include both electric power and transportation fuels. Relevant water uses likely include cooling of electric power plants; hydroelectric power generation; irrigation water for biofuel crops; the use of water in oil and natural gas production (e.g., hydrofracturing); water requirements in fuel refining; and other water uses. Sec. 142 would require the Secretary of Energy to identify water efficiency strategies and technologies in fossil-fuel-fired, solar thermal, and nuclear power generation. Taken together, these provisions would provide information on the water resource implications of changes in the nation's power generation portfolio in the context of volatile fossil fuel prices and policies to reduce U.S. greenhouse gas emissions. Sec. 143 would require the Secretary of the Interior to study the energy used for storing and delivering water at major Bureau of Reclamation projects, and the identification of opportunities to reduce this consumption and its costs. Significant energy can be consumed in delivering water, especially in such states as California, where large quantities are lifted and transported long distances. No similar Bureau of Reclamation studies have been previously authorized or performed. Sec. 144 directs the Secretary of the Interior to operate a federally constructed brackish groundwater desalination research facility in New Mexico. Previously, there had been consideration of having a nonfederal entity be the operator. The facility is charged with developing cost-effective desalination technologies for brackish and impaired groundwater in inland states, including the integration of desalination and renewable energy technologies and the desalination of water from oil and gas production. A significant barrier to greater adoption of desalination is the energy intensity of available technologies. Sec. 145 seeks to address a lack of data about energy use in the procurement, delivery, end use, and treatment of water to clarify linkages between energy efficiency and water efficiency in the United States. Few surveys or reports by federal agencies characterize water withdrawal or consumption at the level of specific end-uses such as clothes washing, landscape watering, or industrial process cooling use. Likewise, there are no systematic and comprehensive studies of energy used by water utilities for water withdrawal, delivery, treatment, or recycling. Consequently, the section requires the Department of Energy to develop a baseline of water use and water-related energy use across the U.S. economy that may ultimately be comparable to the end-use energy information available from the agency's Energy Information Administration. Sec. 146 directs the Secretary of Energy to develop an energy-water roadmap defining future research and development efforts to address the energy-water nexus; a report to Congress describing the roadmap and recommended actions would be required within 120 days of enactment. This section builds on previous legislation calling for reports on the energy-water nexus and creation of a DOE energy-water program (e.g., P.L. 109-58 § 979). Sec. 147 would require the Secretary of Energy to offer competitive technology demonstration grants focused on saving energy through water conservation in commercial, residential, and mixed-use development projects. The grants are intended to direct attention to new opportunities for energy efficiency that may be overlooked by programs focused on water savings only. Sec. 148 would offer technical assistance for energy and water efficiency to rural drinking water and wastewater utilities, many of which may lack the resources to identify and pursue cost-effective savings opportunities on their own. Sec. 149 mandates a study, led by the Department of Energy, examining industrial water use, peak energy use in water treatment and delivery, nonpotable (e.g., recycled) water, and energy "embedded" in water by water utilities. These aspects of the water-energy relationship are viewed as particularly lacking in market data and offering significant potential for both water and energy savings. Accordingly, the study would determine ways to promote the efficient use of water and energy. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 No similar provisions to Subtitle D are in H.R. 2454 . However, the House bill (§215) would formally establish an existing agency-initiated WaterSense program at the U.S. Environmental Protection Agency. The program identifies and promotes water-efficient products, buildings, and landscapes that may reduce energy consumed for pumping, transporting, treating, and heating water. Although H.R. 2454 contains no provision similar to of S. 1462 on energy used by Bureau of Reclamation water projects, the House bill (§195) would require an update of an earlier multi-agency report on the potential for expanding hydroelectric power generation at federal water facilities. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) Although CRS was unable to identify uses by the Department of the Interior (DOI) or the Army Corps of Engineers of ARRA funds for the specific activities authorized by Subtitle D, activities that could complement Subtitle D were funded. For instance, $13.5 million in DOI's ARRA funds was directed to constructing a new energy- and water-efficient building for Bureau of Reclamation regional operations in Boulder City, NV. Subtitle E—Vehicle Technology Deployment32 Summary and Analysis of This Subtitle Secs. 151 through 155 would establish grant programs and require federal studies in support of advanced technology vehicles, especially electric and plug-in hybrid vehicles. Most notably, Sec. 152 would require the Secretary of Energy to establish a program to provide grants to state and local governments for the demonstration and commercial application of plug-in hybrid vehicles. Funds would be used to carry out eligible programs, including support for vehicle purchases, installation of recharging infrastructure, and electric grid upgrades. Sec. 154 would establish a pilot program to provide grants for the demonstration of pre-commercial plug-in vehicles in the federal fleet, and for the installation of recharging infrastructure at federal facilities. Mandated studies would include a comprehensive analysis of energy use in light-duty vehicles by the National Academy of Sciences, an assessment of the necessary infrastructure to support electric vehicles, and a report to Congress with recommendations for establishing and adopting industry standards for electric drive transportation. In all cases, the bill authorizes "such sums as are necessary," as opposed to authorizing a specific amount of funding. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 H.R. 2454 would provide much more support for advanced vehicles than would S. 1462 . Most notably, a significant share of allowances from H.R. 2454 's cap-and-trade program would be allocated to support manufacturing of plug-in hybrid and other advanced vehicles. Distribution of these allowances would effectively make them grants to automakers and parts suppliers—including battery manufacturers—and could easily be worth $1 billion or more each year. Other support for advanced vehicles in H.R. 2454 includes an expansion of Energy Independence and Security Act's (EISA's) Advanced Technology Vehicle Manufacturing (ATVM) loan program, and new model standards that state regulatory authorities and non-regulated electric utilities may adopt. H.R. 2454 would authorize (but not require) the Secretary of Transportation to establish standards requiring automakers to produce flexible fuel vehicles (FFVs). H.R. 2454 would require the Environmental Protection Agency to establish greenhouse gas emissions standards for heavy-duty and non-road vehicles and engines, and would require states and metropolitan planning organizations (MPOs) to establish greenhouse gas emissions reduction plans. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA established a program of $2.0 billion for facility funding grants to manufacturers of advanced battery and battery system components. Covered activities include the production of lithium ion batteries, hybrid electrical systems, system components, and software. ARRA also appropriated $400 million in transportation electrification grants, and provided $300 million to provide grants to states, localities, and metropolitan transit agencies for the purchase of alternative fuel and advanced technology vehicles. Title II—Enhanced Energy Efficiency Subtitle A—Manufacturing Energy Efficiency33 Summary and Analysis of This Subtitle DOE would be directed to help manufacturers increase the use of new technology to improve energy efficiency, stimulate economic growth, improve industrial competitiveness, and reduce GHG emissions, in preparation for a possible carbon-constrained global marketplace. A DOE grant program is proposed that would support the formation of revolving loan programs that would be operated by partnerships among states, community development lenders, and private financial institutions. The loans would help manufacturers increase energy productivity, enable production of clean energy technologies, and improve industrial competitiveness. A total of $1.5 billion is authorized, $500 million for each fiscal year from 2010 to 2012. The grants would go to lenders in the state partnerships, who would be responsible for ensuring a minimum 50% non-federal match. The short time frame of the authorizations for manufacturing plant upgrades would mean that industry would have to be prepared to quickly evaluate the costs and benefits of capital equipment decisions. Another DOE cost-shared competitive grant program would be made available to state-industry partnerships to develop and deploy innovative energy-efficient industrial technologies and processes, with the goals of reducing energy use, pollution, and GHG emissions, while improving industrial cost competitiveness. The federal portion of each grant would be capped at $500,000, and would require an equal or greater non-federal match. DOE would be directed to establish additional Industrial Research and Assessment Centers (IACs) and to establish Centers of Excellence at the top-performing IACs for coordination with other federal agency programs that support manufacturing and building technology programs. Organizational changes at DOE and/or other federal agencies would be required under three provisions. First, R&D partnerships would be established between programs under the Office of Industrial Technologies (OIT) and other programs under the Office of Energy Efficiency and Renewable Energy (EERE) and the Office of Science (OS). Those partnerships would be focused on promoting transfer of "early stage" technology development and manufacturing capabilities to industry. Second, an industry-government R&D partnership would be established within OIT, in collaboration with the National Institute of Standards and other agencies, to help industry shift toward "sustainable" manufacturing and industrial processes. Third, an advisory steering committee would be established to make recommendations on planning and implementation of OIT's programs. DOE planning activities and studies would be required by three provisions. First, DOE would be required to prepare an assessment of the energy and GHG emissions reduction potential of commercially available energy-efficiency technologies that are not yet widely deployed across energy-intensive industries. Second, DOE would be directed to produce industry-specific technology road maps for a "Future of Industry" program aimed at further reducing energy intensity and GHG emissions. Third, DOE would be required to arrange for the National Academy of Sciences to study opportunities and barriers to developing new manufacturing capabilities for producing "advanced" energy technologies. The study would focus on the development of a "clean technology supply chain" that would secure the domestic production of "high value" equipment and prevent its loss to overseas competitors. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 The Senate Committee bill's proposal to establish state revolving loan programs is identical to a provision in the House bill, except that the proposed authorization of $1.5 billion over three years is far less than the House bill's proposal to provide $30.0 billion over two years. Each bill also would support technology transfer and deployment through the use and expansion of "centers" at universities. The Senate Committee bill would expand the number of IACs and create "Centers of Excellence" at some of them to serve as sources of "best practices" for "sustainable" manufacturing, to conduct supply chain analysis, and to provide coordination among the IACs, other federal technology centers, and the national laboratories. The House bill has three provisions to expand or strengthen the centers with broader, but related, purposes. First, "energy innovation hubs" would be established to promote deployment of clean energy technologies to support regional economic development, reduce GHG emissions, and support national technological leadership. Second, "centers for energy and environment" would support industry, clean energy applications, and buildings technology deployment. Those centers would include a training component. Third, "building assessment centers" would be created to support applications of new technologies and the development of training and education programs. In sum, this subtitle of the Senate Committee bill appears to be focused mainly on manufacturing and competitiveness. The House bill includes those aims, but within a broader context of more general goals for accelerated clean energy equipment deployment and the potential for clean energy industries to stimulate regional economic development. The Senate Committee bill has seven provisions that do not appear in the House bill. All are described under the previous section. Those provisions include the innovation deployment grants, organizational changes, and the planning and study provisions. Similarly, the House bill has three provisions that do not appear in the Senate Committee bill. First, an existing industrial standards program would be expanded to include plant energy-efficiency certification standards. Second, DOE would be directed to create a monetary award program to spur innovation in thermal energy recovery by owners and operators of electric power plants and industrial facilities. Third, the Department of Commerce would be directed to establish a clean energy manufacturing supply chain initiative to help manufacturers transition to the use of clean energy, reduce energy intensity, curb GHG emissions, and increase the use of innovative manufacturing technologies. That initiative would seem to closely complement the proposal, in both bills, for DOE to support the creation of state revolving loan programs to aid manufacturers. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA (Title IV) provided $2.0 billion for facility funding grants to manufacturers of advanced battery and battery system components. Covered activities include the production of lithium ion batteries, hybrid electrical systems, system components, and software. In a related action, the Continuing Resolution for FY2009 ( P.L. 110-329 ) provided $7.5 billion to leverage a $25 billion loan program to retool facilities to produce fuel-efficient advanced technology vehicles. ARRA (§1302) established a tax credit that can be used to re-equip, expand, or establish a facility that is designed to manufacture equipment that is used to produce renewable energy (solar, wind geothermal, and other), fuel cells, microturbines, energy storage systems for electric/hybrid vehicles, certain electric grid equipment, renewable fuels property, energy-efficiency technologies, smart grid equipment, plug-in hybrid vehicles, and equipment to capture and sequester carbon dioxide. ARRA allows up to $2.3 billion in credits to be allocated. JCT estimated the cost at $1.6 billion over 10 years. Subtitle B—Improved Efficiency in Appliances and Equipment54 Summary and Analysis of This Subtitle Energy-efficiency standards for certain appliances and equipment would be established or strengthened. Specifically, new standards would be legislated for portable light fixtures, certain lamps, and commercial furnaces. New procedures would be set in place to allow public requests to revise test procedures and to change efficiency standards. A rebate program would be established for energy-efficient motors. Studies would be undertaken on DOE compliance with legislated standards, the use of direct current in certain buildings, and an assessment of a proposed Energy Superstar category under the Energy Star program. Over the past three decades, Congress has legislated efficiency standards for many types of appliances and given DOE authority to set standards by rulemaking for many others. As new energy-using technologies are brought into commercial use, opportunities continuously arise to establish efficiency standards for new categories of equipment. Also, new technologies, such as sensors and computer controls, may create opportunities to improve efficiency for devices where it may have previously been difficult or impossible. Further, as technologies advance, opportunities may arise to improve efficiency beyond the level where previous standards had been set. The provisions of the Senate bill address efficiency opportunities within each of those three categories. The formation of federal appliance standards has historically taken place within a context of major tensions between industry concerns about regulation and state initiatives to set standards. When a variety of state standards emerged, industry tended to seek federal action to set a uniform national standard. Further, tensions between opponents and proponents of new federal standards have occasionally led to court disputes. For the most part, however, such tensions have been addressed through a collaborative process that brings together affected industries with proponents of new efficiency standards. That process, in turn, has often led to the resolution of major differences before legislative proposals are introduced. That appears to be the case with the standards proposed in the Senate Committee bill. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 The two bills have several identical and similar provisions for improving efficiency in appliances and equipment. There are identical lighting efficiency standards proposed for portable light fixtures, art work light fixtures, GU-24 base lamps, and incandescent reflector lamps. The bills also propose identical efficiency standards for commercial furnaces. Regarding motor efficiency, the two bills have identical provisions for rebates and market assessments. Both bills propose to revamp the DOE-EPA Energy Star Program. Each would require periodic updates of product eligibility criteria (every three years) and assessments of product compliance with criteria. As points of difference, the Senate bill would call for an update of the cooperative agreement between the two agencies, while the House bill would seek an update of the rating system. Also, the Senate bill calls for DOE to assume responsibility to implement an Energy Star program for solid state lighting equipment. Five provisions in the Senate Committee bill do not appear in the House bill, of which two involve the standards-setting process and three call for studies. Regarding the standards process, the Senate Committee bill would establish a petition process to prescribe or amend test procedures for consumer and industrial products and a 180-day response period for DOE to address any petition that seeks a rulemaking to amend an efficiency standard. One proposed study calls for DOE and EPA to assess the feasibility of establishing a new "Energy Superstar" designation for products and buildings that make up about 5% of the most efficient products in a market. A second study would examine the degree of compliance with energy-efficiency standards for appliances. The third study would analyze the potential costs and benefits of requiring certain buildings to use high-quality direct current electricity instead of alternating current. Eleven provisions for appliance efficiency appear in the House bill, but do not appear in the Senate Committee bill. One of those provisions would revise the criteria for prescribing new or amended efficiency standards to include the estimated value of reduced emissions of carbon dioxide and other greenhouse gases. The proposed criteria would require that the carbon output of each covered product be included on the mandatory EnergyGuide labels. Such a change in criteria would mark a major shift in the concept of appliance efficiency from being based solely on energy use to binding energy use and carbon displacement into a single metric. Another House provision would establish incentives for manufacture and sale of "best-in-class" appliances. Retailers would be rewarded with bonuses for increasing sales of highly (upper 10%) efficient building equipment, consumer electronics, and household appliances. Bounties would be established for retailers that replace and recycle inefficient appliances. Also, a bonus program would be created for manufacturers that develop new "superefficient best-in-class" products. The other nine appliance provisions found only in the House bill include five that would legislate efficiency standards and four that would create programs or incentives. Two lighting standards would be set: one for outdoor luminaires and one for outdoor high-output lamps. Three additional equipment standards would be set for water dispensers, portable electric spas, and commercial hot food holding cabinets. Three water efficiency programs would be established: a Watersense program at EPA, a federal procurement program for water-efficient products, and an early adopter program for water efficiency incentives. A residential wood stoves program would be established to certify air pollution controls and provide incentives for replacing inefficient stoves. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA appropriated $300 million to EPA to support a program to provide consumers with rebates to buy energy-efficient Energy Star products to replace old appliances and help lower energy bills. The program was authorized by EPACT05 (Sec. 124), which directed DOE to fund rebate programs in eligible states to support residential end-user purchases of Energy Star products. Subtitle C—Building Efficiency67 Summary and Analysis of This Subtitle Building energy efficiency would be improved through updates in national model building energy codes for new construction, establishment of grant and finance programs, strengthening of certain requirements for federal agency energy use, creation of a voluntary energy performance information program, and establishment of a residential high performance zero-net-energy buildings initiative. Achieving energy-efficiency improvements in a building is a much more complex undertaking than, for example, improving efficiency in an appliance. The array of critical barriers to improving energy efficiency in buildings has been well documented. In particular, the regional nature of building codes (e.g. houses in Minneapolis need more insulation than houses in Los Angeles) and other factors have made it impractical to set a single national building energy code. Instead, DOE has used its analytic capacity to develop model energy codes for residential and commercial buildings that states can adopt and adapt to local circumstances. The Senate Energy Committee bill would revamp the current model code processes, require regular future updates to the model codes, and provide incentives to states to employ the codes or equivalent alternatives. The bill also authorizes grants, financial support, and other initiatives to encourage improved efficiency in buildings. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 The two bills have several provisions that are similar and, in some cases, nearly identical. The Senate Committee bill's proposal to establish a program of updates in the national model building energy code is very similar to a provision in the House bill. DOE would be required to update the residential and commercial codes every three years. For future updates, the target for nationwide energy savings would be set 30% higher than the baseline for updates in and after 2010, and then would rise to 50% for updates after January 1, 2016. All model code updates would be coordinated with updates of specified industry standards. Federal training and funding assistance would be available to states that adopt advanced building efficiency codes. States would be required to certify their code updates and code compliance with DOE. Overall, the Senate Committee and House building energy code provisions are similar, with some minor differences in timetables and administrative procedures. One difference is that the Senate bill would authorize appropriations of $100 million per year for five years, while the House bill would authorize such sums as necessary and provide funding from the auction of a share of allowances derived from a cap-and-trade program. The Senate Committee bill's proposal to establish a program for the retrofit of existing buildings has several similarities to provisions in the House bill. Both bills would direct EPA to establish a broad program of criteria and financial support for residential buildings and direct DOE to establish a parallel program for commercial buildings. There are some differences in the energy performance criteria and the structure of the financial assistance mechanisms, but the provisions are otherwise quite similar. Four other policies and programs proposed in the Senate bill have nearly identical companions in the House bill: national energy-efficiency goals, building and training and assessment centers, energy savings performance contracts (ESPCs) for federal agencies, and an implementation strategy for federal agency use of energy-efficient information and communication technologies. Regarding a fifth policy for manufactured housing, the two bills have an identical provision for a low-income rebate, but the Senate bill includes additional provisions for innovation in manufactured and multifamily housing. Eight provisions in the Senate Committee bill do not appear in the House bill. A potentially major provision would establish a zero-net-energy initiative for residential buildings. The goal is to reduce overall energy use while increasing the share of onsite renewable energy. Nearly $1 billion would be authorized over 11 years to support pilot programs, technical assistance, and other means to address the split incentives market failure, technological challenges, and other barriers. Three provisions (purchasing requirement, funding flexibility, and agency incentives) would address federal energy efficiency and renewable energy opportunities. Two provisions (energy performance information and evaluation/verification assessments) would aim to improve the ability to monitor increases in building energy efficiency and the cost-effectiveness of programs. Also, the Senate Energy Committee bill would reauthorize the DOE Weatherization and State Energy programs for FY2011 through FY2015. The Weatherization Program would be authorized $1.7 billion per year and the State Energy Program would be authorized $250 million per year. Several provisions in the House bill do not appear in the Senate Committee bill. In particular, 28 provisions make up a subtitle of the House bill entitled "Green Resources for Energy Efficient Neighborhoods." The provisions focus mainly on establishing a variety of programs, projects, standards, and incentives to support programs for energy-efficient mortgages and for selected programs at the Department of Housing and Urban Development (HUD). There are no similar provisions in the Senate bill. One House provision would direct EPA to establish a building energy performance labeling program that would apply broadly to residential and commercial building markets. The goal is to encourage owners and occupants to reduce energy use. EPA is required to consider existing programs, such as the Home Energy Rating System and DOE programs. Also, EPA is required to develop model performance labels for residential and commercial buildings and to use incentives and other means to spur the use of labels by public and private sector buildings. There is no similar provision in the Senate bill. Eight other assorted provisions of the House bill cover tree planting programs, energy efficiency in data centers, solar energy building permits, residential solar equipment installations, community energy-efficiency flexibility, small community joint participation, low-income community energy efficiency, and consumer behavior research. There are no similar provisions in the Senate bill. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA provided $5.0 billion for the DOE Weatherization Program, $3.1 billion for the DOE State Energy Program, and $3.2 billion for the DOE Energy Efficiency Block Grant program. Under the appropriation for DOE's Office of Energy Efficiency and Renewable Energy, the ARRA conference report ( H.Rept. 111-16 ) included a carveout appropriation of $50.0 million for R&D on the energy efficiency of information and communication technologies. In the federal buildings sector, ARRA provided $4.5 billion to the General Services Administration to support a program of high performance green buildings in federal agencies. Certain appropriations for other agencies were targeted for building construction and other activities that could include building energy-efficiency measures. Subtitle D—Electric Grid85 Summary and Analysis of This Subtitle Although this part of the bill is titled "Electric Grid," the actual focus of Subtitle D is peak demand management. Peak demands on an electric system—that is, the periods when demand is at its highest—tend to be short lived, but account for a disproportionate share of total system capacity and costs. Reducing peak demand, and improving the system load factor (i.e., the ratio between average and peak demand), can yield substantial cost savings. Sec. 295 of the subtitle would establish a national policy for continuously improving load factors on electric power systems through 2030, and directs the Secretary of Energy to lead a combined government and industry effort to develop an action plan to achieve this goal. The plan is to be updated triennially and DOE is to make concurrent progress reports to Congress. However, the bill does not create (with the one exception discussed below) any new executive authority or legal requirements on utility systems that would mandate adoption of the action plan. One of the approaches that can be used to reduce peak demand on a utility system is more use of generation located at a customer site, often referred to as "distributed generation." Sec. 296 of this subtitle would amend the Public Utility Regulatory Policies Act of 1978 to require the state regulatory authorities that oversee utilities, and self-regulating utilities (like many municipal systems) to consider adopting rules that would facilitate connecting small distributed generation sources to the power grid. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 ACES includes in Title I, Subtitle E, Sec. 144, a provision requiring utilities to establish peak demand reduction goals for 2012 and 2015. There is no penalty that applies if a utility fails to meet its goal. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA includes numerous provisions related to funding energy efficiency. See CRS Report R40412, Energy Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) , coordinated by [author name scrubbed]. Title III—Improved Energy Security Subtitle A—Cyber Security of the Electric Transmission Grid87 Summary and Analysis of This Subtitle This subtitle would give executive agencies new emergency authority to direct "any entity that owns, controls, or operates critical electric [power system] infrastructure" to take steps to block a cyber security "threat" or "vulnerability." A "cyber security threat" is imminent danger of a cyber attack on critical electric infrastructure. The Secretary of Energy would have authority to issue emergency orders to block such a threat. A "cyber security vulnerability" is a security weakness that exposes critical electric infrastructure to a cyber security threat. The Federal Energy Regulatory Commission would have authority to issue emergency orders to resolve such a vulnerability. Reflecting the assumptions that cyber-security attacks on the electric power system could develop rapidly and be exceptionally dangerous to national security, prior notice is not required for such orders, and consultation with other agencies or industry is only required to the extent practicable. The Secretary of Energy is encouraged to consult and coordinate with appropriate officials in Canada and Mexico. Emergency orders by FERC or the Secretary would terminate after 90 days unless within the 90-day period FERC provides an opportunity for written comment and decides to affirm the order. No open hearing is required, and it appears that if the emergency measure is affirmed during the initial 90-day period it can continue indefinitely. This provision would apply throughout the contiguous states. In the case of Alaska, Hawaii, and Guam, the Secretary of Defense (in consultation with DOE, the states, the territory, and industry) is to prepare a comprehensive plan defining the measures to be taken to protect the electric power supply to national defense installations in those areas from an imminent cyber security threat. There are no similar provisions in the House-passed bill or in ARRA. Subtitle B—Nuclear Energy88 Summary and Analysis of This Subtitle In response to the Obama Administration's proposal to abandon the planned national nuclear waste repository at Yucca Mountain, NV, this subtitle would establish a National Commission on Nuclear Waste to make recommendations to Congress on alternative waste management strategies. The commission would consist of 11 members appointed by the President who are prominent in professions relevant to nuclear waste policy and who "shall be fairly balanced in terms of the points of view represented." Federal or state employees would not be eligible. Alternative waste management strategies to be studied by the commission include deep geologic repositories, such as Yucca Mountain, long-term waste storage at nuclear power plants and other existing sites, regional storage facilities, and waste reprocessing and recycling technologies. The commission would also be required to analyze previous DOE efforts to develop nuclear waste sites, recommend financial incentives to potential host states and localities, and study alternative approaches to administering and financing the program. The nuclear waste commission provisions in this subtitle would provide congressional direction to the Administration's proposed "blue ribbon" nuclear waste advisory panel included in the FY2010 DOE budget request. The budget request would eliminate further planning and development of the Yucca Mountain repository, but it would continue funding for consideration of the repository license application that is currently before the Nuclear Regulatory Commission. The House included $5 million for the Administration's blue ribbon panel in its version of the FY2010 Energy and Water Development Appropriations Bill ( H.R. 3183 ). However, the House-passed bill specifies that the blue ribbon panel must "consider all alternatives for nuclear waste disposal," including Yucca Mountain, which the Administration wants to terminate. The Senate-passed version of the appropriations bill approves the full budget request but does not include any language on the proposed commission. This subtitle of S. 1462 also includes a "sense of Congress" finding on the importance of nuclear energy and additional requirements for research and development of "an integrated, proliferation-resistant, spent nuclear fuel recycling or transmutation process." No provisions in this subtitle are similar to any provisions in H.R. 2454 , nor to any spending provisions in ARRA. Subtitle C—Improving United States Strategic Reserves89 Summary and Analysis of This Subtitle The Strategic Petroleum Reserve (SPR) comprises five underground storage facilities, hollowed out from naturally occurring salt domes in Texas and Louisiana. It is currently filled with crude oil to near its capacity of 727 million barrels. In the event that it is tapped, 4.4 million barrels can be drawn down initially, and enter into markets within about two weeks. The Energy Policy and Conservation Act ( P.L. 94-163 ) authorized drawdown of the Reserve upon a finding by the President that there is a "severe energy supply interruption." Congress enacted additional authority in 1990 (Energy Policy and Conservation Act Amendments of 1990, P.L. 101-383 ), to permit use of the SPR for short periods to resolve supply interruptions stemming from situations internal to the United States. The Senate legislation would make three major changes to the SPR program. It (1) would require that the SPR include 30 million barrels of refined product; (2) would transfer authority for a drawdown from the President to the Secretary of Energy; and (3) would amend the drawdown authority to permit drawdown and sale in the event of a "severe energy market supply interruption" that has caused, or is expected to cause, "a severe increase" in prices. The proposal to establish product reserves very likely stems from the sharp increase in the price of gasoline during 2008 that was attributed, in part, to a different market situation than has been the historic norm. In the past, inadequate supplies of refined products have had, as their principal cause, a shortage in crude supply, or uncertainty about crude supply that becomes reflected in market distribution. However, high prices in 2008 occurred in a setting where the supply of product was tight in some regions, even though crude itself was plentiful. Drawdown of the SPR is currently premised on crude oil supply, and not product supply or price. The Senate report on the bill does not provide an explanation for the vesting of authority for a drawdown with the Secretary of Energy rather than the President. Some may believe that the Secretary might be inclined to call for a drawdown sooner than the President because the Secretary presumably has closer contact on energy-supply developments, or that a decision by the Secretary to call upon the SPR would be less freighted with political considerations. However, the reason for the change is unspecified. The proposal to shift from premising drawdown on a "severe energy market supply interruption" instead of a "severe energy supply interruption" may be the most sweeping shift in the Senate bill provisions affecting the SPR. As has been noted, the current authorities authorize drawdown based upon crude supply. While a shortage of crude generally expresses itself in higher prices for both crude and products, many calls for tapping of the SPR when prices have spiked have brought the response that the SPR is not supposed to be used to respond to high prices. The Senate Committee bill's proposed change, if enacted, adds language permitting a drawdown of SPR oil if a "market supply interruption" has brought about high prices, or is expected to do so. Expressed another way, a drawdown can be initiated not just to respond to supply conditions "upstream" or "downstream," but to supply and price conditions. If enacted, the legislation would require a report to Congress within 180 days describing what refined products would be acquired for the Reserve and how they would be acquired at minimal cost or disruption of markets. The report would be required to assess storage options (which would need to be above-ground) and "the anticipated location of existing or new facilities." Presumably, some analysis would need to be undertaken to identify regions that might be likeliest affected by incapacitation of normal product distribution, as well as seasonal differences in the refined product itself. No similar provisions are included in H.R. 2454 or ARRA. Subtitle D—Federal Oil and Gas Development90 Summary and Analysis of This Subtitle Congress is currently debating how much of the outer continental shelf (OCS) should be open for oil and gas development. Opening up the OCS is seen by some as a way to increase domestic supply and improve U.S. energy security; others contend that OCS development has risks for the coastal environment and coastal communities, and that other options are available for energy security. The Gulf of Mexico Energy Security Act of 2006 (GOMESA, P.L. 109-432 ) placed nearly all of the eastern Gulf of Mexico under a leasing and drilling moratorium until 2022 but allowed leasing in designated portions of the eastern Gulf. This subtitle would amend GOMESA to open the eastern Gulf of Mexico (EGoM) beyond 45 miles of Florida's coastline but also would open an area known as the Destin Dome, where there are existing leases located 25-30 miles offshore northwest Florida. Destin Dome leases are currently suspended until 2022 under GOMESA. All other areas within 45 miles of Florida's coastline in the EGoM would be remain under a moratorium until 2022. The Minerals Management Service (MMS) conducts assessments of undiscovered technically recoverable resources (UTRR) on the U.S. OCS. The statistical certainty of these assessment estimates varies by region because of wide variations in the availability of geologic data. For example, the extensive exploration and production histories of the central and western Gulf of Mexico and southern California provide a comparatively greater amount of geologic data to use for assessments. In contrast, much of the remainder of the U.S. OCS has seen little exploration and production of oil and gas. Therefore, estimates of UTRR along the Atlantic Coast, much of the Pacific Coast, and coastal Alaska carry significant uncertainties. To address the concerns over resource inventory uncertainty, this subtitle would amend Sec. 357 of EPACT05 and require a seismic inventory (using 2-D and 3-D seismic technology) of the oil and gas resources in the Atlantic, eastern Gulf of Mexico and Alaska regions of the OCS. A report from the Secretary of the Interior to Congress on the implementation (including an estimate of the costs) of the seismic inventory would be required. Funding would be authorized to carry out the inventory at $100 million each year for fiscal years 2010-2015 and $50 million each year for years 2016-2020. The subtitle would also repeal royalty relief for shallow water deep gas and for deepwater oil and gas enacted under EPACT05 (Secs. 344 and 345), would require that the Director of the MMS be confirmed by the Senate, and would provide that, under certain terms and conditions, a high-pressure natural gas pipeline may be permitted by the Secretary of the Interior in specified non-wilderness areas within Denali National Park. This subtitle would amend the Trans-Alaska Pipeline Authorization Act (43 U.S.C. 1651 et seq.) to exempt the trans-Alaska pipeline from certain requirements, establish an Alaskan Office for OCS permit processing, and provide for the production of geothermal energy on oil and gas leases. Currently, EISA Sec. 526 prohibits federal agencies from procuring alternative, synthetic, or nonconventional petroleum-based transportation fuels without contract provisions that limit the fuel's lifecycle greenhouse gases emission to those of equivalent conventional petroleum-based fuels. This provision has been interpreted as blocking federal purchases of oil-sand-derived petroleum imports from Canada, which have been a growing segment of U.S. fuel supplies. Sec. 356 of the Senate Committee bill would exempt federal purchases of oil-sand-derived fuel from the EISA requirement if such fuel were included in a general fuel contract that did not specifically call for unconventional fuel. No similar provisions are included in H.R. 2454 or ARRA. E—Public Land Renewable Energy Deployment91 Summary and Analysis of This Subtitle This subtitle would establish Pilot Project Field Offices throughout the western United States and Alaska to improve federal permit coordination for renewable energy projects. The federal share of royalties from wind or solar energy production would be deposited in a special Treasury fund to be known as the "BLM Wind and Solar Energy Permit Processing Improvement Fund." A programmatic environmental impact statement (PEIS) would be required for solar power on public lands within one year, and a PEIS would be required for solar and wind power on National Forest Service land within 18 months of enactment of this legislation. A study would be conducted by the National Academy of Sciences on the siting, development, and management of projects for the production of wind and solar energy. Matters to be addressed in the study would include the effectiveness of current laws and policies, the advantages and disadvantages of using rights of way (ROW) for wind and solar development, and the potential advantages and disadvantages of using a competitive or noncompetitive leasing system for wind and solar development. Also, the Secretary of the Interior would be required to establish a wind and solar leasing pilot program. The Secretary would make a determination not later than 30 months after the enactment of this legislation on whether to implement a leasing program for solar and wind power on public land. Development of renewable energy such as solar and wind is currently governed by right-of-way authorities under Title V of the Federal Land Policy and Management Act of 1976 (FLPMA; 43 U.S.C. §§1761-1771). Some renewable energy advocates have argued that the current right-of-way regulations are insufficient for large-scale development of solar and wind power projects and associated electricity transmission lines (consisting of potentially thousands of acres). The extent of some of the environmental impacts of renewable energy production has been controversial, such as impacts on wildlife and on environmentally sensitive areas. Some have suggested that a leasing system would provide for better planning during the resource management planning (RMP) process for public land use and provide greater security of tenure for the potential wind or solar energy lessee. Others counter that a leasing system may not offer anything different from a ROW system. For wind energy facilities on BLM lands, the BLM completed a final PEIS in January 2006. This document supports land management plan amendments providing for wind energy development in the western states. On December 19, 2008, BLM issued its updated wind energy development policy. The BLM has authorized 206 rights-of-way for the development of wind on public land. An updated solar energy development policy was published by the BLM on April 4, 2007. The agency continues to collaborate with DOE to prepare a PEIS to evaluate solar energy development on public lands, among other matters. A PEIS scoping report was completed in October 2008. On March 11, 2009, Interior Secretary Ken Salazar issued a Secretarial Order (3285) to make renewable energy a top priority of DOI. The order also established a Departmental Task Force on Energy and Climate Change to identify zones on public land suitable for large-scale renewable energy development. On June 30, 2009, the DOI and DOE announced the extension of the public comment period on solar energy in preparation of the PEIS to September 14, 2009, the opening of new solar permitting offices, and the availability of solar energy study area maps. There are 158 active solar project applications covering about 1.8 million acres of federal land. Geothermal leasing on federal lands is conducted under the authority of the Geothermal Steam Act of 1970, as amended (30 U.S.C. §§1001-1028). Much of the nation's geothermal energy potential is located on federal lands. Increasing geothermal production on federal lands while mitigating environmental impacts has been a long-time policy issue. The BLM administers more than 500 geothermal leases, with 29 operating geothermal power plants having a total electric generation capacity of 1,275 megawatts (equivalent to a large nuclear power plant). This subtitle would extend funding for implementation of the Geothermal Steam Act of 1970 through FY2020. No similar provisions are included in H.R. 2454 or ARRA. Subtitle F—Carbon Capture95 Summary and Analysis of This Subtitle Subtitle F, Sec. 371 would amend EPACT05 to authorize the Secretary of Energy to enter into cooperative agreements to provide financial and technical assistance for as many as 10 projects to demonstrate large-scale integrated capture, transportation, and sequestration (also referred to as CCS) of carbon dioxide (CO 2 ) from industrial sources. The demonstration projects would focus on the sequestration stage of CCS to foster the commercial application of long-term geologic storage of CO 2 , rather than on the capture stage of CCS and the development of carbon-capture technology. To qualify for selection in a competitive process, the applicants would need to meet several requirements under Sec. 371, including: providing sufficient geological site information to establish that the proposed site is capable of long-term storage; possessing the land or interests in the land necessary for injection, storage, closure, and long-term stewardship of the geologic storage unit; possessing or having the reasonable expectation of obtaining all necessary permits and authorizations under federal and state laws and regulation; and agreeing to comply with a list of terms and conditions to ensure that the project complies with all requirements for constructing and operating injection wells, measuring and monitoring the CO 2 plume underground, plugging the wells, and meeting long-term care requirements for the site after injection has ceased. A particular focus of Sec. 371 is on financial assurances provided by the operator during the injection, closure, and post-closure activities, and on indemnification offered by the Secretary of Energy for liability arising from a project in excess of liability covered by financial assurances maintained by the operator. First, the operator would need to maintain financial assurances during the post-injection closure and monitoring phase until the site is certified as closed by the Secretary. Second, the operator would need to maintain financial protection in a form and amount acceptable to the Secretary of Energy, to the Secretary (either of the Interior or of Agriculture) with jurisdiction over the land, and to the EPA Administrator. These assurances must be maintained until the project complies with site closure requirements over a period of at least 10 consecutive years after the plume of CO 2 has stabilized within the geologic storage unit after injection has ceased. The legislation would require the operator to meet all the post-closure requirements, and maintain the financial assurances and protection, such as insurance, before the federal government would accept title and long-term stewardship responsibilities for the site. The post-closure requirements essentially ensure that the CO 2 plume and area of elevated pressure in the underground reservoir have ceased to change (e.g., the plume is no longer spreading, and the pressure in the formation is no longer increasing); CO 2 or displaced formation fluid is not leaking out of the reservoir and endangering underground sources of drinking water; and CO 2 or formation fluids are not expected to leak out of the reservoir in the future. Subject to the operator successfully meeting these requirements, the federal government may take title to the land or interest in the land necessary for monitoring, remediation, or long-term stewardship of the project site. In addition to financial assurances provided by the operator, the legislation would authorize the Secretary of Energy to indemnify the operator from liability arising from a demonstration project that is in excess of the liability covered by the financial assurances and protections held by the operator. The legislation would authorize up to $10 billion of indemnification per project, but would not indemnify the operator from liability arising out of gross negligence or intentional misconduct. The Secretary would be authorized to collect a fee from the recipient of the indemnification agreement, in an amount equal to the net present value of payments made by the United States to cover liability under the indemnification agreement. The criteria for determining the amount of the fee would be established by regulation, taking into account the risk of an incident resulting in liability and other factors related to determining the hazard of operating a particular project. The indemnification provision in the legislation is likely intended to address one of the perceived barriers to commercial-scale deployment of CCS: the risk and magnitude of liability from injecting CO 2 underground in a regulatory environment that is still a work in progress. Also, it is widely perceived that many of the fears and uncertainties associated with injecting industrial-scale quantities of CO 2 could be addressed by on-the-ground projects instead of theoretical modeling simulations—a learning-by-doing approach. Providing liability protection for the CCS demonstration phase could stimulate "early movers" to advance their projects. Sec. 372 would authorize the Secretary of Energy, the Secretary of Transportation, and the EPA Administrator to establish a grant program for employee training at state agencies involved in permitting, management, inspection, and oversight of CCS projects. The section would authorize $10 million per year from FY2010 through FY2020. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 Sec. 114 of H.R. 2454 would establish a program to award grants, contracts, and assistance to support commercial-scale CCS demonstration projects at new plants or at plants retrofitted with carbon capture technology. The legislation would seek to support at least five commercial-scale demonstration projects over a 10-year period. In contrast to Sec. 371 of S. 1462 , which would authorize cooperative agreements with the Secretary of Energy and funding from DOE, funding for CCS demonstration projects under Sec. 114 of H.R. 2454 would be provided through a corporation established by referendum among "qualified industry organizations." Also, funding for the demonstration projects under H.R. 2454 would come from an assessment on distribution utilities for fossil-fuel based electricity delivered to retail customers. Funding for demonstration projects under Sec. 371 of S. 1462 would presumably come from annual appropriations. Another key difference is the emphasis in S. 1462 on the long-term storage component of CCS, as suggested by the provision providing for indemnification from liability and from the detailed requirements for injection, storage, closure, and post-closure, and the provision for assuming title and long-term stewardship by the federal government. Subtitle B of H.R. 2454 —Carbon Capture and Sequestration—does not include similar provisions for indemnification, although Sec. 111 of Subtitle B calls for a report detailing a comprehensive strategy to identify key legal and regulatory barriers to commercial-scale deployment of CCS. Sec. 112 of Subtitle B in H.R. 2454 would amend the Clean Air Act to establish a certification and permitting process for CCS, and would require the EPA Administrator to promulgate regulations for CCS under the Safe Drinking Water Act, but neither provision discusses long-term liability, indemnification, or transfer of title and long-term stewardship of a project site to the federal government. Lastly, Sec. 115 of H.R. 2454 would provide a financial mechanism for funding and deploying commercial-scale CCS technologies by distributing emission allowances under the cap-and-trade provisions to be used for CCS. In contrast, S. 1462 is limited only to demonstration projects and does not include revenues or allowances from a cap-and-trade program to support the projects. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) Of the $3.4 billion made available for CCS-related activities in ARRA, $50 million is available for site characterization activities in geologic formations. Site characterization would be an important factor in qualifying an applicant to receive funding and technical assistance for a demonstration project under Sec. 371 of S. 1462 . Presumably the site characterization information garnered from activities funded with the $50 million in funding from ARRA would be made available to interested applicants to help them determine whether the proposed site would be capable of long-term geologic storage of CO 2 . Subtitle G—Island Energy96 Summary and Analysis of This Subtitle DOE would be directed to establish a team of technical, policy, and financial experts to address the energy needs of each affiliated island (U.S. trust territory). DOE would be required to consider including representatives of regional utility organizations on the team. The team would be directed to provide technical, programmatic, and financial assistance to each island utility and government to develop and implement an energy action plan. Each plan would identify and implement the most cost-effective strategies to reduce dependence on fossil fuels, promote capacity development through education and training, and develop private-public partnerships. Starting one year after enactment, biannual reports to DOE would be required. Such sums as may be needed would be authorized. DOE has previously provided energy resource assessments and planning assistance to island (U.S. trust territory) governments. This provision would require that DOE provide a new round of planning and implementation assistance. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 The two bills have an identical provision. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA explicitly makes funding available to the U.S. trust territories for certain programs that might be able to contribute to the goals for reducing dependence on imported fossil fuels. In particular, funds were made available under the provisions for Department of Defense facilities, the DOE Weatherization Program, and the DOE State Energy Program. Title IV—Energy Innovation And Workforce Development Subtitle A—Funding100 Summary and Analysis of This Subtitle The purpose of this subtitle is to extend authorization for funding in the Department of Energy for research, development, demonstration, and commercial application activities established under Title IX of EPACT05. Authorization for funding for energy efficiency, distributed energy and electric energy systems and renewable energy would start at $2.0 billion for FY2010 and increases to $3.3 billion in FY2013. Authorization for nuclear energy would increase from $998 million in FY2010 to $1.6 billion in FY2013. Authorization for fossil energy would increase from $1.1 billion in FY2010 to $1.7 billion in FY2013. Authorization for the Office of Science would increase from $5.8 billion in FY2010 to $8.0 billion in FY2013. Total authorization for these four activities would be $14.6 billion in FY2013, compared to a total authorization of $7.3 billion for FY2009 under the Energy Policy Act of 2005, precisely doubling the authorization for these activities over four years. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided $1.6 billion for the Office of Science without specifying how the appropriation should be spent. Appropriations were included in ARRA for the Office of Energy Efficiency and Renewable Energy ($16.8 billion), and for the Office of Fossil Energy ($3.4 billion), but those amounts were allocated for specific purposes. Subtitle B—Grand Energy Challenges Research Initiative101 Summary and Analysis of This Subtitle This subtitle would establish a new initiative within DOE to accelerate solutions to "grand energy challenges" by undertaking large-scale, multidisciplinary activities that include basic, applied, and engineering sciences, technology development, and other relevant disciplines. The grand energy challenges addressed by this initiative would include those described in the DOE Basic Research Needs Workshops, those described in two reports of the DOE Basic Energy Sciences Advisory Committee, and those described by the National Academy of Engineering in its report "Grand Challenges for Engineering." The grand energy challenges would be addressed by awarding grants to consortia composed of one or more institutions of higher learning, DOE national laboratories, federally funded research centers, private industry entities, and not-for-profit institutions, but including at least one non-federal entity. This subtitle includes authorization of appropriations for such sums as are necessary to carry out the section for each of fiscal years 2010 through 2019. The intent of this consortium approach is to bring to bear the resources of several key institutions to address the complex multidisciplinary challenges. Subtitle C—Improvements to Existing Energy Research and Development Programs102 Summary and Analysis of This Subtitle This subtitle would amend seven statutes with the intent of improving or extending some aspect of several energy research and development programs within the Department of Energy. One provision would amend the America COMPETES Act (42 U.S.C. 16538) to allow ARPA-E to initiate and execute grants, contracts, cooperative agreements, and other transactions separate from the Department of Energy, and would authorize ARPA-E through 2020. The subtitle would also amend the United States Energy Storage Competitiveness Act of 2007 (42 U.S.C. 17231) to create a vehicle battery manufacturing research program within DOE. The third amendment would increase the amount of authorization for lightweight materials research and development from $80 million to $100 million in the Energy Independence and Security Act of 2007 (42 U.S.C. 17241). The fourth would amend the Methane Hydrate Research and Development Act of 2000 (30 U.S.C. 2001) to include research on potential environmental impacts of methane hydrates, and would expand research for a variety of technological, environmental, developmental, and educational aspects of methane hydrate exploration and development. This amendment would also authorize such research through 2015, and would authorize $10 million per year for environmental monitoring associated with methane hydrate development. The fifth amendment in this subtitle would create a research program at DOE to develop technologies for separating helium from low-BTU natural gas by amending EPACT05 (42 U.S.C. 16513(b)). The intent of the research would be to provide a supply of helium from low-BTU natural gas and to enhance the value of the natural gas. The sixth amendment would revise the Department of Energy Organization Act (42 U.S.C. 7131) to establish an Office of Arctic Energy within DOE to address a variety of energy issues in the Arctic, including deployment of electricity-generating capabilities and promotion and development of enhanced oil recovery, heavy oil production, reinjection of carbon, extended drilling technologies, gas-to-liquids technologies, small hydroelectric facilities, and natural gas hydrates in the Arctic region. The Office of Arctic Energy would have funding authorized through 2012. The last amendment in this subtitle would formally establish and name the Unconventional Domestic Natural Gas and Other Petroleum Resources Program, which would plan and conduct research and development through a grant process to research consortia, via an amendment to EPACT05. The authorization of appropriation for this program would be increased from $100 million to $350 million. There are no similar provisions in H.R. 2454 . Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) Appropriations within the ARRA that relate directly to the proposed amendments in this subtitle include $400 million for ARPA-E, $2.0 billion for grants for advanced battery/battery component manufacturing facilities, and $1.6 billion for the DOE Office of Science. Subtitle D—Energy Workforce Development103 Summary and Analysis of This Subtitle The importance of preparation for energy careers beginning in secondary schools would be recognized by Sec. 431 with the establishment of competitive grants for states to create or expand energy career academic programs. Appropriations authorized are $14 million for fiscal year 2009; $22.5 million for fiscal year 2010; and $30 million for fiscal year 2011. Community colleges are seen as addressing a perceived decline of qualified workers in the energy workforce by using grant programs to expand and enhance educational capabilities for preparing students for careers in trades relevant to the energy industry. The program provides for renewable, competitive grants for as much as $500,000 each year to community colleges for up to five years in duration. DOE is also required to submit a study of energy workforce training programs funded by federal agencies, and plan for filling future needs. Additional funding of up to $100 million is authorized for fiscal years 2010 through 2015 for training in alternative energy technologies, energy efficiency, sustainable energy technologies, recycling and waste reduction, water and energy conservation, and other energy technologies. Sec. 436 establishes direct hire authority for the Secretary of Energy upon a determination that there is a severe shortage of highly qualified scientists, engineers, or critical technical personnel in the agency. The Secretary is also permitted to establish compensation for these positions. No more than 40 such positions may be filled any one time. Compensation and term of employment for such employees must follow prescribed guidelines. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 Sec. 422 increases funding for Energy Worker Training by $25 million in the Workforce Investment Act of 1998. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) Title VIII of ARRA provides $500 million under Training and Employment Services for research, labor exchange, and job training projects preparing workers for careers in energy efficiency and renewable energy. Title IV also provided an additional $100 million for worker training in transmission grid modernization and related activities, such as the Smart Grid. Subtitle E—Strengthening Education and Training in the Subsurface Geosciences and Engineering for Energy Development104 Summary and Analysis of This Subtitle The Secretary of the Interior is directed to provide research funds for 10 years to assist development of academic programs producing workers for subsurface geosciences and engineering in energy (including geological carbon storage), petroleum, groundwater, economic geology, mining, and mineral and geological engineering. Technological developments are increasing the possibilities for developing energy resources in the deep earth once thought undevelopable (such as unconventional natural gas), and may provide future commercial opportunities for carbon sequestration. Skilled workers and technicians may increasingly be needed if long-term underground sequestration becomes the preferred mechanism for dealing with carbon captured from traditional fuels such as coal or natural gas. No similar provisions are included in H.R. 2454 or ARRA. Subtitle F—Miscellaneous105 Summary and Analysis of This Subtitle Sec. 471 authorizes the Secretary of Energy to enter into transactions with public agencies, private organizations or other persons for purposes related to DOE's functions. The Secretary is to report to Congress on how this authority has been used. Sec. 473 is designed to protect the proprietary data of those contracted to perform studies for DOE. DOE is directed to fund a program to demonstrate marine and hydrokinetic technologies, and evaluate the environmental effects of the technologies. Open standards are to be developed to facilitate the transfer of results to the public and incentivize industry compliance with these standards. Up to $250 million is authorized for each fiscal year from 2010 to 2021 for the program. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 Studies are required of CCS issues for geological sequestration sites in Sec. 113. Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA provides $3.4 billion in R&D funding in DOE's Fossil Energy program, the majority of which was for CCS activities, including $20 million for geologic sequestration training and research and $10 million for unspecified activities. Title V—Energy Markets106 Summary and Analysis of This Title This title contains several measures intended to help stabilize the oil, natural gas, and electricity markets. The motivation for these provisions appear to be several disruptive events in the energy markets over the past decade, including the manipulation by Enron and others of the western electricity markets; wide and abrupt swings in the prices of natural gas, crude oil, and gasoline; and concern over the role of speculators and other financial players in the energy markets. The measures fall into three categories: information, analysis, and regulation. The information items, which are intended to promote stability by increasing market transparency, include the following: The Energy Information Administration (EIA, the statistical and analytical arm of the Department of Energy) would be directed to launch new programs to gather information on oil inventories held by the largest traders of oil contracts and on the oil and natural gas storage capacity in the United States. DOE would be directed to expand the existing Tariff Analysis Project, an effort by the Lawrence Berkeley National Laboratory to collect and make easily available online information on retail electric rates. Analytical measures, which are aimed at better understanding the role of financial players in the energy markets, include: EIA is directed to create a new Financial Market Analysis Office to "be responsible for analysis of the financial aspects of energy markets." The bill would establish a high-level Working Group on Energy Markets (including, among others, the Secretaries of Energy and the Treasury). The group's tasks would include "investigat[ing] the effect of increased financial investment in energy commodities on energy prices and … energy security"; recommending steps needed to prevent excessive speculation from destabilizing energy markets; reviewing international energy markets; and performing a study with accompanying recommendations for reform "of the factors that affect the pricing of crude oil and refined petroleum products," including the role of speculators. The regulatory measures, which are potentially the most controversial, include: In the event of an "emergency" in wholesale electricity markets—where "emergency" means a disruption affecting reliability or causing "sudden and excessive price fluctuations"—FERC would have the authority to issue orders temporarily suspending existing tariffs and contracts. The maximum duration of such an order would be 30 days. FERC would be granted "cease and desist" authority to block actual or attempted illegal manipulation of the electricity or natural gas markets. This authority would also allow FERC to freeze the assets of the party at issue, the object being to prevent the party from "dissipating" its assets before it can be ordered to either pay fines or make restitution (this is an issue in a recent case before FERC). Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 Sec. 359 of Subtitle E, Title III, of H.R. 2454 gives FERC cease and desist authority with respect to natural gas markets. Unlike the provision in ACELA, the ACES provision applies to any violation of applicable law and regulation, not just cases of market manipulation. There are no related provisions in ARRA. Title VI—Policy Studies and Reports108 Summary and Analysis of This Title This title would direct the completion of a number of policy studies and reports, summarized briefly here. Taken together, these studies are intended to provide Congress and other decision makers with improved information and understanding for the management of resources and formulation of policy. Sec. 601 of this title would direct the U.S. Geological Survey to conduct a national assessment of helium resources, which are important for a variety of industrial and medical applications, with information on other gases associated with the helium. Sec. 602 calls for an assessment and report on known and undiscovered potash deposits in the United States, and would include provisions for a drilling program and an evaluation of assessment methodologies. Potash is a general term applied to potassium oxide, potassium carbonate, and a variety of related potassium salts that go into fertilizer and the manufacture of glass. Sec. 603 would amend the Department of Energy Organization Act (42 U.S.C. 7321) with the aim of improving national energy planning and strategies. The improved planning process would include input from relevant federal agencies and would examine federal policies that affect energy production, energy efficiency, reduction of air pollution, and the reduction, avoidance, or sequestration of greenhouse gases. This provision would require the National Academy of Sciences to participate in the planning process and would provide authorization of funding for such studies. Sec. 604 acknowledges that international climate change strategies will depend in part on the actions of China and India, and that improved understanding of their actions will benefit strategies undertaken by the United States to help reduce global emissions of greenhouse gases. This section would establish an interagency task force to investigate and analyze national or subnational policies, programs, laws, regulations, incentive mechanisms, and other measures that might reduce energy use and greenhouse gas emissions in China and India. The report would include the current status of, and opportunities and recommendations for, research cooperation and technology deployment and trade, and would be submitted to Congress within six months of passage. Under Sec. 605, carbon leakage is defined as a substantial increase in greenhouse gas emissions by a manufacturing facility located in a country without a greenhouse gas emission regulation commensurate to a cap-and-trade program, or an increase in emissions caused by an increase in the incremental cost of production in the United States as a result of a domestic cap-and-trade program. This section would require DOE, in consultation with other relevant federal agencies, to conduct a study that characterizes the relative risk of such carbon leakage and changes in output and investment in U.S. industrial sectors resulting from the implementation of a cap-and-trade program in the Unites States. The study is to include an assessment of price and trade elasticity of U.S. industries, as well as other economic indicators. DOE would also be directed to conduct a study evaluating the impact of potential measures that might be implemented to mitigate carbon leakage, including an analysis of measures used by other jurisdictions to reduce carbon leakage, the risk of carbon leakage from U.S. industries under potential prices of greenhouse gas emissions, and scenarios for international climate policy. Sec. 606 would require the Secretary of Energy, in consultation with the Secretaries of State and Commerce, to conduct a study and report to Congress on the impact of foreign fuel subsidies on global energy supply and demand, and on the global economy, with associated recommendations for mitigating actions. Sec. 607 would amend Sec. 201(b) of EPACT05 to require the Secretary of Energy, as part of the current requirement for an annual assessment of renewable energy, to assess the quantity of biomass needed for thermal applications, biofuels, and biomass-based electricity, the highest efficiency energy use of biomass resources, the requirements and costs associated with the deployment for each of these applications, and the market penetration for each renewable energy resource that could be accomplished by 2030. Sec. 608 calls for a review to quantify the efficiencies of U.S. electric generation facilities. It would require identification of, among other things, the technologies that may be deployed to increase the efficiency of the electric generation facilities and any obstacles that could impede the deployment of those technologies. Sec. 609 would require DOE, in cooperation with other relevant federal agencies, to evaluate the emissions from the use of alternative transportation fuels and fuel blends used in heavy-duty and light-duty diesel engines and in the aviation sector. The study would evaluate the effect of using alternative transportation fuels on air quality and public health. "Such sums as are necessary" are authorized for the study. Sec. 610 includes findings expressing the vulnerability of the United States resulting from reliance on imported oil, and calls for "transformative steps to wean itself from its addiction to foreign oil." This section contains an explicit statement that it is the policy of the United States to reduce its dependence on foreign oil. An interagency task force composed of DOE and other relevant agencies would submit a report to Congress describing options for agency actions that would reduce forecasted U.S. oil consumption in stages by 10,000,000 barrels of oil per day by 2030. Recommended actions would be required to comply with the policy statement above, include only options directly related to reduced oil consumption, describe advantages and disadvantages for each option, and avoid increases in lifecycle greenhouse gas emissions above levels in effect on the date of enactment. Reports to Congress under this provision would be allowed to request additional legislative authority to implement recommendations. An annual report of progress would also be required. Comparison to Similar Provisions in H.R. 2454, American Clean Energy and Security Act of 2009 H.R. 2454 contains a number of study provisions, but none are precisely the same as the studies mandated in this title. Studies proposed in this title would certainly inform some of the processes and programs established in H.R. 2454 . For example, the assessment of national plans and policies for climate change mitigation in China and India in Sec. 604 of this title would directly support the requirement in H.R. 2454 that the EPA Administrator submit an annual report on the details of any greenhouse gas standards adopted by China and India. Likewise, the report on carbon leakage proposed in this title would support the efforts to address carbon leakage contained in Title IV of H.R. 2454 . Related Spending Provisions in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) ARRA contains several funding provisions for various energy and climate change programs, but none are precisely for the studies mandated here.

As reported by the Senate Committee on Energy and Natural Resources, the six titles of S. 1462 are intended to address the energy security of the United States by promoting the development of clean energy technologies, improving energy efficiency, encouraging the development of domestic energy resources, promoting energy innovation and energy workforce development, improving the stability of U.S. energy markets, and informing energy strategies through a series of studies and reports. Some of these provisions build on similar or related provisions in the Energy Policy Act of 2005 (EPACT05, P.L. 109-58), the Energy Independence and Security Act of 2007 (EISA07, P.L. 110-140) and appropriations under the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). This report compares S. 1462 with certain energy provisions in H.R. 2454, the American Clean Energy and Security Act of 2009, although there are substantial differences. H.R. 2454 is a broader bill that includes a greenhouse gas cap-and-trade system not found in the Senate Committee bill. (The energy provisions in S. 1462 are expected to be considered by the Senate when crafting its own greenhouse gas bill with input from other key committees.) Title I of S. 1462 would promote the commercial deployment of clean energy technologies by modifying the Loan Guarantee Program and increasing Department of Energy's (DOE's) authority to offer additional financial incentives. Title II promotes enhanced energy efficiency through a combination of policies that target manufacturing, appliances, buildings, and the electric grid. Title III is intended to enhance U.S. energy security, according to the Committee Report, by addressing the issues of critical electric infrastructure and its vulnerability to cyber attack; nuclear waste disposal and reprocessing; additional petroleum storage; expansion of oil and gas leasing in certain offshore areas; development of renewable energy resources on public lands; large-scale and long-term geologic storage of CO2; and reduction of the reliance of U.S. island territories on imported fossil fuels. Title IV contains provisions for advancing energy innovation and workforce development, including a variety of energy research, development, demonstration, and commercial application activities; a Grand Energy Challenges Research Initiative to integrate basic and applied energy research programs; expanding and modifying several energy programs, including the Advanced Research Projects Agency—Energy; domestic vehicle battery manufacturing research; lightweight materials research and development; methane hydrate research and development; low-Btu gas and helium resources conservation; Arctic energy research, development, and deployment; and ultra-deepwater and unconventional natural gas and other petroleum resources R&D. Title V contains several measures designed to stabilize the oil, natural gas, and electricity markets and to enhance energy security. Title VI would provide direction and authorization for a number of studies and reports that would inform energy programs and policies.

Background Afghanistan has a history of a high degree of decentralization, and resistance to foreign invasion and occupation. Some have termed it the "graveyard of empires." 18th Century to the early 20th Century Afghanistan's modern history is generally considered to begin with the 1747 foundation of the Durrani Empire by Ahmad Shah Durrani, a Pashtun military commander in the army of the Persian ruler Nadir Shah. After Nadir's assassination, Durrani carved out an Afghan empire, dominated by Pashtuns, between Persia and the Mughal Empire (a Muslim-ruled empire that controlled much of the Indian subcontinent from the sixteenth through eighteenth centuries). After the collapse of the Durrani Empire in 1823, a strong ruler, Dost Muhammad Khan, emerged in Kabul in 1826, becoming the emir (or ruler) of Afghanistan and founding the Barakzai dynasty. For much of the nineteenth century, Afghanistan served as a sort of buffer in the 'Great Game' between the Russian and British empires as they solidified control over Central Asia and the Indian subcontinent, respectively. British fears of Russian expansion southward sparked three Anglo-Afghan wars over eighty years (from 1839 until Afghan independence in 1919) as the British sought to expand their own sphere of influence northward, and Afghan rulers periodically appealed to the Russian Empire for support. In the First World War, the Afghan government remained neutral, resisting popular pressure to respond to the Ottoman Empire's call for pan-Islamic solidarity against Russia and Great Britain. Independence and the Cold War Era King Amanullah Khan (1919-1929) launched attacks on British forces in Afghanistan (in what is referred to as the Third Anglo-Afghan War) shortly after taking power and won complete independence from Britain as recognized in the Treaty of Rawalpindi (August 8, 1919). He was considered a secular modernizer presiding over a government in which all ethnic minorities participated. After a brief seizure of power by an ethnic Tajik, King Habibullah Kalakani, King Mohammad Nadir Shah reasserted Barakzai rule, and was succeeded by his son Mohammad Zahir Shah in 1933. The last king of Afghanistan, Zahir Shah (1933-1973) is remembered fondly by some older Afghans for promulgating a constitution in 1964 that established a national legislature and promoting freedoms for women. Zahir Shah sought U.S. support to counterbalance a newly assertive Soviet Union, and Afghanistan successfully played the Cold War rivals off each other to win military and development assistance from both. The Soviets built large infrastructure projects in Afghanistan during Zahir Shah's time, such as the north-south Salang Tunnel and Bagram airfield. For its part, the United States provided agricultural and other development assistance; among the major U.S.-funded projects was a large USAID-led irrigation and hydroelectric effort in Helmand Province, Kajaki Dam (see below). Afghanistan's slide into instability began in the 1970s, during the Nixon Administration, when the diametrically opposed Communist Party and Islamic movements grew in strength. While receiving medical treatment in Italy in 1973, Zahir Shah was overthrown by his cousin, Mohammad Daoud, who abolished the monarchy, declaring himself the first President of Afghanistan, and established a dictatorship with strong state involvement in the economy. Daoud was overthrown and killed in April 1978 by military officers under the direction of two People's Democratic Party of Afghanistan (PDPA) leaders, Hafizullah Amin and Nur Mohammad Taraki, in the Saur (April) Revolution. Taraki became president, but was himself displaced in a September 1979 coup led by Amin. Both leaders came from the Khalq ("Masses") faction of the PDPA, drawing their strength from rural ethnic Pashtuns, and tried to impose radical socialist change on a traditional society, in part by redistributing land and bringing more women into government. The attempt at rapid modernization sparked rebellion by Islamic parties opposed to such moves. Soviet Invasion and Occupation Period The Soviet Union sent troops into Afghanistan on December 27, 1979, to prevent further gains by the Islamic militias, known as the mujahedin (Islamic fighters). Upon their invasion, the Soviets replaced Amin with another PDPA Saur Revolution leader who the Soviets apparently perceived as pliable, Babrak Karmal, leader of the Parcham ("Banner") faction of the PDPA. Soviet occupation forces numbered about 120,000. They were assisted by Democratic Republic of Afghanistan (DRA) military forces of about 25,000-40,000, supplemented by about 20,000 paramilitary and tribal militia forces, including a paramilitary organization called the Sarandoy . Soviet and Afghan forces were not able to pacify rural areas, in part because DRA forces were plagued by desertions. The mujahedin benefited from U.S. weapons, provided through the CIA in cooperation with Pakistan's Inter-Service Intelligence Directorate (ISI). The Seven Major "Mujahedin" Parties and Their Activities The mujahedin were also relatively well organized and coordinated by seven major parties that in early 1989 formed what they claimed was a government-in-exile—a Peshawar-based "Afghan Interim Government" (AIG). The seven party leaders and their parties—sometimes referred to as the "Peshawar 7"—were: Mohammad Nabi Mohammadi (Islamic Revolutionary Movement of Afghanistan); Sibghatullah Mojaddedi (Afghan National Liberation Front); Gulbuddin Hikmatyar (Hezb-i-Islam—Gulbuddin, Islamic Party of Gulbuddin, HIG); Burhanuddin Rabbani (Jamiat-Islami/Islamic Society); Yunus Khalis (Hezb-i-Islam); Abd-i-Rab Rasul Sayyaf ( Ittihad I slami /Islamic Union for the Liberation of Afghanistan); and Pir (religious honorific) Ahmed Gaylani (National Islamic Front of Afghanistan, NIFA). The mujahedin weaponry included U.S.-supplied portable shoulder-fired anti-aircraft systems called "Stingers," which proved highly effective against Soviet aircraft. The United States decided in 1985 to provide these weapons to the mujahedin after substantial debate within the Reagan Administration over whether they could be used effectively. Some warned that a post-Soviet occupation power structure in Afghanistan could be adverse to U.S. interests because much of the covert aid was being channeled to the Islamist groups. Partly because of the effectiveness of the Stinger in shooting down Soviet helicopters and fixed wing aircraft, the Soviet Union's losses mounted—about 13,400 Soviet soldiers were killed in the war, according to Soviet figures—turning Soviet domestic opinion against the war. In 1986, after the reformist Mikhail Gorbachev became leader, the Soviets replaced Karmal with the director of Afghan intelligence, Najibullah Ahmedzai (known by his first name)—a Ghilzai Pashtun from the Parcham faction of the PDPA. Geneva Accords (1988) and Soviet Withdrawal On April 14, 1988, then-Soviet leader Mikhail Gorbachev agreed to a U.N.-brokered accord (the Geneva Accords) requiring the Soviet Union to withdraw. The withdrawal was completed by February 15, 1989, leaving in place the weak Najibullah government. A warming of relations moved the United States and Soviet Union to try for a political settlement to the Afghan conflict, a trend accelerated by the 1991 collapse of the Soviet Union, which reduced Moscow's capacity for supporting communist regimes abroad. On September 13, 1991, Moscow and Washington agreed to a joint cutoff of military aid to the Afghan combatants as of January 1, 1992. The State Department has said that a total of about $3 billion in economic and covert military assistance was provided by the United States to the Afghan mujahedin from 1980 until the end of the Soviet occupation in 1989. Press reports say the covert aid program grew from about $20 million per year in FY1980 to about $300 million per year during FY1986-FY1990. The Soviet pullout was viewed as a decisive U.S. "victory." The Soviet pullout caused a reduction in subsequent covert funding and, as indicated in Table 9 , U.S. assistance to Afghanistan remained at relatively low levels because support for a major effort to rebuild Afghanistan's economy was lacking. The United States closed its embassy in Kabul in January 1989, as the Soviet Union was completing its pullout, and it remained so until the fall of the Taliban in 2001. Despite the Soviet troop withdrawal in 1989, Najibullah still enjoyed Soviet financial and advisory support and he defied expectations that his government would collapse soon after a Soviet withdrawal. However, his position weakened subsequently after the Soviets cut off financial and advisory support as of January 1, 1992. On March 18, 1992, Najibullah publicly agreed to step down once an interim government was formed, an announcement set off by rebellions by Uzbek and Tajik militia commanders in northern Afghanistan (particularly Abdul Rashid Dostam) who joined prominent mujahedin commander Ahmad Shah Masoud of the Islamic Society, a largely Tajik party headed by Burhannudin Rabbani. Masoud was revered for preventing the Soviets from conquering his power base in the Panjshir Valley north of Kabul. Najibullah fell, and the mujahedin regime began April 18, 1992. The Mujahedin Government and Rise of the Taliban The fall of Najibullah exposed rifts among the mujahedin parties. The leader of one of the smaller parties (Afghan National Liberation Front), Islamic scholar Sibghatullah Mojadeddi, was president during April-May 1992. Under an agreement among the major parties, Rabbani became president in June 1992 with agreement that he would serve until December 1994. He refused to step down at that time, saying that political authority would disintegrate without a clear successor. That decision was strongly opposed by other mujahedin leaders, including Gulbuddin Hikmatyar, a Pashtun, and leader of the Islamist conservative Hizb-e-Islam Gulbuddin mujahedin party. Hikmatyar and several allied factions fought unsuccessfully to dislodge Rabbani. Rabbani reached an agreement for Hikmatyar to serve as Prime Minister, but because of mutual mistrust, Hikmatyar never formally took office and fighting eventually destroyed much of west Kabul. In 1993-1994, Afghan Islamic clerics and students, mostly of rural, Pashtun origin, formed the Taliban movement. Many were former mujahedin who had become disillusioned with conflict among mujahedin parties and had moved into Pakistan to study in Islamic seminaries ("madrassas") mainly of the "Deobandi" school of Islam. Some say this interpretation of Islam is similar to the "Wahhabism" that is practiced in Saudi Arabia. Taliban practices were also consonant with conservative Pashtun tribal traditions. The Taliban's leader, Mullah Muhammad Umar, had been a fighter in Khalis's Hezb-i-Islam party during the anti-Soviet war, even though Khalis' party was generally seen as moderately Islamist at that time. Like Umar, most of the senior figures in the Taliban regime were Ghilzai Pashtuns. The Taliban viewed the Rabbani government as weak, corrupt, and anti-Pashtun, and the four years of civil war between the mujahedin groups (1992-1996) created popular support for the Taliban as able to deliver stability. With the help of defections, the Taliban took control of the southern city of Qandahar in November 1994. Umar reportedly entered the Qandahar shrine containing a purported cloak used by the Prophet Mohammad and donned it in front of hundreds of followers. By February 1995, the movement's fighters were near Kabul. In September 1995, the Taliban captured Herat province, bordering Iran, and imprisoned its Tajik governor, Ismail Khan (ally of Rabbani and Masoud), who later escaped to Iran. In September 1996, Taliban victories near Kabul led to the withdrawal of Rabbani and Masoud to the Panjshir Valley (north of Kabul); the Taliban took control of Kabul on September 27, 1996. Taliban gunmen entered the U.N. facility in Kabul that was sheltering Najibullah, his brother, and aides, and hanged them. Taliban Rule (September 1996-November 2001) During the Taliban regime, Mullah Umar held the title of Head of State and "Commander of the Faithful." He remained in the Taliban power base in Qandahar and made no public appearances, although he did occasionally meet foreign officials. The Taliban lost international and domestic support as it imposed strict adherence to Islamic customs in areas it controlled and employed harsh punishments, including executions. The Taliban authorized its "Ministry for the Promotion of Virtue and the Suppression of Vice" to use physical punishments to enforce strict Islamic practices, including bans on television, Western music, and dancing. It prohibited women from attending school or working outside the home, except in health care, and it publicly executed some women for adultery. In March 2001 the Taliban blew up Buddha statues carved into hills above Bamiyan city, considering them idols. U.S. Policy toward the Taliban Regime and its Hosting of Bin Laden The Clinton Administration opened talks with the Taliban after it captured Qandahar in 1994 and continued to engage the movement after it took power. However, the Administration was unable to moderate the Taliban's policies, and the United States withheld recognition of the Taliban as the legitimate government of Afghanistan, formally recognizing no faction as the government. The United Nations continued to seat the Rabbani government. The State Department ordered the Afghan embassy in Washington, DC, closed in August 1997. U.N. Security Council Resolutions 1193 (August 28, 1998) and 1214 (December 8, 1998) urged the Taliban to end discrimination against women. Women's rights groups urged the Clinton Administration not to recognize the Taliban government. In May 1999, the Senate-passed S.Res. 68 called on the President not to recognize an Afghan government that oppresses women. The Taliban's hosting of Al Qaeda's leadership gradually became the Clinton Administration's overriding agenda item with the Taliban. Umar reportedly forged a political and personal bond with Al Qaeda leader Osama Bin Laden, who relocated to Afghanistan from Sudan in May 1996, and refused U.S. demands to extradite him. In April 1998, then-U.S. Ambassador to the United Nations Bill Richardson headed a small U.S. delegation to Afghanistan, but the group did not meet Mullah Umar or persuade the Taliban to hand over Bin Laden. After the August 7, 1998, Al Qaeda bombings of U.S. embassies in Kenya and Tanzania, the Clinton Administration increased pressure on the Taliban to extradite him by imposing U.S. sanctions on Taliban-controlled Afghanistan and achieving adoption of some U.N. sanctions as well. On August 20, 1998, the United States fired cruise missiles at Al Qaeda training camps in eastern Afghanistan. Some observers assert that the Administration missed several opportunities to strike Bin Laden, including a purported sighting of him by an unarmed Predator drone at a location called Tarnak Farm in the fall of 2000. Clinton Administration officials asserted that U.S. domestic and international support for U.S. intervention to oust the Taliban militarily at that time was lacking. The "Northern Alliance" Congeals The Taliban's policies caused different Afghan factions to ally with the Tajik core of the anti-Taliban opposition—the ousted President Rabbani, Ahmad Shah Masoud, and their ally in the Herat area, Ismail Khan. Joining the Tajik factions in the broader "Northern Alliance" were Uzbek, Hazara Shiite, and even some Pashtun Islamist factions discussed below. Virtually all these figures remain key players in politics in Afghanistan. Uzbeks/General Dostam. One major faction of the Northern Alliance was the Uzbek militia (the Junbush-Melli , or National Islamic Movement of Afghanistan) of General Abdul Rashid Dostam. Frequently referred to by some Afghans as one of the "warlords" who gained power during the anti-Soviet war, Dostam first joined those seeking to oust Rabbani during his 1992-1996 presidency, but later joined him and the other Northern Alliance factions opposed to the Taliban. Hazara Shiites. Members of Hazara tribes, mostly Shiite Muslims, are prominent in Bamiyan, Dai Kundi, and Ghazni provinces of central Afghanistan, as well as Kabul city. The main Hazara Shiite militia in the Northern Alliance was Hizb-e-Wahdat (Unity Party, composed of eight groups). In 1995, the Taliban captured and killed Hizb-e-Wahdat's leader Abdul Ali Mazari. The most prominent current Hazara faction leader is Mohammad Mohaqeq. Pashtun Islamists/Sayyaf. Among the Pashtuns that joined the Northern Alliance was a conservative Islamist mujahedin faction, Ittihad Islami , headed by Abd-i-Rab Rasul Sayyaf. He accused the Taliban of allying with Al Qaeda. Bush Administration Afghanistan Policy Before the September 11 Attacks Bush Administration policy initially continued the existing policy of applying economic and political pressure on the Taliban while retaining some dialogue with it, and refraining from militarily assisting the Northern Alliance. The September 11 Commission report said that, prior to the September 11 attacks, Administration officials leaned toward providing such aid, as well as aiding anti-Taliban Pashtuns. Additional covert options were reportedly also under consideration. In accordance with U.N. Security Council Resolution 1333, in February 2001 the State Department ordered the Taliban representative office in New York closed, although a Taliban representative continued to operate informally in the New York area. In March 2001, Administration officials received a Taliban envoy to discuss bilateral issues, and the Administration stepped up engagement with Pakistan to try to reduce its support for the Taliban, amid widespread allegations that Pakistani military advisers were helping the Taliban. Even though the Northern Alliance was supplied with Iranian, Russian, and Indian financial and military support, the Taliban continued to gain ground, even in areas not inhabited by Pashtuns. By the time of the September 11 attacks, the Taliban controlled at least 75% of the country, including almost all provincial capitals. The Northern Alliance suffered a major setback on September 9, 2001 (two days before, and possibly linked to the September 11 attacks), when Ahmad Shah Masoud was assassinated by Al Qaeda operatives posing as journalists. He was succeeded by a top lieutenant, Muhammad Fahim, a veteran Tajik figure (Fahim died of natural causes in 2014 while serving as First Vice President). September 11 Attacks and Operation Enduring Freedom After the September 11 attacks, the Bush Administration decided to militarily overthrow the Taliban when it refused a U.S. demand to extradite Bin Laden. President Bush articulated a policy that equated those who harbor terrorists to terrorists themselves, and asserted that a friendly regime in Kabul was needed to enable U.S. forces to search for Al Qaeda members there. The Administration sought U.N. backing for military action. U.N. Security Council Resolution 1368 of September 12, 2001, said that the Council "expresses its readiness to take all necessary steps to respond (implying force) to the September 11 attacks." This was widely interpreted as a U.N. authorization for military action in response to the attacks, but it did not explicitly authorize Operation Enduring Freedom or reference Chapter VII of the U.N. Charter, which allows for responses to threats to international peace and security. In Congress, S.J.Res. 23 (passed 98-0 in the Senate and with no objections in the House, P.L. 107-40 , signed September 18, 2011) authorized all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001 or harbored such organizations or persons . Major Combat Operations: 2001-2003 Major combat in Afghanistan (Operation Enduring Freedom, OEF) began on October 7, 2001. The U.S. effort initially consisted primarily of U.S. air-strikes on Taliban and Al Qaeda forces, facilitated by the cooperation between reported small numbers (about 1,000) of U.S. special operations forces and Central Intelligence Agency operatives. The purpose of these operations was to help the Northern Alliance and Pashtun anti-Taliban forces advance by directing U.S. air strikes on Taliban positions. In October 2001, about 1,300 Marines were deployed to pressure the Taliban at Qandahar, but there were few U.S.-Taliban pitched battles. The Taliban regime unraveled after it lost Mazar-e-Sharif on November 9, 2001, to forces led by Dostam. Northern Alliance forces—despite promises to the United States that they would not enter Kabul—did so on November 12, 2001, to popular jubilation. The Taliban subsequently lost the south and east to U.S.-supported Pashtun leaders, including Hamid Karzai. The Taliban regime ended completely on December 9, 2001, when the Taliban and Mullah Umar fled Qandahar, leaving it under tribal law. Subsequently, U.S. and Afghan forces conducted "Operation Anaconda" in Paktia Province in March 2002. On May 1, 2003, U.S. officials declared an end to "major combat." Afghan Governance13 The George W. Bush Administration argued that the U.S. departure from the region after the 1989 Soviet pullout contributed to Afghanistan's descent into chaos. After the Taliban regime was deposed in 2001, the Administration and its international partners decided to build a relatively strong, democratic, Afghan central government. The effort, which many outside experts described as "nation-building," was supported by the United Nations. The Obama Administration's strategy review in late 2009 initially narrowed official U.S. goals to preventing terrorism safe haven in Afghanistan, but policy in some ways expanded the preexisting nation-building effort. Building the capacity of and reforming Afghan governance have been consistently judged to be key to the success of U.S. policy, even after the 2014 security transition to Afghan lead. Table 1 briefly depicts the process and events that led to the formation of the post-Taliban government of Afghanistan and subsequent developments. "National Unity Government" of Ashraf Ghani and Dr. Abdullah Virtually every U.S. and outside assessment has concluded that Afghanistan's central and local governments have increased their capacity since 2001. However, the 2014 U.S.-brokered leadership partnership (national unity government, or NUG) between President Ashraf Ghani and CEO Dr. Abdullah Abdullah has encountered difficulties to the point where Dr. Abdullah publicly accused Ghani in August 2016 of acting unilaterally and refusing to meet regularly with him, reportedly saying, "if someone does not have the patience for discussion, then they are not fit for the presidency, either." Outward signs of tensions seem to have receded since as the two have since met on several occasions to try to resolve their mutual differences and complaints, and the NUG has remained intact. When the NUG was formed, Ghani and Abdullah agreed to share the role of appointing a cabinet and to try to balance competence and factional interests. However, their differences over appointments caused the first cabinet nominations to be delayed well beyond the constitutionally required 30-day period for such nominations (October 28, 2014). In April 2016, Ghani and Abdullah completed appointments to the 34 provincial governorships and the major ambassadorships. In April 2016, the National Assembly confirmed an Interior Minister, Taj Mohammad Jahid, to replace ex-Communist military leader Nur-ul-Haq Ulumi, who resigned in February 2016, and an Attorney General. The appointment of a Defense Minister has long eluded consensus. The chief of staff of the Afghanistan National Army (ANA), Sher Mohammad Karimi, was the original nominee, but he was voted down in large part because Tajik parliamentarians argued that Pashtuns were dominating appointments to the security institutions. In May 2015, Ghani and Abdullah nominated Masoom Stanekzai, who headed the government's insurgent fighter reintegration program (discussed below). However, he, too, is an ethnic Pashtun and non-Pashtuns in the National Assembly led a successful effort to vote him down in June 2015. He served as acting Defense Minister until May 2016, when he was nominated to become the next Intelligence Director (head of the National Directorate for Security, NDS). Also in May 2016, Ghani nominated General Abdullah Habibi as Minister of Defense. In July 2016, the National Assembly confirmed both Habibi and Stanekzai to their new positions. However, Habibi, along with the Afghan army chief of staff, was forced to resign after a major Taliban infiltration of an Afghan military base in normally quiet Mazar-e-Sharif in April 2017. The acting Minister of Defense is General Tariq Shah Bahrami. The NUG has been somewhat more active than was the Karzai administration on corruption issues. The government has sought to enforce court punishments of the convicted perpetrators of the Kabul Bank scandal. And, press reports indicate that the Major Crimes Task Force has become more active in investigating officials accused of corruption. Ghani also has established a High Council for the Rule of Law and Anti-Corruption and, with U.S. financial help and advice, is establishing an anti-corruption justice center. These steps, as well as Ghani's insistence on holding to account those responsible for the 2011 near failure of the Kabul Bank, were praised by the U.S. Special Representative for Afghanistan and Pakistan Ambassador Richard Olson in testimony on September 15, 2016. On the other hand, the U.S. Special Inspector General for Afghanistan Reconstruction stated in a September 2016 report that Afghanistan's long-standing anti-corruption body, the High Office of Oversight (HOO), suffers from a lack of independence, authority, and capability to fulfill its mandate. Growing Fragmentation A trend that worries some experts is increasing fragmentation along ethnic and ideological lines—fractures that were largely contained during Karzai's presidency. A number of high profile attacks, most claimed by ISKP (see below), have targeted the ethnic Hazara minority. In August 2016, gunmen loyal to First Vice President Abdul Rashid Dostam attacked Tajiks who were reburying in a prominent burial site the body of ex-King Habibullah Kalakani (see above). In October 2016, Dostam indirectly threatened an armed challenge against the NUG unless he and his Uzbek constituencies were accorded greater respect. Perhaps suggesting that Dostam and other regional leaders are taking advantage of central government weakness, Dostam also has been accused of beating up and detaining a political rival in his northern redoubt. Some experts assert that the fragmentation might be due, in part, to Ghani's apparent focus on applying principles of governance, such as anti-corruption and establishing formal advisory structures, and his apparent distaste for the consistent engagement with power brokers and ethnic leaders that characterized Karzai's presidency. Dostam himself left Afghanistan for Turkey, where he has sought refuge in the past, in May 2017; Dostam allies and Afghan government officials attributed the move to health concerns and "medical tests," but others speculate that his departure was an attempt to evade facing justice in Afghanistan. His return to Afghanistan in late July 2017 was blocked by the government. Earlier that month, representatives of several other ethnic parties, all senior government officials, visited Dostam and announced from Ankara the formation of a new coalition (termed the "Coalition for the Salvation of Afghanistan") made up of Dostam's Uzbek-majority Junbish-e-Milli party; the Tajik Jamaat-e-Islami party (led by Foreign Minister Salahuddin Rabbani); and the Hazara Hizb-e-Wahdat-e-Islami party. The group called on President Ghani to implement political reforms and introduce a less-centralized decisionmaking process. While some have cast doubt on the coalition's long-term viability and claim that its creation is motivated by political expediency, it represents a challenge to President Ghani's authority at a time when public discontent with his government is high and clashes among the militias loyal to figures nominally supporting the central government have accelerated. A May 31, 2017, bombing in central Kabul left over 150 dead (likely the most deadly such attack in Afghan history) and led to large anti-government protests in which several demonstrators were killed by security forces. Those protesters coalesced into a group calling itself the Uprising for Change Movement. The group, which does not align with any political party, has held several more rallies in Kabul to call for the resignation of the Interior Minister and other officials and for security sector and governance reforms. Another group, called Mehwar-e Mardom-e Afghanistan (the People's Axis of Afghanistan), was formed in July 2017 and criticizes the NUG as "unconstitutional" because of overdue elections and other unmet conditions of the September 2014 agreement. Mehwar is seen as being aligned with former president Karzai, who may harbor ambitions to return to power and has been an increasingly vocal critic in recent months of the NUG, as well as of the United States and its operations in Afghanistan. Way Forward for the NUG Abdullah loyalists insist on adhering to the terms of the NUG agreement and holding a constitutional loya jirga (an Afghan assembly) that would convert Abdullah's post into a formal prime ministership. With the loya jirga not held by its planned deadline of September 2016, some Afghan figures centered around ex-President Karzai seek to hold a traditional loya jirga instead. The delegates of a traditional loya jirga would be subject to the prerogatives of the conveners of the assembly, and the format far less structured than a constitutional loya jirga . Such a meeting could potentially yield unpredictable outcomes such as the replacement of the NUG entirely and the selection of new leadership. Some perceive that Karzai and his allies might seek to engineer his return as leader from such a meeting. Some Abdullah supporters criticized Secretary of State Kerry's comments in April 2016 that the NUG is intended to be of a five-year duration (the length of a presidential term) as opposing a government restructuring by the planned loya jirga . The holding of a constitutional loya jirga is contingent on the holding of parliamentary elections as well as district elections, which still have not been held in post-Taliban Afghanistan. Parliamentarians and district council members constitute part of the attendance of a constitutional loya jirga. A deadline that the Independent Electoral Commission (IEC) set in January 2016 for new parliamentary elections—October 15, 2016—was not met. A commission on election reform ("Special Electoral Reform Commission") was established and Ghani accepted 7 of its 10 recommendations, but the lower house of parliament voted them down. However, in late 2016, a new IEC and Electoral Complaints Commission (ECC) were appointed and an election law was enacted—appearing to remove key impediments to holding the required parliamentary and district elections. Going forward, parliamentary and district council elections are scheduled for July 7, 2018. However, in light of the current delay (parliament's mandate expired in June 2015 but was extended indefinitely by a presidential decree due to security concerns), some are skeptical of that timeline. Continued contention among electoral commissioners may further reduce confidence in the government's ability to hold elections next year. Some observers have called for district council elections to be delayed further and held alongside the 2019 presidential election, arguing that holding them next year, before broader questions of local governance and autonomy are answered, "risks perpetuating the long-standing fallacy in Afghan statebuilding: if subnational structures are built on paper, state legitimacy will follow." U.S. and International Civilian Policy Structure U.S. and international civilian institutions have helped build the capacity of the Afghan government. The U.S. embassy in Kabul, which had closed in 1989 when the Soviets pulled out of Afghanistan and was guarded by Afghan caretakers, reopened in late 2001. The post of U.S. Ambassador to Afghanistan is currently unfilled, but the Trump Administration announced in July 2017 its intention to nominate career foreign service officer John Bass (currently ambassador to Turkey) to the position. In February 2009, the Obama Administration set up the position of an appointed "Special Representative for Afghanistan and Pakistan" (SRAP), occupied first by Ambassador Richard Holbrooke, reporting to the Secretary of State. The position was reportedly slated for elimination by the Trump administration, though Secretary Tillerson announced in July 2017 that Acting Assistant Secretary for South and Central Asian Affairs Alice Wells would also serve as acting SRAP, and it was subsequently reported that Secretary Tillerson proposes to integrate the SRAP position into the Bureau of South and Central Asian Affairs. In line with the U.S. military drawdown, the Administration has sought to "normalize" its presence in Afghanistan. From 2009 to 2014, the U.S. civilian presence expanded to over 1,300 U.S. civilian officials—up from only about 400 in 2009—of which about one-third were serving outside Kabul. Staff levels dropped by about 20% by the completion of the transition in December 2014. As of September 2017, there are currently 568 total U.S. direct hires supporting U.S. Embassy operations in Afghanistan (mostly from the State Department and USAID), who work alongside 1,500 U.S. contractors. Consulates . In June 2010, Deputy Secretary of State William Burns formally inaugurated a U.S. consulate in Herat city, a location considered pivotal to U.S. engagement with the Tajik and Uzbek minorities of Afghanistan. The facility was attacked by the Taliban in September 2013, and its staff were relocated to ISAF's Camp Arena; it is unclear what the mission's current status is. The State Department spent about $80 million on a facility in Mazar-e-Sharif that was slated to replace the existing facility, but the new site was abandoned in 2012 because of concerns about security and plans for consulates in other cities like Qandahar and Jalalabad appear to be on hold, perhaps indefinitely. General Human Rights Issues U.S. policy has been to establish and empower human rights institutions in Afghanistan and to promote the government's adherence to international standards of human rights practices. As do previous years' State Department human rights reports on Afghanistan, the report for 2016 attributes most of Afghanistan's human rights deficiencies to overall lack of security, loose control over the actions of Afghan security forces, corruption, and cultural attitudes such as discrimination against women. The State Department and UNAMA reports cite torture, rape, and other abuses by officials, security forces, detention center authorities, and police. One of the institutional human rights developments since the fall of the Taliban has been the establishment of the Afghanistan Independent Human Rights Commission (AIHRC), an oversight body on human rights practices, but its members are appointed by the government and some believe it is not independent. In addition, there has been a proliferation of Afghan organizations that demand transparency about human rights deficiencies and have sometimes produced government responses, for example by establishing "human rights units" in security institutions. Such groups include the Afghanistan Human Rights and Democracy Organization, and the Equality for Peace and Democracy organization. Countering the influence of institutions such as the AIHRC are traditional bodies such as the National Ulema Council. The Council consists of the 150 most widely followed clerics throughout Afghanistan, who represent about 3,000 clerics nationwide. It has taken conservative positions on free expression and social freedoms, such as the type of television and other media programs available in Afghanistan. Clerics sometimes ban performances by Afghan singers and other performers whose acts they consider inconsistent with Islamic values. On the other hand, some rock bands have been allowed to perform high profile shows since 2011. Because of the power of Islamist conservatives, alcohol is increasingly difficult to obtain in restaurants and stores, although it is not banned for sale to non-Muslims. According to recent State Department reports on human rights, there continue to be intimidation and some violence against journalists who criticize the central government or powerful local leaders, and some news organizations and newspapers have been closed for incorrect or derogatory reporting on high officials. Advancement of Women Women's groups are a large component of Afghan civil society. Freedoms for women have greatly expanded since the fall of the Taliban with their elections to the parliament and their service at many levels of government. The Afghan government pursues a policy of promoting equality for women under its National Action Plan for Women of Afghanistan (NAPWA). The Tokyo Mutual Accountability Framework requires Afghanistan to implement the NAPWA and all of its past commitments and laws to strengthen the rights of women and provide services to them. The major institutional development was the formation in 2002 of a Ministry of Women's Affairs dedicated to improving women's rights. Its primary function is to promote public awareness of relevant laws and regulations concerning women's rights. It plays a key role in trying to protect women from domestic abuse by overseeing the running of as many as 29 women's shelters across Afghanistan. The Afghanistan Freedom Support Act of 2002 (AFSA, P.L. 107-327 ) authorized $15 million per year (FY2003-FY2006) for the Ministry of Women's Affairs (Economic Support Funds controlled by USAID). The United States has continued to donate to the Ministry since AFSA expired. One of the most prominent civil society groups is the Afghanistan Women's Network. It has at least 3,500 members and its leaders say that 125 nongovernmental organizations work under its auspices. In addition, the AIHRC and outside Afghan human rights groups focus extensively on rights for Afghan women. Among the most notable accomplishments since 2001 is that women are performing jobs that were rarely held by women even before the Taliban came to power in 1996. The civil service is 22% female, although that is below the 30% target level set in the Tokyo Mutual Accountability Framework. About 4,388 women serve in the Afghanistan National Defense and Security Forces (ANDSF), making up around 1.4% of the force, though the Afghan government has set a goal to increase the number of women in the ANDSF to 10%. There are over 260 female judges, up from 50 in 2003, and several hundred female journalists nationwide. Women constitute over one-third of the seats of the nationwide Community Development Councils (CDCs, discussed above), in part because each CDC is required to have two women in its executive bodies. Women are legally permitted to drive and, mainly in larger cities, they exercise that right regularly. Wearing the full body covering called the burqa is no longer obligatory, but many women still wear it, in part to protect themselves from sexual advances. Some women in rural areas are reportedly advancing in social and economic status through agricultural cooperatives prevalent in several areas. Despite the gains since 2001, numerous abuses, such as denial of educational and employment opportunities, continue primarily because of Afghanistan's conservative traditions. Among the most widespread abuses reported are the following: More than 70% of marriages in Afghanistan are forced, despite laws banning the practice, and a majority of brides are younger than the legal marriage age of 16. The practice of baad , in which women are given away to marry someone from another clan to settle a dispute, remains prevalent. There is no law banning sexual harassment, and women are routinely jailed for a crime under the penal code called zina . The term means adultery, but under Afghan law includes defying family choice of a spouse, eloping, or fleeing domestic violence. Women can be jailed for having a child outside wedlock, even if the child is a product of rape. Under the penal code, a man who is convicted of "honor killing" (killing a wife who commits adultery) can be sentenced to no more than two years in prison. Women's rights activists have been assassinated on several occasions. In an effort to prevent these abuses, on August 6, 2009, then-President Karzai issued, as a decree, the "Elimination of Violence Against Women" (EVAW) law that makes many of the practices above unlawful. Partly as a result of the decree, prosecutions of abuses against women are increasingly obtaining convictions. A "High Commission for the Elimination of Violence Against Women" has been established to oversee implementation of the EVAW, and provincial offices of the commission have been established in each province. On the other hand, despite the EVAW decree, only a small percentage of reports of violence against women are registered with the judicial system, and about one-third of those proceed to trial. The number of women jailed for "moral crimes" has increased by 50% since 2011. Efforts by the National Assembly to enact the EVAW in December 2010 and in May 2013 failed due to opposition from Islamic conservatives who assert that males should decide family issues. President Ghani has signaled his strong support for women's rights by publicly highlighting the support he receives from his wife, despite the Afghan cultural taboo about mentioning wives and female family members in public. Ghani nominated a female to Afghanistan's Supreme Court, but the National Assembly rejected her nomination in July 2015. He has also appointed two female governors—one more than was the case during Karzai's presidency—in Ghor and in Daykundi provinces. There are four female ministers. Religious Freedoms According to State Department reports on international religious freedom, the constitution and government to some extent restrict religious freedom. The government (Ministry of Hajj and Religious Affairs) is involved in regulating religious practices. Of Afghanistan's approximately 150,000 mosques, 50,000 are registered and funded by the government. Clerics in these mosques, paid about $100 per month, are expected to promote the government's views. There are around 5,000 of these clerics, out of an estimated nationwide total of 300,000, though the Ministry says that it does not have the resources to comprehensively register all of the country's mosques or clerics. Members of minority religions, including Christians, Sikhs, Hindus, and Baha'i's, often face discrimination, but members of these communities sometimes serve at high levels of government. Baha'is fare worse than members of some of the other minorities because the Afghan Supreme Court declared the Baha'i faith to be a form of blasphemy in May 2007, and blasphemy is a capital offense. There are no public Christian churches but Afghan Christians can worship in small congregations in private homes. Still, several conversion cases drew harsh punishments and earned international attention. There are four synagogues, but they are not used because there is only one Afghan national who is Jewish. There are three active gurdwaras (Sikh places of worship) and five Hindu mandirs (temples). Buddhist foreigners are free to worship in Hindu temples. The Hazaras and other Afghan Shiites tend to be less religious and more socially open than their co-religionists in Iran. Afghan Shiite leaders appreciated the July 2009 enactment and "gazetting" of a "Shiite Personal Status Law" that gave Afghan Shiites the same degree of recognition as the Sunni majority, and provided a legal framework for Shiite family law issues. Afghan Shiites are able to celebrate their holidays openly and some have held high positions, but some Pashtuns have become resentful of the open celebrations and some clashes have resulted. The Shiite community has also been aggressively targeted by ISKP. Human Trafficking Afghanistan was ranked as "Tier 2" in the State Department Trafficking in Persons Report for 2017, an improvement from 2016 when Afghanistan was ranked as "Tier 2: Watch List" on the grounds that the Afghan government was not complying with minimum standards for eliminating trafficking and did not demonstrate increased efforts against trafficking since the prior reporting period. As part of the government's significant efforts to combat trafficking, the 2017 report cites increased law enforcement and new victim protection measures, including the reopening of a short term shelter for trafficking victims in Kabul. However, the report says that women from China, some countries in Africa, Iran, and some countries in Central Asia are being trafficked into Afghanistan for sexual exploitation, although trafficking within Afghanistan is more prevalent than trafficking across its borders. The report asserts that some families knowingly sell their children for forced prostitution, including for bacha b azi , a practice in which wealthy men use groups of young boys for social and sexual entertainment (see textbox below) and in which some ANDSF have allegedly participated. Other reports say that many women have resorted to prostitution, despite the risk of social and religious ostracism or punishment, to cope with economic hardship. Security Policy: Transition and Beyond The stated Obama Administration goal in Afghanistan was to prevent terrorist organizations that can plan attacks against the U.S. homeland, partners, and interests from regaining safe haven in Afghanistan. To accomplish that goal, U.S. policy is to enable the Afghan government and security forces to defend the country against the insurgency and to govern effectively and transparently. In an August 2017 speech, President Trump articulated an intent to reorient Afghanistan policy around a conditions-based approach, forsaking timelines and public discussion of troop levels and other benchmarks. The strategy articulated by the President also appeared to emphasize pressure on Pakistan to deny safe haven to Afghan militants, as well as an explicit repudiation of past U.S. efforts to "nation-build" in Afghanistan and to build Western-style institutions there. Who Is "The Enemy"? The insurgent challenge to stability in Afghanistan has been sustained by a number of factors, including (1) the small numbers of security forces in many rural areas; (2) logistical and other shortfalls on the part of the ANDSF; (3) safe haven enjoyed by militants in Pakistan; (4) a backlash against civilian casualties caused by military operations; and (5) unrealized public expectations of economic performance and the effectiveness and integrity of Afghan governance. There are numerous insurgent groups in Afghanistan, all of which are generally—although not always—allied with each other. U.S. rules of engagement allow for operations against Al Qaeda, the Islamic State (as of January 2016), and associated groups by affiliation, and against the Taliban and other insurgent groups if they pose an imminent threat to U.S. forces or the ANDSF and the Afghan government (since June 2016). Prior to the June 2016 decision by the Obama administration to loosen rules of engagement, direct U.S. action was limited to defending U.S. and Afghan government forces under imminent threat by the Taliban. In a January 2017 hearing, General Nicholson described the new rules of engagement as "instrumental to our successes." In August 2017, President Trump declared that he would further expand battlefield authorities "to target the terrorist and criminal networks that sow violence and chaos throughout Afghanistan;" exactly which groups that might fall into these categories (and that are not already authorized U.S. military targets) is a subject of some speculation. For additional information on Al Qaeda- and Islamic State-related groups, see CRS In Focus IF10604, Al Qaeda and Islamic State Affiliates in Afghanistan , by [author name scrubbed]. The Taliban The insurgency is still led primarily by the Taliban movement. The death in 2013 of its original leader, Mullah Umar, was revealed in a July 2015 Taliban announcement. In a disputed selection process, he was succeeded by Akhtar Mohammad Mansour, who in turn was killed by a U.S. unmanned aerial vehicle strike on May 21, 2016. Several days later, the Taliban confirmed his death and announced the selection of one of his deputies, Haibatullah Akhunzadeh, as the new Taliban leader. The group announced two deputies: Mullah Yaqub (son of Mullah Umar) and Sirajuddin Haqqani (operational commander of the Haqqani Network). Non-Pashtun Taliban . Some press reports also note that non-Pashtun (e.g. Tajik or Uzbek) anti-government groups are operating in non-Pashtun areas (particularly northern Afghanistan) and are increasingly affiliating themselves with the Taliban; some reports also note new Taliban efforts to recruit among non-Pashtun populations. The Taliban's temporary seizure of the northern city of Konduz in October 2015 was seen by many observers as a consequence of this trend, and a possible harbinger of greater activity in the region. These factions are said to be less ideological than is the core of the Taliban movement in implementing Islamic law and other restrictions in areas under their control. However, the rise of an Islamic State affiliate (see below), many members of which are Uzbek, "constitutes a challenge to the Taleban recruitment strategy among non-Pashtuns." Pakistani Taliban . A major Pakistani group, the Pakistani Taliban (Tehrik-e-Taliban Pakistan, TTP), is now thought to be beset with infighting following a contentious leadership succession in 2013 and number of prominent splits within the organization in 2014. Some TTP fighters reportedly operate from safe havens in Taliban-controlled areas on the Afghan side of the border, where many have defected and joined the nascent Islamic State- Khorasan Province (below). The State Department designated the TTP as an FTO on September 2, 2010. Al Qaeda and Associated Groups In May 1996, shortly before the Taliban entered Kabul, Osama bin Laden relocated from Sudan to Afghanistan, where he had been a recruiter of Arab fighters during the anti-Soviet war. He initially settled in territory in Nangarhar province (near Jalalabad city), but later had freer reign as the Taliban captured additional territory in Afghanistan. After the September 11 attacks, Al Qaeda was largely driven out of Afghanistan by U.S.-supported Afghan forces that ousted the Taliban from power. The post-2014 U.S. counterterrorism mission in Afghanistan focuses largely on Al Qaeda and its affiliates. From 2001 until 2015, Al Qaeda was considered by U.S. officials to have only a minimal presence (fewer than 100) in Afghanistan itself, operating mostly as a facilitator for insurgent groups and mainly in the northeast. However, in late 2015 U.S. Special Operations forces and their ANDSF partners discovered and destroyed a large Al Qaeda training camp in Qandahar Province—a discovery that indicated that Al Qaeda had expanded its presence in Afghanistan. In April 2016, U.S. commanders publicly raised their estimates of Al Qaeda fighters in Afghanistan to 100-300, and said that relations between Al Qaeda and the Taliban are increasingly close. Afghan officials put the number of Al Qaeda fighters in Afghanistan at 300-500. Some have noted cooperation between Al Qaeda and the Taliban, particularly in the east. Until the killing of Bin Laden by U.S. Special Operations Forces in Pakistan on May 1, 2011, there had been frustration within the U.S. government with the search for Al Qaeda's top leaders. In December 2001, in the course of the post-September 11 major combat effort, U.S. Special Operations Forces and CIA operatives reportedly narrowed Bin Laden's location to the Tora Bora mountains (30 miles west of the Khyber Pass), but Afghan militia fighters failed to prevent his escape. U.S. efforts to find remaining senior Al Qaeda leaders reportedly focus on Bin Laden's successor Ayman al-Zawahiri, who is presumed to be on the Pakistani side of the border. A U.S. strike reportedly missed Zawahiri by a few hours in the village of Damadola, Pakistan, in January 2006. Some senior Al Qaeda leaders had been in Iran, including operational chief Sayf al Adl and Sulayman Abu Ghaith, son-in-law of bin Laden and Al Qaeda spokesperson, but both reportedly were forced out of Iran in 2013. Abu Ghaith was subsequently captured by U.S. authorities, but Adl reportedly was traded to Al Qaeda's affiliate in Yemen for Iranians diplomats held there. U.S. efforts have killed numerous other senior Al Qaeda operatives in recent years, including chemical weapons expert Abu Khabab al-Masri (August 2008); two senior operatives allegedly involved in the 1998 embassy bombings in Africa (January 2009); top leaders Attiyah Abd al-Rahman and Abu Yahya al-Libi (killed in Pakistan by reported U.S. drone strikes in 2011 and 2012); operative Abu Bara Al Kuwaiti (October 2014, in Nangarhar Province); and Al Qaeda's commander for northeastern Afghanistan, Faruq Qahtani (October 2016). Al Qaeda Affiliated Groups Some groups that operate in Afghanistan have been affiliated with Al Qaeda. Al Qaeda in the Indian Subcontinent (AQIS) . AQIS is subfaction of Al Qaeda based in and including members from various terrorist groups in the countries of South and Central Asia. Its formation was announced by Zawahiri in 2014. In June 2016, the State Department designated the group as an FTO and its leader, Asim Umar, as a specially-designated global terrorist. Islamic Movement of Uzbekistan (IMU). The Islamic Movement of Uzbekistan (IMU) originated as a militant group active primarily against the authoritarian government in Uzbekistan. In Afghanistan, the IMU has been affiliated with Al Qaeda, although some of its fighters have realigned with the Islamic State branch there. The group is active throughout northern Afghanistan and some of its estimated 300 fighters in Konduz Province took part in the September 2015 capture of Konduz city. The IMU contingent in Afghanistan reportedly is led by Qari Balal, who escaped from a Pakistani jail in 2010. A splinter group, the Jamaat Ansarullah, is active in Central Asia and northern Afghanistan. Lashkar-e-Tayyiba. A Pakistani Islamist militant group said to be increasingly active inside Afghanistan is Laskhar-e-Tayyiba (LET, or Army of the Righteous). LET was initially focused on operations against Indian control of Kashmir, but reportedly is increasingly active elsewhere in South Asia and elsewhere. The State Department has stated that the group was responsible for the May 23, 2014, attack on India's consulate in Herat. Lashkar-i-Janghvi. Another Pakistan-based group that is somewhat active in Afghanistan is Lashkar-i-Janghvi. It has conducted some suicide attacks in Afghanistan and was accused of several attacks on Afghanistan's Hazara Shiite community during 2011-2012. Harakat ul-Jihad Islami (Movement of Islamic Jihad) is a Pakistan-based militant group that trained in Al Qaeda camps. Its former leader, Ilyas Kashmiri, was killed in U.S. drone strike in June 2011. He had earlier been indicted in the United States for supporting LET operative David Coleman Headley, who planned a terrorist attack on Danish newspaper Jyllands-Posten . The Islamic State-Khorasan Province (ISKP) An Islamic State affiliate—Islamic State-Khorasan Province (ISKP, often also referred to as Islamic State of Iraq and the Levant-Khorasan, ISIL-K), named after an area that once included parts of what is now Iran, Afghanistan, and Pakistan—has been active in Afghanistan since mid-2014. ISKP was named as a Foreign Terrorist Organization (FTO) by the State Department on January 14, 2016. Islamic State leader Abu Bakr al-Baghdadi reportedly lived in Kabul during the Taliban regime and cooperated with Al Qaeda there. The group's presence in Afghanistan has crystallized from several small Afghan Taliban and other militant factions—such as Da Fidayano Mahaz and Tora Bora Mahaz—that announced affiliation with the organization in 2013. The Islamic State presence grew further as additional Taliban factions defected to the group and captured some small areas primarily in eastern Afghanistan. Its members also reportedly include former fighters of the Taliban faction in Pakistan, which is discussed above. Afghan affiliates of the Islamic State have reportedly received financial assistance from the core organization located in the self-declared "caliphate" in parts of Iraq and Syria. U.S. commanders narrowed their estimate of ISKP fighters in Afghanistan to 1,200-1,300 in September 2016 and again to 700 in April 2017. U.S. officials say the Islamic State's goal in Afghanistan is to expand its presence further in northeastern Afghanistan (where it is reportedly active in Jowzjan and Sar-i-Pol provinces) and Qandahar. To address the ISKP threat, as of December 2015 U.S. commanders have authorization to combat ISKP fighters by affiliation, whether or not these fighters pose an immediate threat to U.S. and allied forces. According to General Nicholson on September 23, 2016, cited above, U.S. airstrikes and other combat against ISKP had reduced the group's primary presence to one province, Nangarhar, and their fighters by approximately 25 percent. The group's leaders have repeatedly been targeted by U.S. operations, with three killed in less than a year: Hafiz Saeed Khan died in a July 2016 U.S. airstrike and successors Abdul Hasib and Abu Sayed were killed in April and July 2017, respectively. Still, ISKP has survived these leadership deaths and appears to be a growing factor in U.S. and Afghan strategic planning. ISKP was the target of the much publicized April 2017 use of a GBU-43 (also known as a Massive Ordnance Air Blast, or MOAB), the first such use of the weapon in combat. Of the ten U.S. battlefield casualties in 2017 (as of August), seven were killed in anti-ISKP operations. At least two CIA personnel have also been killed in clashes with ISKP in 2017. Press reports indicate that Afghans consider the Taliban's practices in areas of their control as moderate compared to the brutality practiced by Islamic State adherents. ISKP and Taliban fighters have sometimes clashed over control over territory or because of political or other differences. However, at least one Afghan source claims that the two groups conducted a joint operation in Sar-i-Pol province in August 2017 (a claim the Taliban denied), perhaps an indication of the increasingly fluid and complex militant landscape in the north. ISKP has claimed responsibility for a number of large-scale attacks, particularly in Kabul, including multiple bombings targeting Afghanistan's Shi'ite minority and armed assaults against government targets. Haqqani Network The "Haqqani Network," founded by Jalaludin Haqqani, a mujahedin commander and U.S. ally during the U.S.-backed war against the Soviet occupation, is often cited by U.S. officials as a potent threat to U.S. and allied forces and interests, and a "critical enabler of Al Qaeda." Jalaluddin Haqqani served in the Taliban regime as Minister of Tribal Affairs, and his network has fought against the current Afghan government. Over the past few years, Jalaludin's son Sirajuddin has largely taken over the group's operations and has become increasingly influential in setting overall insurgency strategy. As noted above, Sirajuddin remains deputy leader of the Taliban under the new leader, Mullah Akhunzadeh. Two of Sirajuddin's brothers, Badruddin and Nasruddin, were killed by U.S. and Pakistani operations in 2012-2013. Another, Anas, is held by the Afghan government and has been sentenced to death. Some see the Haqqani Network as on the decline. The Haqqani Network had about 3,000 fighters and supporters at its zenith during 2004-2010, but it is believed to have far fewer currently. However, the network is still capable of carrying out operations, particularly in Kabul city, where it allegedly carried out the devastating May 2017 bombing in Kabul's diplomatic district that left over 150 dead and sparked violent protests against the government. The network earns funds through licit and illicit businesses in the areas of Afghanistan where it has a presence as well as in Pakistan and the Persian Gulf. The group apparently has turned increasingly to kidnapping to perhaps earn funds and publicize its significance. It reportedly holds two professors (Timothy Weeks, an Australian, and American citizen Kevin King, who is reportedly seriously ill) kidnapped from the American University of Afghanistan in August 2016; and a journalist (Paul Overby) seized in 2014 after crossing into Afghanistan to try to interview the Haqqani leadership. American citizen Caitlan Coleman, along with her Canadian husband Joshua Boyle and the three children to whom she gave birth during the family's five-year captivity, were freed in October 2017 by what the Pakistani military called an "intelligence-based operation" conducted in conjunction with the United States. Suggesting it often acts as a tool of Pakistani interests, the Haqqani network has targeted several Indian interests in Afghanistan. The network claimed responsibility for two attacks on India's embassy in Kabul (July 2008 and October 2009), and is widely suspected of conducting the August 4, 2013, attack on India's consulate in Jalalabad. U.S. officials also attributed to the group the June 28, 2011, attack on the Intercontinental Hotel in Kabul; a September 10, 2011, truck bombing in Wardak Province (which injured 77 U.S. soldiers); and attacks on the U.S. Embassy and ISAF headquarters in Kabul on September 13, 2011. Then Joint Chiefs of Staff Chairman Mullen, following September 2011 attacks on U.S. Embassy Kabul, testified (Senate Armed Services Committee, September 22, 2011) that the Haqqani network acts "as a veritable arm" of the Pakistan's Inter-Services Intelligence Directorate (ISI). Other U.S. officials issued more cautious versions of that assertion. Some reports also attribute to the group a major January 10, 2017, attack at the Qandahar governor's compound that killed at least six UAE diplomats, including the UAE ambassador to Afghanistan, and several Afghan officials. Haqqani commanders have told journalists that the Haqqani Network would participate in a political settlement with the Afghan government if the Taliban decided to accept such an agreement. However, the faction's participation in a settlement could potentially be complicated by its designation as an FTO under the Immigration and Naturalization Act. That designation was made on September 9, 2012, after the 112 th Congress enacted S. 1959 (Haqqani Network Terrorist Designation Act of 2012, P.L. 112-168 ), that required an Administration report on whether the group meets the criteria for FTO designation. Insurgent Tactics Insurgent groups often shift their tactics and targets to accomplish a variety of objectives. In addition to straightforward combat, insurgent groups have made use of improvised explosive devices (IEDs), surface-to-air missiles, suicide bombs hidden in clothing, and "insider attacks" using infiltrators or recruiting sympathizers among the ANDSF. Suicide bombers killed former President Rabbani on September 20, 2011, and then-President Karzai's cousin Hashmat Karzai on July 29, 2014. Insider attacks were particularly frequent in 2012 constituting nearly half of the approximately 100 that outside groups have assessed to have occurred to date. In August 2014, an insider attack killed Major General Harold Greene during his visit to a prestigious Afghan military academy. U.S. commanders have said they have verified some use of surface-to-air missiles, although missiles apparently were not used in the Taliban's downing of a U.S. Chinook helicopter that killed 30 U.S. soldiers on August 6, 2011. In January 2010, then-President Karzai issued a decree banning importation of fertilizer chemicals (ammonium nitrate) commonly used for the roadside bombs, but there reportedly is informal circumvention of the ban for certain civilian uses, and the material still comes into Afghanistan from production plants in Pakistan. It has also been reported that U.S. arms provided to the Afghan military have, through both corruption and battlefield losses, been obtained by the Taliban; these weapons, including Humvees and night vision devices, have reportedly given Taliban forces an advantage in some provinces over less-well armed ANDSF units. Insurgent Financing: Narcotics Trafficking and Other Methods64 All of the insurgent groups in Afghanistan benefit, at least in part, from narcotics trafficking. However, the adverse effects are not limited to funding insurgents; the trafficking also undermines rule of law within government ranks. The trafficking generates an estimated $70 million-$100 million per year for insurgents—perhaps about 25% of the insurgents' budgets that is estimated by some U.N. officials at about $400 million. In November 2017, the United Nations reported that the total area used for poppy cultivation in 2017 was 328,000 hectares, an increase of 63% from 2016 and 46% higher than the previous record in 2014; similarly, opium production increased by 87%. Taliban drug production facilities are a major new focus of the Trump Administration's strategy in Afghanistan, and late 2017 has seen a number of high-profile strikes on Taliban narcotics laboratories and other related sites. For a detailed analysis of narcotics issue and U.S. and coalition counternarcotics efforts, see CRS Report R43540, Afghanistan: Drug Trafficking and the 2014 Transition , by [author name scrubbed] and [author name scrubbed]. The Obama Administration sought to reduce other sources of Taliban funding, including continued donations from wealthy residents of the Persian Gulf. On June 29, 2012, the Administration sanctioned (by designating them as terrorism supporting entities under Executive Order 13224) two money exchange networks ( hawalas ) in Afghanistan and Pakistan allegedly used by the Taliban to move its funds earned from narcotics and other sources. The Anti-Taliban Military Effort: 2003-2009 During 2003 to mid-2006, U.S. forces and Afghan troops fought relatively low levels of insurgent violence with focused combat operations mainly in the south and east where ethnic Pashtuns predominate. These included "Operation Mountain Viper" (August 2003); "Operation Avalanche" (December 2003); "Operation Mountain Storm" (March-July 2004); "Operation Lightning Freedom" (December 2004-February 2005); and "Operation Pil" (Elephant, October 2005). By late 2005, U.S. and partner commanders considered the insurgency mostly defeated and NATO/ISAF assumed lead responsibility for security in all of Afghanistan during 2005-2006. The optimistic assessments proved misplaced when violence increased significantly in mid-2006. NATO-led operations during 2006-2008 cleared key districts but did not prevent subsequent reinfiltration. Nor did preemptive combat and increased development work produce durable success. Taking into account security deterioration, the United States and its partners increased force levels. U.S. troop levels started 2006 at 30,000 and increased to 39,000 by April 2009. Partner forces also increased during that period to 39,000 at the end of 2009—rough parity with U.S. forces. In September 2008, the U.S. military and NATO each began strategy reviews, which were briefed to the incoming Obama Administration. Obama Administration Policy: "Surge," Transition, and Drawdown Upon taking office, the Obama Administration articulated that the Afghanistan mission was a high priority, but that the U.S. level of effort there needed to be reduced over time. The Administration integrated the late 2008 policy reviews into a 60-day inter-agency "strategy review," chaired by South Asia expert Bruce Riedel and co-chaired by then-SRAP Holbrooke and then-Under Secretary of Defense for Policy Michele Flournoy. President Obama announced a "comprehensive" strategy on March 27, 2009, that announced deployment of an additional 21,000 U.S. forces. In June 2009, General Stanley McChrystal, who headed U.S. Special Operations forces from 2003 to 2008, replaced General McKiernan as top U.S. and NATO commander in Afghanistan. In August 2009, General McChrystal delivered a strategy assessment that recommended that the goal of the U.S. military should be to protect the population rather than to focus on searching out and combating Taliban concentrations, warning of the potential for "mission failure" in the absence of a fully resourced, comprehensive counterinsurgency strategy. His assessment stated that about 44,000 additional U.S. combat troops would be needed to provide the greatest chance for success. The assessment set off debate within the Administration and another policy review. Some senior U.S. officials argued that adding many more U.S. forces could produce a potentially counterproductive sense of "U.S. occupation." President Obama announced the following at West Point academy on December 1, 2009: That 30,000 additional U.S. forces (a "surge") would be sent to "reverse the Taliban's momentum" and strengthen the ANDSF. The addition brought U.S. force levels to 100,000, with most of the additional forces deployed to the south. Beginning in July 2011, there would be a transition to Afghan security leadership and a corresponding drawdown of U.S. forces. The Administration argued this transition would focus the Afghan government on training its own forces. To address Afghan concerns that the deadline signaled decreasing U.S. involvement, a November 2010 NATO summit in Lisbon decided on a gradual transition to Afghan leadership that would be completed by the end of 2014. When the surge was announced, the Afghan Interior Ministry estimated that the government controlled about 30% of the country, while insurgents controlled 4% (13 out of 364 districts) and influenced or operated in another 30%, and tribes and local groups with varying degrees of loyalty to the central government controlled the remainder. The Taliban had named "shadow governors" in 33 out of 34 of Afghanistan's provinces, although some were merely symbolic. Transition and Drawdown: Afghans in the Lead, 2011-2014 The surge was assessed as having reduced areas under Taliban control substantially and the transition to Afghan security leadership began on schedule in July 2011. The process culminated with June 18, 2013, U.S. and Afghan announcements that Afghan forces were now in the security lead throughout Afghanistan. In concert with the transition, and asserting that the killing of Osama Bin Laden represented a key accomplishment of the core U.S. mission, on June 22, 2011, President Obama announced that U.S. force levels would fall to 90,000 (from 100,000) by the end of 2011. That U.S. force levels would drop to 68,000 by September 2012. In the February 12, 2013, State of the Union message, President Obama announced that the U.S. force level would drop to 34,000 by February 2014, which subsequently occurred. Partner countries drew down their forces at roughly the same rate and proportion as the U.S. drawdown, despite public pressure in the European countries to end or reduce military involvement in Afghanistan. During 2010-2012, the Netherlands, Canada, and France, respectively, ended their combat missions, but they continued to train the ANDSF until the end of 2014. As noted in Table 12 , several countries are contributing trainers and advisers to the Resolute Support Mission. Resolute Support Mission (RSM) and Further Drawdowns As international forces were reduced in 2014, Afghan and international officials expressed uncertainty about U.S. and partner plans for the post-2014 period. On May 27, 2014, President Obama clarified Administration plans by announcing the size of the post-2014 U.S. force and plan for a U.S. military exit. Asserting that a full U.S. military departure from Afghanistan would continue to focus the Afghans on improving their skills, the President announced in May 2014 The U.S. military contingent in Afghanistan would be 9,800 in 2015, deployed in various parts of Afghanistan, consisting mostly of trainers in the "Resolute Support Mission" (RSM). About 2,000 of the U.S. force would be Special Operations Forces, of which half would conduct counterterrorism missions. The U.S. military renamed the Afghanistan and related operations "Operation Freedom's Sentinel"—replacing the post-September 11 mission Operation Enduring Freedom. The U.S. force would decline to about 5,000 by the end of 2016 and to consolidate in Kabul and at Bagram Airfield. After 2016, the U.S. military presence would be consistent with normal security relations with Afghanistan (about 1,000 military personnel) under U.S. Embassy authority (without a separate military chain of command in country). Their mission would be to protect U.S. installations, process Foreign Military Sales (FMS) of weaponry to Afghanistan, and train the Afghans on that weaponry. During 2014, the United States and its partners prepared for the end of the ISAF mission. U.S. airpower in country was reduced, ISAF turned over the vast majority of the about 800 bases to the ANDSF, and the provincial reconstruction teams (PRTs) were turned over to Afghan institutions. Adjustments to Force Levels in Light of Security Deterioration U.S. and other concerns about the post-2014 drawdown plan intensified after the June 2014 offensive in Iraq by Islamic State fighters. Critics of Administration plans for Afghanistan force levels asserted that the decision to leave no significant residual troop force in Iraq after 2011 contributed to the growth of the Islamic State there, and that similar events could happen in Afghanistan if U.S. forces leave. Despite assertions by U.S. commanders that the ANDSF is performing well despite taking heavy casualties, concerns of U.S. commanders and outside observers have grown since early 2015. The Taliban has made gains in Helmand Province, and the Taliban's week-long capture of Konduz city in September 2015 was the first seizure of a significant city since the Taliban regime fell in 2001. It has captured parts of that city and encroached on population centers in several parts of southern and eastern Afghanistan since, although many such gains were quickly reversed by the ANDSF. Chairman of the Joint Chiefs of Staff Joseph Dunford testified in September 2016 that the battlefield situations represented "roughly a stalemate," an assessment that was echoed by General Nicholson in February 2017 and again in November 2017. Growing Taliban gains were further highlighted with their purported capture of Helmand's Sangin district in March 2017, though some Afghan and U.S. officials disputed that narrative and described the actions as a preplanned, orderly withdrawal. Sangin is important both strategically, as a link between Helmand and Qandahar, and symbolically, as one of the most deadly districts in all of Afghanistan- according to The New York Times , " more British troops and, later, American marines died in Sangin than in any of Afghanistan's roughly 400 districts" through 2013. By most measures, the amount of territory controlled or contested by the Taliban has grown in recent years, and that trend may be accelerating. In December 2016, General Nicholson estimated that 64% of the Afghan population lived under government control, a decrease from September 2016 when he put the figure at 68-70%. According to the most recent SIGAR report (October 2017), just under 60% of Afghan districts are under government control or influence. In the past several months, multiple U.S. commanders have warned of increased levels of assistance, and perhaps even material support, for the Taliban from Russia and Iran. Both nations were opposed to the Taliban government of the late 1990s, but reportedly see the Taliban as a useful point of leverage vis-a-vis the United States. Russia and Iran publicly cite the growth of IS-aligned fighters in Afghanistan (more below) to justify their involvement, though in some cases their assessments of IS strength far outpace those offered by U.S. and Afghan officials. Still, no U.S. official has publicly assessed that the insurgency, by itself, poses a threat to overturn the Afghan governing structure. And, the killing of Taliban leader Mullah Mansour by a U.S. strike in May 2016 demonstrates Taliban vulnerabilities to U.S. intelligence and combat capabilities, although it has not to date had a measurable effect on Taliban effectiveness. Alterations to the 2016-2017 Drawdown Schedule and Rules of Engagement Concerns about insurgent gains have led to several alterations to the U.S. mission in recent years under both the Obama and Trump Administrations. On March 24, 2015, in concert with the visit to Washington, DC, of Ghani and Abdullah, the President announced that U.S. forces would remain at a level of about 9,800 for all of 2015, rather than reduce to 5,500 by the end of the year, as originally announced. In January 2016, U.S. commanders in Afghanistan were authorized to attack ISKP forces by affiliation, as noted above. In June 2016, the President authorized U.S. forces to conduct preemptive combat. According to Secretary of Defense Carter on July 12, 2016, U.S. forces can now "anticipate battlefield dynamics and ... deploy and employ their forces together [with the ANDSF] in a way that stops a situation from deteriorating; interrupts an enemy in the early stages of planning and formulating an attack." Some have also interpreted this authority as additional latitude to use more airstrikes. On July 6, 2016, President Obama again adjusted planned U.S. force levels, stating that U.S. force levels would drop to 8,400 at the end of 2016—and not drop to the 5,500 that was previously announced. The announcement took into account General Nicholson's initial assessment, which he reportedly submitted to his superiors in June 2016. The announcement differed from Section 1215 of the House-passed FY2017 Defense Authorization Act ( H.R. 4909 ) that expressed the sense of Congress to keep U.S. troop levels in Afghanistan at 9,800 after 2016. The communique of the NATO summit in Warsaw, Poland (July 8-9, 2016), announced that other NATO countries would continue to support RSM beyond 2016, both with force contributions and donations to the ANDSF (the latter until 2020). No numbers were specified in the declaration, but the announcement appeared to imply that other countries would continue to contribute a total of about 6,000 forces to RSM and about $1.25 billion per year to the ANDSF. Developments During the Trump Administration At a February 2017 Senate Armed Services Committee hearing, General Nicholson indicated that the United States has a "shortfall of a few thousand" troops that, if fulfilled, could help break the "stalemate." He further clarified that while the number of Special Operations forces is sufficient to conduct operations, more troops are needed for advising and training Afghan forces, particularly at lower levels in the chain of command. Initial reports indicated that the Trump Administration was likely to approve Nicholson's request, in whole or in part, while perhaps also indicating that more U.S. forces will not, in and of themselves, resolve the Afghanistan conflict. However, an NSC-led review of U.S. strategy that included plans for more troops was reportedly held up due to disagreements within the administration over the path forward in Afghanistan. Some expressed skepticism that a few thousand more troops could meaningfully impact dynamics on the ground, pointing to previous 'surges' that did not do so, and raised concerns about an open-ended U.S. commitment in a country where U.S. troops have already been deployed for nearly two decades. Others countered that the relative cost of the U.S. commitment in Afghanistan is a worthy investment when viewed against the cost of a terrorist attack U.S. forces' absence could allow, comparing it to "term-life insurance." The Pentagon long reported the number of U.S. troops in Afghanistan at the authorized level of 8,400, but in August 2017 it was reported that the actual figure, due to units rotating in and out of theater, is actually between 11,000 and 12,000 on any given day. Secretary Mattis seemed to confirm this discrepancy when he stated a need that same month to "account for everyone that is on the ground there now" before approving new troops; the level was officially confirmed by the Pentagon in August 2017. President Trump delegated the authority to set force levels, reportedly limited to around 3,900 additional troops, in June 2017. As of November 2017, those additional forces (all of which are dedicated to RSM) have arrived in Afghanistan, putting the total number of troops in the country at around 15,000. NATO also announced plans that month to increase its own forces in Afghanistan by around 3,000, bringing the RSM level to about 16,000. In a national address on August 21, 2017, President Trump announced a "new strategy" for Afghanistan and South Asia that includes several pillars: abandoning timetables in favor of a conditions-based approach; integrating diplomatic and economic assets into the military effort; and a revised regional approach that features a more aggressive stance toward Pakistan and further development of a strategic partnership with India. Some of these elements appear similar to facets of the Obama Administration's approach. Despite widespread expectations that he would describe specific elements of his new strategy, particularly the prospects for additional troops, President Trump declared "we will not talk about numbers of troops or our plans for further military activities." Some have criticized the strategy as "short on details" and argue that its focus on diplomatic engagement is contradicted by the deep cuts the administration has proposed to the State Department. Others welcomed the decision, contrasting it favorably with proposed alternatives such as a full withdrawal of U.S. forces (which President Trump conceded was his "original instinct") or heavy reliance on contractors. Beyond additional troops, the strategy also features broader authority for U.S. forces to operate independently of Afghan forces and "attack the enemy across the breadth and depth of the battle space," expanding the list of targets to include those related to "revenue streams, support infrastructure, training bases, infiltration lanes." This was demonstrated in a series of strikes against Taliban drug labs in Helmand province in late 2017. Those strikes, highlighted by U.S. and Afghan officials, have sought to combat what is widely viewed as one of the Taliban's most important sources of revenue, namely the cultivation, production, and trafficking of narcotics. Operations have been carried out by U.S. B-52 and F-22 combat aircraft (the first use of the latter in combat in Afghanistan) alongside Afghan A-29s. General John Nicholson, the U.S. commander in Afghanistan, has cited both new troops and expanded authorities in saying that, with the new strategy, "we've set all the conditions to win." Bilateral Security Agreement (BSA) The post-2014 U.S. military presence is based on a Bilateral Security Accord (BSA), which includes the U.S. demand for legal immunities for U.S. forces in Afghanistan. The immunity was authorized by a special loya jirga in November 2013 . On September 30, 2014, almost immediately after Ghani took office, the BSA—as well as a similar document providing for the presence of NATO forces—was signed between then U.S. Ambassador Cunningham and National Security Advisor Mohammad Hanif Atmar. Afghanistan's parliament ratified the BSA in late November 2014, and it was considered by the Administration as an executive agreement and was not submitted for U.S. Senate ratification. During the March 2015 visit of Ghani and Abdullah, the Administration announced that the U.S and Afghan governments agreed to form the bilateral Joint Commission stipulated by the BSA to oversee its implementation. Strategic Partnership Agreement (SPA) The BSA followed a broader "Strategic Partnership Agreement" (SPA) signed by President Obama and President Karzai in Afghanistan on May 1, 2012. The SPA, which terminates at the end of 2024, signaled an extended U.S. commitment to Afghan stability. It was signed after a long negotiation that focused on resolving Afghan insistence on control over detention centers and a halt to or control over nighttime raids on insurgents by U.S. forces. Major SPA provisions include A commitment to continue to foster U.S.-Afghan "close cooperation" to secure Afghanistan. This strongly implied, but did not state outright, that U.S. troops would remain in Afghanistan after 2014, but no U.S. troop number was specified. A U.S. commitment to request appropriations to provide training and arms to the Afghan security forces. No dollar amounts or weapons systems were specified. U.S. designation of Afghanistan as a "Major Non-NATO Ally," a designation reserved for close U.S. allies. In keeping with that pledge, on July 7, 2012, then-Secretary Clinton announced that designation, opening Afghanistan to extensive defense research cooperation with the United States and facilitating U.S. training and leasing of defense articles to Afghanistan. A U.S. pledge not to establish "permanent" U.S. bases or use Afghan facilities against neighboring countries. The agreement allows long-term U.S. use of Afghan facilities. Successive National Defense Authorizations have contained provisions prohibiting the establishment of permanent U.S. bases in Afghanistan. A U.S. commitment to request economic aid for Afghanistan for the duration of the agreement (2014-2024). No dollar amounts were specified. A commitment to form a U.S.-Afghanistan Bilateral Commission to monitor implementation of the SPA. Secretary of State Kerry's visit to Kabul on April 9, 2016, was partly to reconvene the commission after a three-year hiatus. The final SPA was ratified by the Afghanistan National Assembly on May 26, 2012, by a vote of 180-4 after previous approval by a loya jirga called by Karzai. Building Afghan Forces and Establishing Rule of Law Key to the security of Afghanistan is the effectiveness of the ANDSF, which consists primarily of the Afghan National Army (ANA) and Afghan National Police (ANP). Among the major concerns raised in DOD and other reports are (1) absenteeism and the fact that about 35% of the force does not reenlist each year, and the rapid recruitment might dilute the force's quality; (2) widespread illiteracy within it, which prompted an increasing focus on providing literacy training (as of 2010); (3) casualty rates that U.S. commanders call "unsustainable," including over 6,700 combat deaths in 2016 (up from 5,500 the previous year), (4) inconsistent leadership that sometimes causes Afghan commanders to overestimate insurgent strength or to panic at the first sign of insurgent assault; and (5) a deficit of logistical capabilities, such as airlift, medical evacuation, resupply, and other associated functions. Many units also still suffer from a shortfall in weaponry, spare parts, and fuel. Some key metrics related to ANDSF performance, such as casualties, attrition rates, and personnel strength, were newly classified by U.S. Forces-Afghanistan (USFOR-A) in the October 2017 SIGAR quarterly report; SIGAR previously published those and related metrics as part of its quarterly reports. The training component of RSM supersedes the prior training institutions such as the "Combined Security Transition Command-Afghanistan" (CSTC-A) and the NATO Training Mission-Afghanistan (NTM-A). In 2012, CSTC-A's mission was reoriented to building the capacity of the Afghan Defense and Interior Ministries and to provide financial resources to the ANDSF. CSTC-A pays the salaries of the ANA and provides financial and advisory input to the Law and Order Trust Fund for Afghanistan (LOTFA), discussed below, that pays the Afghan police. Size and Other Features of the ANDSF On January 21, 2010, a joint U.N.-Afghan "Joint Coordination and Monitoring Board" (JCMB) decided that the ANA would expand to 171,600 and the ANP to about 134,000, (total ANDSF of 305,600) before the end of 2011. In August 2011, a larger target size of 358,000 (196,000 ANA and 162,000 ANP) was set, to be reached by November 2012. The size of the forces—which do not include the approximately 30,000 local security forces discussed below—is about 330,000, roughly 8% below target levels. Both higher and lower ANDSF target sizes (378,000 and 228,000) were discussed within NATO but not adopted over various concerns. Ethnic Composition of the ANDSF . After the 2001 ousting of the Taliban regime, Northern Alliance (see above) figures took key security positions and weighted recruitment toward ethnic Tajiks. Many Pashtuns, in reaction, refused recruitment, but the naming of a Pashtun as Defense Minister in December 2004 mitigated that difficulty. The problem was further alleviated with better pay and other reforms, and the force composition is now roughly in line with that of the Afghan population. Tajiks are still slightly overrepresented in the command ranks. Some of the difficulties in forming a new cabinet after the NUG was formed in September 2014 concerned maintaining ethnic balance in the leadership of security institutions. Literacy Issues . Regarding literacy, the U.S. goal was to have all ANDSF have at least first-grade literacy, and half to have third-grade literacy, by the end of 2014. It is unclear whether those goals were met, though literacy in the ANDSF has been improved by the program, by some accounts. However, a SIGAR audit from January 2014 cautioned that the goals were "unrealistic" and "unattainable" given authorized force levels, and warned that efforts to measure the effectiveness of ANDSF literacy programs were limited. ANDSF Funding It costs an estimated $5 billion per year to fund the ANDSF. The Administration contributed $4.1 billion for the ANDSF for FY2015 and $3.65 billion for FY2016 (Consolidated Appropriation for FY2016, P.L. 114-113 )—slightly lower than the $3.75 billion requested by the Administration. For FY2017, the Obama Administration requested about $3.45 billion for the ANDSF. At the NATO summit in Warsaw in July 2016, U.S. partners pledged $1 billion annually for the ANDSF during 2017-2020. Afghanistan is assessed by U.S. officials as contributing its pledged funds—$500 million (as calculated in Afghan currency)—despite budgetary difficulties. U.S. funding is authorized yearly in the National Defense Authorization. The FY2017 NDAA ( S. 2943 , P.L. 114-328 ) extended authority to provide Afghan Security Forces Funding (ASFF) for the ANDSF, and both bills set as a goal the use of $25 million to increase the recruitment of women to the ANDSF. NATO Trust Fund for the ANA and Law and Order Trust Fund for the ANP Some of the donations for the ANDSF are channeled through Trust Funds. In 2007, ISAF set up a Trust Fund for the ANA, used to fund the transportation of donated military equipment and training of the ANA. The fund's mandate was expanded in 2009 to include sustainment costs and in 2010 to support literacy training for the ANA. Since inception, 26 donor nations have given the ANA Trust Fund over $1.5 billion, according to the DOD report on Afghanistan issued in June 2016. There is also a separate "Law and Order Trust Fund for Afghanistan" (LOTFA), run by the U.N. Development Program (UNDP). It pays salaries of the ANP as well as food costs. Since 2002, donors have contributed $4.96 billion to the Fund, of which the United States contributed about $1.7 billion. Japan contributes about $250 million per year and South Korea contributes about $100 million per year. The fund is in the process of transition from management by UNDP to the Afghan government. Other Bilateral Donations . Other bilateral donations to the ANDSF, both in funds and in arms and equipment donations, include the "NATO Equipment Donation Program" through which donor countries supply the ANDSF with equipment. Since 2002, over $3 billion in assistance to the ANDSF has come from these sources. There is also a NATO-Russia Council Helicopter Maintenance Trust Fund. Launched in March 2011, this fund provides maintenance and repair capacity to the Afghan Air Force helicopter fleet, much of which is Russian-made. The Afghan National Army (ANA) The Afghan National Army has been built "from scratch" since 2002—it is not a direct continuation of the national army that existed from the 1880s until the Taliban era. That army disintegrated entirely during the 1992-1996 mujahedin civil war and the 1996-2001 Taliban period. The ANA is reportedly highly regarded by Afghans as a symbol of nationhood and factional nonalignment. Of its authorized size of 195,000, the ANA (all components) has about 170,000 personnel. Its special operations component, trained by U.S. Special Operations Forces, numbers nearly 21,000, and U.S. commanders say it might be one of the most proficient special forces in the region. Afghan special forces are utilized extensively to reverse Taliban gains, and their efforts reportedly make up 70 to 80 percent of the fighting. The problem of absenteeism within the ANA is in large part because soldiers do not serve in their provinces of residence. Many in the ANA take long trips to their home towns to remit funds to their families. However, absenteeism has eased somewhat in recent years because almost all of the ANA is now paid electronically. The United States and other donors have given the ANA primarily light weapons rather than large numbers of heavy arms such as tanks. The ANA operates a few hundred Russian-built T-55 and T-62 tanks left over from the Soviet occupation. The United States is also helping the ANDSF build up an indigenous weapons production capability. However, in line with U.S. efforts to cut costs for the ANDSF, the Defense Department shifted in 2013 from providing new equipment to maintaining existing equipment. Afghan Air Force (AAF) Afghanistan's Air Force is emerging as a key component of the ANDSF's efforts to combat the insurgency. It has been mostly a support force but, since 2014, has progressively increased its bombing operations in support of coalition ground forces, mainly using the Brazil-made A-29 Super Tucano discussed below. The force is a carryover from the Afghan Air Force that existed prior to the Soviet invasion, and its equipment was virtually eliminated in the 2001-2002 U.S. combat against the Taliban regime. It has about 8,400 personnel, matching its target size. Since FY2010, the United States has obligated over $3.2 billion for the AAF, including nearly $1 billion for equipment and aircraft. Still, equipment, maintenance, logistical difficulties, and defections continue to plague the Afghan Air Force. The Afghan Air Force has about 104 aircraft including four C-130 transport planes and 46 Mi-17 (Russian-made) helicopters. The target size of its fleet is 140 total aircraft. Defense Department purchases for the AAF of 56 Mi-17s has been mostly implemented to date. The AAF also has taken delivery of the first eight out of 20 A-29 Super Tucano aircraft that it has purchased. Other platforms available to the AAF include the MD-530 helicopter, and 3 Cheetah helicopters donated by India. The FY2016 Consolidated Appropriation ( P.L. 114-113 ) prohibits U.S. funding of any additional C-130s (acquisition of four more is planned by the AAF) until DOD provides a report on Afghanistan's airlift requirements, a provision maintained in Sec. 9020 of the FY2017 Consolidated Appropriations Act ( P.L. 115-31 ). U.S. plans do not include supply of fixed-wing combat aircraft such as F-16s, which Afghanistan wants to acquire eventually, according to U.S. officials. Afghanistan also is seeking the return of 26 aircraft, including some MiG-2s that were flown to safety in Pakistan and Uzbekistan during the past conflicts in Afghanistan. In 2010, Russia and Germany supplied MI-8 helicopters to the Afghan Air Force. Afghan National Police (ANP) U.S. and Afghan officials believe that a credible and capable national police force is critical to combating the insurgency. DOD reports on Afghanistan assess that there have been "significant strides [that] have been made in professionalizing the ANP." However, many outside assessments of the ANP are negative, asserting that there is rampant corruption to the point where citizens mistrust and fear the ANP. DOD reports acknowledge that the force has a far higher desertion rate (about 2% a month) than does the ANA; substantial illiteracy; and involvement in local factional or ethnic disputes because the ANP works in the communities its personnel come from. The target size of the ANP, including all forces under the ANP umbrella (except the Afghan Local Police), is 162,000 personnel. The force has about 154,000 personnel. About 3,110 ANP are women, and in January 2014—for the first time—a woman was appointed as a district police commander. The ANP is increasingly being provided with heavy weapons and now have about 5,000 armored vehicles countrywide. Still, most police units lack adequate ammunition and vehicles. In some cases, equipment requisitioned by their commanders was sold and the funds pocketed by the police officers. The U.S. police training effort was first led by State Department/Bureau of International Narcotics and Law Enforcement (INL), but DOD took over the lead role in April 2005. Police training has been highlighted by SIGAR and others as a potentially problematic area where greater interagency cooperation is needed. Supplements to the National Police: Afghan Local Police (ALP) and Others In 2008, the failure of several police training efforts led to a decision to develop local forces to protect their communities, despite long-standing hesitance to recreate militias prone to committing abuses and arbitrary execution of justice. To try to mitigate that risk, the United States and Afghanistan placed the newly empowered local forces firmly under Afghan Ministry of Interior control. Among these forces (which are in addition to the ANP forces) are the following: Afghan Local Police (ALP) . The ALP concept grew out of earlier programs. In 2008, the "Afghan Provincial Protection Program," funded with DOD (CERP) monies, was implemented in a district of Wardak Province in 2009 with 100 recruits, and was eventually expanded to 1,200 personnel. U.S. commanders said that weapons were supplied to the militias by the Afghan government, using U.S. funds. Participants were given $200 per month in salary. In February 2010, a similar effort called Village Stability Operations (VSO) began in Qandahar Province when U.S. Special Operations Forces organized about 25 villagers into a local armed watch group. The program was expanded in 2012 into the ALP program in which the U.S. Special Operations Forces set up and trained local security organs of about 300 members each, under the control of district police chiefs. Each fighter is vetted by local elders as well as Afghan intelligence. The current number of ALP members (known as "guardians") is around 29,000, close to the Defense Department's target of 30,000. The ALP have the authority to detain criminals or insurgents temporarily, and transfer them to the ANP or ANA, but the ALP have been cited by Human Rights Watch and other human rights groups, as well as by DOD investigations, for killings, rapes, arbitrary detentions, land grabs, and sexual abuse of young boys. Others characterize ALP forces as unaccountable militias serving the interests of local strongmen, criticizing the ALP as incompatible with the goal of creating nationalized defense and security forces. The ALP are completely funded by the United States (ASFF funds disbursed by CSTC-A) at around $90 million a year. Afghan Public Protection Force . This force, operating as a state-owned enterprise under the supervision of the Ministry of Interior, guards sites and convoys. It was formed to implement Karzai's August 17, 2010, decree (No. 62) that private security contractor forces be disbanded and their functions performed by official Afghan government forces by March 20, 2012. The unit, which bills customers for contracted work, numbers about 22,000, but there is no formal target size. The local security forces above resemble but are not traditional local security structures called arbaki , which are private tribal militias with no connection to national institutions. Some believe that the arbaki concept should be revived as a means of securing Afghanistan, as they did during and prior to the reign of Zahir Shah. The programs discussed above somewhat reverse earlier efforts to disarm local sources of armed force. Rule of Law/Criminal Justice Sector Many experts believe that an effective justice sector is vital to Afghan governance. Some of the criticisms and allegations of corruption at all levels of the Afghan bureaucracy have been discussed throughout this report. U.S. justice sector programs generally focus on promoting rule of law and building capacity of the judicial system, including police training and court construction. The FY2016 consolidated appropriation ( P.L. 114-113 ) requires that at least $50 million in Economic Support Funds or International Narcotics and Law Enforcement funding be used for rule of law programs in Afghanistan in FY2016; the FY2017 measure makes $7 million available for such programs to a number of countries including Afghanistan. The rule of law issue is covered in CRS Report RS21922, Afghanistan: Politics, Elections, and Government Performance , by [author name scrubbed], and CRS Report R41484, Afghanistan: U.S. Rule of Law and Justice Sector Assistance , by [author name scrubbed] and [author name scrubbed]. Reintegration and Potential Reconciliation with Insurgents For years, the U.S., the Afghan government, and various neighboring states have engaged in efforts to bring about a political settlement with insurgents that could involve Taliban figures' obtaining ministerial posts, seats in parliament, or control over territory. On September 5, 2010, an "Afghan High Peace Council" (HPC) was formed to oversee the settlement and reintegration process. Then-President Karzai appointed former President/Northern Alliance political leader Burhanuddin Rabbani to head it, largely to gain Northern Alliance support for negotiations with the Taliban. On September 20, 2011, Rabbani was assassinated and his son, Salahuddin Rabbani, was named by the HPC to succeed him in April 2012. Rabbani is currently Foreign Minister in the NUG cabinet; his successor as HPC head, Ahmad Gaylani (a Pashtun former mujahedin party leader mentioned earlier), died of natural causes in January 2017. In 2011, U.S. diplomats held their first meetings with Taliban officials, and subsequent U.S.-Taliban meetings discussed proposals for the United States to transfer five senior Taliban captives from the Guantanamo detention facility to a form of house arrest in Qatar; and the Taliban would release the one U.S. prisoner of war it held, Bowe Bergdahl. The talks broke off in March 2012 but were resurrected in 2013, and, in June 2013, the Taliban opened a representative office in Qatar and issued a statement refusing future ties to international terrorist groups. However, the Taliban violated understandings with the United States and Qatar by raising a flag of the former Taliban regime and calling the facility the office of the "Islamic Emirate" of Afghanistan—the name the Taliban regime gave for Afghanistan during its rule. These actions prompted U.S. officials, through Qatar, to compel the Taliban to close the office. However, the Taliban officials remained in Qatar, and indirect U.S.-Taliban talks through Qatari mediation revived in mid-2014. These indirect talks led to the May 31, 2014, exchange of Bergdahl for the release to Qatar of the five Taliban figures, with the stipulation that they cannot travel outside Qatar for at least one year. That ban expired on June 1, 2015, but Qatar extended the ban until there is an agreed solution that would ensure the five do not rejoin the Taliban insurgency. President Ghani was elected in 2014 pledging to prioritize forging a reconciliation agreement with the insurgency, despite skepticism from many Afghan figures over the Taliban's intentions as well as those of Pakistan. A settlement will undoubtedly require compromises that could adversely affect the human rights situation because the insurgents are Islamists who seek strict adherence to Islamic law. The Obama Administration initially withheld endorsement of the concept over concerns about concessions to the Taliban, but eventually backed it under the stipulation that any settlement require insurgent leaders, as an outcome, to (1) cease fighting, (2) accept the Afghan constitution, and (3) sever any ties to Al Qaeda or other terrorist groups. The Taliban reportedly submitted a political platform that signaled acceptance of some aspects of human rights and women's rights provisions of the current constitution at a meeting between senior Taliban figures and members of the Northern Alliance faction held in France (December 20-21, 2012). Ghani's trips as President to Pakistan, Saudi Arabia, and China have focused on building support among these regional powers for talks; these countries are perceived as holding some leverage over the Taliban movement (or, in the case of China, over Pakistan). In May 2015, the Pugwash International Conference on Science and World Affairs convened talks in Qatar between Taliban representatives and Afghan officials, acting in their personal capacities. The Pugwash meetings, which reportedly have continued despite formal Taliban rejection of further negotiations, may have resulted in agreement for the Taliban to reopen its office in Qatar, to serve as a location for further talks, and for possible amendments to the Afghan constitution should a settlement be reached—a concept previously rejected by the Afghan government. Later that month, a member of the HPC met in western China with three former Taliban regime figures—a meeting convened by China reportedly with assistance from Pakistan. The government reportedly hopes that the political settlement with HIG signed in September 2016 (more below) will prompt the Taliban to agree to a political settlement. Subsequently, press reports indicated that some Taliban figures continue to favor a settlement and integration into the Afghan political process, at least in part to distance the movement from Pakistani influence. Talks have been supported by regional governments. In late 2015, the United States, Pakistan, Afghanistan, and China formed a working group to try to restart government-Taliban negotiations; the four have held several meetings that ended with pledges to continue efforts toward that end. In December 2015, Ghani received a warm reception in Islamabad to attend a Heart of Asia process regional meeting, and during that visit Afghanistan, Pakistan, and the United States agreed that settlement talks should resume. However, meetings in late 2016 between Russia, China, and Pakistan angered the Afghan government, which was not invited to join. It is unclear what role reconciliation plays in President Trump's new approach to Afghanistan. In his August 21, 2017, speech laying out the new strategy, he referred to a "political settlement" as an outcome of an "effective military effort," but did not elaborate on what U.S. goals or conditions might be as part of this putative political process. In remarks the next day, Secretary of State Rex Tillerson rejected the idea of preconditioning talks on the Taliban's acceptance of certain arrangements, saying "the Government of Afghanistan and the Taliban representatives need to sit down and sort this out. It's not for the U.S. to tell them it must be this particular model, it must be under these conditions." There have been no recent indications that the Taliban leadership is contemplating new talks with the Afghan government. President Trump and others within the U.S. and Afghan governments may support closing the Taliban's Qatar office, citing its evident failure to contribute to a meaningful political settlement. Others warn that doing so could strengthen the hands of hardliners within the Taliban who argue that the Afghan government is not serious about talks. Hikmatyar Faction (HIG) and its Reconciliation with the Government The recent reconciliation with the government of one insurgent faction, Hizb-e-Islami-Gulbuddin (HIG), led by former mujahedin party leader Gulbuddin Hikmatyar, has been seen as a possible template for further work toward a political settlement. HIG received extensive U.S. support against the Soviet Union, but turned against its mujahedin colleagues after the Communist government fell in 1992. Hekmatyar is accused of human rights abuses, most notably indiscriminate shelling in Kabul that left thousands dead, as part of his role in the civil war. In the post-Taliban period, HIG allied with the Taliban, while sometimes clashing with it north and east of Kabul. HIG was not a major factor on the Afghanistan battlefield and focused primarily on high-profile attacks, such as a suicide bombing on September 18, 2012, which killed 12 perople, including 8 South African nationals working for a USAID-chartered air service. HIG also killed six Americans (two soldiers and four contractors) in a suicide bombing in Kabul on May 16, 2013. On February 19, 2003, the U.S. government designated Hikmatyar as a "Specially Designated Global Terrorist," under Executive Order 13224, subjecting it to a freeze of any U.S.-based assets. The group is not designated as a "Foreign Terrorist Organization" (FTO). In January 2010, Hikmatyar signaled his openness to reconciliation with Kabul by setting a number of conditions, including elections under a neutral caretaker government following a U.S. withdrawal. Some HIG members attended the government's consultative "peace jirga" on June 2-4, 2010, which discussed the issue of reconciliation. HIG figures met Afghan government representatives at a June 2012 conference in Paris and a meeting in Chantilly, France, in December 2012. In January 2014, Hikmatyar instructed followers to vote in the April 5, 2014, Afghan presidential elections. After months of negotiations, a 25-point reconciliation agreement was signed between Afghan officials and Hikmatyar representatives on September 22, 2016, and reportedly includes Hikmatyar eventually obtaining a ceremonial government post and Afghan efforts to obtain the lifting of U.S. sanctions against him; U.N. sanctions against him were dropped in February 2017. In May 2017, Hekmatyar returned to Kabul, rallying thousands of supporters at a speech in which he criticized the NUG, leading to concerns about how constructive or destabilizing a role he might play in Afghan politics going forward. Reintegration A concept related to reconciliation is "reintegration"—an effort to induce insurgent fighters to stop fighting. A reintegration plan was drafted by the Afghan government and adopted by a "peace loya jirga " during June 2-4, 2010, providing for surrendering fighters to receive jobs, amnesty, protection, and an opportunity to be part of the security architecture for their communities. About 11,000 fighters have been reintegrated since 2010, a majority of whom are from the north and west. The program depended on donations: Britain, Japan, and several other countries, including the United States, have donated about $200 million, of which the U.S. contribution has been about half the total (CERP funds). Overall funding shortfalls slowed the program in 2014 and, during the Ghani and Abdullah visit in March 2015, the United States announced an additional $10 million to support the reintegration program. However, funding largely stopped in early 2016 and payments to reintegrated fighters were halted as donors reassessed the value of the program. Funding for the HPC and related reintegration work continues. The United States spent about $33 million in FY2016 on programs to counter violent extremism, including cultural, entertainment, and educational efforts. Some observers say there have been cases in which reintegrated fighters have committed human rights abuses against women and others, suggesting that the reintegration process might have unintended consequences. Earlier reintegration efforts had marginal success. A "Program for Strengthening Peace and Reconciliation" (referred to in Afghanistan by its Pashto acronym "PTS") operated during 2003-2008, headed by then- Meshrano Jirga speaker Sibghatullah Mojadeddi and then-Vice President Karim Khalili, and overseen by Karzai's National Security Council. The program persuaded 9,000 Taliban figures and commanders to renounce violence and join the political process, but made little impact on the tenacity or strength of the insurgency. Removing Taliban Figures f rom U.N. Sanctions Lists. A key Taliban demand in negotiations is the removal of the names of some Taliban figures from U.N. lists of terrorists. These lists were established pursuant to Resolution 1267 and Resolution 1333 (October 15, 1999, and December 19, 2000, both pre-September 11 sanctions against the Taliban and Al Qaeda) and Resolution 1390 (January 16, 2002). The Afghan government has submitted a list of 50 Taliban figures it wants taken off the list, which includes about 140 Taliban-related persons or entities. On January 26, 2010, Russia, previously a hold-out against such a process, dropped opposition to removing five Taliban-era figures from these sanctions lists, paving the way for their de-listing: those removed included Taliban-era foreign minister Wakil Mutawwakil and representative to the United States Abdul Hakim Mujahid. Mujahid is now on the HPC. On June 17, 2011, in concert with U.S. confirmations of talks with Taliban figures, the U.N. Security Council adopted Resolutions 1988 and 1989. The resolutions drew a separation between the Taliban and Al Qaeda with regard to the sanctions. However, a decision on whether to remove the 50 Taliban figures from the list, as suggested by Afghanistan, was deferred. On July 21, 2011, 14 Taliban figures were removed from the "1267" sanctions list; among them were four members of the HPC (including Arsala Rahmani, mentioned above). Regional Dimension The United States has encouraged Afghanistan's neighbors to support a stable and economically viable Afghanistan and to include Afghanistan in regional security and economic organizations and platforms. The Trump Administration has specifically linked U.S. policy in Afghanistan to broader regional dynamics, particularly as they relate to South Asia, and in particular signaled that the Administration plans to assertively pressure Pakistan to deny safe haven to Afghan militants. The Administration first obtained formal pledges from Afghanistan's neighbors to noninterference in Afghanistan at an international meeting on Afghanistan in Istanbul on November 2, 2011 ("Istanbul Declaration") and again at the December 5, 2011, Bonn Conference (held on the 10 th anniversary of the Bonn Conference that formed the post-Taliban government). As a follow-up to the Istanbul Declaration, confidence-building measures by Afghanistan's neighbors were discussed at a Kabul ministerial conference on June 14, 2012, which is now known as the "Heart of Asia" ministerial process. The Heart of Asia process involves 14 regional countries, 14 supporting countries, and 11 regional and international organizations that agreed to jointly fight terrorism and drug trafficking and pursue economic development. The most recent Heart of Asia meetings were in Islamabad in December 2015 and Amritsar, India, on December 4, 2016; the next annual conference (the seventh) is to be held in Azerbaijan. Afghanistan has sought to increase its integration with neighboring states through participation in other international fora, including South Asian Association for Regional Cooperation (SAARC), which Afghanistan joined in November 2005; the Shanghai Cooperation Organization (SCO), a security coordination body that includes Russia, China, Uzbekistan, Tajikistan, Kazakhstan, and Kyrgyzstan, to which Afghanistan was granted full observer status in June 2012; the Regional Economic Cooperation Conference on Afghanistan (RECCA), which was launched in 2005, last met in November 2016 in Istanbul, and is to be hosted by Turkmenistan in Ashkabad in 2017; a "Regional Working Group" initiative, co-chaired by Turkey and UNAMA, which organized the November 2011 Istanbul meeting mentioned above; a "Kabul Silk Road" initiative, led by UNAMA, to promote regional cooperation on Afghanistan; and the still-expanding 50-nation "International Contact Group," through which U.S. officials have sought to enlist regional and greater international support for Afghanistan. In addition, several regional meetings series have been established between the leaders of Afghanistan and neighboring countries. These include summit meetings between Afghanistan, Pakistan, and Turkey; between Afghanistan, Pakistan, the U.S., and China (the Quadrilateral Coordination Group, or QCG); and between Iran, Afghanistan, and Pakistan. However, this latter forum ended in mid-2012 after Afghanistan signed the SPA with the United States, which Iran strongly opposed. The Quadrilateral Coordination Group met for the sixth time in October 2017. Russia convened a meeting with Pakistan and China to discuss Afghanistan in December 2016 (more below), drawing harsh condemnation from the Afghan government, which was not invited to participate; Afghanistan was invited to, and attended, the second (February 2017) and third (April 2017) meetings, though the United States declined to attend. Economically, the U.S. has emphasized the development of a Central Asia-South Asia trading hub—part of a "New Silk Road" (NSR)—in an effort to keep Afghanistan stable and economically vibrant as donors wind down their involvement. The FY2014 omnibus appropriation, ( P.L. 113-76 ) provided up to $150 million to promote Afghanistan's links within its region. The FY2016 Consolidated Appropriation ( P.L. 114-113 ) contains a provision that an unspecified amount of Economic Support Funds (ESF) appropriated for Afghanistan be used "for programs in South and Central Asia to expand linkages between Afghanistan and countries in the region." Pakistan The neighbor that is considered most crucial to Afghanistan's security is Pakistan. Experts and officials of many countries debate the extent to which Pakistan is committed to Afghan stability versus attempting to exert control of Afghanistan through ties to insurgent groups. DOD reports on Afghanistan's stability repeatedly have identified Afghan militant safe havens in Pakistan as a threat to Afghan stability, and some DOD reports have stated that Pakistan uses proxy forces in Afghanistan to counter Indian influence there. President Trump, in announcing a new Afghanistan strategy in August 2017, declared that "we can no longer be silent about Pakistan's safe haven for terrorist organizations," and that while "in the past, Pakistan has been a valued partner ... it is time for Pakistan to demonstrate its commitment to civilization, order, and to peace." Some argue that Pakistan sees Afghanistan as potentially providing it with strategic depth against India. Traditional Pakistani concerns over Indian activities in Afghanistan could be compounded by President Trump's pledge to further develop the United States' strategic partnership with India as part of the new U.S. approach to Afghanistan and South Asia. However, Pakistan's leaders appear to increasingly believe that instability in Afghanistan could rebound to Pakistan's detriment. At a hearing of the Senate Foreign Relations Committee on September 15, 2016, U.S. officials testified that Pakistan's military leaders directed their subordinates to deny safehaven to Afghan militant groups, but that the Pakistani military is overburdened by fighting Pakistani militant groups and cannot always focus adequately on fighting Afghan groups. About 2 million Afghan refugees have returned from Pakistan since the Taliban fell, but as many as another 2 million might still remain in Pakistan and Pakistan is pressing many of them to return to Afghanistan by the end of 2017; the forced return of several hundred thousand so far has exacerbated humanitarian problems in Afghanistan. Ghani has visited Pakistan and hosted visiting Pakistani officials several times as President in a concerted effort to improve relations. Pakistan has begun training small numbers of ANDSF officers in Pakistan and, in May 2015, improved cooperation manifested as a Memorandum of Understanding for Afghanistan's NDS intelligence service to be trained by Pakistan's Inter-Services Intelligence Directorate (ISI), its key intelligence arm. Pakistan appears to anticipate that improved relations with Afghanistan's leadership will also limit India's influence in Afghanistan. Pakistan has long asserted that India is using its Embassy and four consulates in Afghanistan (Pakistan says India has nine consulates) to recruit anti-Pakistan insurgents, and that India is using its aid programs only to build influence there. Many Afghans had viewed positively Pakistan's role as the hub for U.S. backing of the mujahedin that forced the Soviet withdrawal in 1988-1989, but later came to resent Pakistan as one of only three countries to formally recognize the Taliban as the legitimate government (Saudi Arabia and the United Arab Emirates are the others). Relations improved after military leader President Pervez Musharraf left office in 2008. However, the September 2011 insurgent attacks on the U.S. Embassy and killing of former President Rabbani caused then president Karzai to move demonstrably closer to India. International Border Question . There are no indications the two countries are close to settling the long-standing issue of their border. Pakistan has long sought that Afghanistan formally recognize as the border the "Durand Line," a border agreement reached between Britain (signed by Sir Henry Mortimer Durand) and then-Afghan leader Amir Abdul Rahman Khan in 1893, separating Afghanistan from what was then British-controlled India (later Pakistan after the 1947 partition). The border is recognized by the United Nations, but Afghanistan continues to indicate that the border was drawn unfairly to separate Pashtun tribes and should be renegotiated. Afghan leaders criticized October 21, 2012, comments by then-SRAP Grossman that U.S. "policy is that border is the international border," even though that is the long-standing U.S. position. Tensions between the two neighbors have erupted several times in recent years, most recently in May 2017, when clashes at the Chaman border crossing over several days reportedly led to civilian and military casualties on both sides. Previous agreements led to efforts to deconflict the situation, but such bilateral mechanisms have evidently proven insufficient. U.S.-Pakistan Cooperation on Afghanistan In the several years after the September 11, 2001, attacks, Pakistani cooperation against Al Qaeda was considered by U.S. officials to be relatively effective. Pakistan arrested over 700 Al Qaeda figures after the September 11 attacks and allowed U.S. access to Pakistani airspace, some ports, and some airfields for the major combat phase of OEF. In April 2008, in an extension of the work of the Tripartite Commission (Afghanistan, Pakistan, and ISAF), the three countries agreed to set up five "border coordination centers" (BCCs) that include radar nodes to give liaison officers a common view of the border area. Four were established, but all were on the Afghan side of the border and Pakistan did not fulfill a pledge to establish one on the Pakistani side of the border, causing the BCC process to wither. However, according to DOD, as of mid-2015, there is an RSM Tripartite Joint Operations Center at which Afghan and Pakistan military liaison officers meet monthly. DOD reports that Afghanistan and Pakistan have conducted some high-level dialogues on countering the threat from the ISK-P. The May 1, 2011, U.S. raid that killed Osama bin Laden in Pakistan added to preexisting strains caused by Pakistan's refusal to crack down on the Haqqani network. Relations worsened further after a November 26, 2011, incident in which a U.S. airstrike killed 24 Pakistani soldiers, and Pakistan responded by closing border crossings, suspending participation in the border coordination centers, and boycotting the December 2011 Bonn Conference. U.S.-Pakistan cooperation on Afghanistan has since improved, but continued concerns over insufficient Pakistani action against the Haqqanis have led the Pentagon to withhold some U.S. security aid to Pakistan. It is unclear how President Trump's stated intent to "change the approach and how to deal with Pakistan" might impact this assistance or other elements of the U.S.-Pakistan relationship. Senior administration officials have raised the issue of aid (which has been withheld in the past, evidently to little effect), as well as such measures as reexamining Pakistan's status as a major non-NATO ally, increasing U.S. drone strikes on targets within Pakistan, and imposing sanctions on Pakistani officials. Others warn such measures could be counterproductive, highlighting the potential geopolitical costs of increasing pressure on Pakistan, especially as they relate to U.S. counterterrorism efforts and Pakistan's critical role in facilitating U.S. ground and air lines of communication to landlocked Afghanistan. Successful Pakistani efforts to secure the release of several Americans held by the Haqqanis in Afghanistan in October 2017 (see " Haqqani Network ") were hailed by U.S. officials, including President Trump who described the operation as "a sign that [Pakistan] is honoring America's wishes for it to do more to provide security in the region." Iran Iran apparently seeks to exert its historic influence over western Afghanistan and to protect Afghanistan's Shiite and other Persian-speaking minorities. Iran also seeks to ensure that U.S. forces cannot use Afghanistan as a base from which to pressure or attack Iran, to the point where Iran strenuously but unsuccessfully sought to scuttle the May 1, 2012, U.S.-Afghanistan SPA and BSA. According to General Nicholson in February 2017, Iran is backing Taliban insurgent elements in western Afghanistan. Iran has allowed a Taliban office to open in Iran, and high-level Taliban figures have visited Iran. While some see the contacts as Iranian support of the insurgency, others see them as an effort to exert some influence over reconciliation efforts. Iran previously allowed Taliban figures to attend conferences in Iran attended by Afghan figures, including late High Peace Council head Burhanuddin Rabbani. Some experts see inconsistency in Iran's support of Taliban fighters who are Pashtun, because Iran has traditionally supported the non-Pashtun Persian-speaking and Shiite factions in Afghanistan. Iran has funded pro-Iranian armed groups in the west. It has supported Hazara Shiites in Kabul and in Hazara-inhabited central Afghanistan, in part by providing scholarships and funding for technical institutes as well as mosques. There are consistent allegations that Iran has funded Afghan provincial council and parliamentary candidates in areas dominated by the Persian-speaking and Shiite minorities. These efforts have helped Iran retain close ties with Afghanistan's leading Shiite cleric, Ayatollah Mohammad Mohseni, as well as Hazara political leader Mohammad Mohaqiq. Iran's ties to the Shiite community in Afghanistan have also facilitated Iran's recruitment of Afghan Shiites to fight on behalf of the Asad regime in Syria. Iran also opposed the Taliban regime in Afghanistan, which Iran saw that regime as a threat to its interests in Afghanistan, especially after Taliban forces captured Herat in September 1995. Iran subsequently drew even closer to the Northern Alliance than previously, providing its groups with fuel, funds, and ammunition. In September 1998, Iranian and Taliban forces nearly came into direct conflict when Iran discovered that nine of its diplomats were killed in the course of the Taliban's offensive in northern Afghanistan. Iran massed forces at the border and threatened military action, but the crisis cooled without a major clash, possibly out of fear that Pakistan would support the Taliban. Iran offered search and rescue assistance in Afghanistan during the U.S.-led war to topple the Taliban, and it also allowed U.S. humanitarian aid to the Afghan people to transit Iran. Iran helped broker Afghanistan's first post-Taliban government, in cooperation with the United States, at the December 2001 "Bonn Conference." In February 2002, Iran expelled Gulbuddin Hikmatyar (see above). Even as it funds anti-government groups as a means of pressuring the United States, Iran has built extensive ties to the Afghan government. Ghani has generally endorsed the approach of his predecessor on Iran, which was to call Iran a "friend" of Afghanistan and to assert that Afghanistan must not become an arena for disputes between the United States and Iran. Ghani visited Tehran in April 2015 and, following meetings with President Rouhani and Supreme Leader Ali Khamene'i, there was agreement to work jointly against the Islamic State organization. Iran is helping combat that organization in Iraq and, to a lesser extent, in Syria. The two countries signed a Memorandum of Understanding on broader security and economic cooperation in August 2013, and in December 2013 expanded that pact into a strategic cooperation agreement. In October 2010, then-President Karzai acknowledged accepting about $2 million per year in cash payments from Iran, but Iran reportedly ceased the payments after the Karzai government signed the SPA with the United States in May 2012. At other times, Afghanistan and Iran have had disputes over Iran's efforts to expel Afghan refugees. There are 1 million registered Afghan refugees in Iran, and about 1.4 million Afghan migrants living there. A crisis erupted in May 2007 when Iran expelled about 50,000 into Afghanistan. About 300,000 Afghan refugees have returned from Iran since the Taliban fell. Iran reportedly is recruiting Shiite Afghans to fight on behalf of the Asad regime in Syria. The Obama Administration saw Iran as potentially helpful to its strategy for Afghanistan. Iran was invited to the U.N.-led meeting on Afghanistan at The Hague on March 31, 2009, at which Iran pledged cooperation on combating Afghan narcotics and in helping economic development in Afghanistan—both policies Iran is pursuing to a large degree. The United States supported Iran's attendance of the October 18, 2010, meeting of the International Contact Group on Afghanistan, held in Rome. The United States and Iran took similar positions on drug trafficking across the Afghan border at a U.N. meeting in Geneva in February 2010. Iran did not attend the January 28, 2010, London conference on Afghanistan, but it did attend the July 28, 2010, Kabul conference, the 2011 Bonn Conference, and several of the other donors' conferences. Iran's Development Aid for Afghanistan Iran's economic aid to Afghanistan does not conflict with U.S. efforts to develop Afghanistan. Iran has pledged about $1 billion in aid to Afghanistan, of which about $500 million has been provided to date. The funds have been used mostly to build roads and bridges in western Afghanistan. In cooperation with India, Iran has been building roads that would connect western Afghanistan to Iran's port of Chahbahar, and provide Afghan and other goods an easier outlet to the Persian Gulf. In July 2013, Iran and Afghanistan signed an agreement allowing Afghanistan to use the port, and this agreement was expanded in May 2016. Iran has developed power transmission lines in the provinces bordering Iran. Some of the funds reportedly are funneled through the Imam Khomeini Relief Committee, which provides charity worldwide. India India's goals in Afghanistan appear to be, at least in part, to limit Pakistan's influence in Afghanistan. India saw the Afghan Taliban's hosting of Al Qaeda during 1996-2001 as a major threat because of Al Qaeda's association with radical Islamic organizations in Pakistan that seek to end India's control of part of the disputed territories of Jammu and Kashmir. Some of these groups have committed major acts of terrorism in India, including the terrorist attacks in Mumbai in November 2008 and in July 2011. Afghanistan has sought close ties to India—in large part to access India's large and rapidly growing economy—but without causing a backlash from Pakistan. In October 2011, Afghanistan and India signed a "Strategic Partnership." The pact affirmed Pakistani fears by giving India, for the first time, a formal role in Afghan security by providing for India to train ANDSF personnel, of whom thousands have been trained since 2011. As noted above, India has donated three Cheetah military helicopters to the Afghan Air Force. In the immediate aftermath of Afghanistan-Pakistan border clashes in May 2013, Karzai visited India to seek sales of Indian artillery, aircraft, and other systems that would help it better defend its border with Pakistan, but India resisted in order not to become ever more directly involved in the conflict in Afghanistan or alarm Pakistan. Ghani cancelled that request, as discussed above, apparently to avoid complicating his outreach to Pakistan. Ghani visited India in April 2015 to engage directly with Prime Minister Narendra Modi, who has expressed concerns about Ghani's emphasis on engaging Pakistani leaders. India's past involvement in Afghanistan reflects its long-standing concerns about potential Pakistani influence and Islamic extremism emanating from Afghanistan. India supported the Northern Alliance against the Taliban in the mid-1990s and retains ties to Alliance figures. Many Northern Alliance figures have lived in India, although Indian diplomats stress they have close connections to Afghanistan's Pashtuns as well. Development. Prior to 2011, India limited its involvement in Afghanistan to development issues. India is the fifth-largest single country donor to Afghan reconstruction, funding projects worth over $2 billion. At the NATO summit in Brussels in October 2016, India pledged an additional $1 billion for Afghanistan development needs. Indian officials assert that their projects are focused on civilian, not military, development and are in line with the development priorities set by the Afghan government. As part of the new U.S. strategy for Afghanistan, President Trump called for India to "help us more with Afghanistan, especially in the area of economic assistance and development." Prime Minister Modi visited Afghanistan in December 2015 and June 2016 to inaugurate India-sponsored projects (a new parliament complex in Kabul and the Afghan-India Friendship Dam in Herat province, respectively). In addition, India, along with the Asian Development Bank, financed a $300 million project, mentioned above, to bring electricity from Central Asia to Afghanistan. renovated the well-known Habibia High School in Kabul. signed, in May 2016, with Iran and Afghanistan, the "Chahbahar Agreement" under which India will invest $500 million to develop Iran's Chahbahar port on the Arabian Sea. That port is designed to facilitate increased trade between India and Afghanistan, bypassing Pakistan. In December 2011, the Indian firm Steel Authority of India, Ltd. (SAIL) won a bid for three of four blocs of the Hajji Gak iron ore project in Bamiyan Province. helped Afghanistan's Independent Directorate of Local Governance (IDLG) with its efforts to build local governance organizations, and it provides 1,000 scholarships per year for Afghans to undergo higher education in India. Some Afghans want to enlist even more Indian assistance in training Afghan bureaucrats in accounting, forensic accounting, oversight, and other disciplines that will promote transparency in Afghan governance. Russia, Central Asian States, and China Some regional states take an active interest not only in Afghan stability, but in the U.S. military posture that supports U.S. operations in Afghanistan. The region to the north of Afghanistan has been a key factor in U.S. efforts to rely less on routes through Pakistan to access Afghanistan. Russia Russia seeks to contain U.S. influence in Central Asia, but for years tacitly accepted the U.S. presence in Afghanistan as furthering the battle against radical Islamists in the region. Russia cooperated in developing the Northern Distribution Network supply line to Afghanistan and, in February 2009, ended a one-year suspension—related to differences over Russia's conflict with Georgia—on the shipment of nonlethal equipment into Afghanistan through Russia. About half of all ground cargo for U.S. forces in Afghanistan flowed through the Northern Distribution Network from 2011 to 2014, despite the extra costs as compared to the Pakistan route. However, Russian-U.S. collaboration in Afghanistan, a relative (and rare, perhaps singular) bright spot in the two countries' relationship, has suffered in light of a more general deterioration of bilateral ties. Moscow has taken a markedly more assertive role in Afghanistan since at least late 2015, and while U.S. officials have differed in how they characterize both the nature of and motivation behind Russia's actions, there appears to be widespread agreement that they represent a challenge to U.S. goals there. The clearest apparent confirmation of material support by Russia to the Taliban came in April 2017, when General Nicholson explicitly declined, in response to a question, to refute reports that "they [the Russians] are sending weapons to the Taliban." The Washington Post , citing unnamed U.S. defense officials, subsequently reported that Russia has provided weapons (including heavy machine guns) to the Taliban ostensibly to be used against the Islamic State affiliated fighters, but that the weapons had surfaced in places far from ISKP strongholds, like Helmand province. Russia had previously condemned such claims as "groundless" and "absurd fabrications;" a Taliban spokesman also denied the reports, saying "our contacts with Russia are for political and diplomatic purposes only." It can be argued that Russian supply of weaponry to the Taliban is counter-intuitive, insofar as the Taliban represents a Sunni extremist faction that is allied with other Sunni groups, such as affiliates of Al Qaeda, that have conducted attacks inside Russia itself. Russia has also sought to establish itself as a player in Afghanistan by its efforts to bring about a negotiated settlement. In December 2016, Moscow hosted Chinese and Pakistani officials in a meeting that excluded Afghan representatives, drawing harsh condemnation from the Afghan government. Afghanistan was included in the second meeting (February 2017), and the United States was invited to the third (April 2017), though the United States declined to attend. Some analysts speculated that U.S. wariness about Russian goals and a reluctance to legitimize Russian efforts were behind the refusal to participate. Afghan officials have been more accepting, describing Russian efforts as complementary to ongoing processes, some of which include the United States. U.S. officials largely frame Russia's growing role in Afghanistan in terms of the broader U.S.-Russian rivalry. Secretary Mattis has characterized the Russian effort as "choosing to be strategic competitors" with the United States, and General Nicholson earlier said the Russians were motivated simply by a desire to "undermine the United States and NATO." Other analysts note Russian anxieties about a potential long-term U.S. military presence in what has traditionally been Moscow's sphere of influence. The Russian government frames its renewed interest in Afghanistan as a reaction to the growth of ISKP, for which Russia faults the United States. However, Russian descriptions of ISKP strength and geographic location far surpass estimates by the United States and others, perhaps overstating the threat to justify supporting the Taliban, which Russia sees as less of a direct danger. Afghan views of Russia are also colored by the legacy of the Soviet occupation. However, in line with Russian official comments in June 2010 that more economic and social assistance is needed there, Russia is investing $1 billion in Afghanistan to develop its electricity capacity and build out other infrastructure. The investments implement an agreement, reached during a Karzai visit to Moscow on January 22, 2011, for Russia to resume long dormant Soviet occupation-era projects such as expanding the Salang Tunnel connecting the Panjshir Valley to Kabul, hydroelectric facilities in Kabul and Baghlan provinces, a customs terminal, and a university in Kabul. Russia also raised its profile with a $25 million investment in the Kabul Housebuilding Factory, the country's largest factory, and a $20 million project to renovate the former "Soviet House of Science and Culture" as the "Russian Cultural Center" in 2014. In November 2010, in its first significant intervention in Afghanistan since its occupation, Russian officers reportedly joined U.S. and Afghan forces attempting to interdict narcotics trafficking in Afghanistan. During the 1990s, after its 1989 withdrawal and the breakup of the Soviet Union, Russia supported the Northern Alliance against the Taliban with some military equipment and technical assistance in order to blunt Islamic militancy emanating from Afghanistan. The Taliban government was the only one in the world to recognize Chechnya's independence, and some Chechen fighters fighting alongside Taliban/Al Qaeda forces have been captured or killed. Central Asian States These states are potentially crucial to Afghanistan stability and to the success of the New Silk Road (NSR) strategy that seeks to help Afghanistan become a trade crossroads between South and Central Asia. An increasing amount of trade is flowing from Afghanistan to and through the Central Asian states, and Afghanistan earns transit fees and customs duties from this commerce. The revival of a long-standing plan to establish Afghanistan as a transit hub for Central Asian natural gas ( TAPI pipeline) is discussed later in this report under " Development in Key Sectors ." Central Asian states are also concerned about any potential ISKP expansion in Afghanistan, given the high number of Central Asian fighters who could be returning to the region as the group's territorial holdings in the Middle East diminish. In 1996, several of the Central Asian states banded together with Russia and China into the Shanghai Cooperation Organization because of the perceived Taliban threat. Kazakhstan . Since 2001, Kazakhstan has allowed the use of its air facilities for operations in Afghanistan but only in case of emergency. In May 2011, Kazakhstan became the first Central Asian state to pledge forces to Afghanistan (four noncombat troops). In 2010, Kazakhstan agreed to allow U.S. over flights of lethal military equipment to Afghanistan, enabling U.S. aircraft to fly materiel directly from the United States to Bagram Airfield. Kazakhstan funded a $50 million program to develop Afghan professionals. Tajikistan . Roughly a quarter of Afghanistan's population is made up of ethnic Tajiks, and the two nations have deep historical and cultural ties. Tajikistan supported the Northern Alliance against the Taliban, and received significant U.S. security assistance in the years after the fall of the Taliban, particularly after it allowed for the transit of non-military supplies to NATO forces in Afghanistan in 2009. The Panj bridge, built largely with U.S. funds, has become a major thoroughfare for goods to move between Afghanistan and Tajikistan. Uzbekistan . There has been no evident change in Uzbekistan's policy since the transfer of power in late 2016 following the death of longtime President Islam Karimov. The country has been a backer of ethnic Uzbek faction leader Abdul Rashid Dostam, who is under investigation for his altercation with a rival faction leader. Uzbekistan allowed use of Karshi-Khanabad air base by OEF forces from October 2001 until a rift emerged in May 2005 over Uzbekistan's crackdown against riots in Andijon. Uzbekistan's March 2008 agreement with Germany for it to use Karshi-Khanabad air base temporarily, for the first time since the rift with the United States, suggested potential for resumed U.S.-Uzbek cooperation on Afghanistan. In early 2009 Uzbekistan allowed the use of its Navoi airfield for shipment of U.S./NATO goods into Afghanistan. As noted below, railway lines have been built from Afghanistan to Uzbekistan. The Al Qaeda-linked IMU, which was responsible for four simultaneous February 1999 bombings in Tashkent that nearly killed then-President Islam Karimov, is active in Afghanistan. One of its leaders, Juma Namangani, reportedly was killed while commanding Taliban/Al Qaeda forces in Konduz in November 2001. Tur kmenistan . Turkmenistan has taken a position of "positive neutrality" on Afghanistan, continuing the policy Turkmenistan had when the Taliban was in power. It does not allow its territory to be used by U.S. and NATO forces for operations or logistics in Afghanistan. Turkmenistan was the only Central Asian state to actively engage the Taliban regime, viewing engagement as a means of preventing spillover of radical Islamic activity from Afghanistan. The country also saw Taliban control as facilitating construction of the TAPI natural gas pipeline that was under consideration during Taliban rule. Still, the September 11 attacks on the United States stoked Turkmenistan's fears of the Taliban and its Al Qaeda guests and caused the country to publicly support the U.S.-led war in Afghanistan. China147 China's involvement in Afghanistan has been primarily to secure access to Afghan minerals and other resources; to help its ally Pakistan avoid encirclement by India; and to reduce the Islamist militant threat to China itself. China is concerned about the potential for Islamic militants who operate in Afghanistan to assist China's restive Uighur (Muslim) community. The East Turkestan Islamic Movement (ETIM) is an opposition group in China, some of whose operatives are based in Afghanistan. A major organizer of the Shanghai Cooperation Organization, China has a small border with a sparsely inhabited sliver of Afghanistan known as the "Wakhan Corridor," and it is building border access routes and supply depots to facilitate China's access to Afghanistan through the corridor. Since 2012, China has deepened its involvement in Afghan security issues and, as noted, has taken on a more prominent role as a potential mediator in Afghan reconciliation. In September 2012, China and Afghanistan signed security and economic agreements. In 2012, China signed a series of agreements with Afghanistan, one of which reportedly promised Chinese training and funding for Afghan policy, though some reports, citing participants, question how beneficial that training is. It also has offered training for ANDSF officers at People's Liberation Army training colleges and universities. In October 2014, China hosted Ghani for bilateral meetings and attendance at the "Heart of Asia" (Istanbul process) ministerial meeting in Beijing. During Ghani's visit in 2014, China agreed to train 3,000 Afghan bureaucrats and to provide an additional $330 million in bilateral aid over the coming three years. As a consequence of that visit, some Taliban figures reportedly visited China, apparently accompanied by Pakistani security officials, as part of an effort to promote an Afghan political settlement. Perhaps because of China's growing role in Afghanistan's affairs, CEO Abdullah said in May 2016 that Afghanistan supports China's position on the South China Sea and China's efforts to resolve South China Sea issues through peaceful means. However, the statement—which conflicts to some extent with the U.S. position—might not have been vetted throughout the Afghan government. In March 2017, the Pentagon confirmed for the first time the presence of Chinese troops operating within Afghanistan, reportedly as part of joint counterterror patrols with Afghan forces along the nations' shared border. Still, many experts see China's activities in Afghanistan as primarily economically driven. From 2002 to 2014, China provided about $255 million in economic aid to Afghanistan. Chinese delegations continue to assess the potential for new investments in such sectors as mining and energy. The cornerstone of China's investment to date has been the development of the Aynak copper mine south of Kabul, but that project is stalled over security issues surrounding the mine site. In 2012, China National Petroleum Co. was awarded the rights to develop oil deposits in the Amu Darya basin (for more on both, see below). Transportation and trade routes through Afghanistan comport with China's vision of a "One Belt, One Road" regional network linking East, Central, and South Asia—China's version of the U.S.-led New Silk Road. During the Taliban era, in December 2000, reflecting concern about Taliban policies, a Chinese official delegation met with Mullah Umar. However, China did not enthusiastically support U.S. military action against the Taliban, possibly because China was wary of a U.S. military buildup nearby. Persian Gulf States The Gulf states have, at times, been considered a key part of the effort to stabilize Afghanistan. As noted, the late Ambassador Holbrooke focused substantial U.S. attention—and formed a multilateral task force—to try to curb continuing Gulf resident donations to the Taliban in Afghanistan. He maintained that these donations are a larger source of Taliban funding than is the narcotics trade. The Gulf states have also been a source of development funds and for influence with some Afghan clerics and factions. Saudi Arabia . Saudi Arabia has a long history of involvement in Afghanistan; it channeled hundreds of millions of dollars to the mujahedin during the war against the Soviet occupation and Saudi Arabia was one of three countries to formally recognize the Taliban government. Saudi Arabia broke diplomatic relations with the Taliban in September 2001 and permitted the United States to use a Saudi base for command of U.S. air operations over Afghanistan, but it did not permit U.S. airstrikes from the base. Saudi Arabia later brokered some of the negotiations between the Afghan government and "moderate" Taliban figures. More recently, however, Saudi officials have described the Taliban as "armed terrorists," though some allege that the kingdom has not taken measures to stop the flow of what is considered to be a high level of financial support for the Taliban. UAE . The United Arab Emirates, another country that recognized the Taliban regime, is emerging as another major donor to Afghanistan. The UAE deployed both troops and six F-16s to support NATO security missions in southern Afghanistan. The UAE has donated over $250 million to Afghanistan since 2002, for housing, health care, and education projects. UAE officials were discussing the UAE aid program for southern Afghanistan at the time of the January 10, 2017, bombing at the Qandahar governor's guest house that killed at least six UAE diplomats, including the UAE's Ambassador to Afghanistan. Qatar . Until 2011, Qatar was not regarded as a significant player on the Afghanistan issue. It did not recognize the Taliban regime when it was in power. Beginning in 2010, Qatar's mediation contributed to the release of Sergeant Bowe Bergdahl, discussed above (see " Reintegration and Potential Reconciliation with Insurgents "). Senior Taliban figures opened an informal "political office" in Doha with U.S. acquiescence as part of efforts to establish talks with the Taliban. According to at least one media report, President Trump may support closure of the office. Bahrain . In January 2009, Bahrain sent 100 police officers to Afghanistan to help U.S./NATO-led stabilization operations there. That tour extended until the end of the ISAF mission at the end of 2014. Oman . Oman hosted the sixth meeting of the Quadrilateral Coordination Group (QCG) in October 2017, and some speculate that it could play the same kind of role in hosting talks between the Taliban and others as it did years earlier in hosting Iranian and U.S. diplomats in the years before the Joint Comprehensive Plan of Action (JCPOA, or Iran Deal). Aid and Economic Development Experts have long asserted that economic development is pivotal to Afghanistan's long-term stability. The economy is struggling against a donor drawdown. The economy (Gross Domestic Product, GDP) has grown an average of 9% per year since 2001, although aid cutbacks and political uncertainty about the post-2104 security situation caused a slowing to 4% growth in 2013 and a further slowing to below 2% in 2014, 2015, and 2016, with a slight recovery forecast for 2017. On the other hand, the Afghan government is assessed by the international community as increasingly able to execute parts of its budget and deliver basic goods and services. Afghan government revenue comes mostly through taxation (which rose by nearly 27% from FY2015 to FY2016), including through a 20% corporate tax rate, and most of the remainder from customs duties. The tax system has been computerized. Since the international community intervened in Afghanistan in 2001, there have been debates over many aspects of aid to Afghanistan, including amounts, mechanisms for delivery, donor coordination, and distribution within Afghanistan. Donor aid accounts for more than 95% of Afghanistan's GDP and at least two-thirds of total Afghan government expenditures (operating budget and development budget). Some economic sectors in Afghanistan have been developed largely with private investment, including by well-connected Afghan officials or former officials who founded companies. Therefore, it is often difficult to determine the effects on Afghanistan's economy of aid, as compared to the effects of investment, trade, and other variables. As noted above, in 2011 the United States articulated a vision of greater Afghan economic integration in the region and its role in a "New Silk Road" trading pattern that would presumably accelerate Afghan private sector growth and customs revenue receipts. However, implementation has been slow due to political differences within the region and the difficult security situation regionally. Further hindering Afghanistan is that its economy and society are still fragile after decades of warfare that left about 2 million dead, 700,000 widows and orphans, and about 1 million Afghan children raised in refugee camps outside Afghanistan. Millions of Afghan refugees have since returned, although as many as 2.7 million remain outside Afghanistan (mostly in Pakistan and Iran). In October 2016, Afghanistan and the European Union signed an accord under which Afghan refugees who have recently been resettled in the EU countries would return to Afghanistan. The literacy rate is very low and Afghanistan has a small, although growing, pool of skilled labor, middle managers, accountants, and information professionals. U.S. Assistance to Afghanistan During the 1990s, the United States was the largest single provider of assistance to the Afghan people even though no U.S. aid went directly to the Taliban government when it was in power during 1996-2001; monies were provided through relief organizations. Between 1985 and 1994, the United States had a cross-border aid program for Afghanistan, implemented by USAID personnel based in Pakistan. Citing the difficulty of administering this program, there was no USAID mission for Afghanistan from the end of FY1994 until the reopening of the U.S. Embassy in Afghanistan in late 2001. Table 11 at the end of this report portrays U.S. assistance to Afghanistan since the fall of the Taliban. The cited figures do not include costs for U.S. combat operations. Aid Oversight and Conditionality Some laws have required the withholding of U.S. aid subject to Administration certification of Afghan compliance on a variety of issues, including counternarcotics efforts, corruption, vetting of the Afghan security forces, Afghan human rights practices and protection of women's rights, and other issues. All required certifications have been made and virtually no U.S. funds have been withheld from Afghanistan. The FY2017 Consolidated Appropriation ( P.L. 115-31 ) conditions ESF and INCLE funding to Afghanistan on various requirements, including the submission of an interagency strategy for U.S. policy in Afghanistan, and the certification, by the Secretary of State, that the Afghan government is meeting certain benchmarks related to various metrics including corruption, democratic development, and women's rights. The Secretary is required to submit biannual reports (with the first due 90 days after passage) on these benchmarks. Separately, the FY2017 National Defense Authorization Act ( P.L. 114-328 ) extends a number of reporting requirements, with an added provision on the implementation of the Afghan Personnel and Pay System ( P.L. 114-92 ). Separately, U.S. officials have been able to use such U.S.-provided benefits as fuel supplies and advice on institutions that control Afghan pay scales to exercise some leverage over Afghans suspected of corruption. The FY2008 defense authorization bill ( P.L. 110-181 ) established a "Special Inspector General for Afghanistan Reconstruction" (SIGAR) modeled on a similar outside auditor for Iraq. The SIGAR issues quarterly reports and specific audits of aspects of Afghan governance and security, with particular attention to how U.S.-provided funds have been used. The SIGAR, as of October 2017, is John Sopko. Some executive branch agencies, including USAID, have criticized some SIGAR audits as inaccurate or as highlighting problems that the agencies are already correcting. For example, DOD took strong exception to a December 4, 2013, audit by the SIGAR that asserted that the U.S. military had failed to adequately manage risk accounting for $3 billion in DOD funds for the ANDSF. The FY2017 Consolidated Appropriation, referenced above, provides $54.9 million for SIGAR operations in FY2017. Aid Authorization: Afghanistan Freedom Support Act A key post-Taliban aid authorization bill, S. 2712 , the Afghanistan Freedom Support Act (AFSA) of 2002 ( P.L. 107-327 , December 4, 2002), as amended, authorized about $3.7 billion in U.S. civilian aid for FY2003-FY2006. The law, whose authority has now expired, was intended to create a central source for allocating funds; that aid strategy was not implemented. However, some of the humanitarian, counternarcotics, and governance assistance targets authorized by the act were met or exceeded by appropriations. The act authorized the following: $15 million per year in counternarcotics assistance (FY2003-FY2006); $10 million per year for FY2003-FY2005 for political development, including national, regional, and local elections; $80 million total to benefit women and for Afghan human rights oversight ($15 million per year for FY2003-FY2006 for the Afghan Ministry of Women's Affairs, and $5 million per year for FY2003-FY2006 to the Human Rights Commission of Afghanistan); $425 million per year for FY2003-FY2006 in humanitarian and development aid; $300 million for an Enterprise Fund; and $550 million in drawdowns of defense articles and services for Afghanistan and regional militaries. (The original law provided for $300 million in drawdowns. That was increased by subsequent appropriations laws.) A subsequent law ( P.L. 108-458 , December 17, 2004), implementing the recommendations of the 9/11 Commission, contained "The Afghanistan Freedom Support Act Amendments of 2004." The subtitle mandated the appointment of a U.S. coordinator of policy on Afghanistan and requires additional Administration reports to Congress. A bill in the 110 th Congress to reauthorize AFSA, H.R. 2446 , passed by the House on June 6, 2007 (406-10). It would have authorized about $1.7 billion in U.S. economic aid and $320 million in military aid (including drawdowns of equipment) per year for several years. A Senate version ( S. 3531 ), with fewer provisions than the House bill, was not taken up by the full Senate. Direct Support to the Afghan Government Currently, the United States disburses about 50% of its donated aid funds through the Afghan government. That percentage meets the goal set by the international community in 2010. USAID has approved over a dozen Afghan ministries to receive direct U.S. aid, some of which is channeled through the Afghanistan Reconstruction Trust Fund (ARTF), run by the World Bank. Donors have contributed about $6 billion to the ARTF, the funds of which are about equally split between funding Afghan salaries and priority development investments. No "enterprise fund" that was envisioned in the Afghanistan Freedom Support Act was ever established. However, small amounts of USAID funds have been used to assist a few Afghan enterprises, at least partially fulfilling the intent of the legislation. In an effort to increase cooperation with the Afghan government in assisting development, during the Ghani visit to Washington, DC, the Administration announced an $800 million "New Development Partnership." The funds, which will come from already appropriated funds (not representing a request for additional funding), will be overseen by USAID, and will be disbursed on programs in Afghanistan "only after agreed reforms or development results have been accomplished, as measured by clear and objective indicators of achievement." National Solidarity Program Through the ARTF, the United States supports an Afghan government program—implemented through the Ministry of Rural Rehabilitation and Development—that promotes local decision making on development—the "National Solidarity Program" (NSP). Donors have provided the program with over $600 million, about 90% of which has been U.S. funding. The program provides block grants of up to $60,000 per project to local councils to implement their priority projects. The program has given at least 20,000 grants to a total of 21,600 villages that participate in the program—participation requires setting up a Community Development Council (CDC) to help decide on what projects should be funded. The Afghan Funds from the NSP have brought bridges, water wells, and some hydroelectric power to numerous villages. The program has been widely hailed by many institutions as a highly effective, Afghan-run program. U.S. funds for the program are drawn from a broad category of ESF for "good governance." Afghanistan Infrastructure Trust Fund The Afghanistan Infrastructure Trust Fund was set up in early 2013 to channel an additional percentage of U.S. aid directly to Afghanistan. The multilateral fund is managed by the Asian Development Bank. An initial U.S. contribution of $45 million was made in March 2013, but was supplemented by tens of millions more to support a power grid project running north-south; the total U.S. contribution is around $153 million. (This is not the same program as the U.S. "Afghanistan Infrastructure Fund," which is a DOD-State program to fund Afghan infrastructure projects.) Other Donor Aid/Oversight/Tokyo Mutual Accountability Framework Non-U.S. donors, including such institutions as the EU and the Asian Development Bank, provide much of the funds for Afghanistan's development. Major pledges have been made primarily at donor conferences such as Tokyo (2002), Berlin (April 2004), Kabul (April 2005), London (February 2006), Paris (June 2008), London (January 2010), Tokyo (July 2012), and Brussels (October 4-5, 2016). Tokyo Conference and Mutual Accountability Framework (TMAF). The Tokyo conference (July 8, 2012) focused on identifying sources of post-2014 assistance (2012-2022 is termed the "transformation decade"). At the conference, the United States and its partners pledged a total of $16 billion in aid to Afghanistan through 2015 ($4 billion per year for 2012-2015) and agreed to sustain support through 2017 at levels at or near the past decade. As part of that overall pledge, at the conference, then-Secretary Clinton said the Obama Administration would ask Congress to sustain U.S. aid to Afghanistan at roughly the levels it has been through 2017. Among other major pledges, Japan pledged $5 billion over five years (2012-2017), and Germany pledged $550 million over four years (2014-2016). The Tokyo Mutual Accountability Framework (TMAF) that resulted from the conference stipulated requirements of the Afghan government in governance, anti-corruption, holding free and fair elections, and human rights practices. As an incentive, if Afghanistan meets the benchmarks, the TMAF increases (to 10% by 2014 and to 20% by 2024) the percentage of aid provided through the Afghanistan Reconstruction Trust Fund (ARTF) and other mechanisms that gives Kabul discretion in the use of donated funds. A senior officials meeting held in Kabul on July 3, 2013, to review the Afghan performance found that the Afghan government had met only a few of the stipulated benchmarks and was making slow progress on most of the others. A follow-up to the Tokyo conference was the London Conference that was held on December 4, 2014, and which was attended by 60 countries, including Pakistan. Brussels Conference . Donors met again to assess progress on the TMAF benchmarks and pledged more funds for Afghanistan at a donors meeting in Brussels on October 4-5, 2016. The conference welcomed Afghanistan's new "National Peace and Development Framework" and its efforts to fight corruption. At the conclusion of the meeting, donors announced pledges of $15.2 billion for the period of 2017-2020 (about $5 billion per year), of which about 20% will be provided by the United States. Among multilateral lending institutions, the World Bank has been key to Afghanistan's development. In May 2002, the World Bank reopened its office in Afghanistan after 20 years. Its projects have been concentrated in the telecommunications and road and sewage sectors. The Asian Development Bank (ADB) has also been playing a major role in Afghanistan, including in financing railway construction. The ADB funded the paving of a road from Qandahar to the border with Pakistan and contributed to a project to bring electricity from Central Asia to Afghanistan. On the eve of the London donor's conference of January 28, 2010, the IMF and World Bank announced $1.6 billion in Afghanistan debt relief. Development in Key Sectors Efforts to build the legitimate economy are showing some results, by some accounts. Some sectors, discussed below, are being developed primarily (although not exclusively) with private investment funding. Private investment has been the main driver of much of the new construction evident particularly in Kabul, including luxury hotels; a $25 million Coca Cola bottling factory (opened in September 2006); apartment and office buildings; and marriage halls and other structures. The bottling factory is located near the Bagrami office park (another private initiative), which includes several other factories. The Serena luxury hotel was built by the Agha Khan foundation, a major investor in Afghanistan. A multi-billion dollar development near the Kabul airport, called "New Kabul City," has been constructed. An arm of DOD, called the Task Force for Business and Stability Operations (TFBSO), sought to facilitate additional private investment in Afghanistan. However, A SIGAR report of November 2014 assessed that the Task Force's efforts yielded very little result. The TFBSO concluded its operations in March 2015 after its authorities expired the previous year. Funding for the Task Force is included in Table 11 at the end of this report. Uncertainty about the post-2014 political and security situation caused some Afghan businessmen to relocate outside the country, or to develop external components of their business in case the situation in Afghanistan deteriorates. The following sections outline what has been accomplished with U.S. and international donor funds and private investment. Education Continuing Taliban attacks on schools have caused some ("over 1,000" according to a January 2017 address by the acting Minister of Education) to close and hindered efforts to enroll Afghan students. While most sources give a figure of 9 million children enrolled in school, the January 2017 SIGAR report relays a December 18, 2016, interview with the Afghan Minister of Education, who said that "after adjusting numbers for more than three million permanently absent registered students from school records, only six million students were actually attending classes in Afghanistan." Afghanistan's university system is said to be highly underfunded, in part because Afghans are entitled to free higher education (to the B.A. level) by the Constitution, which means that demand for the higher education far outstrips Afghan resources. The shortfall is impeding the development of a large enough pool of skilled workers for the Afghan government. Afghanistan requires about $35 million to operate its universities and institutes for one year. Health The health care sector has made considerable gains in reducing infant mortality and giving about 85% of the population at least some access to health professionals. Still, according to some outside groups, nearly 20% of all Afghans have had a close relative or friend who died because of the inability to quickly reach medical care or unaffordable cost, even though health care technically should be free according to Afghan law and regulations. USAID funds for health have gone directly to the Ministry of Health to contract with international NGOs to buy medical supplies for clinics. Egypt operates a 65-person field hospital at Bagram Air Base that instructs Afghan physicians, and Jordan operates a similar facility in Mazar-e-Sharif. A $236 million USAID program called "Partnership Contracts for Health" provided immunizations, prenatal exams, and equipment and salaries in 13 provinces. Roads Road building has been a priority; as former commander of U.S. forces in Afghanistan General Eikenberry (later Ambassador) has said, "where the roads end, the Taliban begin." At least 10,000 miles of roads have been built since 2001 by all donors, of which about half was funded by the United States. Road construction has been USAID's largest project category there, accounting for about $2.8 billion in U.S. spending since the fall of the Taliban, according to a SIGAR report of October 2016. Roads are considered key to enabling Afghan farmers to bring legitimate produce to market in a timely fashion; in several of the most restive provinces, U.S. funds, including CERP, have been used to build small roads linking farming communities to the markets for their products. The major road, the Ring Road (including Highway One from Qandahar to Kabul), has been completely repaved using funds from various donors, including substantial funds from the Asian Development Bank, at a total expense of about $4 billion (all donors). Other major projects include a road from Qandahar to Tarin Kowt (Uruzgan province) built by U.S. military personnel, inaugurated in 2005; a road linking the Panjshir Valley to Kabul; a Salang Bypass Road through Bamiyan province; and an East-West road across Afghanistan, from Herat to Kabul, though funding for only a few segments (Herat to Chest-e-Sharif, and Maidany Shar to Bamiyan, and Bamiyan City to Yakowlang in that same province) has been identified (from Italy and Japan). Some observers warn that the Afghan government lacks the resources to adequately maintain the roads built with international funds. Many of the roads built have fallen into disrepair and are marked with major potholes, as discussed in detail in the SIGAR report on U.S.-funded road projects in Afghanistan released in October 2016. Bridges Afghan officials say that trade with Central Asia increased after a bridge over the Panj River, connecting Afghanistan and Tajikistan, opened in late 2007. The bridge was built with $33 million in (FY2005) U.S. assistance. The bridge is helping what press reports say is robust reconstruction and economic development in the relatively peaceful and ethnically homogenous province of Panjshir, the political base of the Northern Alliance, though others claim it has facilitated drug trafficking. Railways Afghanistan is beginning to develop a rail system—a sector it lacked as a legacy of security policy during the late 19 th century that perceived railroads as facilitating invasion of Afghanistan. Rail is considered increasingly crucial to Afghanistan's ability to develop its mineral wealth because it is the means by which minerals can be exported to neighboring countries. In particular, China has committed to building a rail line from its Mes Aynak copper mine project to the northern border and it is conducting a feasibility study for that railway as of mid-2014. A spur to the Hajji Gak iron mine would be funded by India (about $1 billion) as part of its project there. However, there are indications India and China might opt instead truck their minerals out, a process that would slow full exploitation of these mines. There are also plans to build a line from Herat and Kabul to Qandahar, and then on to the border with Pakistan. The planned railways will link Afghanistan to the former Soviet railway system in Central Asia, and to Pakistan's railway system, increasing Afghanistan's economic integration in the region. In September 2012, the government established the Afghan Rail Authority to maintain and regulate this sector. Electricity Energy sector development is considered crucial to economic growth and political stability in Afghanistan, but considerable U.S. efforts in this area over the past fifteen years have arguably yielded mixed results. While the percentage of Afghans with access to electricity has increased due to these and other development efforts, by most estimates the large majority remains without grid-connected power. Afghanistan has a complex power system, operating in nine separate, unconnected grids, and is still largely dependent on the sale of surplus power from its neighbors, importing 77% of its energy. The vast majority (95%) of Afghanistan's domestically generated electricity is provided by hydropower. The United States has worked to create more independent and cohesive system by assisting in the development of indigenous power production and management capabilities and by connecting Afghanistan's disparate power grids. According to the most recent quarterly Special Inspector General for Afghanistan Reconstruction (SIGAR) report, total U.S. disbursements for power projects total over $2 billion, including: over $1.5 billion in USAID Economic Support Funds (ESF) since FY2002; approximately $180 million in DOD Commander's Emergency Response Program (CERP) funds as of July 2015; and about $467 million in DOD Afghanistan Infrastructure Funds as of June 2017. Some have raised concerns about the sustainability of these efforts. In April 2014, SIGAR John Sopko said in congressional testimony that "the problem of planning and implementing programs without considering the cost and feasibility of sustaining them is, perhaps, no more strikingly evident than in the U.S. government's efforts to develop Afghanistan's energy sector." He highlighted the $355 million Kabul Power Plant (also known as the Tarakhil Power Plant), which a subsequent SIGAR audit found was operating at less than one percent of its capacity. That audit described the plant as "severely underutilized," though more recent reports indicate it has occasionally fulfilled Kabul's electricity needs when the city's usual sources of power are unavailable. Agriculture Even though only about 12.5% of Afghanistan's land is arable, about 80% of Afghans live in rural areas and the agriculture sector has always been key to Afghanistan's economy and stability. About 25% of Afghanistan's GDP is contributed by agriculture. The late Ambassador Holbrooke, including in his January 2010 strategy document, outlined U.S. policy to boost Afghanistan's agriculture sector not only to reduce drug production but also as an engine of economic growth. Prior to the turmoil that engulfed Afghanistan in the late 1970s, Afghanistan was a major exporter of agricultural products. USAID programs have helped Afghanistan double its legitimate agricultural output over the past five years, particularly through the export of commodities like pomegranates, saffron, and raisins. Since 2002, USAID has disbursed over $2 billion to build capacity at the Ministry of Agriculture, Irrigation, and Livestock (MAIL), increase access to markets, and provide alternatives to poppy growing, according to a January 2017 SIGAR report. U.S. strategy has addressed not only crop choice but also trying to construct the entirety of the infrastructure needed for a healthy legitimate agriculture sector, including road building, security of the routes to agriculture markets, refrigeration, storage, transit through Pakistan and other transportation of produce, building legitimate sources of financing, and other aspects of the industry. Select U.S. projects include a $150 million program for the relatively safe areas of Afghanistan to continue to develop licit crops. The Incentives Driving Economic Alternatives for the North, East, and West (IDEA-NEW) program ran through FY2014. a $474 million program in southern and eastern areas of the country where counterinsurgency operations are ongoing, Afghanistan Vouchers for Increased Production in Agriculture (AVIPA-Plus). The program ran through FY2011 and included initiatives coordinated with U.S. counterinsurgency operations in Helmand and Qandahar provinces. The program provided vouchers for wheat seed, fertilizer, and tools, in addition to supporting cash for work programs and small grants to local cooperatives. Telecommunications Several Afghan telecommunications firms (e.g., Roshan, MTN, and Afghan Wireless) have been formed since 2002 and over $2 billion in private investment has flowed into this sector, according to a 2016 SIGAR report. Cellular networks now reach approximately 90% of Afghans, and the Asia Foundation found in 2016 that 89% of respondents reported that their household owned at least one mobile phone, up from 52% in 2009. This rapid development, aided by tens of millions of dollars in support from DOD, State, and USAID, has made telecommunications a key driver of the Afghan economy. The telecommunications sector has been assessed by various government agencies as contributing billions in tax revenues to the Afghan government, and providing employment to tens of thousands of Afghans. Airlines The 62-year-old national airline, Ariana, is said to be in significant financial trouble due to corruption that has affected its safety ratings and left it unable to service a heavy debt load. There are new privately run airlines, such as Safi Air (run by the Safi Group, which has built a modern mall in Kabul) and Kam Air, but they, along with Ariana Afghan Airlines, have been banned from EU airspace since 2010 due to safety concerns. In January 2013, the U.S. military ceased contracting with Kam Air on the grounds that it was helping traffic opium; the U.S. military rescinded the ruling after Afghan complaints that questioned the allegation. Mining and Gems Afghanistan's mining sector has been largely dormant since the Soviet invasion. Some Afghan leaders complain that not enough has been done to revive such potentially lucrative industries as minerals mining, such as of copper and lapis lazuli (a stone used in jewelry). The issue became more urgent in June 2010 when the DOD Task Force for Business and Stability Operations announced, based on surveys, that Afghanistan may have untapped minerals worth over $1 trillion. Although copper and iron are the largest categories by value, there are believed to also be significant reserves in Western Afghanistan of such minerals as lithium, which is a crucial component in batteries. However, as noted above, the expected revenue from this sector has not materialized to date because investors have not built rail lines needed to export the minerals from Afghanistan in large volumes. Some experts assert that U.S. hopes for this sector as a driver of long-term economic sustenance for Afghanistan, as several senior U.S. officials have expressed, are misplaced. An additional brake on investment is the lack of legislative action on a new Law on Mines. The Afghan Cabinet approved a draft in February 2013 and sent it to the National Assembly in July 2013, but the Assembly has not acted on it to date. Mes Aynak Copper Field. A major project, signed in November 2007, is with China Metallurgical Group for the company to invest $3.0 billion to develop Afghanistan's Mes Aynak copper field in Lowgar Province. The agreement, viewed as generous to the point where it might not be commercially profitable for China Metallurgical Group, includes construction of two coal-fired electric power plants (one of which will supply more electricity to Kabul city); a segment of railway (discussed above); and a road from the project to Kabul. Work was slowed by various factors, including the need to clear mines in the area and to excavate ancient Buddhist artifacts that local activists insist be preserved. Actual extraction was expected to begin in mid-2012, and still has not begun. U.S. forces do not directly protect the project, but U.S. forces have set up small bases on some of the roads leading to the mine project to provide general stability there. Hajji Gak Iron Ore Project . In September 2011 seven bids were submitted for another large mining project, the Hajji Gak iron ore mine (which may contain 60 billion tons of iron ore) in Bamiyan Province. The bids—from Chinese, Indian, and other firms—were evaluated and, in late 2011, the Steel Authority for India Ltd. (SAIL) was awarded the largest share of the project. One of the four blocs of the project was awarded to Kilo Gold of Canada. The project, involving an investment of nearly $11 billion, is expected to generate $200 million in annual government revenues when fully operational (by 2017), although this level might not be reached unless the associated rail lines are built to allow export in high volumes. SAIL denied reports in May 2015 that it would not proceed with the project, saying only that it had completed an assessment of the costs and benefits of the project. Other mining projects have been awarded (subject to finalized contract negotiations): The Balkhab coooper mine in Sar-i-Pol Province, awarded to Afghan Gold and Minerals Co.; The Shaida copper mine in Herat Province, awarded to Afghan Minerals Group.; The Badakshan gold project, in that province, awarded to Turkish-Afghan Mining Co.; and Zarkashan copper and gold project (Ghazni Province), awarded to Sterling Mining/Belhasa International LLC. Oil, Gas, and Related Pipelines Years of war have stunted developed of a hydrocarbons energy sector in Afghanistan. The country has no hydrocarbons export industry and a small refining sector that provides some of Afghanistan's needs for gasoline or other fuels. Most of Afghanistan's fuel comes from neighboring states; oil and gas account for about a quarter of all imports. However, Afghanistan's prospects in this sector appeared to brighten by the announcement in March 2006 of an estimated 3.6 billion barrels of oil and 36.5 trillion cubic feet of gas reserves, amounts that could make Afghanistan self-sufficient in energy or even able to export. Major projects and contracts include the Angot field in northern Afghanistan, part of a field that may contain 60 million barrels of oil, originally let by the Afghan government to a local firm (Ghazanfar Neft Gas); the Amu Darya basin (northern Afghanistan) oil fields, the development rights to which were awarded to China National Petroleum Co. in 2012. The field began producing at about 5,000 barrels per day in early 2013, with a longer-term potential of 145,000 barrels per day. The $3 billion development has a local partner, the Watan Group, owned by Karzai relatives Rashid and Rateb Popal; the "Afghan-Tajik Basin," estimated to hold 950 million barrels of oil, 7 trillion cubic feet of gas, and other gas liquids (an agreement on extraction was signed in October 2013 with Turkey's state owned TPIC, UAE's Drago Oil, and Ghazanfar); and large oil fields in Balkh Province (which includes Angot field), estimated to hold 1.8 billion barrels of oil; a contract for their development was awarded to China National Petroleum Company. USAID has funded test projects to develop gas resources in northern Afghanistan. One key project was the Shehbergan Gas Development Project, which consisted of a number of gas wells and, in partnership with the private sector, building a 200 megawatt gas-fired thermal plant and associated transmission lines in northern Afghanistan (linking Afghanistan's natural gas field in Shehbergan to the population center in Mazar-e-Sharif). A contract was awarded to the Turkish Petroleum Company to conduct gas drilling, and test drills indicated that commercial amounts of gas exist, though production will likely take 5-7 years once professional exploration begins. USAID's contribution to the roughly $580 million project, which ended in 2016, was $120 million. Another pilot project, funded by the Task Force for Business and Stability Operations, is to develop filling stations and convert cars to use compressed natural gas (CNG), which is produced in the gas field in Shehbergan and could provide an inexpensive source of fuel in the future. During the March 2015 Ghani visit to Washington, DC, the United States and Afghanistan announced forming a "Joint Working Group" to explore ways to support Afghanistan's integration into regional energy markets. TAPI (Turkmenistan-Afghanistan-Pakistan-India) Gas Pipeline Project. Another long-stalled major energy project apparently has begun to move forward. During 1996-1998, the Clinton Administration supported proposed natural gas and oil pipelines through western Afghanistan as an incentive for the warring factions to cooperate. A consortium led by Los Angeles-based Unocal Corporation proposed a $7.5 billion Central Asia Gas Pipeline that would originate in southern Turkmenistan and pass through Afghanistan to Pakistan, with possible extensions into India. The deterioration in U.S.-Taliban relations after 1998 suspended hopes for the pipeline projects. In May 2002, the leaders of Turkmenistan, Afghanistan, and Pakistan signed preliminary agreements on the project and, in 2011, the Asian Development Bank agreed to finance the project. On July 8, 2014, Turkmenistan, Afghanistan, Pakistan, and India signed an operational agreement on the $10 billion pipeline under which Pakistan and India would each get 42% of the gas transported and Afghanistan would get the remainder. India is a large customer for natural gas and its participation is considered crucial to making the venture commercially viable. The leaders of the four countries involved formally "broke ground" on the pipeline at a ceremony in Turkmenistan on December 15, 2015, and work on the Pakistani section began in March 2017. While originally scheduled for completion in 2019, Afghan officials now assess production will begin in 2021. U.S. officials view this project as superior to a proposed gas pipeline from Iran to India, transiting Pakistan. Trade Promotion/Reconstruction Opportunity Zones The key to U.S. economic strategy, as exemplified by the New Silk Road strategy, is to encourage Afghanistan's trade relationships. The United States is promoting regional economic integration, discussed above, as well as bilateral economic agreements between Afghanistan and its neighbors. A key to the strategy was accomplished in 2011 when Afghanistan and Pakistan finalized provisions to implement their 2010 transit trade agreement. To facilitate Afghanistan's ability to increase trade, USAID funded a five-year project ($63 million total during 2010-2014) to simplify the customs clearance process. This includes new import procedures that have reduced the time needed for imports to clear customs by 45%. Afghanistan took a major step forward on building its trade relationships with its July 29, 2016, accession to the World Trade Organization (WTO). Afghanistan applied for membership in 2003 and, in December 2004, the countries of the WTO voted to start membership talks with Afghanistan. Earlier, in September 2004, the United States and Afghanistan signed a bilateral trade and investment framework agreement (TIFA), and most of Afghanistan's exports are eligible for duty free treatment under the enhanced Generalized System of Preferences (GSP) program. The Administration economic strategy report of December 2011 says the Administration is reaching out to Afghan exporters and U.S. importers of Afghan products to make increased use of the GSP program. The TIFA is seen as a prelude to a broader and more complex bilateral free trade agreement, but negotiations on an FTA have not begun. The TIFA is monitored by a joint TIFA "Council" that meets periodically. Another initiative supported by the United States is the establishment of joint Afghan-Pakistani "Reconstruction Opportunity Zones" (ROZs) which would be modeled after "Qualified Industrial Zones" run by Israel and Jordan in which goods produced in the zones receive duty free treatment for import into the United States. Bills in the 110 th Congress, S. 2776 and H.R. 6387 , would have authorized the President to proclaim duty-free treatment for imports from ROZs to be designated by the President. In the 111 th Congress, a version of these bills was introduced ( S. 496 and H.R. 1318 ), and President Obama specifically endorsed their passage during his March 2009 strategy announcement. H.R. 1318 was incorporated into H.R. 1886 , a major Pakistan aid appropriation, but the version of the major Pakistan aid bill that became law ( P.L. 111-73 ) did not authorize ROZs.

The United States, partner countries, and the Afghan government are attempting to reverse recent gains made by the resilient Taliban-led insurgency since the December 2014 transition to a smaller international mission consisting primarily of training and advising the Afghanistan National Defense and Security Forces (ANDSF). The Afghan government has come under increasing domestic criticism not only for failing to prevent insurgent gains but also for its internal divisions that have spurred the establishment of new political opposition coalitions. In September 2014, the United States brokered a compromise to address a dispute over the 2014 presidential election, but a September 2016 deadline was not met for enacting election reforms and deciding whether to elevate the Chief Executive Officer (CEO) position to a prime ministership. The Afghan government has made some measurable progress in reducing corruption and implementing its budgetary and other commitments. It has adopted measures that would enable it to proceed with new parliamentary elections, but no election date has been set. The number of U.S. forces in Afghanistan, which peaked at about 100,000 in 2011, is reportedly about 15,000, of which most are assigned to the NATO-led "Resolute Support Mission" (RSM) that trains, assists, and advises the ANDSF. About 2,000 of the U.S. contingent are involved in combat against Al Qaeda and other terrorist groups, including the Afghanistan branch of the Islamic State organization (ISIL-Khorasan), under "Operation Freedom's Sentinel" (OFS). In August 2017, after several months of deliberation, President Trump announced a new strategy that includes several thousand additional U.S. forces to help Afghan forces break a "stalemate" in combat against insurgent groups, as well as expanded authorities to strike Taliban targets. The strategy also appears to signal a U.S. intent to more assertively pressure Pakistan to deny safe haven to Afghan militants. U.S. officials assert that insurgents control or contest about 40% of Afghan territory, but still are not positioned to overturn the government. In May 2016, the vulnerabilities of the Taliban were exposed when the United States tracked and killed with an unmanned aerial vehicle strike the head of the Taliban, Mullah Akhtar Mohammad Mansour. However, the successor Taliban leadership has continued to produce battlefield gains and rejects new settlement talks with the government. One small insurgent group reached a settlement with the government in late September 2016, but the agreement has not, to date, broadened to other groups. Afghanistan's minorities and women's groups assert concerns that a settlement with the Taliban might erode post-2001 human rights gains. U.S. forces have helped Afghan units kill several successive leaders of the Islamic State affiliate in Afghanistan, but without defeating the group outright. A component of U.S. policy to help establish a self-sustaining Afghanistan is to encourage economic development and integration into regional trading patterns. However, Afghanistan will remain dependent on foreign aid for many years. Through the end of FY2016, the United States provided about $111 billion to Afghanistan since the fall of the Taliban, of which about 60% has been to equip and train the ANDSF. These figures do not include funds for U.S. military operations in Afghanistan. The FY2017 appropriation for the ANDSF is $4.2 billion; allocations to Afghanistan from economic assistance account appropriations have not yet been finalized. For FY2018, the Trump Administration has requested $4.9 billion for the ANDSF, as well as funding for a number of other priorities, including $650 million in economic support.

Introduction The National Health Service Corps (NHSC) is a clinician recruitment and retention program that Congress created to reduce health workforce shortages in locations where providers historically have not served or have not served in numbers sufficient to address the needs of the local population. The NHSC consists of federal and state programs that recruit qualified individuals who agree to serve at approved facilities located in federally designated health professional shortage areas (HPSAs) for a minimum of two years. The federal program awards scholarships to, and makes loan repayment agreements with, individuals; the state programs make loan repayment agreements, only, to individuals. All NHSC scholars and loan repayers (federal and state) must agree to serve for a minimum of two years at an NHSC-approved facility that is located in a HPSA. The federal portion of the NHSC program awards scholarships to individuals studying in (1) a qualified academic program that leads to a degree in medicine (allopathic or osteopathic) or a degree in dentistry, or (2) a qualified program that trains physician assistants, nurse-midwives, or nurse practitioners. Further, NHSC makes loan repayment agreements with eligible providers who may be dental hygienists and mental and behavioral/mental health (BMH) providers, in addition to the aforementioned list of professionals who are scholarship-eligible. In December 2016 Congress passed legislation to clarify that child and adolescent psychiatrists are eligible providers for the NHSC loan repayment program. The state portion of the NHSC's loan repayment program may support all providers who are eligible to participate in the federal scholarship and loan repayment programs, and each state may choose to expand the list of eligible providers to include those who are trained in other disciplines (such as pharmacy or optometry). The NHSC's programs are managed within the Bureau of Health Workforce (BHW) in the Health Resources and Service Administration (HRSA), an agency in the Department of Health and Human Services (HHS). The NHSC was created in the Emergency Health Personnel Act of 1970 to provide an adequate supply of trained health providers in federally designated HPSAs. Throughout its four decades of existence, legislators have authorized and revised the program several times, with the most recent authorization in the Patient Protection and Affordable Care Act (ACA). In 2010, Congress permanently authorized the NHSC in the ACA. In addition, the ACA established the Community Health Center Fund (CHCF), which authorized mandatory appropriations for the NHSC (and the Federal Health Centers Program) from FY2011 through FY2017; required the Secretary of HHS to redefine how HPSAs and Medically Underserved Areas/Populations are designated; implemented a part-time option from which NHSC clinicians (or providers) may choose to fulfill their service commitments; authorized a policy that excludes from taxed income the money that an individual receives from NHSC and similar loan repayment and scholarship programs that are designed to increase health care access in HPSAs or other designated underserved areas; and authorized a policy that permits NHSC clinicians to count time spent teaching at teaching health centers toward the fulfillment of their NHSC service commitment. In addition to this background, this report provides funding trends from FY2011 through FY2017, and a summary of the programs for the NHSC. Funding Until FY2009, and dating back to its inception in 1972, annual discretionary appropriations were the sole funding source for the NHSC. Now the opposite is true, with mandatory funding accounting for all (through FY2017) funding for NHSC. The ACA created the CHCF and provided mandatory funding for it over a five-year period (FY2011-FY2015). The act also directed the transfer of $11 billion total from the CHCF over that period to support the NHSC and federal health center programs; the NHSC received various amounts beginning in FY2011. For FY2016 and FY2017, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10 ) extended the CHCF funding for the NHSC funding transfers, as shown in Table 1 . The FY2017 NHSC funding level is $288.6 million for this program, following a mandatory spending sequester for FY2017 of 6.9% (pursuant to the Balanced Budget and Emergency Deficit Control Act of 1985, as amended). From FY2012 through FY2016, the CHCF was the sole funding source for the NHSC, as no discretionary funds were appropriated to this program during this period. In each of FY2013 through FY2015, these mandatory funds were subject to the mandatory spending sequestration that was required by the Balanced Budget and Emergency Deficit Control Act of 1985, as amended. In FY2015, when authority for NHSC funding through the CHCF expired, this authority was extended through the enactment of MACRA on April 16, 2015. MACRA extended the mandatory funding for the CHCF and authorized a transfer of funds to the NHSC in the amount of $310 million for each of FY2016 and FY2017. However, because this funding extension was enacted after the mandatory spending sequester for FY2016 was calculated by OMB, the FY2016 funding for the NHSC was not included in OMB's sequester calculation, and thus no sequester was ordered. The final FY2016 funding for the NHSC was $310 million, whereas the final FY2017 funding level is estimated to be $288.6 million due to the 6.9% mandatory sequester for FY2017. Recruitment and Retention Programs Various sections in Title III of the Public Health Service Act (PHS Act) authorize clinician recruitment and retention programs as part of the NHSC. NHSC participants must agree to a period of service in a federally designated HPSA in exchange for scholarships and/or loan repayment. If NHSC scholars and loan repayers are in good standing and eligible for additional awards, they may receive continuation awards, thereby extending the clinician's length of service in a HPSA. The NHSC supports programs at the federal and state levels. The federal program supports loan repayments and scholarships, with the loan repayment program making the majority of all federal awards. States participating in the NHSC receive federal funding in the form of matching funds. Nearly all NHSC programs offer continuation agreements to qualified individuals, with the objective of increasing the NHSC clinician field strength and length of time served in a HPSA. Each state has the authority to make awards for loan repayments according to its needs, but in a manner that is consistent with federal regulation. Federal Scholarship Program PHSA Section 338A establishes the NHSC Scholarship Program, which recruits students who are enrolled in medical school, physician assistant programs, dental school, or advance practice nursing school. Qualified students may receive financial support through scholarships, which include tuition, reasonable education expenses, and a monthly living stipend. They must be enrolled in a fully accredited training program, and may receive up to four years of benefits in exchange for a service commitment. With each full year (or partial year) of support after the first year, the student must agree to provide an additional year of service in a HPSA. For example, if a full-time service a scholar receives three years of scholarship support the scholar would owe three years of full-time service at an approved facility. The number of school years of NHSC scholarship support received by the scholar may not exceed four school years. Federal Loan Repayment Program PHSA Sections 338B and 331(i) establish the Federal Loan Repayment Program, which is designed to recruit licensed professionals, including physicians, physician assistants, dentists, dental hygienists, advanced practice nurses, and behavioral/mental health workers. These professionals must be employed or have accepted an offer to be employed at an NHSC-approved work site. Federal loan repayers have a choice of service options based on full- or part-time service. For full-time service, a loan repayer may receive amounts up to $50,000 for an initial two-year obligation, when serving at an NHSC-approved site with a HPSA score of 14 or above. Also, for full-time service, a loan repayer who serves at an NHSC service site with a HPSA score of 13 or lower is eligible to receive up to $30,000 for an initial two years of service. Federal Students to Service (S2S) Loan Repayment Program PHSA Section 338B establishes authority for the Secretary of HHS to create the Students to Service (S2S) Loan Repayment Program, which began in 2012. The S2S program provides assistance of up to $120,000 to medical students (allopathic and osteopathic) in their final year of medical school. In return for the loan repayment, the S2S loan repayer must complete an approved primary care residency in a HPSA of the greatest need for at least three years (full-time option) or six years (half-time option). Instead of completing a primary care residency, the S2S loan repayer may complete post-graduate training as an intern or geriatrics fellow in an approved specialty for a period of one year. State Loan Repayment Program PHSA Section 338I authorizes the State Loan Repayment Program. The State Loan Repayment Program is similar to the Federal Loan Repayment Program, except that (1) it is a matching grant between the state and the NHSC, and (2) states may choose to expand or contract the number of clinicians (or providers) in their program. States have the option of addressing their unique workforce needs by choosing from additional types of professionals, such as registered nurses and pharmacists (who are ineligible to participate in the federal loan repayment program). Federal statute, regulation, and a program document provide additional guidance for clinician selection in the State Loan Repayment Program. Special Loans for Former Corps Members to Enter Private Practice PHSA Section 338G establishes an additional option for NHSC participants. This provision authorizes the Secretary to make a single loan to an NHSC member on the condition that the member must serve as a full-time private practice provider in a HPSA for a minimum of two years, in exchange for a loan in amounts up to $25,000. This option has never been implemented. Trends in Recruitment From FY2011 through FY2016, the most recent data, the NHSC offered an estimated 27,000 loan repayment agreements and scholarship awards to individuals who have agreed to serve for a minimum of two years in a HPSA. The following is a summary of those awards: 23,854 federal loan repayment agreements (new and continuing), 1,084 scholarship awards (new and continuing), 322 students to service agreements (new only), and 2,206 state loan repayment awards (defined by each state). The NHSC awarded an estimated 15,303 new federal loan repayments from FY2011 through FY2016, averaging 3,061 new federal loan repayments annually. A significant increase in new federal loan repayments was awarded in FY2011, when the NHSC awarded 4,113 new federal loan repayments, the largest number of new loan repayments issued in a single year during FY2011-FY2015. This increase was made possible by a larger program appropriation in FY2011. Table 2 shows NHSC clinician recruitment activity for the NHSC's active programs, by type of award, from FY2011 through FY2016 (the FY2017 operating budget is not yet available). Trends in Field Strength and Composition NHSC recruits, who remain committed to serve in a HPSA, eventually become the providers that make up its field strength. Field strength is the number of NHSC providers who are fulfilling a service obligation in a HPSA in exchange for a scholarship or loan repayment agreement. In FY2015, the most recent data available, total NHSC field strength was 9,683, which enabled NHSC providers to serve an estimated 10.2 million individuals in HPSAs. Changes in the size of the NHSC's field strength are shaped by appropriation levels. For example, increases in funding from FY2010 to FY2011 resulted in a 36% increase in field strength, from 7,530 to 10,279. As the NHSC's field strength size has increased or decreased, the number of individuals served by NHSC providers has been affected. For example, in FY2011, when the NHSC appropriation peaked at $315 million, NHSC providers served 10.5 million individuals, compared with 9.3 million individuals in FY2013 and 10.2 million individuals in FY2015 (see Figure 1 ). The NHSC's workforce composition consists of an increasingly diverse set of health professionals representing mental and behavioral health, medical, nursing, dental and other disciplines. Since FY2010, behavioral/mental health providers are the largest group of providers making up the NHSC's field strength. Physicians and nurse practitioners are the next largest group of providers constituting NHSC field strength. Over time, Congress has requested that the Secretary of HHS consider adding other disciplines to the NHSC. In FY2015, Congress recognized the Secretary's authority to add other disciplines to the NHSC, and urged the Secretary to include pharmacists as eligible to participate in NHSC loan repayment and scholarship programs. In FY2012, the Secretary of HHS expanded eligibility for the NHSC State Loan Repayment Program (SLRP) to include pharmacists. In FY2015, the most recent year for which complete data are available, the following three professional groups made up 73% of the NHSC: 30% are mental and behavioral health providers, 24% are allopathic and osteopathic physicians, and 21% are nurse practitioners (including nurse midwives). The composition of the NHSC workforce continues to be a subject of debate. In FY2009, physicians accounted for nearly 35% of providers and were the largest group of providers in the NHSC. Some argue for diversification of the NHSC workforce, arguing that many rural populations have little or no access to different types of providers, while opponents argue that the NHSC mission might be spread too thin if too many specialists were added to the program. In December 2016, child and adolescent psychiatrists were the newest group of professionals to be added to the list of NHSC-eligible providers for the loan repayment program. Figure 2 shows the NHSC's workforce by provider type in FY2015, the most recent year for which complete data are obtained.

The National Health Service Corps (NHSC) is a pipeline for clinician recruitment and training. Its program objective is to increase the availability of primary care services to populations in Health Professional Shortage Areas (HPSAs). It aims to increase clinician availability by making loan repayments and awarding scholarships to individuals in exchange for their agreement to serve as NHSC clinicians (or providers) at approved sites. NHSC providers are mainly physicians, physician assistants, nurse practitioners, and behavioral/mental health professionals who must serve for a minimum of two years at an approved facility. An approved facility, for example, may be a Federally Qualified Health Center (FQHC) and FQHC Look-Alike, American Indian and Native Alaska Health Clinic, Rural Health Clinic, Critical Access Hospital, School-Based Clinic, Mobile Unit, Free Clinic, or Community Mental Health Center, and must be located in a federally designated HPSA. All NHSC providers must fulfill a minimum of two-year service commitment at an NHSC-approved site. The NHSC is administered by the Health Resources and Services Administration (HRSA), within the Department of Health and Human Services (HHS). Congress created the NHSC in the Emergency Health Personnel Act of 1970 (P.L. 91-623), and since then has reauthorized and amended its programs several times. The Patient Protection and Affordable Care Act of 2010 (ACA; P.L. 111-148) permanently reauthorized the NHSC. Legislation to potentially repeal or replace all or parts of the ACA, depending on its scope, may impact NHSC authorization and funding. In 2010, Congress implemented major revisions in the NHSC through the ACA. Most notably, the ACA permanently authorized the NHSC and created the Community Health Center Fund (CHCF), a source of mandatory funding for the NHSC from FY2011 through FY2015. This funding was subsequently extended in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10). MACRA provided $310 million to support the NHSC in FY2016 and FY2017 through the CHCF. MACRA is the sole source of NHSC funds in FY2017. (Because this fund is subject to the mandatory spending sequester, the FY2017 funding level is $289 million.) In addition, the ACA amended statutory authorities pertaining to the NHSC's requirements for part-time service, teaching credits toward service obligations, and exclusions from an individual's gross income for those payments from state loan repayment or loan forgiveness programs that seek to increase health care access in federally designated HPSAs. In FY2015, the most recent annual data available, the NHSC awarded 2,934 new loan repayment agreements; 1,841 continuing loan repayment agreements; 96 student-to-service loan repayments; 620 state loan repayments; 196 new scholarships; and 11 continuing scholarships. In FY2014, the NHSC issued the largest number of awards, 5,620, in a single year. Mental health providers, physicians, and nurse practitioners represented the largest number of NHSC clinicians in recent years. Also, in recent years, congressional appropriators have expressed concerns about updating the methodology for designating areas where NHSC providers are placed, and interest in the possibility of authorizing pharmacists as NHSC clinicians. The 21st Century Cures Act (P.L. 114-255) expanded the list of NHSC providers to include child and adolescent psychiatrists. This report summarizes the NHSC's recruitment and retention programs, and the NHSC's funding trends from FY2010 through FY2017.

Background: Program Framework And Activities1 The International Military Education and Training program (IMET) was formally established in 1976 as part of a restructuring of the United States Foreign Military Sales (FMS) program. It had its antecedents in legislation passed in 1949 that created the grant Military Assistance Program (MAP). IMET, as currently constituted, is intended to be a low-cost policy program to provide training in U.S. Defense Department schools to predominantly military students from allied and friendly nations on a grant basis. The foreign students must speak English and train to U.S. standards, alongside American military personnel and other foreign students. They are offered courses in military skills and doctrine, exposed to the U.S. professional military establishment and the American way of life, including democratic values, respect for internationally recognized human rights, and the belief in the rule of law. Students are also exposed to U.S. military procedures and the manner in which the military functions under civilian control. Through the IMET program, the United States seeks to influence students who may rise to positions of prominence in foreign governments, expose foreign students to a professional military in a democratic society, and professionalize foreign armed forces. It also seeks to strengthen regional relationships while enhancing the self-defense capabilities of U.S. friends and allies, as well as enhancing the ability of the U.S. and participant nations to conduct military operations and peacekeeping activities together. Many nations come to participate in IMET, in part, to enhance their capabilities to utilize effectively the defense articles and services they obtain from the United States. The United States in recent years has annually trained, on average, over 10,000 students from approximately 130 countries through IMET. Formal instruction involves over 2,000 courses, nearly all of which are taught in the United States at approximately 150 military schools and installations. Other activities utilized to achieve IMET goals include orientation tours for key senior military and civilian officials, observer training, and on-the-job training. The United States Coast Guard also provides education and training in maritime search and rescue, operation and maintenance of aids to navigation, port security, at-sea law enforcement, international maritime law, and general maritime skills. Schools Utilized to Accomplish IMET Training Senior Service Schools . The Service War Colleges and the National Defense University's (NDU) National War College programs are attended by U.S. and foreign senior military and civilian equivalents. These programs focus on service/national security policy and the politico-military aspects of Service/Defense policies and programs. The Services and the Joint Staff (for the NDU) annually provide invitations to the governments of foreign friends and allies, for foreign student participation. The senior service schools remain a significant element of IMET sponsored training. The specific schools and their locations are as follows: NDU, Fort McNair, Washington DC; Army War College, Carlisle Barracks, PA; Navy War College, Newport, RI; Air War College, Maxwell Air Force Base, AL. Professional Military Education (PME) Program s. The United States military services offer numerous programs and courses categorized as professional training. These include Service Command and Staff College programs, basic and advanced officer training in specialized areas such as finance, ordnance, artillery and medicine. PME programs and the senior service school programs combined account for approximately 50% of the annual IMET appropriation. A representative listing of the schools involved include Army Command and Staff College, Fort Leavenworth, KA; Army Logistics Management College, Fort Lee, VA; U.S. Army Infantry School, Fort Benning, GA; Air Force Institute of Technology, Wright-Patterson Air Force Base, OH. English Language Training. The majority of IMET sponsored training is conducted in the United States at Defense Department and U.S. military Service schools, with U.S. military personnel. Therefore, English language proficiency is required. The U.S. Defense Department has assigned the English language training mission to the Defense Language Institute English Language Center (DLIELC), located at Lackland Air Force Base, TX. DLIELC provides resident English language training in state-of-the art facilities. Additionally, DLIELC conducts English language training surveys to evaluate foreign government programs and will assign instructors as a "detachment" to the host country to personally assist in the establishment and maintenance of their English language training program. Expanded International Military Education and Training Program (E-IMET) In 1990, the House and Senate Appropriations Committees initiated a statutory change based on their view that changing world political-military circumstances warranted a new direction for the traditional IMET program, one that would bring an increased emphasis on enhancing the skills and professionalism of both civilian and military leaders and managers of foreign military establishments. The Foreign Operations Appropriations Act for FY1991 ( H.R. 5114 , P.L. 101-513 , signed November 5, 1990) directed the Defense Department to establish a program within IMET focused, in particular, on training foreign civilian and military officials in managing and administering military establishments and budgets; creating and maintaining effective military judicial systems and military codes of conduct, including observance of internationally recognized human rights; and fostering greater respect for the principle of civilian control of the military. Congress earmarked $1 million of the FY1991 IMET Appropriation to be used to establish this program. This initiative is called Expanded IMET, or E-IMET, and each year the Defense Department has broadened the program. Although Congress did not earmark IMET funds to support this program after FY1991, it has in report language noted an expectation that the financial investment in E-IMET be increased. Congress further broadened the program to include participation by members of national legislatures who are responsible for oversight and management of the military, and "individuals who are not members of a government." Because E-IMET is a sub-element of the overall IMET program, it is funded as part of the annual IMET appropriation. The E-IMET initiative is accomplished through educational programs in the United States offered by U.S Defense Department and U.S. military Service schools, by Mobile Education Teams visiting host countries, and by funding military participation in overseas conferences, such as the African American Institutes' seminar on "The Role of the Military in a Democracy" (a joint USAID, World Bank and IMET funded initiative). Although IMET funding can be used for such an initiative (overseas seminars) under the auspices of the E-IMET program when such activities are deemed appropriate, the emphasis and preference is for a longer training experience in the United States that maximizes the students' exposure to the American way of life. Programs for Implementing E-IMET Beginning in FY1991, the Defense Department launched E-IMET by refining some existing programs and initiating new courses through the military departments. Further, new educational programs were established to address the topics of military justice, human rights and civil-military relations. The bulk of this effort is accomplished through three schools: Defense Resource Management Institute, Naval Postgraduate School (NPS), Monterey, CA; Center for Civil-Military Relations, Naval Postgraduate School, Monterey, CA; and the Naval Justice School, Newport, RI. Defense Reso urce Management Institute (DRMI). The Defense Resource Management Institute at the Naval Postgraduate School at Monterey, CA, was tasked with meeting the E-IMET criteria to assist recipients establish processes for more effective defense resources management. DRMI reactivated a two week Mobile Education Team, which takes the curriculum to the host country, and developed two resident programs within the U.S.—the 11-week, mid-level International Defense Management Course, and the four-week Senior International Defense Management Course established for flag-rank military and civilian equivalents. The Naval Justice School . Under Defense Department assistance and guidance, the Naval Justice School established a program to address the topics of military justice and human rights. They developed a multi-phased program, comprised of seminars and resident programs, designed to culminate in the passage of a rewritten military code by their national legislature. Albania was the first nation to legislate into effect its rewritten military code in October 1995. The Center for Civil-Military Re lations (CCMR) . The Center for Civil-Military Relations, located at the Naval Postgraduate School in Monterey CA, was established by DOD's Defense Security Assistance Agency to provide a broad range of innovative graduate level educational programs and research to address the issue of civil-military relations in a democratic society. This program is first conducted as a one week seminar, held in the host country, which is attended by ministers, key parliamentarians, ranking military representatives, and the U.S. Ambassador. It is followed with resident programs within the United States, to include a one year accelerated graduate degree program—the first class of which began in January 1996. Other E-IMET Programs . All E-IMET approved programs are published in an annual E-IMET Handbook. The handbook reflects the various programs described above and others covering such topics as equal opportunity, financial management, and maritime law. In addition, the E-IMET effort was recently broadened to include environmental military law and resource management issues. The Value of IMET: Perspectives of Supporters and Critics As worldwide U.S. military assistance funding levels have declined in the post-Cold War era, the IMET program is viewed by its supporters as a valuable tool in support of American foreign policy. IMET, and within it, E-IMET, are seen as a low-cost means of maintaining access to and influencing the military and civilian leaderships of nations with political traditions less democratic in nature than most Western democracies. By making professional military training available to U.S. friends and allies, IMET also enhances the ability of participating countries to make the most of U.S. weaponry they have obtained from the United States, thereby increasing the self-defense capabilities of these nations—and lessening the need for U.S. military forces to be utilized to protect such nations. Advocates of a strong IMET program believe it should be afforded increased funding to build on the programs' successes in the past, and to enable IMET to be extended to more of the emerging nations of the former Soviet Union, while continuing to provide assistance to traditional clients. Critics of IMET argue that it is a relic of the high Cold War era and has been, at best, only marginally successful in advancing United States foreign policy interests. Indeed, IMET opponents believe that much of the training related to human rights issues and exposure to American democratic institutions is conducted in a pro forma fashion, and is, in any event, not taken seriously by many foreign participants. IMET critics argue that a number of the program's notably effective military elements should be drastically curtailed, if not totally eliminated, because they enhance the capabilities of anti-democratic military establishments and associate the United States with their practices. Should IMET focus almost exclusively on training foreign military and civilian participants in U.S. democratic values, institutions, and principles of human rights, they might be prepared to support carefully targeted funding of the program. But in the absence of a substantial re-direction of the program toward these ends, these opponents would support a termination of the program. Current Issues for Congress Funding Level and Focus The level of funding for IMET has increased significantly since FY1995 from $26.35 million to an estimated $91.7 million for FY2004, while overall foreign assistance program funding has continued to decline. The recent funding levels represent a restoration of IMET funding to levels more consistent with those that existed in the late 1980s and early 1990s. It also reflects support for efforts to meet training requirements generated by 29 newly emerging democracies globally. The Defense Department expects the costs associated with the IMET program to increase due to inflation, to growing requirements of Central Europe and the Newly Independent States (NIS), to the increasing popularity of Expanded IMET, and efforts to maintain existing programs in Africa and Latin America. In addition, since FY1994, the United States has placed a strict limitation on the amount of technical and high-cost training in response to an earlier large reduction in IMET funding. Instead emphasis has been placed on the U.S. military services' senior service school programs, professional military educational efforts, Expanded IMET and English language training. As a result, there has been a notable reduction in the proportion of technical training. In FY1995, for example, technical training represented about 17% of the overall IMET appropriation, while professional military education programs constituted over 50% of the appropriation. These facts raise the current issue of whether or not more resources, and possibly more funds, should be made available for technical training. This issue may become more acute as the United States attempts to advance its policy goals in NATO enlargement (which might well require training on NATO interoperable systems), and in seeking to help IMET participants enhance their ability to assume greater roles in international peacekeeping operations. However, any decision to provide additional funding for IMET would mean that those funds could come at the expense of other programs, given current budgetary constraints. Human Rights and IMET In recent years, American concerns with human rights practices of certain nations that were recipients of United States foreign aid has led to restrictions or conditions being placed on their participation in the IMET program. In the case of Indonesia, for example, Congress has required that the President make a number of certifications about the actions of the Indonesian government before funds can be provided under the Expanded IMET program. In some cases, the IMET program represents the major current vehicle for contact between the United States military and its counterparts in countries with a record of human rights violations or a tradition of authoritarian or undemocratic governments. As reductions in the United States Foreign Military Financing program (FMF) continue, IMET is increasingly the remaining military assistance program that Congress can use to sanction nations it finds to be abusing the human rights of its people. At the same time, IMET may also be the only instrument available that might assist in changing the attitudes of military-dominated governments and lead to a reduction in human rights abuses and greater levels of democratic government. A current issue, then, is whether using IMET restrictions to sanction nations with poor human rights records can be an effective means for modifying the behavior of their governments.

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

Introduction The No Child Left Behind Act ( P.L. 107-110 ) amended and reauthorized the Safe and Drug-Free Schools and Communities Act (SDFSCA) within the Elementary and Secondary Education Act (ESEA) as Part A of Title IV—21 st Century Schools. This program will again be considered for reauthorization in the 110 th Congress. SDFSCA is administered by the Department of Education (ED). Grants are awarded to states and at the national level for programs to promote school safety and assist in preventing drug abuse. Although the SDFSC program is the primary federal government program targeted to reduce drug use and violence through educational and prevention methods in the nation's schools, it is one of several substance abuse and violence prevention programs funded by the federal government. In a 1997 report, the General Accounting Office (GAO) identified 70 federal programs authorized to provide services for either substance abuse prevention or violence prevention. ED, the Department of Health and Human Services (HHS), and the Department of Justice (DOJ) administered 48 of the programs. For FY2006, Congress appropriated $568.8 million for the program. For FY2007, the President requested $216.0 million. The House Appropriations Committee recommended $526.0 million for the SDFSC program ($310 million more than requested), and the Senate Appropriations Committee recommended $492.5 million ($276.5 million more than requested). The program continues to operate at FY2006 levels under a continuing resolution through February 15, 2007. For information about reauthorization and appropriations for the SDFSC program, see CRS Report RL33870, The Safe and Drug-Free Schools and Communities Act: Reauthorization and Appropriations , by [author name scrubbed]. Since 1986, when a crack cocaine crisis appeared to be developing among older youth and adults in the nation, drug abuse among students in school has been a congressional concern. In response to the growing concern about crack cocaine and drug abuse in general, Congress passed the Anti-Drug Abuse Act of 1986. In 1994, this legislation was expanded (as discussed below) to include violence occurring in and around schools. GAO stated that in 1994, about 3 million violent crimes and thefts occurred annually in or near schools, which equaled almost 16,000 incidents per school day. The Schools and Staffing Survey (SASS) conducted by the National Center for Education Statistics (NCES) indicated that in the 1993-1994 school year, violence in public schools was on the rise and schools appeared less safe than in the 1987-1988 school year. From the 1987-1988 school year to the 1993-1994 school year, an increasing percentage of public elementary and secondary school teachers reported that physical conflict and weapon possession among students were moderate to serious problems in schools. Similarly, between 1992 and 1995, drug use rates among school-aged youth increased for over 10 different drugs, particularly marijuana, after declining in the 1980s. To address those concerns, on October 20, 1994, President Clinton signed into law the Improving America's School Act ( P.L. 103-382 ), which reauthorized ESEA, and created SDFSCA as Title IV. The 1994 legislation extended, amended, and renamed the Drug-Free Schools and Communities Act of 1988 ( P.L. 100-297 , DFSCA). Violence prevention was added to DFSCA's original drug abuse-prevention purpose by incorporating the Safe Schools Act. Consequently, SDFSCA was intended to help deter violence and promote school safety as well as discourage drug use in and around the nation's schools. Funding was authorized for federal, state, and local programs to assist schools in providing a disciplined learning environment free of violence and drug use, including alcohol and tobacco. This report provides background information about the school safety and drug abuse issues, presents a detailed overview of the various aspects of the SDFSC program as it exists under current law, and discusses an evaluation of the SDFSC program. School Safety Indicators of School Crime and Safety: 2006 ( Indicators Study ), a joint publication by ED and DOJ, provides the most recent federal data on school crime and student safety. The report states that "it is difficult to gauge the scope of crime and violence in schools given the large amount of attention devoted to isolated incidents of extreme school violence." The authors note that the aim of the study is to create good indicators of the current state of school crime and safety across the nation and to periodically monitor and update those indicators, which they believe is required to ensure safer schools. The Indicators Study draws information from a variety of independent data sources, which include national representative sample surveys of students, teachers, and principals, and a complete array of data collected from federal departments and agencies including DOJ's Bureau of Justice Statistics (BJS) and the Federal Bureau of Investigation, NCES, and the Centers for Disease Control and Prevention (CDC). Each data source has its own separate sample design, method of collecting data, and questionnaire design or results from a universe of data collection. The national representative sample surveys used in the report were the National Crime Victimization Survey (NCVS) and School Crime Supplement to NCVS, sponsored by BJS and NCES, respectively, NCES's Schools and Staffing Survey and the School Survey on Crime and Safety , and CDC's Youth Risk Behavior Survey . The Indicators Study noted that in the 2004-2005 school year, an estimated 54.9 million students were enrolled in elementary and secondary schools in the nation. The study showed that violent crime victimization rates of 12- to 18-year-old students at school actually declined from 73 victimizations per 1,000 students in 2003 to 55 such occurrences in 2004. The study observed that despite such a decline, violence, theft, drugs, and weapons continued to pose problems in schools. Preliminary data revealed that 28 youth ages 5 to 18 were victims of school-associated violent deaths from July 1, 2004, through June 30, 2005—that is, 21 homicides and 7 suicides. Those figures translated to about one homicide or suicide of school-aged students at school per 2 million students enrolled during the 2004-05 school year. In 2005, 36% of 9 th through 12 th -grade students reported being in a fight anywhere, while 14% stated that they had been in a fight on school property during the previous year. Also in 2005, the report noted that 28% of 12- to 18-year-old students stated that they had been bullied within the last six months. Males were more likely than females to report being injured as a result of a bullying incident. Furthermore, 24% of such students reported sustaining an injury as a result of bullying incidents. The presence of gangs in schools was reported by 24% of 12- to 18-year-old students in 2005, with a larger percentage of such reports from urban school students than suburban students. This is an increase from the 21% of students who reported the presence of gangs in schools in 2003. In 2004, 12-to-18-year-old students were victims of about 1.4 million nonfatal crimes at school. The incidence of thefts at school was 33 per 1,000 students, compared with 27 thefts per 1,000 students that occurred away from school. The study noted that students were more likely to be victims of theft at school than away from school. In 2005, 43% of students in the 9 th through 12 th grades reported drinking at least one alcoholic beverage anywhere, while 4% drank at least one such beverage at school within the previous month. Also in 2005, 20% of 9 th through 12 th grade students reported using marijuana anywhere within the previous month, while 5% stated that they used the drug on school property during the same time period. Furthermore, in 2005, 19% of such students stated that they had carried a weapon anywhere, while about 6% reported carrying a weapon on school property within the previous month. Hispanic students were more likely to report being threatened or injured with a weapon at school than white students. The Indicators Study stated that "Our nation's schools should be safe havens for teaching and learning, free of crime and violence." It noted, however, that any instance of crime or violence at school might broadly affect not only the persons involved but also might cause disorder in the educational process and the school itself, as well as affect bystanders and the adjacent community. Also, the report found that in 2005, as in both 1999 and 2001, students were more likely to be afraid of being harmed at school than while away from school. In 2005, as grade levels increased, it was found that the percentage of students who reported fearing an attack at school or on the way to or from school declined. The study revealed that feelings regarding safety at school depended on the racial and/or ethnic group, grade level, and school location of the students. In 2005, larger percentages of black and Hispanic students feared attack or harm at school, or on the way to and from school, than white students, regardless of location. Furthermore, students in lower grades generally were more fearful of harm at school, en route to or from school, or away from school, than students in higher grades. Students in urban schools were more likely than those in suburban or rural schools to fear attack both at school or on the way to and from school. Similarly, students in public schools were more fearful of harm than those in private schools. In 2005, 11% of 12- to 18-year-old students revealed that someone at school used hate-related words against them (that is, a derogatory word having to do with race, religion, ethnicity, disability, gender, or sexual orientation). Also, 38% of students reported seeing hate-related graffiti at school (that is, such words or symbols written in classrooms, bathrooms, hallways, or on the outside of the school building). In 2005, females were more likely to report gender-related hate words than males, while males were more likely than female students to report hate words related to both race and ethnicity. Blacks, Hispanics, and students of other races were more likely to report race-related hate words than white students. Furthermore, students in urban schools were more likely than students in suburban or rural schools to be called a hate-related word. Students in public schools were more likely than private school students to report being called a hate-related word and to see hate-related graffiti. Some other significant findings involved threats and attacks on teachers. In the 2003-04 school year (the most recent data available), a smaller percentage of teachers reported that they had been threatened with injury by a student in their school within the previous year than in the 1993-94 and 1999-2000 school years. Also, in 2003-04, teachers were less likely to report being physically attacked than in 1993-94. Between 1993-94 and 2003-04, teachers in central city schools were more likely to be threatened with injury or physically attacked than those who worked in urban fringe areas or in rural schools. Furthermore, in 2003-04, a larger percentage of male teachers than female teachers reported being threatened with injury, while female teachers were more likely to have been physically attacked than their male counterparts. Secondary school teachers were more likely to have been threatened with injury by a student than elementary school teachers, while elementary school teachers were more likely to have reported being physically attacked. Indicators Study Data Questioned Regarding the findings of the Indicators Study 2005 , Kenneth Trump, President of the National School Safety and Security Services (NSSSS), an independent national school safety private consulting firm, stated that data showing a decline in school crime were misleading because they were not based on actual reported crimes. He stated that such "outdated, and limited data is misleading and creates a false sense of security." In November 2004, Trump summarized what he believed to be the situation with school violence nationwide by observing that, "Federal statistics grossly underestimate the extent of school crime and public perception tends to overstate it. Nobody knows exactly how many school crimes occur or whether there is an upward or downward trend because there is no mandatory school crime reporting and tracking laws in the United States." Furthermore, Trump stated that unlike the Federal Bureau of Investigation's Uniform Crime Report, which is based on actual crimes reported, the Indicators Study and similar publications "are based upon limited research studies, academic surveys, and self-report surveys." Trump conducts annual national surveys for the National Association of School Resource Officers (NASRO), which comprises the nation's school-based police officers, and has found that survey results consistently indicated that crime in schools is under-reported to law enforcement. Specifically, the 2003 survey of 728 school resource officers (SROs) showed that over 87% reported that the numbers of crimes occurring on school property nationwide were under-reported to police. Over 61% of SROs believed that the possibility of a school being labeled "persistently dangerous" (which the No Child Left Behind Act makes possible) could lead to school administrators under-reporting school crime. Furthermore, over 88% of survey respondents believed that Congress should pass a law requiring nationwide mandatory, consistent school crime reporting for elementary and secondary schools. School Homicides The Departments of Education and Justice have concluded that violent school deaths are extremely rare events. Therefore, schools remain the safest places for children, although some might perceive them to be dangerous. Research reported by the Journal of the American Medical Association (JAMA) discovered that less than 1% of homicides and suicides among school-aged youth occurred on school property or when traveling to or from school or at school-sponsored events. The Indicators Study states that "violent deaths in schools are rare but tragic events with far-reaching effects on the school population and surrounding." The discussion below about school-related violent deaths presents data collected prior to the 2006 Indicators Study , which, as stated above, is the most recent compilation of federal research available on such incidents. The 1996 Study on School-Related Violent Deaths In 1996, JAMA published the first study investigating violent school-related deaths nationwide, conducted by researchers from CDC, the Safe and Drug-Free Schools and Communities Program at ED, the National School Safety Center (NSSC) of Westlake Village, CA, and the National Institute of Justice of DOJ. The period studied covered two consecutive academic years from July 1, 1992, through June 30, 1994 (specifically, July 1, 1992-June 30, 1993 and July 1, 1993-June 30, 1994). Over the two-year period, 105 school-related deaths were identified. The researchers used a case definition for school-associated deaths as "any homicide or suicide in which the fatal injury occurred on the campus of a functioning elementary or secondary school in the United States, while the victim was on the way to or from regular sessions at such a school, or while the victim was attending or traveling to or from an official school-sponsored event." Deaths of students, non-students, and staff members were included. Researchers discovered the following: As mentioned above, less than 1% of all homicides among school-aged children, 5 to 19 years, occurred in or around school grounds or on the way to and from school; 65% of school-related deaths were students, 11% were teachers or other staff members, and 23% were community members who were killed on school property; 83% of school homicide or suicide victims were males; 23% of the fatal injuries occurred inside the school building, 36% happened outdoors on school property, and 35% occurred off campus; and The deaths occurred in 25 states across the nation and took place in both primary and secondary schools and communities of all sizes. Update of the 1996 Study The December 5, 2001 issue of JAMA contained the results of an update of the 1996 study. Entitled "School-Associated Violent Deaths in the United States, 1994-1999," the study described the trends and features of such deaths from July 1, 1994, through June 30, 1999. Using a definition similar to the 1996 study, a school-related death was defined as "a homicide, suicide, legal intervention, or unintentional firearm-related death of a student or nonstudent in which the fatal injury occurred (1) on the campus of a public or private elementary or secondary school, (2) while the victim was on the way to or from such a school, or (3) while the victim was attending or traveling to or from an official school-sponsored event." Researchers discovered that between 1994 and 1999, there were 220 events that led to 253 school-related deaths. Of the 220 events, there were 172 homicides, 30 suicides, 11 homicide-suicide occurrences, five legal intervention deaths, and two unintentional firearm-related deaths. Several trends were noted in a CDC press release as follows: "School-associated violent deaths represent less than one percent of all homicides and suicides that occur among school-aged children." "Troubled teens often give potential signals such as writing a note or a journal entry, or they make a threat. In over half the incidents that were examined, some type of signal was given." "While the rate of school-associated violent deaths events has decreased significantly during the study time period, the number of multiple-victim events has increased." "More than 50% of all school-associated violent death events occurred during transition times during the school day—either at the beginning or end of the day or during lunch-time." "Homicide perpetrators were far more likely than homicide victims to have expressed previous suicidal behaviors or had a history of criminal charges; been a gang member; associated with high-risk peers or considered a loner; or used alcohol or drugs on a weekly basis. Among students, homicide perpetrators were twice as likely than homicide victims to have been bullied by peers." "The rate of school-associated violent deaths was over twice as high for male students." Researchers concluded and emphasized that such deaths remained rare events but occurred often enough to indicate patterns and to identify possible risk factors. Therefore, this information might assist schools in responding to the problem. Centers for Disease Control and Prevention 2001 Reported Study The CDC, which has been involved in school-associated violent deaths research in collaboration with ED and DOJ (as mentioned above), also collected data to assess whether the risk for such deaths varied during the school year. The case definition for school-associated violent deaths used in this study was the same one that was used in the 1996 study discussed above. Researchers analyzed monthly counts of school-associated homicides and suicides for seven school terms, from September 1, 1992, to June 30, 1999, that occurred among middle, junior, and senior high school students in the nation. For that seven-year period, 209 school-related violent deaths occurred involving either a homicide or a suicide of a student. An average of 0.14 school-related homicide incidents occurred each school day, which translated to one homicide every seven school days. Homicide rates usually were highest near the beginning of the fall and spring semesters and then declined over the subsequent months. An average of 0.03 suicide incidents occurred each school day, which was one suicide every 31 school days. The overall suicide rates were higher during the spring semester than in the fall semester, but did not vary significantly within semesters. The CDC researchers believe that these findings could be useful for school personnel in planning and implementing school violence prevention programs. They point out possible explanations for why high school-related homicide rates were highest at the beginning of each semester. One suggested explanation is that conflicts that began either before or during the semester or holiday break might have escalated into deadly violence when students returned to school for the start of a new semester. Another suggestion was that the beginning of a new semester represented a time of considerable change and stress for students when they have to adapt to new schedules, teachers, and classmates. Such stressors might contribute to violent behavior. For these reasons, they propose that schools should consider policies and programs that might ease student adjustment during the transitional periods. The researchers warn that the results of the study should be interpreted with caution because incidents were identified from news media reports. Therefore, any such event that was not reported in the news media would not have been included in the study. Reports of suicides were of particular concern because media coverage of such events might be limited or discouraged. If under-reporting of suicides did occur, the report states, "coverage probably did not vary by time of year and would not account for the higher rate observed during the spring semester." Source of Firearms Used in School-Related Violent Deaths In March 2003, CDC released findings regarding the source of firearms used by students in the violent deaths of elementary and secondary students that occurred from July 1, 1992 through June 30, 1999. Information on the types of weapons and their sources was obtained by interviewing school and police officials and by reviewing official police reports. CDC found that the majority of weapons used in such school-related violent deaths were obtained from either the perpetrator's home, or from friends or relatives. CDC concluded that "The safe storage of firearms is critically important and should be continued. In addition, other strategies that might prevent firearm-related injuries and deaths among students, such as safety and design changes for firearms, should be evaluated." School-Associated Violent Deaths: CDC's 2006 Update On October 6, 2006, CDC provided an update regarding school associated violent deaths. The update suggested measures that might help prevent school-associated violent deaths as follows: —Encouraging efforts to reduce crowding, increase supervision, and institute plans/policies to handle disputes during transition times that may reduce the likelihood of potential conflicts and injuries; —Taking threats seriously: students need to know who to go to when they have learned of a threat to anyone at the school, while parents, educators, and mentors should be encouraged to take an active role in helping troubled children and teens; —Taking talk of suicide seriously: it is important to address risk factors for suicidal behavior when trying to prevent violence toward self and others; —Promoting prevention programs that are designed to help teachers and other school staff recognize and respond to incidences of bullying between students; —Ensuring at the start of each semester that schools' security plans are being enforced and that staff are trained and prepared to use the plans. Youth Violence Prevention Resources CDC's 2006 update also listed several resources related to youth violence prevention in general that educators, parents, and others might find useful: CDC's Best Practices of Youth Violence Prevention: A Sourcebook for Community Action . This is a source book for Community Action that looks at the effectiveness of violence prevention practices in four basic areas—parents and families, home visitation, social and conflict resolutions skills, and mentoring. Blueprints for Violence Prevention was designed and launched in 1996 by the University of Colorado's (at Boulder) Center for the Study and Prevention of Violence (CSPV). Eleven violence prevention and intervention programs or Blueprints were recognized by DOJ as being effective in reducing youth violent crime, aggression, delinquency, and substance abuse. Youth Violence: A Report of the Surgeon General summarizes a large body of research clarifying youth violence trends, identifying risk factors, and reviewing the effectiveness of particular prevention strategies. Early Warning, Timely Response: A Guide to Safe Schools provides research-based practices intended to assist schools in identifying warning signs early in order to develop plans to prevent, intervene, and respond to crises. The publication was based on the work of an independent panel of experts in the areas of education, law enforcement, and mental health. National School Safety and Security Services Data NSSSS President Trump identifies school-related deaths, shootings, and crisis incidents from print and electronic news sources, professional contacts, and other nationwide sources. NSSSS research on school-related violent deaths is not exhaustive nor is it a scientific study. To monitor such incidents, the organization used the same definition for school-related violent deaths as CDC (that is, including homicides and suicides with firearms), but NSSSS also included other violent, non-accidental deaths (such as fighting and stabbing) and also reported such fatal injuries occurring at parochial schools. Furthermore, NSSSS has collected data for the 1999-2000 school year through the 2006-2007 school term. NSSSS data and a news account (summarized in Table 1 ) show that during those school terms, a total of 232 school-related violent deaths occurred (as of January 19, 2007). The data appear to indicate that school violence incidents declined from 33 in the 1999-2000 school term to 16 in the 2002-2003 school term. A significant increase of such incidents was recorded, however, in the 2003-2004 school year to a high number of 49 deaths. Those deaths included 23 from shootings, 10 stabbings, five suicides, six murder-suicides, four fight-related, and one other death (the cause of death was not specified). NSSSS President Trump noted that those deaths represented more than twice the number of such incidents in the previous two school terms combined. Trump believed that the reasons for the sharp increase in school violence-related deaths included complacency. The April 20, 1999 incident at Columbine High School in Littleton, Colorado has been called the worst school shooting tragedy in the nation's history by some commentators. Two male students armed with handguns and rifles shot and killed 12 classmates, a teacher, and wounded 23 others, before killing themselves. This incident stirred much concern and questions about safety in the nation's schools. Trump stated that "School safety is an on-going process, not a one-time event" (referring to the steps taken following the Columbine tragedy). He noted that after Columbine, many schools immediately adopted emergency and safety plans, but those plans started "collecting dust." Also, he observed that "Staff members were named to task forces or committees, but many of these programs are now inactive. School administrators are under enormous political pressure to raise test scores to meet accountability standards, and they may be too preoccupied to focus on school safety." The number of school-related violent deaths recorded by NSSSS declined to 39 in the 2004-2005 school year, and decreased again to 27 deaths in the 2005-2006 school year. There has been a spate of school-related violent deaths and injuries thus far in the 2006-2007 school year. Experts were reported to be baffled regarding the reasons for such occurrences. There have been 20 school-related violent single deaths as of January 19, 2007. Those incidents included eight shootings, two suicides, eight murder-suicides, and two stabbing deaths. Three high-profile school shootings occurred within two days of each other beginning on September 27, 2006, in Colorado, followed by another in Wisconsin on September 29, and then a multiple shooting in Pennsylvania on October 2, 2006 (discussed below). Multiple Deaths and Injuries From the 1995-1996 school year through the 2000-2001 school term, several school violence incidents occurred that appeared to reflect a pattern of multiple-victim attacks at various schools across the nation. Mark Moore, chairman of a National Research Council/Institute of Medicine Case Studies of School Violence Committee (CSSVC), and fellow committee members stated that "the frequency of student-perpetrated school rampages resulting in multiple victimizations increased dramatically after 1994." CCSVC research showed that from 1974 to 1990 and from 1991 to 2001, the mean number of "student-perpetrated rampages increased from an average of 0.53 incidents per year to an average of 3.27 incidents per year." Although that increase might have skewed the public's perception about the safety of children and youth at school, CCSVC noted that such occurrences were not entirely a new phenomena. CCSVC investigated both lethal school violence, which were incidents involving more than one victim (their core operational definition for most of their work), and "school rampages," which included "cases in which more than one person was injured, and there was a significant potential for lethal violence as well as those in which people were actually killed." The committee observed that the numbers of lethal school violence and school rampage incidents were very small, and that the increase in such incidents in the 1990s might be explained in part by media reporting. CCSVC believed that although such school rampages would have been newsworthy during the earlier period, the media might have been more sensitized to the school shootings issue in the late 1990s and began covering them more diligently than previously. CCSVC concluded that if this was the case, then the increase might partly be explained as the result of more news accounts of such incidents rather than an increase in the basic rate of those events. CCSVC collected data from an assemblage of newspaper accounts (of school-associated violent deaths and injuries) produced and gathered by the National School Safety Center between 1992 and 2001. Using its core definition for lethal school violence, CCSVC separated out such incidents from the NSSC data. CCSVC compiled a list of its estimates of the number of multiple-victim, student-perpetrated school violence incidents in the nation from 1974 to 2001. Their data indicated that between 1974 and 1993, there were 19 incidents of multiple-victim school shootings. From 1995 to 2001, they listed 26 such incidents. Table 2 below draws from CCSVC's compilation of such incidents. The definition the Committee used for listing such occurrences included not only multiple fatalities, but also multiple non-fatal serious injuries. NSSSS data and news accounts indicate that since the 2001-2002 school year, there appear to have been about 38 multiple-victim school-related violent incidents. Such incidents included 40 fatalities and 110 non-fatal violent acts (including shootings and stabbings), for a total of 150 multiple victims. Table 3 , below, lists NSSSS data and information from news accounts about such incidents from the 2001-2002 school year to the 2006-2007 school year (as of December 22, 2006). Interestingly, in the multiple-victim school violence episodes in Colorado and Pennsylvania, a total of 16 female students were traumatized, and six were killed before each of the assailants (who were atypically adult males) committed suicide. Some experts believe that the Pennsylvania incident might have been a case of copycat violence fostered by media attention. James Fox, a criminologist at Northeastern University in Boston, stated that he believes the news media bear some responsibility for the copycat phenomena. He remarked that "This is especially the case when attackers' personalities and grudges are exposed to high-profile public analysis—as when two teenage attackers in the Columbine attack were featured on the cover of a news magazine.... While most sympathize with the victims, others empathize with the shooters. It's the publicity they get that turns the shooter into a celebrity that spawns more of them." Another similarity between the Colorado and Pennsylvania shootings is that in both incidents, girls were the targeted victims. Katherine S. Newman, a Harvard urban studies professor and co-author of the book, Rampage: The Social Roots , who has researched school shootings since the 1970s, observed that "The predominant pattern in school shootings of the past three decades is that girls are the victims.... Though it is impossible to know whether girls were randomly victimized in those cases ..., 'in every case in the U.S. since the early 1970s we do note this pattern' of girls being the majority of victims." Both the Colorado and Pennsylvania multiple-victim shootings occurred in rural settings. Newman reports that it is uncommon for such incidents to occur in urban areas. Revenge, she observed, can be particularly fertile in rural settings. Cheryl Meyer, a Wright State University psychology professor in Dayton, Ohio, has conducted research on school shooting similarities in rural and small towns. She noted that "It's so often about revenge. Even if something happened 20 years ago, it doesn't mean it is gone. People talk about it and everybody remembers. It just trails after you." White House Conference on School Safety The early 2006-2007 school violence incidents and several school lockdowns because of the threat of violence stirred schools across the nation to review school safety issues. Also, the occurrences led President Bush to call for a conference on school safety that was held on October 10, 2006, in Chevy Chase, Maryland. Convened by Attorney General Alberto Gonzales and Education Secretary Margaret Spellings, the purpose of the hour-long meeting was to gather leading school and youth safety experts and concerned citizens to discuss how federal, state, and local governments could work together and discuss best practices for keeping the nation's schools safe learning environments for students. NSSSS President Trump, who attended the conference, observed that the discussions broke no new ground regarding school safety, and that best practices discussed have been well established within the school safety profession since the Columbine tragedy. Also, in follow-up to the conference, Trump and NSSSS called upon Congress to create a bipartisan task force to promote the following recommendations: establish a required K-12 school crime reporting and tracking mandate for schools to report up-to-date actual crime data to law enforcement. The Indicators of School Crime and Safety: 2005 report discusses 2002-2003 school year data, not 2005 onward; revise the Safe and Drug-Free Schools and Communities State Grant program. Remove responsibility for school security, school-based policing, and school emergency planning from ED and place it under DOJ. Drug and alcohol prevention curricula programs, suicide prevention, and similar education and curriculum-based projects should remain under ED in cooperation with HHS. Funding cuts for such projects should be restored to support new restructured programs; restore funding for the Emergency Response and Crisis Management Program, significantly enlarge funds for K-12 school emergency preparedness funding and resources, and move to DOJ the responsibility for this component, along with, as previously stated, school security and school-based policing initiatives; restore funding for the COPS in Schools program conducted by DOJ, and increase funding for local and regional training for school resource officers (SROs) and school administrators concentrating on school violence prevention, school security evaluations, school emergency preparedness planning, and related initiatives; and create legislation that would allow K-12 schools to apply for Department of Homeland Security (DHS) funding for increased security and emergency preparedness to protect against possible terrorist attacks upon schools and school buses. Also, Congress should guarantee that K-12 schools would remain classified as government facilities by DHS, and that such schools are incorporated into National Critical Infrastructure programs. After the conference, ED Secretary Margaret Spellings responded to questions from the public about school safety and other education-related topics of interest on the White House online site "Ask the White House." Four questions were asked about school safety. Replying to one inquiry, the Secretary mentioned some things communities, students, parents, teachers, and school officials could do to help prevent further violence in schools: ... [T]here are some things communities can do to improve school safety such as: ensuring that every school has a comprehensive crisis plan, that every school involves students, parents, law enforcement and community groups in the development of its crisis plan and prevention programs and trains educators in how to use the crisis plan, and that schools ensure that every student is connected to a responsible adult in the school or community. ... [Y]ou as a student can help ensure that schools remain safe. You can do that by reporting threats and criminal incidents, speaking out against those who bully or harass others, and serving as a peer mentor to someone who needs a helping hand. Whether a student, parent, teacher, or school official, one of the most important actions we can take to prevent further violence is to remain aware, watch for warning signs of violence and report them immediately. Drug Abuse Since 1975, the University of Michigan's Institute for Social Research has conducted the Monitoring the Future (MTF) study, funded by the National Institute on Drug Abuse at the National Institutes of Health of HHS. High school seniors and, since 1991, 8 th and 10 th grade youth have been canvassed annually about their behavior, attitudes, values in general, and substance use. At each grade level, responses of students surveyed were used to represent all students nationwide in public and private secondary schools. For the 2006 MTF study, 48,460 students in 410 secondary schools were surveyed about their use of illicit drugs, alcohol, cigarettes and smokeless tobacco within three prevalence periods, that is, lifetime, annual (or 12 months), past month (or 30-day), and daily use. Overall, for 2006, illicit drug use and alcohol consumption continued a decade-long decline. Decreases since 2005, however, were relatively small and, while statistically significant for all grades combined, were not for any one individual grade. Lloyd Johnston, MTF's principal investigator, noted that the "youngest students that we survey—the 8 th graders—have shown the largest proportional drop in their use of nearly all of the illicit drugs since the recent peak rates of the mid to late 1990s..., but their improvements now seem near an end. The older teens, on the other hand, are showing a continuation of their decreases, as they catch up with the progress of the younger age groups. We believe that this reflects what social scientists call a 'cohort effect'...." A cohort effect refers to teens who were previously in lower grades who have entered the upper grades. In 2006, as in 2005, researchers reported that survey results revealed high rates of prescription painkillers use, such as Vicodin and OxyContin, and in abuse of sedatives/barbiturates, especially among 12 th graders. OxyContin use increased among 8 th and 10 th graders, but slightly declined among 12 th graders. Although relatively few youth are using OxyContin, Johnston observed, given the addictive potential of this narcotic drug, there still should be concern about its rates of use among teens. Vicodin use slightly increased among all three grades in 2006, but since 2002, when rates were first measured, its use has remained relatively stable. The use of sedatives, including barbituates, showed a steady increase over a period of years among 12 th graders, whose yearly use of such drugs increased from 1993 to 2005. In 2006, however, such use declined, marking what researchers called "the end of a long rise, but ... still near its recent peak in teen-age use." Furthermore, Johnston noted that "Because most of the illegal drugs like LSD, ecstasy, cocaine, and heroin have shown considerable declines in recent years, while the misuse of prescription-type drugs has been growing, the latter have become a more important part of the country's drug problem." Also, he observed that marijuana is still the most widely used among all illicit drugs and recently, its use has gradually decreased. Among the class of prescribed psychotherapeutic drugs used for purposes other than a medical regimen, researchers found that amphetamines constituted the only drug in this class that had not shown a recent increase in use among teens. A new question was added to the study in 2006 regarding the use of over-the-counter cough and cold medications for the sole purpose of getting high. The street names for those drugs include "DXM," "Dex," and "skittles." The proportion of 8 th , 10 th , and 12 th grade students who reported using such drugs to get high translated to one in every 25 students in 8 th grade and one in 14 high school seniors. Because these types of drugs are sold over-the-counter, researchers noted, most students might not fully understand the dangers in using them. Johnston observed, "If the dangers of using these drugs receive more attention in the media I would expect that their popularity to fade somewhat" (sic). In general, MTF researchers noted that alcohol use has been in decline among teens for many years and continued in all three grades in 2005. In 2006, however, 12 th graders constituted the only group that showed a further decline in 30-day use of alcohol. Teen cigarette smoking rates continued to show a decline in all grade levels in 30-day use with the greatest decrease among 12 th graders. Similarly, smokeless tobacco use declined only among 12 th graders who had used the product 30 days prior to the survey. Survey findings of specific drugs are discussed below. Marijuana Use In 2003, the use of marijuana, the most widely used illicit drug among all grade levels, declined for the second year in a row among 10 th and 12 th graders, and for the seventh year among 8 th graders. In 2004, the decline continued in all grade levels, but was more modest among 10 th and 12 th graders because their use of the drug held steady from 1997 to 2001, before declining. This modest decline in use continued in the upper grades in 2006. Researchers noted that the 30-day prevalence of any illicit drug use, including marijuana, among such students dropped by statistically significant amounts between 2003 and 2004. It was reported that over those two years, there had been significant increases in the proportion of students who perceived marijuana use as dangerous. Researchers believed that this change in perception was a possible explanation for the decline in use. In 2005, however, this increase in perceived risk in marijuana use continued among 12 th graders only. In 2006, for the fifth consecutive year, marijuana use continued to decrease among 10 th and 12 th graders. It appeared, however, that declines in such use among 8 th graders had ended. Although researchers noted that the decline in marijuana use among 8 th graders ended in 2006, Johnston observed that 8 th graders showed the largest proportional drop in the use of nearly all illicit drugs since the peak rates of the mid to late 1990s. Ecstasy Use In 2001, there was a sharp increase in the proportion of students who believed that using ecstasy was dangerous. Also, the rate of use that had increased between 1999 and 2001 began to slow among all students. In 2002, there was another marked rise in the proportion of teens who believed that using ecstasy was dangerous, and a decline in the drug's usage occurred. In 2003, the trend continued with an even sharper decline in ecstasy use as the perceived dangers in using the drug continued to climb. Consequently, since 2002, Johnston observed, "the annual prevalence of ecstasy use fell by more than half among both 10 th and 12 th graders." The declines, however, were much smaller in 2004, and did not reach statistical significance, although such decreases in ecstasy use occurred in all three grades. In 2005, only 12 th graders showed any further decline in ecstasy use. In 2006, 12 th graders showed a slight but insignificant increase in the annual prevalence of ecstasy use. There was very little change, however, in the proportion of 8 th or 10 th graders saying that they used the drug. The perception that there is a great risk associated with experimenting with ecstasy, Johnston believed, accounted for most of the turnaround in ecstasy use prior to 2006. Since 2000, there has been an increased disapproval of ecstasy use among teens that continued among 10 th and 12 th grade students in 2004. Also, fewer students in 2004 believed that the drug was readily available. In 2006, however, Johnston noted that over the past one to three years, there had been a reduction in the proportion of students who believed that using ecstasy was dangerous, or who stated that they disapproved of using the drug. Johnston warned that this change "could be setting the stage for a resurgence in the use of this drug, since use often moves with these beliefs and attitudes." Other Illicit Drug Use In 2006, as previously mentioned, researchers found no or very little decline at any grade level in the use of LSD, hallucinogens other than LSD, cocaine powder, inhalants, crystal methamphetamine ("ice"), heroin, narcotics other than heroin, tranquilizers, sedatives, various club drugs, and steroids. Since 2000, student use of illicit drugs other than marijuana had shown evidence of some decline or had remained steady. Use of anabolic steroids, which are often used to improve strength and muscle mass, continued to decline among 8 th and 10 th graders in 2004. Steroid use remained steady for 8 th graders from 2004 to 2005, and slightly declined for 10 th and 12 th graders for the first time since a decline from 1999 to 2000. None of those reductions continued in 2006, and there were no significant changes in usage rates among students in all three grades. Also, steroid use remained considerably higher among boys than girls. Since 1996, LSD use declined in all three grade levels, but showed a sharp decrease in 2002 and in 2003. There was little change in LSD use in 2004 or in 2005, which kept its use at historic low levels. Perceived LSD availability dropped considerably since 2001. Johnston observed, "Our concern about this drug is that a new generation of young people, particularly the 8 th graders, do not see LSD as dangerous. This leaves them vulnerable to a possible new epidemic of use at some time in the future if easy availability returns." In 2005, the 30-day prevalence of crack cocaine use held steady for 8 th and 12 th graders and slightly declined for 10 th graders. In 2006, only 10 th graders showed a further decline in use of the drug, which was statistically significant, although their belief that there was a great risk in using the drug slightly declined after an increase in that belief in 2005 over 2004. Cocaine powder use slightly increased in 2005 among 8 th graders, declined among 10 th graders, and remained steady among 12 th graders. As previously mentioned, researchers found no or very little decline at any grade level in cocaine powder use in 2006. The belief that there is a great risk in trying crack cocaine once or twice or occasionally among 8 th graders declined in 2006. This perceived risk in using the drug had held moderately steady in 2004 and in 2005. Among 12 th graders, there was a decline in the belief that there is a great risk if crack cocaine was used once or twice or regularly, but data indicated an increase in perceived risk if the drug was used occasionally. The use of inhalants (called "huffing"), after a long and continuous decline in all grade levels, significantly increased among 8 th graders in 2003. Researchers believed that such use among 8 th graders was likely because inhalant products (such as glues, aerosols, butane, paint thinner, and nail polish remover) were inexpensive, legal, and easy to obtain. In 2004, inhalant use among 8 th graders continued to rise, and for the first time in recent years, also increased among 10 th and 12 th graders. In 2005, there was no further increase among 8 th and 10 th graders in such use, but some further increase occurred among 12 th graders. Researchers believed that the increase in use among 12 th graders might reflect a cohort effect, as mentioned above. Researchers noted that over the past four years, the perceived dangers in using inhalants declined among both 8 th and 10 th graders. Johnston observed that "This fact continues to suggest the need for greater attention to this class of drugs in media messages and in-school [prevention] programming." In 2006, as previously stated, researchers found no or very little decline at any grade level in the use of inhalants. Figure 1 , below, depicts the usage levels of any illicit drug within the last 12 months by grade, from 1992 through 2006. Alcohol Use In 2002, some significant declines occurred in teen alcohol use. Quite large drops occurred in the proportion of students in all three grades who said that they had consumed any alcohol in the past year, or in the past 30 days. Those declines were statistically significant for 8 th and 10 th graders. Furthermore, there were decreases in the proportion of students in all three grades who indicated that they got drunk in the past year, and in the past 30 days prior to the survey. In 2003, only 12 th graders showed further decreases in alcohol use in the past 30 days, although the decline was statistically insignificant. Heavy drinking (that is, more than five or more drinks in a row), continued to slightly decline among all grade levels, although none reached statistically significant changes. Alcohol use among 8 th and 10 th graders remained steady in 2004, although there were drops in several alcohol use indicators among all grade levels. Among 12 th graders in 2004, however, levels of drinking increased. Johnston observed "We will have to wait for another year to see if this increase in 12 th grade is a real one, or just a blip in the data." In 2005, alcohol use declined in all three grades. Also, heavy drinking or binge drinking (that is, more than five or more drinks in a row at least once in the prior two weeks), continued to slightly decline among all grade levels. Researchers noted, however, that over the past two years there has been only a modest decrease in binge drinking among 8 th and 10 th graders, and no decline among 12 th graders. There has been an increase among all grades in the perceived risk to health as a result of binge drinking, and an increase in disapproval of such behavior. Only 12 th graders showed a further decline in 30-day prevalence of alcohol use in 2006. Researchers believed that this result suggested that the decline in such use might have ended for 8 th and 10 th graders, but was continuing among the older youth for a while longer as a result of the cohort effect (that is, teens who were previously in lower grades who had entered the upper grades). Survey results showed that there were high prevalence rates among all teens of being drunk at least once during the previous month. Despite those results, the analysts noted that the data actually reflected proportional declines from recent peaks of drunkenness that occurred among the students in previous years, but no further improvement (that is, declines) occurred in 2006. Flavored alcoholic beverages (sometimes referred to as "alcopops" or malternatives") used in the past 30 days were first measured in all grades in 2004. In 2006, the prevalence of such use declined to slightly lower levels among all students than in the previous survey. The analysts reported that despite the fears of some, the use of these types of alcoholic beverages did not appear to be expanding among teens, but rather appeared to have declined somewhat in teen use. The perceived belief that alcohol is readily available if wanted has steadily declined among 8 th graders (that is, they do not believe it is readily available) since 1997, and declined slightly among 10 th graders since 2001. Among 12 th graders, however, more than 90% believe that alcohol is readily available, a belief that has not changed in recent years. Figure 2 , below, shows alcohol use by teens surveyed within the last 30 days before the survey. Cigarette Smoking Cigarette smoking (defined as smoking one or more cigarettes during the past 30 days), which showed a steady increase among all grade levels between 1992 and 1998, continued a decline in 2004 that had begun in 1998 (see Figure 3 ). Johnston and his associates emphasized that these significant reductions translated into the lengthening of many lives and preventing an even larger number of serious illnesses, such as heart disease, stroke, cancer, and emphysema. In 2003 and 2004, the declines continued, but researchers found the rate of decline had slowed considerably. In 2005, the decline in cigarette smoking ended among 8 th graders, whom researchers observed had been the leaders in smoking trends among teens. In addition, although declines in smoking were noted among 10 th and 12 th graders, researchers believed that those decreases would likely end in the near future. In 2004, researchers cautioned that despite the decreases, substantial numbers of teen smokers were evident—25% of 12 th graders, 16% of 10 th graders, and 9% of 8 th graders reported having smoked 30 days prior to taking the survey. One finding that analysts found to be encouraging was that in 2004, the proportion of current smokers had declined by half from mid-1990s peak levels among 8 th and 10 th graders, and by one-third among 12 th graders. Johnston cautioned in 2005: Among the facts that we would like to share with young people who are thinking about taking up smoking are these: In 2005 about half of all 10 th and 12 th graders said that they strongly dislike being near people who are smoking; and 75 percent to 80 percent of them say that they personally prefer to date nonsmokers. It is clear that there is a high social price to be paid for any teen becoming a smoker today, and that's all in addition to the serious costs in terms of one's eventual health and length of life. And, of course, the other fact they should know is that once the smoking habit is established, most people find it terribly difficult to quit. Even though many teenage smokers say they expect to quit, most fail to do so.... MTF researchers reported that after 10 years of substantial improvement in daily smoking among students in their early to mid-teens, the decline has ended. In 2006, there were no further declines in daily smoking among 8 th and 10 th graders. A further decline, however, did occur among 12 th graders, particularly in their half-pack-a-day cigarette use. The 12 th graders have been showing the greatest declines. These results occurred, researchers observed, "as the class cohorts of 8 th and 10 th graders who have previously shown large declines in their use move into 12 th grade." For 30-day prevalence in smoking, all grades showed a small, continuing decline. Most notably, data for monthly smoking among teens were down substantially from the mid-1990s, when such smoking reached a peak. Johnston noted that much fewer students in 2006 had ever tried smoking cigarettes than in 1996, when the peak in lifetime usage was attained. He observed that the decline was expected to continue among 12 th graders as the younger, less tobacco-experienced students move into the 12 th grade. Researchers noted, however, that there appeared to be a leveling off in the decline in cigarette smoking among teens in recent years. They attributed this change to a reduction in anti-tobacco advertising campaigns that were widespread in the mid-1990s after the Tobacco Settlement occurred between major tobacco companies and state attorneys general, focusing on the hazards of smoking and questionable practices of the tobacco industry. The researchers believed these campaigns probably contributed to less favorable attitudes toward smoking. They contend, however, that since the Tobacco Settlement is now over and there are fewer heated public debates regarding the problems with smoking or with the tobacco industry, national anti-smoking ad campaigns have declined and the reduction in teen smoking has diminished. Over the past two years, the proportion of students who believed that smoking was dangerous, Johnston observed, leveled off among 10 th graders and has begun to drop among 8 th graders. He stated, "Generally we have found perceived risk to be an important indicator of changes in future use of a drug, so this is not a favorable development. The good news is that disapproval of cigarette smoking is still rising and is at very high levels among teens." The analysts found, however, that the perceived risk of cigarette smoking among 8 th and 10 th graders is declining (that is, fewer of them believe that smoking is dangerous), and the reductions in the percentages of such youth who smoke cigarettes have ended. In 2000, because of concern about a possible increase in use among teens of small flavored cigarettes imported from India called "bidis," the MTF study introduced a new question regarding their use. Likewise in 2001, because of the same concern, a new question was introduced regarding teen use of clove-flavored cigarettes imported from Indonesia called "kreteks." Relatively small prevalence rates were observed among teens in the use of both types of cigarettes during the initial years of measurement. Since that time, use of the specialty cigarettes dropped substantially and steadily in all grades. By 2006, the decline in the annual use of the specialty cigarettes had continued to steadily drop, which produced a statistically significant decrease. The researchers concluded that both types of specialty cigarettes constituted short-term fads that did not catch on with the nation's mainstream youth, diminishing the likelihood of these types of cigarettes becoming health hazards, as some people had feared. The analysts noted, however, that U.S. tobacco companies had introduced their own flavored cigarettes, which might have influenced the demise of the imported products. Smokeless Tobacco Use In 2003, use of smokeless tobacco (that is, chewing tobacco) continued a decline that began around 1996/1997 among teens. Between 1994 and 2003, the 30-day prevalence of smokeless tobacco use among 8 th graders declined by about one-half, and remained at that level in 2005. Similar to cigarette usage, declines in smokeless tobacco use ended among 8 th and 10 th graders, and such use leveled off in 2006. Only 12 th graders showed evidence of a further decrease in such use probably, researchers believed, because of the cohort effect of teens previously in lower grades entering the upper grades. Johnston observed that the data appeared to be a little deceptive because boys accounted for nearly all smokeless tobacco use, of which one in 9 males in 12 th grade had used the product in 2006. Analysts believed that one important reason for the considerable declines in smokeless tobacco use by teens between 1995 and 2004 was that a growing portion of such youth believed that using the product could be dangerous. That belief showed a slight turnaround in 2005. Johnston noted that in 1995, teens began to get the message that using smokeless tobacco could cause mouth and throat cancer, and were probably deterred from using such products. He believed that a new group of teens would also have to hear the same message if the rates in such use were to remain low. MTF 2004 survey data indicated that using smokeless tobacco was perceived as a great risk among 8 th and 12 th graders (such a perception declined among 10 th graders), but that 8 th and 10 th graders disapproved of its use. The 12 th graders were not asked the question regarding whether they disapproved of the product. Johnston noted that "A rise in disapproval often starts a year after an increase in perceived risk is observed for a drug, which is what we saw here as well. I think a reasonable interpretation of the dynamic is that young people eventually become more disapproving of using a drug after they have come to see its use as dangerous." In 2006, the MTF survey data indicated that fewer 8 th and 10 th graders (compared with the percentage of such students in 2005) believed that using smokeless tobacco regularly could be harmful to one's health, while 12 th graders believed that such use would be a great risk to health. Furthermore, the percentage of such teens who disapproved of using the product declined for 8 th graders, but remained steady for 10 th graders in 2006. Twelfth graders were not asked the question about their attitude toward using the product. MTF researchers reported throughout the survey years (that is, from 1975 through 2005) that smokeless tobacco was primarily used by boys, especially in rural areas. Also, some demographic differences in its use by teens indicated that such use tended to be higher in the South and North Central regions of the nation, than in the Northeast or in the West. Also, as implied above, such use tended to be more focused in non-metropolitan areas than in metropolitan regions. Furthermore, its use was negatively correlated with the education level of the parents, and tended to be higher among Whites than among Black or Hispanic youths. The SDFSC Program The Safe and Drug-Free Schools and Communities Act is administered by the Department of Education. Grants are authorized for state programs and for a variety of national programs to promote school safety and assist in preventing drug abuse in the nation's schools. For the program's appropriations and funding history, see CRS Report RL33870, The Safe and Drug-Free Schools and Communities Act: Reauthorization and Appropriations , by [author name scrubbed]. As previously stated the SDFSC Act is up for reauthorization in the 110 th Congress. How the program is administered under current law is discussed below. State Grants State grants are administered through a formula grant program. Funds for state grants are disbursed as follows: From the total appropriation for state grants each fiscal year, 1%, or $4,750,000 (whichever is greater) is reserved for outlying areas (Guam, American Samoa, the Virgin Islands, and the Commonwealth of the Northern Mariana Islands); 1% or $4,750,000 (whichever is greater) is reserved for the Secretary of the Interior to administer programs for Indian youth; and 0.2% is reserved to provide programs for Native Hawaiians. The remaining funds are distributed to the states (which include the District of Columbia, and the Commonwealth of Puerto Rico), by a formula based 50% on school-aged population and based 50% on ESEA Title I, Part A concentration grants for the preceding fiscal year. No state receives less than the greater of one-half of 1% (0.5%) of the total amount allotted to all of the states, or the amount the state received for FY2001. State grant funds may be redistributed to other states if the Secretary determines that a state will not be able to use the funds within two years of the initial award. Also, funds appropriated for national programs may not be increased unless state grant funding is at least 10% more than the previous fiscal year's appropriation. Language in the FY2005 Consolidated Appropriations Act negated this "limitation" provision. Since the FY2006 national programs appropriation is less than its FY2005 appropriation, the limitation does not appear to apply. Of the total allotted to a state, up to 20% is used by the state Chief Executive Officer (Governor) for drug and violence prevention programs and activities, and the remainder is administered by the State Educational Agency (SEA). The Governor may use not more than 3% of the funds for administrative costs. Those aspects of the SDFSC program are discussed below. The distribution of state funds is depicted in Figure 5 . State Chief Executive Officer's Funds As mentioned above, of the total state allotment, up to 20% goes to the Governor to award competitive grants and contracts to local educational agencies (LEAs), community-based groups, other public entities, private groups, and associations. Grants and contracts are to be used to support the comprehensive state plan for programs and activities that complement an LEA's drug and violence prevention activities. The Governor must award grants based on the quality of the proposed program or activity, and how such program or activity fulfills the principles of effectiveness. Funding priority for such programs and activities must be given to children and youth who are not normally served by SEAs and LEAs, or to populations that require special services, such as youth in juvenile detention facilities, runaway and homeless children and youth, pregnant and parenting teens, and school dropouts. In addition, when awarding funds, the Governor must give special consideration to grantees that seek to accomplish a comprehensive approach to drug and violence prevention efforts that include providing and incorporating into their programs mental health services related to drug and violence prevention. Furthermore, funds must be used to implement and develop drug and violence prevention programs that include activities to prevent and reduce violence related to prejudice and intolerance, to disseminate information about drug and violence prevention, and to develop and implement community-wide drug and violence prevention plans. The Governor may use not more than 3% of the funds for administrative costs. State and Local Educational Agencies Grant Allocations and Activities SEAs can reserve up to 5% of their allotted funds for statewide drug and violence prevention efforts. Funds should be used for planning, developing, and implementing capacity-building, training and technical assistance, evaluating the program, providing services to improve the program, coordinating activities for LEAs, community-based groups, and other public and private entities that are intended to assist LEAs in developing, carrying out, and assessing comprehensive prevention programs that are consistent with the SDFSC mandated requirements. Such uses of the funds are required to meet the principles of effectiveness (discussed below), should complement and support LEA-funded activities, and should be in agreement with the purposes of state activities. Funded activities may include, but are not limited to, identifying, developing, evaluating, and disseminating drug and violence prevention projects, programs, and other information; training, technical assistance, and demonstration programs, to address violence associated with prejudice and intolerance; and providing financial assistance to increase available drug and violence prevention resources in areas that serve numerous low-income children, that are sparsely populated, or have other special requirements. SEAs may use up to an additional 3% of funds for administering the program. At least 93% of SEA funds must be subgranted to LEAs for drug and violence prevention and education programs and activities. Of those funds, 60% are based on the relative amount LEAs received under ESEA Title I, Part A for the previous fiscal year, and 40% are based on public and private school enrollments. Of the amount received from the state, LEAs may use not more than 2% for administrative costs. LEAs are required to use funds "to develop, implement, and evaluate comprehensive programs and activities, which are coordinated with other school and community-based services and programs." Such programs should nurture an environment conducive for learning that is safe and drug-free and supports academic attainment, should be consistent with the principles of effectiveness, and should be designed to prevent or reduce violence, the use, possession, and distribution of illegal drugs, and delinquency. Activities should be included to promote parental involvement in the program or activity, coordination with community organizations, coalitions, and government agencies, and distribution of information about the LEA's needs, goals, and programs that are funded under the SDFSCA. Uniform Management Information and Reporting System States are required to create and maintain a uniform management information and reporting system to provide the public with information about truancy rates, the frequency, seriousness, and incidence of violence and drug-related offenses resulting in suspensions and expulsions in elementary and secondary schools; the types of curricula, programs, and services provided by the Governor, SEA, LEAs, and other fund recipients; and about the incidence and prevalence, age of onset, perception of health risk, and perception of social disapproval of drug use and violent behavior by youth in schools and in communities. The data collected must include incident reports by school officials, and anonymous student and teacher surveys. In addition, the state must submit a report to the Secretary of Education (hereafter, the Secretary) every two years on the implementation, outcomes, and effectiveness of its SEA, LEA, and Governor's SDFSC programs, and on the state's progress toward achieving its performance measures for drug and violence prevention efforts. State Application To receive an allotment, a state must provide the Secretary with an application that contains a comprehensive plan about how the SEA and the Governor will use the funds for programs and activities that will complement and support LEA activities to provide safe, orderly, and drug-free schools and communities; how such programs and activities comply with the principles of effectiveness; and that they are in accordance with the purpose of the SDFSCA. The application must describe how funded activities will promote a safe and drug-free learning environment that supports academic attainment; must guarantee that it was developed by consulting and coordinating with appropriate state officials and others; must describe how the SEA will coordinate its activities with the Governor's drug and violence prevention programs and with the prevention efforts of other state agencies and programs, as appropriate; and must comply with several other additional requirements. LEA Application An LEA must submit an application to its SEA that has been developed through timely and meaningful consultation with state and local government representatives, as well as representatives from public and private schools to be served, teachers and other staff, parents, students, community-based groups, and others such as, medical, mental health, and law enforcement personnel with relevant and demonstrated expertise in drug and violence prevention activities. The application should contain, among other things, an assurance that the funded activities and programs will comply with the principles of effectiveness, promote safe and drug-free learning environments that provide for academic achievement, and contain a detailed account of the LEA's comprehensive plan for drug and violence prevention activities. LEA Limitation LEAs are authorized to use the funds for a wide range of related activities. There is a limitation, however, on the use of funds by LEAs regarding drug and violence prevention activities related to (1) Acquiring and installing metal detectors, electronic locks, surveillance cameras, or other related equipment and technologies; (2) Reporting criminal offenses committed on school property; (3) Developing and implementing comprehensive school security plans or obtaining technical assistance concerning such plans; (4) Supporting safe zones of passage activities that ensure that students travel safely to and from school; and (5) The hiring and mandatory training, based on scientific research, of school security personnel. Not more than 40% of LEA funds may be used to support these five activities. Out of the 40% of LEA funds used for the five activities, not more than one-half of those funds (that is, 20% of the LEA funds) may be used to support the first four activities. An LEA, however, may use up to 40% of the funds for the first four activities, only if funding for those activities is not received from other federal government agencies. Principles of Effectiveness for State and Local Grant Recipients A 1997 study authorized by ED to assess drug and violence programs in 19 school districts across the nation, found that few districts weighed research results when planning their prevention programs nor generally did they use proven prevention approaches with the greatest potential to make a difference among students. Therefore, to improve the quality of drug and violence prevention programs, ED devised four principles of effectiveness for all grant recipients. On July 1, 1998, the Principles of Effectiveness became operative. Under these principles, grantees are required to use SDFSC State and Local Grants Program funds to support research-based drug and violence prevention programs for youth. The principles were adopted by the Secretary to ensure that SEAs, LEAs, Governors' offices, and community-based groups would plan and implement effective drug and violence prevention programs and use funds as efficiently and effectively as possible. The Principles of Effectiveness became mandated requirements under NCLBA. Grant recipients must base their programs on a thorough evaluation of objective data about the drug and violence problems in the schools and communities served; design activities to meet goals and objectives for drug and violence prevention; create and implement activities based on research that provides evidence that the strategies used prevent or reduce drug use, violence, or disruptive behavior among youth; and assess programs periodically to determine progress toward achieving program goals and objectives, and use evaluation results to refine, improve, and strengthen the program, and refine goals and objectives as necessary. National Programs Under National Programs, funding is authorized for various programs to foster safe and drug-free school environments for students and to assist at-risk youth. These activities and programs are discussed below. Federal Activities The Safe Schools/Healthy Students Initiative has been funded under the National Program's federal activities since FY1999. This program is jointly funded with HHS and DOJ to assist school districts and communities in developing and implementing community-wide projects in order to create safe and drug-free schools and to encourage healthy childhood development. For each fiscal year, the Secretary is required to reserve an amount necessary to continue the Safe Schools/Healthy Students initiative. Other SDFSC National Programs collaborative efforts include funding grants with DOJ's Office of Juvenile Justice and Delinquency Prevention (OJJDP) for projects to recruit and train adult mentors to assist at-risk youth in avoiding alcohol, illegal drug use, participation in gangs, and in acts of violence. Another joint project with OJJDP is supporting a National Safe Schools Resource Center to provide training and technical assistance to large urban school districts. Federal activities are authorized to allow the Secretary to consult with the HHS Secretary, the Director of the Office of National Drug Control Policy (ONDCP), and the Attorney General, to administer programs aimed at preventing violence and illegal drug use among students and promoting their safety and discipline. The ED Secretary must carry out such programs directly or through discretionary grants, contracts, or cooperative agreements with public and private entities and persons, or by agreements with other federal agencies, and coordinate such programs with other suitable federal activities. Impact Evaluation The Secretary may reserve up to $2,000,000 to conduct a required evaluation every two years of the national impact of the SDFSC program and of other recent and new enterprises to deter violence and drug use in schools. The evaluation must report on whether funded community and LEA programs complied with the principles of effectiveness, considerably reduced the usage level of illegal drugs, alcohol, and tobacco, lowered the amount of school violence, reduced the level of the illegal possession of weapons at school, conducted effective training programs, and accomplished efficient parental involvement. Similar to the required uniform management information and reporting system for states, under national programs, the National Center for Education Statistics (NCES) must collect data to determine the incidence and prevalence of illegal drug use and violence in elementary and secondary schools in the states. Such data must include incident reports by school officials, and anonymous student and teacher surveys. Furthermore, by January 1, 2003, and subsequently, biennially, the Secretary was required to submit a report on the findings of the impact evaluation to the President and to the Congress. Along with such findings, the Secretary must provide NCES collected data, and statistics from other sources on the incidence and prevalence of drug use and violence in elementary and secondary schools, as well as on the age of onset, perception of health risk, and perception of social disapproval of such behavior among students. In late 2003 or early 2004, ED awarded a contract for an independent impact evaluation of violence and drug prevention programs in schools. ED estimates that the evaluation probably will take five years to complete. Whether interim reports will be issued prior to its completion is not known. The Institute on Educational Sciences (ED's research arm) is working with the contractor. Prior to the No Child Left Behind Act, NCES collected data regarding crime and violence occurring in schools and to and from school. NCES, however, does not collect data on drug use in schools because there are three surveys that ED believes meet this requirement—CDC's Youth Risk Behavior Survey , HHS's National Survey on Drug Use and Health (formerly the National Household Survey on Drug Abuse ), and the HHS funded University of Michigan's Monitoring the Future study discussed in this report. National Coordinator Program In FY1999, the National Coordinator Initiative was created under national programs allowing LEAs to recruit, hire, and train persons to serve as SDFSC program coordinators in middle schools. ED officials believed that middle school students were at the age where they were most likely to begin experimenting with drugs and becoming more involved in violence and crime. SDFSCA continued this permissive activity by expanding coverage for national coordinators to serve as drug prevention and school safety program coordinators in all schools with notable drug and safety problems. The coordinators were responsible for developing, conducting, and analyzing assessments of drug and crime problems at their schools and for administering the SDFSC state grant program. Funding for the National Coordinator initiative was terminated in FY2004. Grants to Reduce Alcohol Abuse The Secretary may award competitive grants, in consultation with the Administrator of the Substance Abuse and Mental Health Services Administration (SAMSHA, within HHS), to LEAs allowing school districts to develop and implement new programs to reduce alcohol abuse in secondary schools. The Secretary may reserve 20% of amounts used for these grants to empower SAMSHA's Administrator to provide alcohol abuse resources and start-up assistance to LEAs receiving the grants. Furthermore, the Secretary may reserve up to 25% of the funds to award grants to low-income and rural SEAs. To be eligible to receive a grant, LEAs must prepare and submit an application to the Secretary containing the following required information: Describing activities that will be administered under the grant; Guaranteeing that such activities will include one or more of the proven strategies that reduce underage alcohol abuse; Explaining how activities to be conducted will be effective in reducing underage alcohol abuse by including information about previous effectiveness of such activities; Guaranteeing that the LEA will submit an annual report to the Secretary about the effectiveness of the programs and activities funded under the grant; and Providing any additional information required. Mentoring Programs176 The Secretary may award competitive grants to eligible entities, that is, LEAs, non-profit community-based groups, or a partnership between an LEA and a non-profit community-based organization, for assistance in creating and supporting mentoring programs and activities for children with greatest need in middle schools. Mentors would assist such students in successfully making the transition to secondary school. The mandate defines a child with greatest need as "a child who is at risk of educational failure, dropping out of school, or involvement in criminal or delinquent activities, or who lacks strong positive role models." A mentor is defined as "a responsible adult, a postsecondary school student, or a secondary school student who works with a child." Grants, which will be made available for an obligation of up to three years, may be awarded to eligible entities for mentoring programs that are designed to link children with greatest need, especially those living in rural areas, high-crime areas, stressful home environments, or children experiencing educational failure, with mentors who have been trained and supported in mentoring; screened with appropriate reference checks, child and domestic abuse record checks, and criminal background checks; and who have been deemed as interested in working with such children. Mentors are expected to achieve one or more of several goals with respect to the children including—providing general guidance; fostering personal and social responsibility; increasing participation in, and enhancing the ability to profit from elementary and secondary school; discouraging the illegal use of drugs and alcohol, violent behavior, using dangerous weapons, promiscuous behavior, and other criminal, harmful, or potentially harmful behavior; encouraging goal setting and planning for the future; and discouraging gang involvement. When awarding grants, the Secretary must give priority to each eligible entity that provides adequate service for children with greatest need who live in rural areas, high crime areas, reside in troubled homes, or who attend schools with violence problems; provides high quality background screening of mentors, training for mentors, and technical assistance in administering mentoring programs; or that plans a school-based mentoring program. The Gun-Free Schools Act The Gun-Free Schools Act, which was Title XIV, Part F of the ESEA, was incorporated as part of SDFSCA because of its close relationship with the SDFSC program. This provision calls for each state receiving funds under the No Child Left Behind Act to have a law that requires LEAs to expel for one year any student bringing a weapon to school. The chief administering officer of an LEA, however, can modify the expulsion requirement on a case-by-case basis. In order to receive funds under the SDFSCA, an LEA must have a policy requiring that any student who brings a firearm or weapon to school will be referred to the criminal justice or juvenile delinquency system. Program Assessment Rating Tool (PART) PART is an instrument that was developed by the Administration to examine the performance of certain programs across federal agencies. It was used in 2004 for the first time, and the SDFSC State Grants component of the SDFSC program was selected to be rated by the instrument. The SDFSC State Grants component was found to be "ineffective" by PART because ED was unable to demonstrate that those programs worked and because state grant funds were distributed too thinly to support quality interventions. Consequently, the Administration proposes to terminate the state grants program in FY2007. ED has explained that the department's strategy to determine whether positive outcomes are occurring as a result of the state grants program is using national survey data from CDC's Youth Risk Behavior Surveillance System to determine how widespread are teen drug use and violence, along with data on the extent SDFSC state grant recipients implement research-based programs. Also, ED is conducting an evaluation "using rigorous methodology for measuring the impact of promising interventions, and supporting grants and technical assistance to help States improve the collection, analysis, and use of data to improve the quality, and report the outcomes, of their SDFSC programs."

The No Child Left Behind Act (P.L. 107-110), amended and reauthorized the Safe and Drug-Free Schools and Communities Act (SDFSCA) as Part A of Title IV—21st Century Schools. The act is up for reauthorization in the 110th Congress. The Department of Education (ED) administers SDFSCA through the SDFSC program, which is the federal government's major initiative to prevent drug abuse and violence in and around schools. State grants are awarded by formula to outlying areas, state educational agencies, and local educational agencies in all 50 states, the District of Columbia and the Commonwealth of Puerto Rico. Also, funds go to state Governors for creating programs to deter youth from using drugs and committing violent acts in schools. National programs are supported through discretionary funds for a variety of national leadership projects designed to prevent drug abuse and violence at all educational levels. Other federally sponsored substance abuse and violence prevention programs are administered in the Departments of Justice, Health and Human Services, and other agencies. Those programs are not discussed in this report. A joint Department of Education and Department of Justice (DOJ) study (Indicators of School Crime and Safety: 2006) states that "Our nation's schools should be a safe haven for teaching and learning free of crime and violence.... However, it is difficult to gauge the scope of crime and violence in schools given the large amount of attention devoted to isolated incidents of extreme school violence." ED and DOJ data show that from July 1, 2004, through June 30, 2005, there were 21 homicides and seven suicides at school of 5- to 18-year-old students, which translated to about one homicide or suicide of such a student at school per 2 million students enrolled in the 2004-05 school year. Also, in 2004, 12- to-18-year-old students were victims of about 1.4 million nonfatal crimes at school. A spate of school violence deaths and injuries occurred early in the 2006-2007 school term, prompting renewed interest in the issue, including a White House conference on school safety. A study conducted by the University of Michigan (2006 Monitoring the Future), revealed a continued general decline in illicit drug use by all 8th, 10th, and 12th grade students. In 2006, very little or no declines in drug use occurred in any grade of such drugs as inhalants, LSD, cocaine powder, methamphetamines, heroin, tranquilizers, sedatives, various club drugs, steroids and others. There was little change in MDMA (ecstasy) use among 8th and 10th graders, but a very small increase in annual use among 12th graders. Marijuana use continued to decline among 10th and 12th graders, but stopped declining among 8th graders. After decreasing slightly in recent years among all grades, crack cocaine use showed a further decline among 10th graders. OxyContin use increased among 8th and 10th graders, but declined among 12th graders. Vicodin use slightly increased among all three grades. Alcohol use, cigarette smoking, and smokeless tobacco use declined only among 12th graders who had used the product 30 days prior to the survey. About one in every 25 8th graders and one in every 14 high school seniors abused over-the-counter cough or cold medications.

What is the Federal Information Technology Acquisition Reform Act? The Federal Information Technology Acquisition Reform Act (FITARA) was enacted on December 19, 2014. The law outlines seven areas of reform that affect how federal agencies purchase and manage their information technology (IT) assets, including— enhancing the authority of agency chief information officers (CIOs); improving transparency and risk management of IT investments; setting forth a process for agency IT portfolio review; refocusing the Federal Data Center Consolidation Initiative (FDCCI) from only consolidation to optimization; expanding the training and use of "IT Cadres," as initially outlined in the "25 Point Implementation Plan to Reform Federal Information Management Technology"; maximizing the benefits of the Federal Strategic Sourcing Initiative (FSSI); and creating a govemment-wide software purchasing program, in conjunction with the General Services Administration. How is FITARA being implemented? On June 10, 2015, OMB published guidance to implement the requirements of FITARA and harmonize existing policy and guidance with the new law. Among other goals, the requirements are intended to— assist agencies in establishing management practices that align IT resources with agency missions, goals, programmatic priorities, and statutory requirements; establish government-wide IT management controls that will meet FITARA requirements while providing agencies with the flexibility to adapt to agency processes and unique mission requirements; establish universal roles, responsibilities, and authorities of the agency CIO and other senior agency officials; strengthen the agency CIO's accountability for the agency's IT costs, schedules, performance, and security; strengthen the relationship between agency and bureau CIOs; establish consistent government-wide interpretation of FITARA terms and requirements; and provide appropriate visibility and involvement of the agency CIO in the management and oversight of IT resources to support the implementation of effective cybersecurity policies. Are other laws affected by FITARA? In addition to implementing FITARA, OMB Memorandum M-15-14, "Management and Oversight of Federal Information Technology," also harmonizes the requirements of FITARA with existing law, primarily the Clinger-Cohen Act of 1996 and the E-Government Act of 2002. Those laws require OMB to issue management guidance for information technology and electronic government activities across the government, respectively. FITARA also contains provisions that required OMB interpretation before implementation. Why was FITARA enacted? The Government Accountability Office (GAO) has reported that the federal government budgets more than $80 billion each year for IT investment. In FY2017, that investment will be more than $89 billion. Unfortunately, these investments often incur "multi-million dollar cost overruns and years-long schedule delays," may contribute little to mission-related outcomes, and in some cases fail altogether. For example— the Department of Defense (DOD) canceled its Expeditionary Combat Support System in December 2012 after it had spent more than a billion dollars, but had not deployed the system within five years of initially obligating funds; the Department of Homeland Security's Secure Border Initiative Network program was canceled in January 2011 after it had spent more than $1 billion because the program did not meet cost-effectiveness and viability standards; the Department of Veterans Affairs' (VA's) Financial and Logistics Integrated Technology Enterprise program, which was intended to be delivered by 2014 at a total estimated cost of $609 million, was terminated in October 2011 due to challenges in managing the program; the Farm Service Agency's Modernize and Innovate the Delivery of Agricultural Systems program, which was to replace aging hardware and software applications that process benefits to farmers, was canceled after 10 years at a cost of at least $423 million, while delivering only about 20% of the functionality that was originally planned; and the Office of Personnel Management's Retirement System Modernization program was canceled in February 2011 after the agency had spent approximately $231 million on its third attempt to automate the processing of federal employee retirement claims. These undesirable results, according to GAO, "can be traced to a lack of disciplined and effective management and inadequate executive-level oversight." FITARA was enacted to reduce the likelihood of such results . What agencies are covered by FITARA? Generally, agencies identified in the Chief Financial Officers (CFO) Act of 1990, as well as their subordinate divisions and offices, are subject to the requirements of FITARA ( Table 1 ). The DOD, the Intelligence Community, and portions of other agencies that operate systems related to national security are subject to only certain portions of FITARA. Additionally, executive branch agencies not named in the CFO Act are encouraged, but not required, to follow FITARA guidelines. How is FITARA implementation monitored? The OMB develops and promulgates guidance based on the codified requirements of FITARA and monitors agency implementation of that guidance. Additionally, Congress monitors the progress of FITARA implementation through audits conducted by GAO and hearings by relevant House and Senate committees. Between FY2010 and FY2015, GAO has made approximately 800 recommendations to OMB and agencies to improve acquisition and operations of IT. As of October 2015, GAO reported that about a third of its recommendations had been implemented. That percentage remained the same in May 2016. Since FITARA was signed into law in December 2014, the Senate has held two hearings and the House has held four hearings on FITARA implementation: Risky Business: Examining GAO 's 2015 List of High Risk Government Programs Senate Committee on Homeland Security and Governmental Affairs (Full Committee) February 11, 2015 Reducing Unnecessary Duplication in Federal Programs: Billions More Could Be Saved Senate Committee on Homeland Security and Governmental Affairs (Full Committee) April 14, 2015 The Role of FITARA in Reducing IT Acquisition Risk Joint Hearing: House Committee on Oversight and Government Reform (Subcommittees on Information Technology and Government Operations) June 10, 2015 The Role of FITARA in Reducing IT Acquisition Risk, Part II — Measuring Agencies' FITARA Implementation Joint Hearing: House Committee on Oversight and Government Reform (Subcommittees on Information Technology and Government Operations) November 4, 2015 The Federal Information Technology Reform Act Scorecard 2.0 Joint Hearing: House Committee on Oversight and Government Reform (Subcommittees on Information Technology and Government Operations) May 18, 2016 Federal Agencies' Reliance on Outdated and Unsupported Information Technology House Committee on Oversight and Government Reform May 25, 2016 What is the status of FITARA implementation? The House Committee on Oversight and Government Reform released a "FITARA scorecard" in conjunction with its November 4, 2015, hearing on the status of FITARA implementation (see Table 1 ). In explaining the scorecard, Representative Gerry Connolly, ranking Member of the Subcommittee on Government Operations and co-author of FITARA, stated: This scorecard is not intended to be a juridical, prescriptive exercise. It is an initial assessment, a point in time snapshot, much like a quarterly report card one might get in a university or school. The intent isn't to punish or stigmatize. It is, in fact, to exhort and urge agencies to seize this opportunity, and use the scorecard as a management tool to better guide decision making and investments within the agency. While the grades themselves are illustrative of overall performance, it is the multiple elements that make up the grades on which agencies and our committee will focus to ensure we deliver on the transformative promise of FITARA. The committee scored agencies across four of the seven requirement areas of FITARA to develop a final score: data center consolidation plans, planned IT portfolio review savings, transparency of IT project risk assessment, and incremental development for IT projects. Across the four metrics and the final score, agencies earned a total of 14 "A" ratings out of 120 total grades. The only agencies to get a passing grade in each of the four categories were the Department of Commerce and the General Services Administration, which both received overall B ratings. What are the next steps in the FITARA implementation process? GAO has stated that legislative oversight of agencies and their progress in implementing FITARA will continue and perhaps increase during 2016, as plans and expectations become more concrete. Another issue to be resolved is that OMB approved 22 out of 24 agencies' original self-assessments and FITARA implementation plans, but GAO found that not all of the self-assessments were accurate. OMB imposed an April 30, 2016, deadline for agencies to submit updated FITARA common baseline self-assessments and GAO has reported that as of May 2016, 22 of the 24 CFO Act agencies had made their plans publicly available.

Federal agencies rely on information technology (IT) to conduct their work, requiring extensive investments in both updating existing IT and developing new IT. The Government Accountability Office (GAO) has reported that the federal government budgets more than $80 billion each year for IT investment. In FY2017, that investment will be more than $89 billion. Unfortunately, these investments often incur "multi-million dollar cost overruns and years-long schedule delays," may contribute little to mission-related outcomes, and in some cases fail altogether. The Federal Information Technology Acquisition Reform Act (FITARA) (P.L. 113-291) was enacted on December 19, 2014, to address this problem. FITARA outlines seven areas of reform to how federal agencies purchase and manage their information technology (IT) assets, including— enhancing the authority of agency chief information officers (CIOs); improving transparency and risk management of IT investments; setting forth a process for agency IT portfolio review; refocusing the Federal Data Center Consolidation Initiative (FDCCI) from only consolidation to optimization; expanding the training and use of "IT Cadres," as initially outlined in the "25 Point Implementation Plan to Reform Federal Information Management Technology" issued by the CIO of the United States; maximizing the benefits of the Federal Strategic Sourcing Initiative (FSSI); and creating a govemment-wide software purchasing program, in conjunction with the General Services Administration. Not all federal agencies are covered by FITARA. Generally, agencies identified in the Chief Financial Officers Act of 1990, as well as their subordinate divisions and offices, are subject to the requirements of FITARA. The Department of Defense, the Intelligence Community, and portions of other agencies that operate systems related to national security are subject to only certain portions of FITARA. The Office of Management and Budget (OMB) published guidance to implement the requirements of FITARA in June 2015 (OMB Memorandum M-15-14). In addition to implementing FITARA, this guidance also harmonizes the requirements of FITARA with existing laws, primarily the Clinger-Cohen Act of 1996 (P.L. 104-106) and the E-Government Act of 2002 (P.L. 107-347). The OMB also monitors agency implementation of FITARA. Congress also monitors the progress of FITARA implementation through audits conducted by GAO and hearings by relevant House and Senate committees. Since FITARA was signed into law, the Senate and House have each held two hearings on overall agency FITARA implementation. OMB imposed an April 30, 2016, deadline for agencies to submit updated FITARA common baseline self-assessments and GAO has reported that as of May 2016, 22 of the 24 CFO Act agencies had made their plans publicly available.

Introduction The 111 th Congress has devoted considerable effort to health reform that seeks to increase health insurance coverage for more Americans and help control increasing costs while improving quality and patient outcomes. H.R. 3962 , the Affordable Health Care for America Act, was passed by the House of Representatives on November 7, 2009. H.R. 3962 is based on H.R. 3200 , America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. One major difference between H.R. 3200 and H.R. 3962 is the addition of Division D, "Indian Health Care Improvement," which would reenact, authorize, and amend the Indian Health Care Improvement Act (IHCIA). Division D differs from much of the other divisions of H.R. 3962 in that it targets a specific population group—American Indians and Alaska Natives, a group that, in general, has lower health status, lower life expectancy, and higher rates of a number of diseases, including diabetes, than the U.S. population as a whole. The goal of the division—to improve the health of American Indians and Alaska Natives—is consistent with the changes proposed in other divisions that also propose to improve health care access and quality, augment the health care workforce, and increase access to mental health services. Provisions to reauthorize and amend IHCIA were also included in H.R. 3590 , the Patient Protection and Affordable Care Act, as passed by the Senate on December 24, 2009. On February 25, 2010, President Obama hosted a health reform summit with congressional Democrats and Republicans in an effort to find common ground and revive stalled legislative activity on health reform. Ahead of the summit, the President released his proposal for a health care overhaul. The President's proposal is based on the Senate-passed bill, including IHCIA reauthorization. It also incorporates several policies from the House-passed measure, as well as a number of the President's priorities and some provisions from Republican-sponsored legislation. 5 The House is preparing to vote on H.R. 3590 , as passed by the Senate, and on an accompanying reconciliation bill ( H.R. 4872 ). The reconciliation bill would change several controversial elements in H.R. 3590 —none of these changes would modify IHCIA—and otherwise amend the underlying legislation so that its budgetary impact meets the reconciliation instructions in last year's budget resolution. If the House approves H.R. 3590 , it will be sent to the President to be signed into law. The reconciliation measure, if approved by the House, would then be taken up by the Senate. Overview of Indian Health Care The Indian Health Service (IHS), an agency in the Department of Health and Human Services (HHS), provides health care for approximately 1.8 million eligible American Indians/Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas. IHS is organized into 12 Areas administered by an Area Office; Areas, in turn, are further subdivided into service units. IHS may provide services directly, or Indian tribes (ITs) or tribal organizations (TOs) may operate IHS facilities and programs themselves through self-determination contracts and self-governance compacts negotiated with IHS. Urban Indian Organizations (UIOs) also provide services using contracts and grants from IHS. IHCIA authorizes many specific IHS activities, sets out the national policy for health services administered to Indians, and states the federal goal for the health condition of the IHS service population, which is to "assure the highest possible health status for Indians and urban Indians." Significantly, IHCIA also authorizes direct collections from Medicare, Medicaid, and other third party insurers. IHCIA also gives IHS authority to grant funding to urban Indian organizations to provide health care services to urban Indians, and establishes substance abuse treatment programs, Indian health professions recruitment programs, and many other programs. The IHCIA was last fully reauthorized by the Indian Health Amendments of 1992, which extended authorizations of its appropriations through FY2000. In 2000, all IHCIA appropriations authorizations were extended through FY2001. Congress has continued to appropriate funds for IHCIA programs since 2001. IHCIA reauthorization has been under consideration in Congress since 1999. In the current Congress, IHCIA reauthorization bills were introduced in the House ( H.R. 2708 ) and the Senate ( S. 1790 ). Another act, the Snyder Act of 1921, provides an additional, but very general, authorization for Indian health programs. The Snyder Act is a permanent, indefinite authorization for federal Indian programs, including for "conservation of health." In 1921, all Indian programs, including health, were under the management of the Bureau of Indian Affairs (BIA) in the Department of the Interior (Interior). The Snyder Act was passed in order to authorize all the activities the BIA was then carrying out. The act's broad language might be read as authorizing—although not requiring—nearly any Indian program, including health care, for which Congress enacts appropriations. The act, however, gives no directions or policies for federal Indian health care. When Congress transferred Indian health care programs from the BIA to the Public Health Service (PHS) in the then-Department of Health, Education, and Welfare (predecessor to the Department Health and Human Services (HHS)) in 1954, the Snyder Act's authorization accompanied the transfer. Overview of Report The Affordable Health Care for America Act ( H.R. 3962 ), as passed on November 7, 2009, would make sweeping reforms of the U.S. health insurance and health care system. H.R. 3962 contains four major divisions: A, B, C, and D. Division A, "Affordable Health Care Choices," focuses on reducing the number of uninsured, restructuring the private health insurance market, setting minimum standards for health benefits, and providing financial assistance to certain individuals and, in some cases, small employers. Division B, "Medicare and Medicaid Improvements," proposes modifications to the largest two health insurance programs to make them consistent with the changes proposed in Division A and to amend other provisions in existing federal statute. Division B also introduces a number of technical changes intended to improve quality of care, reduce federal and state expenditures, and address coverage gaps for both Medicare and Medicaid. Division C, "Public Health and Workforce Development," would amend and expand existing health professions and nursing workforce programs. Division D, "Indian Health Care Improvement," would reenact, authorize, and amend the Indian Health Care Improvement Act (IHCIA). This report does not discuss other Divisions of H.R. 3962 ; reports on these divisions can be found at CRS's website under "Issue in Focus-Health Reform." Proposals in other divisions of H.R. 3962 may also affect American Indians and Alaska Natives. For example, Indian tribes may be eligible for grant or contract programs proposed in H.R. 3962 , may benefit from proposed Medicaid reforms. This report summarizes the provisions of Division D of H.R. 3962 as passed on November 7, 2009. The division contains two titles. Title I contains three sections. Section 3101(a) would replace current IHCIA language with new language that would reenact, amend, and reauthorize all eight titles of IHCIA. Section 3101 (b) and (c) and would make technical corrections to other federal law as necessitated by IHCIA Section 601's creation of a new Assistant Secretary for Indian Health. Sections 3102 and 3103 make changes to Indian programs not in IHCIA. Title II of Division D contains five sections (Sections 3201-3205), three of which amend sections of the Social Security Act (SSA), and none of which amend IHCIA. This report summarizes the major sections of Division D; for analysis of selected provisions and issues in each title of IHCIA and related SSA programs, see pages 22-50 of CRS Report RL33022, Indian Health Service: Health Care Delivery, Status, Funding, and Legislative Issues , by [author name scrubbed]. The first part of this report covers Title I of Division D, especially Section 3101(a). Section 3101(a) contains IHCIA's general provisions and its eight titles: (1) Indian health workforce, (2) health services, (3) health care and sanitation facilities, (4) access to federal reimbursements, (5) health services for urban Indians, (6) IHS organizational improvements, (7) behavioral health programs, and (8) miscellaneous. Most authorizations of appropriations are included in the final section of each IHCIA title. Division D would make each title's authorizations of appropriations permanent and indefinite (as noted above, appropriations authorizations in the current IHCIA expired in FY2000). Sections that include only appropriations authorizations are not summarized in the discussions below. Section 3101(a) would replace current IHCIA language; in doing so it would provide new language for some, but not all, of the existing IHCIA provisions. Sections 3101(b) and 3101(c) make technical corrections to other laws based on IHS organizational improvements made in Section 3101(a); these changes are discussed with the relevant IHS organizational changes. This report's second part covers Title II of Division D. Title II (Sections 3201-3205) includes provisions related to improving Indian health care provided through federal health programs authorized in the Social Security Act (SSA)—Medicare, Medicaid, and the Children's Health Insurance Program (CHIP). These sections amend the SSA and cross-reference a number of provisions included in Section 3101(a), especially IHCIA Title IV, which, among other things, amends the current IHCIA as it relates to these SSA programs. These two titles will be discussed separately with appropriate cross-references. For Title I of Division D, in most instances, the discussion of each IHCIA title begins with some background on current law to provide context for the descriptions of the bill's provisions. The Appendix includes a list of acronyms used in this report. The Children's Health Insurance Program Reauthorization Act of 2009 renamed the State Children's Health Insurance Program and its acronym, SCHIP. The program is now the Children's Health Insurance Program, or CHIP. The text of Division D in H.R. 3962 refers to this program as SCHIP, but this report uses the new acronym, CHIP. The term "Secretary," as used in this report, means the Secretary of HHS, unless otherwise indicated. The term "Indian" in this report refers to "Indian" as defined in IHCIA and maintained in Section 4 below. Under this definition, an Indian is a person who is a member of a federally recognized tribe, band, nation, or other organized group or community, including any Alaska Native village or group, or regional or village corporation, as defined in or established pursuant to the Alaska Native Claims Settlement Act. The report also includes, in footnotes, instances where there are potential technical errors in the bill. This report will be updated to reflect future legislative actions. Title I of Division D: IHCIA Reauthorization Federal Indian Health Policy and IHCIA Definitions Section 3. Declaration of National Indian Health Policy This section would declare that national policy, in fulfillment of special responsibilities and legal obligations to Indians, is to assure the highest possible health status for Indians and urban Indians and to provide all resources necessary to effect the policy; to raise Indian and urban Indian health status to that set forth in the Healthy People 2010 national health agenda; to allow Indians to the greatest extent possible to set their health care priorities; to increase health professions degrees awarded to Indians so that the proportion of Indian health professionals is the same as the general population in each IHS area; to require meaningful consultation with ITs, TOs, and UIOs; and to fund Indian-operated programs and facilities at the same level as IHS-operated programs and facilities. Section 4. Definitions This section would define 28 terms. It would maintain 12 definitions in current law, amend five current definitions, delete three terms, and define 11 new terms. The new terms include "accredited and accessible", "Assistant Secretary", "behavioral health," "California Indians," "contract health service," "Department," "Indian Health Program," "reservation," "telehealth," "telemedicine," and "Tribal Health Program." The report uses the following terms: "Indian Health Program" (IHP), which is defined as any health program administered by the IHS or by an IT or TO under either the Indian Self-Determination and Education Assistance Act, as amended (ISDEAA), or the Buy Indian Act; and "Tribal Health Program" (THP), which is defined as any tribe or tribal organization operating a health program under ISDEAA. THPs are included within the term IHP. Indian Health Workforce22 IHCIA Title I in Section 3101(a) includes provisions related to personnel recruitment, scholarships, and other educational programs that would address the Indian health workforce. IHS has high vacancy rates in many of its health professions––over 20% for physicians, dentists, and nurses, for instance, as of December 2008. The purpose of IHCIA Title I is to increase the number, and also enhance the skills, of Indian and non-Indian health professionals and other health personnel in the IHS. To do this, the title would authorize scholarships for preparatory and professional schools. Compared with current law, H.R. 3962 would add UIO programs and employees, where possible, as eligible for workforce programs. It would also expand the right to a "retention bonus" to all health professionals employed in or assigned to IHP or UIO programs. Section 102. Health Professions Recruitment Program for Indians This section would authorize grants to THPs or UIOs, and public and nonprofit entities for recruitment programs, to include identifying Indians with potential for entering health professions, publicizing funding sources, and establishing programs to facilitate enrollment in health professions courses of study. This section also includes requirements for funding applications, and the amount of funding, in addition to outlining the eligibility for these programs, and establishing a three year grant period. Section 103. Health Professions Preparatory Scholarship Program for Indians This section would authorize scholarships to Indians for compensatory pre-professional education as well as undergraduate education leading to a baccalaureate degree in a preparatory field for a health profession. The pre-professional scholarships would be awarded for up to two years on a full-time basis, and undergraduate scholarships would be awarded for up to four years (with an extension of up to two years). This section also would specify the expenses covered by the scholarship and would specify that scholarships cannot be denied on scholastic achievement if the applicant has already been admitted or maintains good standing at an accredited institution, or denied because of the applicant's eligibility for assistance under other federal programs. Section 104. Indian Health Professions Scholarships This section would authorize scholarships to Indians enrolled full- or part-time in accredited schools pursuing courses of study in the health professions, in accordance with Section 338A of the Public Health Service Act (PHSA). Scholarship recipients would be obligated to serve at an IHS, THP, or urban Indian health project (UIHP), or in a private practice located in a health professional shortage area that has a substantial number of Indians, for the greater of either one year for each scholarship year or two years. The section would also authorize the Secretary to allocate scholarships among health professions based on health services needs, specify guidelines for fulfilling the service obligation in private practice or through teaching, set sanctions for failure to complete service obligations, and permit the Secretary to waive the service obligation under certain circumstances. Section 105. American Indians into Psychology Program This section would authorize the Secretary, acting through the IHS director, to establish a grant program to award grants of not more than $300,000 to each of nine colleges and universities for developing and maintaining Indian psychology career recruitment programs. The sections would require that one grant be awarded to the University of North Dakota to establish a "Quentin N. Burdick American Indians into Psychology Program." The section would also require that grants be awarded to locations throughout the United States to maximize their availability to Indian students, including grants at new locations. In addition, the section would require the Secretary to issue regulations for competitive funding, and would specify conditions of the grants, including recipients' service obligations. The section would authorize an appropriation of such sums as may be necessary to carry out this section. Section 106. Scholarship Programs for Indian Tribes This section would require the Secretary, acting through IHS, to award matching grants to ITs or TOs for scholarships to educate Indians to serve as health professionals in Indian communities. The section would require that entities receiving grants match 20% of the funds. The section would specify (1) the requirements for receiving such funds, the course of study, contract conditions, and specific parameters for a breach of contract; (2) that individuals receiving scholarships would not be permitted to discriminate against patients who receive assistance through the Medicare, Medicaid, and CHIP programs; and (3) the conditions of continuance of funding. Recipients would be required to use the scholarship for tuition and reasonable education or living expenses, to meet their health professions' licensing and educational requirements, and to fulfill service obligations. Recipients may serve in another IHS Area if the tribe and IHS approve and if services are not diminished in the contracting tribe's Area. Section 107. Indian Health Service Extern Programs This section would require that recipients of scholarships under IHCIA Sections 104 or 106 receive preference for IHS employment and authorized employment with IHS, tribal, or urban Indian health programs or with other HHS agencies, during non-academic parts of a year, without regard to competitive or agency personnel limitations. The section would specify that such employment would not be counted towards any active duty service obligation. The section would also authorize an extern program for enrollees in health professions recruitment programs under IHCA Section 102(a), including high school programs, and would specify the timing and length of such employment. Section 108. Continuing Education Allowances This section would authorize the Secretary to provide programs or allowances to encourage specified health professionals and scholarship and stipend recipients under IHCIA Sections 104, 105, 106, and 115 to join or continue in IHS and THPs, and to work in rural or remote areas where significant numbers of Indians reside. These programs or allowances may be used to help individuals to transition into IHPs, including licensing and board or certification examination assistance and technical assistance in fulfilling service obligations. The section would also authorize programs and allowances for IHS and tribal health professionals to take leave of their duty stations for a period of time each year for specified continuing professional education. Section 109. Community Health Representative Program This section would require the Secretary to establish through IHS, IT, and TOs a program of health paraprofessionals, called Community Health Representatives (CHRs), to provide health care, health promotion, and disease prevention services in Indian communities. The section would require the Secretary to establish training and continuing education for CHRs, provide supervision and evaluation systems, and promote traditional tribal health care practices as consistent with IHS standards for health care. Section 110. Indian Health Service Loan Repayment Program This section would require the Secretary to establish a loan repayment program for health professionals who contract to work for a specified time for, or are already employed by, IHPs or UIHPs. The section would specify the individuals eligible for the program and the program's application, selection, and notification processes. It would further specify that the program would give first priority to Indian applicants. The loan repayment program would include payment of principal, interest, and related expenses of school loans up to $35,000 for each year of obligated service and, in addition to this payment, may include an amount to cover tax liability incurred for this payment. This section also includes a number of other program requirements, such as those related to assigning individuals and recruitment programs, and it includes a required annual report to Congress. Section 111. Scholarship and Loan Repayment Recovery Fund This section would establish, within the Department of the Treasury, an Indian Health Scholarship and Loan Repayment Recovery Fund (Fund), consisting of amounts that may be collected from contract breaches under IHCIA Sections 104, 106, and 110, plus any appropriation to the Fund and interest. The section authorizes Fund payments to THPs with health professional needs resulting from breaches of contracts under the three programs, and allows THPs receiving such payments to use them for scholarships and recruitment or employment of health professionals. The section would also require the Secretary of the Treasury to invest any amounts in the Funds that the HHS Secretary determines are not needed to meet current withdrawals. Section 113. Indian Recruitment and Retention Program This section would require the Secretary to fund, on a competitive basis, demonstration projects to enable IHPs and UIOs to recruit, place, and retain health professionals to meet their staffing needs. The section would specify that any IHP or UIO may apply for these funds, and limits funding for a project to three years. Section 114. Advanced Training and Research This section would require the Secretary to establish a program to enable health professionals who have worked for an IHS, THP, or UIHP for a substantial period of time to pursue advanced training or research in areas of study where the Secretary determines a need exists. The section would obligate participants to work for an equivalent period for IHS or a tribal or urban health program, make participants failing to complete such service liable to the United States for the remaining service period, and require equal opportunity to participate in the program for ITs and TOs. Section 115. Quentin N. Burdick American Indians into Nursing Program This section would require the Secretary to make grants to nursing schools, tribally-controlled community and vocational colleges, and nurse-midwife and advanced practice nurse programs to increase the number of nurses serving Indians, through scholarships, recruitment, continuing education, or other programs encouraging nursing services to Indians. The section would specify the criteria that the Secretary would be required to use when making grant awards, and would require that one grant be for the establishment of the "Quentin N. Burdick American Indians into Nursing Program" at the University of North Dakota. The section would specify the uses of grants and the required service obligations for individuals who receive a scholarship under this section. The section would also require that applicants show a connection to a health facility primarily serving Indians. Section 116. Tribal Cultural Orientation This section would require the Secretary to establish a mandatory training program, for appropriate IHS employees serving tribes in each IHS Area, in the history and culture of the tribes they serve and the tribes' relationship to IHS. The section would require the Secretary, to the extent feasible, to develop the program in consultation with the affected ITs , TOs, or UIOs, to implement the program, which includes instruction in Native American studies and traditional health care practices, through tribal community and vocational colleges. Section 117. INMED Program This section would authorize the Secretary to provide grants to colleges and universities to maintain and expand the Indian health careers recruitment program ("Indians Into Medicine Program," or "INMED"), and would require that one of the grants go to the "Quentin N. Burdick Indian Health Programs" at the University of North Dakota. The section would also specify the requirements and regulations for the grant program. Section 118. Health Training Programs of Community Colleges This section would require the Secretary to award grants to accredited and accessible community colleges to assist in establishing health profession education programs leading to a degree or diploma for individuals desiring to practice on or near an Indian reservation or in an IHP. The section would set the maximum first year grant at $250,000. The section would also require the Secretary to award grants to community colleges that already have such programs, and to provide technical assistance and qualified IHS personnel to teach courses. The section would set eligibility requirements for colleges and would give priority to tribally-controlled colleges in IHS Areas if other requirements in the section are met, and would require grantees to provide Indian preference for program participants and advanced training for health professionals. Section 119. Retention Bonus This section would authorize the Secretary to pay retention bonuses to any health professional employed by an IHS, TO, or UIO, in needed positions for which recruitment is difficult, who agree to continue their current employment with IHS, a THP, or UIHP for not less than one year. The health professional must have completed two years of employment in an IHS, IHP, or UIO, or any service obligation from federal scholarships or loan repayment programs. Retention bonuses may be higher for multiple years but may not exceed an annual rate of $25,000. The section would require that the health professional refund the bonus if the term of service is not completed, unless the default is not the fault of the individual. Section 120. Nursing Residency Program This section would require the Secretary to establish a program to enable Indians who are licensed practical nurses, licensed vocational nurses, and registered nurses working for an IHP or UIO for at least one year to pursue advanced training in a residency program. The program shall include a combination of education and work study leading to either an associate or bachelor's degree for specified nursing disciplines or to any advanced degree or certification in nursing and public health. The section would require that participants incur a service obligation time period that is twice the period of time in the program for professional nurses and the same as the period of time in the program for nonprofessional nurses. Section 121. Community Health Aide Program This section would require the Secretary, under authority of the Snyder Act, to develop and operate a Community Health Aide Program (CHAP) in Alaska, under which IHS trains Alaska Natives to provide health care, health promotion, and disease prevention in rural Alaska Native villages. The section would require the Secretary to provide, in a specified manner, a high standard of training to community health aides, to establish a CHAP certification board, and to provide continuing education, close supervision, and a system to review and evaluate CHAP work. The section would prohibit a CHAP dental health aide therapist from performing certain pulpal therapy or extractions without a determination of a medical emergency by a licensed dentist and from performing any other oral or jaw surgeries except for uncomplicated extractions. The section would also authorize the expansion of CHAP, except for the dental health aide therapist program, into a national program, but would require that the expansion not reduce Alaska CHAP funding. The section would require the Secretary to establish a neutral review panel to study the CHAP dental health aide therapist program to ensure that the quality of care is adequate and appropriate. The section would also specify panel membership, and the factors of the study, and would require consultation with Alaska tribal organizations and a report to Congress. Section 122. Tribal Health Program Administration This section would require the Secretary to provide training to Indians in the administration and planning of THPs. Section 123. Health Professional Chronic Shortage Demonstration Programs This section would authorize the Secretary to fund demonstration programs for THPs to address chronic shortages in health professionals. The section would specify the purposes of the demonstration programs, and would require that the programs incorporate an advisory board composed of representatives from tribes and Indian communities served by the program. Section 124. National Health Service Corps This section would prohibit the Secretary from removing a member of the National Health Service Corps (NHSC) from an IHS, IHP, or UIO, or withdrawing funding to support such member, unless the Secretary ensures that Indians will experience no reduction in services. The section would authorize that, at the IHP's request, the services of NHSC personnel may be limited to only the persons eligible for services from that IHP. Section 125. Substance Abuse Counselor Educational Demonstration Programs This section would authorize the Secretary to enter into contracts with or make grants to accredited and accessible tribal community colleges, tribal vocational colleges, and eligible community colleges to establish demonstration programs developing educational curricula for substance abuse counseling. The section would limit grants to three years, with a two year renewal, and would require the Secretary (in consultation with tribes, tribal and community colleges, and eligible community colleges) to issue criteria for approval of applications. The section would also require the Secretary to provide technical and other assistance to grant recipients, and submit an annual report to the President for inclusion in the annual report to Congress. The section would define the term "educational curriculum." Section 126. Behavioral Health Training and Community Education Programs This section would require the Secretary and the Secretary of the Interior, in consultation with IT and TOs, to conduct a study and compile a list of specified types of staff positions within the BIA, IHS, ITs, TOs, and UIOs whose qualifications should include training in the identification, prevention, education, referral, or treatment of mental illness, dysfunction, or self-destructive behavior. The appropriate Secretary would be required to provide training criteria appropriate for each type of position and to ensure that this training is provided. The Secretary would be required, upon request by a IT, TO, or UIO, to develop and implement a program of community education on mental illness, or assist the requester with doing so. The section would also require the Secretary to provide technical assistance for obtaining and developing community education materials. Within 90 days of enactment, the Secretary would be required to develop a plan, to be implemented under the Snyder Act, to increase behavioral health services by at least 500 staff positions within five years, with at least 200 of such positions devoted to child, adolescent, and family services. Section 127. Exemption from Payment of Certain Fees This section would exempt employees of a THP or UIO from the payment of licensing, registration, and other fees imposed by a federal agency, to the same extent that PHS Commissioned Corps officers or other IHS employees are exempt from the fees. Health Services IHCIA Title II in Section 3101(a) would authorize a number of specific non-behavioral-health programs and activities, including prevention activities, diabetes and cancer programs, Indian men's health, Indian school health education programs, research and epidemiological centers, and a fund for the elimination of funding inequities among health care programs. The title would also define the contract health service (CHS) delivery areas in several states. CHS refers to services that IHS, ITs, or TOs may purchase, through contract, from private providers in instances where the THP cannot provide the needed care. Section 201. Indian Health Care Improvement Fund This section would authorize the use of funds, designated as the "Indian Health Care Improvement Fund" (IHCIF), to eliminate tribes' deficiencies in health status and resource (as defined in the section), eliminate backlogs in provision of health care to Indians, meet health needs efficiently and equitably, eliminate inequities in funding for both direct care and CHS, and augment the ability of IHS to meet 10 specified health service responsibilities. The Secretary would be authorized to expend IHCIF funds either directly or through contracts or compacts under ISDEAA. The section would prohibit using funds appropriated under this section to offset funds appropriated under other laws, allow IHCIF allocation among service units and THPs, and require the Secretary to determine (with the participation of affected tribes and tribal organizations) the apportionment of funds among service units, tribes, and tribal organizations for the specified health service responsibilities. The section would make THPs equally eligible for funds with IHS programs and would require that appropriations under this section be included in the base budget of the IHS for subsequent fiscal years. The section would also require a report to Congress three years after enactment on the current health status and resource deficiencies for each tribe or service unit, and would specify the data to be included in the report. In addition, the section would specify that nothing in the section is intended to diminish the primary responsibility of the IHS to eliminate backlogs in unmet health care or to discourage additional efforts by IHS to achieve parity among tribes. Section 202. Health Promotion and Disease Prevention Services This section would make a congressional finding that health promotion and disease prevention activities improve the health and well-being of the Indian population while reducing health care expenses. It would require the Secretary to provide such services to Indians in order to meet the act's health status objectives, and would require the Secretary, after receiving input from THPs, to submit to the President an evaluation statement of the resources required to undertake these health promotion and disease prevention activities. This evaluation statement would be included in annual reports to Congress. Section 203. Diabetes Prevention, Treatment, and Control This section would require the Secretary to determine the incidence of diabetes and its complications among Indians and, based on the incidence determined, what actions IHS service units would need to take to prevent, treat, and control the disease, including effective ongoing monitoring. The Secretary would be required to screen Indians for diabetes and for conditions that indicate a high risk for diabetes; it would require that such screenings be medically indicated and conducted with informed consent. The section would also permit screening through Internet-based programs, and would require the Secretary to establish a cost-effective approach to ensure ongoing monitoring of diabetes indicators. In addition, the section would require the Secretary to maintain existing model diabetes projects and authorize the Secretary to provide dialysis programs for IHS, ITs, and TOs, including equipment and staffing. The Secretary would be required to consult with the ITs and TOs in each IHS area on diabetes programs, establish diabetes patient registries in each IHS Area Office, and ensure that the data collected are disseminated to other Area Offices. The section would also authorize diabetes control officers in each IHS Area Office. Section 204. Shared Services for Long-Term Care This section would authorize the Secretary to provide, directly or through ISDEAA contracts or compacts with THPs, long-term care and health care services associated with long-term care at any long-term care or related facility owned or operated by a THP directly or under ISDEAA. The section would require that the agreements provide for sharing staff and other services between an IHS facility and the contracting IT's or TO's facility. The section would authorize such contracts to allow delegation to the contractors of necessary supervision over IHS employees, and would allow ITs and TOs to construct, renovate, or expand nursing facilities. The section would also specify certain terms of the agreement, including funding allocations, and would also specify that any nursing facility funded under this section must meet the requirements for such facilities under Medicare statute. The section would also require the Secretary to provide necessary technical and other assistance to tribal applicants, and to encourage the use of existing underused facilities or allow the use of swing beds, for long-term or similar care. Section 205. Health Services Research This section would authorize funding for clinical and nonclinical research to further the performance of IHPs' responsibilities. The section would require the Secretary to coordinate HHS research resources and activities to address IHP research needs, to the maximum extent practical. The section would also require that THPs have equal opportunity to compete for these research funds and would require the Secretary to evaluate the impact of the research conducted under this section and disseminate research findings to THPs as appropriate. Section 206. Mammography and Other Cancer Screening This section would require the Secretary to provide for screening mammography for Indian women, at a frequency determined appropriate under accepted national standards and under terms and conditions consistent with standards established by the Secretary under the SSA, to ensure the safety and accuracy of the mammography. The section also would require the Secretary to provide certain other cancer screening that complies with the recommendations of the United States Preventive Services Task Force (USPSTF) on specified factors . Section 207. Patient Travel Costs This section would authorize the Secretary, through IHS, to provide funds for specified patient travel costs associated with receiving IHS-funded health care services, including emergency air transport and non-emergency air transport where ground transport is not feasible; transportation by ambulance, specially equipped vehicle, or private vehicle where no other transportation is available; or other means required when air or motor vehicle transport is not available. The section would also authorize funding for qualified escorts, as defined in the section. Section 208. Epidemiology Centers This section would require the Secretary to establish an epidemiology center in each IHS Area to carry out seven specified functions, in consultation with ITs and tribal and urban Indian communities. An epidemiology center would be subject to ISDEAA. The section would require that the Director of the Centers for Disease Control and Prevention (CDC) provide technical assistance to these epidemiology centers. The section would also authorize the Secretary to make grants to tribes, tribal and urban Indian organizations, and eligible intertribal consortia (as defined) to operate an epidemiology center and to conduct epidemiological studies of Indian communities, and would specify the criteria for applicants and the uses of such grants. The section would further require that epidemiology centers operated under such grants be treated as public health authorities for purposes of the Health Insurance Portability and Accountability Act (HIPAA). In addition, the section would require the Secretary to grant such centers access to and use of data, data sets, monitoring systems, delivery systems, and other protected health information in the Secretary's possession, and would specify that such centers' activities would be required to be, for purposes of HIPPAA, for research or disease prevention and control. Section 209. Comprehensive School Health Education Programs This section would authorize the Secretary to provide grants to ITs and TOs to develop comprehensive school health education programs for children from pre-school through grade 12 in schools for the benefit of Indian children. The section would specify the purposes for which grant funds may be used and would require the Secretary to provide technical assistance to ITs and TOs in developing and disseminating comprehensive health education plans, materials, and information, and, in consultation with these groups, to establish criteria for review and approval of grant applications. The section also would require the Secretary of the Interior, in consultation with the HHS Secretary, to develop similar school health education programs in BIA-funded schools. In addition, the section would specify the subjects the programs must include, and it directs the Interior Secretary to provide teacher training, ensure coordination with community programs, and encourage healthy, tobacco-free school environments. Section 210. Indian Youth Program This section would authorize the Secretary to make grants to ITs, TOs, and UIOs for innovative mental and physical disease prevention and health promotion and treatment programs for Indian and urban Indian preadolescent and adolescent youths. The section would specify the criteria to review and approve applications, and the allowable and prohibited uses of the grants, and would require the Secretary to disseminate information to ITs, TOs, and UIOs regarding models for delivery of comprehensive health care services to Indian youth, encourage the implementation of these models, and provide technical assistance upon request. The section would also prohibit funds provided under this section to be used for Indian youth services described in IHCIA Section 707. Section 211. Projects Related to Communicable and Infectious Diseases This section would authorize the Secretary to make grants to ITs, TOs, and UIOs for projects to prevent, control, and eliminate communicable and infectious diseases, provide public information and education on such diseases, provide education and skills improvement activities on such diseases for health professionals, and establish demonstration projects for the screening, treatment, and prevention of the hepatitis C virus. Grant recipients would be encouraged to coordinate their activities with the CDC and state and local health agencies. The section would also authorize the Secretary to provide technical assistance, upon request, and would require the Secretary to make a biennial report to Congress. Section 212. Other Authority for Provision of Services This section would authorize the Secretary to provide funding, through programs and services of IHS, ITs, and TOs, for health-care-related services and programs (not otherwise specified in the act) for hospice care, assisted living, long-term care, and home- and community-based services. This section would also define these terms: "Assisted living services" would be defined as any service provided by an assisted living facility (as defined in Section 232 of the National Housing Act), although the facility would be exempt from having to obtain a license, but would be required to meet all applicable standards for licensure; "Home- and community-based services" would be defined as certain services listed in SSA Section 1929 that are or will be provided in accordance with applicable standards; "Hospice care" would be defined as certain services listed in SSA Section 1861 and such other services as an IT or TO determines are necessary and appropriate to provide in furtherance of the hospice care; "Long-term care services" would be defined to be the same as "qualified long-term care services" in Section 7702B of the Internal Revenue Code of 1986 (IRC). The section would specify the criteria by which individuals would be eligible for long-term care. The section would also authorize funding, through IHS, tribes, and tribal organizations, for "convenient care services" pursuant to IHCIA Section 306. Section 213. Indian Women's Health Care This section would require the Secretary, acting through IHS, ITs, TOs, and UIOs, to monitor and improve the quality of Indian women's health care delivered through programs administered by IHS. Section 214. Environmental and Nuclear Health Hazards This section would require the Secretary and IHS, in conjunction with other federal agencies and in consultation with concerned tribes and organizations, to conduct studies on trends in health hazards to Indian miners and Indians on or near reservations and in Indian communities as a result of environmental hazards that may result in chronic or life-threatening health problems. The section would specify the subjects of the studies, and would require the Secretary and IHS, upon completion of the studies, to develop health care plans to address the health problems studied, including diagnosis, treatment, preventive care, testing, and education. The section would require the Secretary to submit the study to Congress 18 months after enactment and, no later than one year after the study, submit to Congress a report containing the health care plans, with recommendations for implementation. The section would also establish an Intergovernmental Task Force, chaired by the Secretary, to identify nuclear resource development or other environmental hazards and take corrective action. The section would require IHPs to provide medical care to IHS-eligible Indians who suffer from work-related conditions as a result of employment in uranium mines or mills on or near any other environmental hazard, and would authorize reimbursement from the mine or mill operator or other entity who would be responsible for the expense of such care. Section 217. California Contract Health Services Program This section would authorize the Secretary to fund a program using an intertribal consortium as a CHS intermediary to improve the accessibility of health services to California Indians. The section would require the Secretary to enter an agreement with an intertribal consortium to reimburse the intertribal consortium for costs incurred, including limited administrative expenses while serving as a CHS intermediary. This section references the definitions of California Indians in Section 805 and the California CHS delivery area in Section 218. This section would also specify that no payment may be made for treatment under this section to the extent payment may be made under the Catastrophic Health Emergency Fund (as described below) or from amounts appropriated or otherwise made available to the California CHS delivery area. This section would also establish an Advisory Board to advise the intertribal consortium in carrying out this section, to be comprised of representatives from not less than eight THPs serving California Indians covered under this section, at least one-half of whom are not affiliated with the intertribal consortium. Section 221. Licensing This section would require that licensed health care professionals employed by a THP would be exempt from state licensing requirements while employed at a THP providing services under an ISDEAA contract or compact. Section 222. Notification of Provision of Emergency Contract Health Services This section would allow 30 days (as a condition of payment) for notifying IHS of any emergency medical care or services received by an elderly or disabled Indian from a non-IHS provider or in a non-IHS facility under the authority of this act. Section 223. Prompt Action on Payment of Claims This section would require IHS to respond to notification of a claim by a CHS provider within five working days of receipt of the notification, with either an individual purchase order or a claim denial. The section also provides that if IHS fails to respond within the required time, IHS would be required to accept the claim as valid. The section would require IHS to pay a valid CHS claim within 30 days after completion of the claim. Section 224. Liability for Payment This section would exempt a patient who receives IHS-authorized CHS from being held liable for any charges or costs associated with those authorized services. The section would also require the Secretary to notify the CHS provider and the patient who receives the services that the patient is not liable within five business days of receipt of a notification of a claim by the provider. The section prohibits the CHS provider from recourse against the patient for payment if the notice has been received or if the claim has been deemed accepted under IHCIA Section 224. Section 225. Office of Indian Men's Health This section would authorize the Secretary to establish the Office of Indian Men's Health in IHS, headed by a director appointed by the Secretary, to coordinate and promote the health status of Indian men. The section would require the Secretary to submit a report to Congress within two years of enactment describing any activities and findings of the director. Section 226. Catastrophic Health Emergency Fund This section would establish the Catastrophic Health Emergency Fund (CHEF), to be administered by the Secretary through the IHS central office, to meet extraordinary medical costs associated with the treatment of victims of disasters or catastrophic illnesses. The section would specify the uses, administration, and regulations of this fund. It would also specify that CHEF would consist of appropriations and third-party reimbursements to which IHS is entitled for treatments paid for by CHEF, and would require that no part of the CHEF or the administration thereof be subject to contract or grant. It also would require that CHEF not be apportioned on an Area Office, Service Unit, or any other basis. The section would also prohibit funds appropriated to CHEF from being used to offset or limit other IHS appropriations and it requires that all reimbursements to which IHS is entitled from any source, by reason of treatment rendered to any victim of a disaster or catastrophic illness, the cost of which was paid from CHEF, be deposited into CHEF. Health Care and Sanitation Facilities IHCIA Title III of Section 3101(a) covers health care and sanitation facilities. IHS funds the construction, equipping, and maintenance of hospitals, health centers, clinics, and other health care delivery facilities for facilities operated by IHS and tribes. IHS also funds the construction of water supply and sewage facilities and solid waste disposal systems, and provides technical assistance for the operation and maintenance of such facilities. This title would set new requirements for closure of IHS-operated health care facilities, authorize a feasibility study for a new health facility construction loan fund for ITs and TOs, and allow IHS to accept funding for health care facility construction from federal, state, and non-governmental sources. Section 301. Consultation, Construction and Renovation of Facilities, Reports This section would require that the Secretary, prior to expending or firmly committing to expend funds for planning, designing, constructing, or renovating facilities, consult with affected ITs and ensure that the facility meets the construction standards of any accrediting body recognized by the Secretary for the Medicare, Medicaid, and CHIP programs. The section would prohibit closure of any IHS hospital or outpatient health care facility unless the Secretary has submitted to Congress, not less than one year and not more than two years before the date of the proposed closure, an evaluation of the impact of the proposed closure, completed not more than two years before such submission, with specified information; temporary closures for medical, environmental, or construction safety reasons are exempted from this requirement. The section requires that the Secretary maintain a health care facility priority system developed in consultation with ITs and TOs that prioritizes tribal needs, includes the methodology for prioritization, and allows the nomination of new projects at least once every three years, and may include the top 10 priority facilities for five specified types of facilities as well as other facilities or needs as IHPs may identify. The section would prohibit a project's priority in effect at enactment from being affected by a new facility priority system if the project meets specified criteria and was identified in the FY2008 IHS budget justification as being in the top 10 for five specified types of facilities. The section would also define the Facilities Appropriations Advisory Board and a Facilities Needs Assessment Workgroup , and would require the Secretary to submit to specified committees of Congress an initial report with a national ranked list of all IHPs health care facilities needs developed for the board and workgroup, and would require the Secretary to update the report every five years beginning in 2011. The section would also require the Secretary to submit to the President, for inclusion in reports to Congress, an annual report describing the new health care facility priority system and its methodology and listing top 10 facilities for five specified types of facilities with justifications and projected costs; the Secretary would be required to prepare the annual report in consultation with ITs, TOs, and UIOs and would be required to review the ITs' and TOs' total unmet facility needs. The section would also require the U.S. Government Accountability Office (GAO) to study the methodologies used by IHS in developing the health care facility priority system and making facility needs assessments, and report to specified committees of Congress and the Secretary. The section would require the Secretary to cooperate with ITs, TOs, and UIOs in developing innovative approaches to address unmet facility needs. The section would also make facility funds appropriated under the Snyder Act subject to ISDEAA. Section 302. Sanitation Facilities This section would provide congressional findings on water and sanitary systems and Indian communities; affirm IHS's primary responsibility and authority to provide sanitation facilities and services; authorize financial and technical assistance to IT, TO, and Indian communities for utility organizations to operate sanitation facilities; and authorize priority funding for operation or maintenance assistance (including emergency repairs) to avoid imminent health threats or protect the investment in health benefits gained through the sanitation facilities. The section would authorize the Secretary of Housing and Urban Development (HUD) to transfer funds appropriated under the Native American Housing and Self-Determination Act to the HHS Secretary, but would prohibit the use of IHS funding for new homes constructed using HUD funds (unless authorized when appropriated). The section would authorize the Secretary to accept sanitation facility funds from a variety of sources; authorize the Secretary to use Indian Sanitation Facilities Act funding to fund tribes' federal loans or meet matching or cost participation requirements to construct sanitation facilities; require the Secretary to enter into federal interagency agreements for financial assistance for sanitation facilities; and require the Secretary to establish standards, by regulation, for the planning, design, and construction of sanitation facilities. In addition, the section would require that the financial and technical capability of an IT, TO, or Indian community to safely operate and maintain a sanitation facility would not be a prerequisite to the provision or construction of sanitation facilities by the Secretary. The section would assign ITs primary responsibility for collecting user fees and other funding to operate and manage sanitation facilities, but would authorize the Secretary to assist the operating tribe or organization when a facility is threatened with imminent failure. The section would also require that THPs be equally eligible with IHS for funds appropriated under this section or to provide sanitation facilities. The section would also require the Secretary to submit to the President, for inclusion in reports to Congress, an annual report (developed in consultation with IT, TOs, HUD, and tribally designated housing entities) on the current IHS sanitation facility priority system, the level of sanitation deficiency (as defined in the section) for each sanitation facilities project, the funding necessary to raise all ITs and communities to the highest sanitation levels, and a 10-year plan to provide sanitation facilities to existing, renovated, and new Indian homes and to Indian communities. The Secretary would be authorized to provide to ITs, TOs, and Indian communities the federal share of the costs of operating and maintaining the facilities described under the 10-year plan. The section would define the term "Indian community," and defines "sanitation facilities" to include safe and adequate water supply systems, sanitary sewage and solid waste disposal systems, and all related equipment and support infrastructure. Section 303. Preference to Indians and Indian Firms This section would authorize the Secretary to use the Buy Indian Act to give Indians and Indian firms (as defined in the section) preference in the construction of IHS health care and sanitation facilities pursuant to IHCIA Sections 301 and 302 discussed above. This section would permit such preference unless the Secretary finds that the contracted project, under specified factors, would not be satisfactory or cannot be properly completed or maintained. The section would require the Secretary to assure that pay rates for construction or renovation of facilities under IHCIA Title III are not less than the prevailing local wage rates as determined in accordance with the Davis-Bacon Act, and direct that contracts for construction or renovation of facilities under IHCIA must also comply with the Davis-Bacon Act. Section 304. Expenditure of Non-service Funds for Renovation This section would authorize the Secretary to accept any major renovation, expansions, or modernization by an IT or TO of any IHS facility or any health facility operated under ISDEAA. The section would set criteria for accepting such renovation, expansion, or modernization. In addition, the section would require the Secretary to maintain a separate priority list for such facilities' needs for increased operating expenses, personnel, and equipment and develop and revise the methodology for establishing the priority list annually in consultation with IT and TO. The Secretary would also be required to include the priority list in a report submitted to the President for inclusion in annual reports to Congress. The section would require ITs and TOs to provide the Secretary with staffing, equipment, and other costs of facility expansions. The section would also authorize an IT that completed such a renovation or modernization to recover the prorated value of the facility if the facility ceases to be used as an IHS facility within 20 years after completion. Section 305. Funding for Small Ambulatory Care Facilities This section would require the Secretary to make grants to ITs and TOs for THPs to construct, expand, or modernize small ambulatory care facilities. The section would establish criteria for eligible facilities, including providing at least 150 patient visits annually in a service area with at least 1,500 eligible Indians (unless the facilities are on an island or are without road access to an inpatient hospital). The section would also permit a portion of funds to be used for debt reduction for ITs or TOs that built, expanded, or modernized facilities. For all grants awarded, the section would require that funding be used for the portion of costs which benefits the eligible population. The section would require that grants be approved under regulations, require certain assurances of grant applicants, assign grant priority to applicants demonstrating need, and authorize the Secretary to use peer review panels to evaluate applications. The section would require that funding provided under this program is not recurring and would exclude such grant funding from calculations of a tribe's tribal shares under ISDEAA. The section would also require that the facility would revert to the United States if it ceases to be used to provide ambulatory care services to Indians. Section 306. Indian Health Care Delivery Demonstration Project This section would authorize the Secretary to make grants to, or construction contracts or agreements with, IT and TOs under ISDEAA to establish demonstration projects to test alternative health care delivery systems through health facilities to Indians, including through construction and renovation of hospitals, health centers, health stations, and other facilities. The section would specify the uses of funds and permits their use to match federal and other funds. The section would require the Secretary to promulgate regulations for application approval. It would also establish granting criteria, the grant selection process, and the requirements for technical assistance. In addition, under the demonstration projects, facilities would be allowed to provide services to otherwise ineligible persons—that is, those who are not eligible for IHS services—and would extend hospital privileges in IHS facilities to non-IHS health practitioners. The section would require that equal criteria be used in evaluating tribal and IHS facilities, and require integration of ISDEAA facility planning and construction into demonstration projects. Section 308. Leases, Contracts, and Other Agreements This section would authorize the Secretary to enter into leases, contracts, or other agreements with ITs or TOs for the use of facilities owned or leased by ITs or TOs and used for the delivery of health services by an IHP. The section would authorize the leases to include provisions for construction or renovation and for compensation to ITs or TOs. Section 309. Study on Loans, Loan Guarantees, and Loan Repayment This section would require that the Secretary, in consultation with the Secretary of the Treasury and ITs and TOs, carry out a study to determine the feasibility of a loan or loan guarantee fund to provide ITs and TOs either direct loans or loan guarantees for the construction of health care facilities. The section would require the Secretary to make 10 specified determinations, such as the maximum principal amount and term of loans, amounts attributable for planning, appropriate security for loans, and legislative or regulatory changes needed. The section would also require the Secretary to submit a report to specified committees of Congress describing the consultations, the study results, and any recommendations. Section 311. Indian Health Service/Tribal Facilities Joint Venture Program This section would require the Secretary to establish joint venture demonstration projects with tribes and tribal organizations under which an IT or a TO would be required to expend funds, from tribal or non-tribal sources, to acquire or construct a health facility (including staff quarters) for at least 10 years, under a no-cost lease, in exchange for IHS agreement to provide staffing, equipment, and supplies for the operation and maintenance of the facility. The section would specify that tribes are eligible that have not begun, or have begun but not completed, the process of acquiring or constructing a facility. The provision would require the Secretary to determine, before entering into an agreement, whether the tribe or tribal organization meets criteria of need under either the criteria developed under IHCIA Section 301 or other criteria as determined under regulations. In addition, the section would require the Secretary to negotiate an agreement for the continued operation of the facility at the end of the 10-year lease. The section would also authorize recovery by tribes and organizations in a proportional amount from the United States for non-use or other breaches of the lease agreement within the 10-year agreement period. In addition, the section would require that an IT or TO that breaches or terminates such an agreement without cause be liable for United States amounts paid, and grant the Secretary specified rights of recovery. Section 312. Location of Facilities This section would require IHS and the BIA to give priority to locating facilities and projects on Indian lands, and on any lands in Alaska owned by an Alaska Native village or a village or regional corporation under the Alaska Native Claims Settlement Act, or allotted to an Alaska Native, when developing or reorganizing IHS facilities or establishing related employment projects to address unemployment conditions in economically depressed areas, if requested by the Indian landowner and the IT with jurisdiction over the Indian lands. The section would require priority be given to tribally-owned lands and defines "Indian lands" as all lands within the limits of any Indian reservation and all trust or restricted lands over which a tribe exercises governmental power. Section 313. Maintenance and Improvement of Health Care Facilities This section would require the Secretary to submit to the President, for inclusion in an annual report to Congress, a report on the backlog of needed maintenance and repairs at IHS and tribal health care facilities, and on the renovation and expansion needs of existing facilities to support the growth of health care programs. The provision would limit the expenditure of IHS maintenance and improvement funds for newly constructed space to an IT's or TO's approved supportable space allocation (as defined through the health care facility priority system under IHCIA Section 301). The provision would authorize ITs and TOs to use maintenance and improvement funds for renovation, modernization, and expansion, and for construction of replacement facilities if the costs of renovation would exceed a maximum renovation cost threshold, to be determined by the Secretary in consultation with ITs and TOs. Section 314. Tribal Management of Federally Owned Quarters This section would authorize THPs operating a health care facility and the associated federally owned quarters pursuant to an ISDEAA contract or compact to establish reasonable rental rates for the federally owned quarters, by notifying the Secretary, and to collect the rent directly. The section would set the objectives of the THP's rental rates, require that such quarters remain eligible for improvement and repair funds to the same extent as federally owned quarters, and require at least 60-days notice before changes in the rental rate. In addition, the section would specify requirements for direct rent collection by a THP, require federal employees subject to the rent to pay the THP directly, and set the effective date for a retrocession of rent collection authority. The provision would also allow rental rates in Alaska to be comparable to those in the nearest established community with a year-round population of 1,500. Section 315. Applicability of Buy American Act Requirement This section would require application of the Buy American Act for all procurements made with funds appropriated under IHCIA Section 317 (authorizing appropriations for IHCIA Title III), but exempts ITs and TOs from the requirements of the Buy American Act. The section would also set a penalty for persons fraudulently affixing a "Made in America" label. Section 316. Other Funding for Facilities This section would authorize the Secretary to accept from any source, including federal and state agencies, funds available for the construction of health care facilities, to use such funds for the planning, design, and construction of Indian health facilities, and to place such funds in ISDEAA contracts and compacts. In addition, the section would authorize the Secretary to enter into interagency agreements with federal and state agencies or other entities, and to accept funds from such agencies, for the planning, design, and construction of health care facilities to be administered by an IHP. The section also would authorize any federal agency to which appropriations are made for health care facilities construction to transfer the funds to the Secretary for the construction of health care facilities to carry out the purposes of this act (i.e., to improve Indian health) and the purposes for which the funds were originally appropriated. The section would also require the Secretary to establish standards by regulation for the planning, design, and construction of health care facilities for Indians. Access To Federal Health Services and Reimbursements IHCIA Title IV in Section 3101(a) authorizes IHS health care facilities to receive reimbursements from SSA's Medicare and Medicaid programs. This authorization was a major component of the original IHCIA passed in 1976. The title establishes a "special fund" to receive the reimbursements and would specify what they can be used for. It also authorizes THPs to elect to receive reimbursements directly, instead of through IHS. It excludes Medicare or Medicaid reimbursements from being considered when determining annual Indian health appropriations and would specify that IHS and THPs are the payer of last resort. Sections 409, 410, 411, and 412 of IHCIA Title IV contain cross references to enacted SSA amendments that affect Indian health care. Specifically, the Children's Health Insurance Programs Reauthorization Act ( P.L. 111-3 ) and American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ) amended Medicaid and CHIP statutes as they apply to American Indians and Alaska Natives to require states to increase outreach, facilitate enrollment, and eliminate cost sharing for eligible American Indians and Alaska Natives in Medicaid and CHIP. These cross references are not included below. In addition to amendments related to SSA programs, this title also includes sections related to private insurance and sections related to coordination between IHS, the Department of Veterans Affairs (VA), and the Department of Defense (DOD). Section 401. Treatment of Payments under SSA Health Benefits Programs This section would require that payments received by an IHP or a UIO from Medicare, Medicaid, or CHIP may not be considered in determining appropriations for Indian health care services. The section also would prohibit the Secretary from providing services to Indians with coverage under Medicare, Medicaid, or CHIP in preference to those Indians without such coverage. The section would also require that Medicare and Medicaid payments to IHS facilities be placed in a special fund to be held by the Secretary, and would require the Secretary to ensure that each IHS service unit receives 100% of the reimbursed amounts to which the service unit's facilities are entitled. The section would require that amounts in the special fund be used by a facility first (to the extent provided in appropriations acts) to improve IHS facilities so they can comply with the applicable conditions and requirements of Medicare or Medicaid; if the reimbursed amounts are in excess of the amount necessary to make such improvements, the facility would be required to use the funds, after consulting with the tribes being served by the service unit, to increase the facility's capacity to provide services or to increase the quality or accessibility of its services. The section would exclude THPs electing to receive payments directly from Medicare or Medicaid from making payments into, or receiving from, the special fund. The section would authorize a THP to elect to directly bill and receive payments from Medicare, Medicaid, or CHIP. The section would require that payments be used for the same purposes as the special fund, and subject the payments to all auditing requirements applicable both to whichever programs it chooses to bill directly and to the IHP. The section would also require that a THP receiving reimbursements or payments under Medicare, Medicaid, or CHIP provide to IHS a list of each provider enrollment number (or other identifier) under which the THP receives such reimbursements or payments and requires that IHS share this and other necessary information with the Centers for Medicare and Medicaid Services (CMS), the agency that administers the Medicare, Medicaid, and CHIP programs. The section would direct the Secretary, with assistance from CMS, to examine and implement any administrative changes that would facilitate direct billing and reimbursement, including agreements with states necessary to provide for direct billing under Medicaid or CHIP. The section would allow participants (i.e. THPs) to withdraw from the program under the same conditions that a tribe or tribal organization may retrocede a contracted program under ISDEAA. In addition, the section would authorize the Secretary to terminate a direct billing participant if the Secretary determines that the participant has failed to comply with certain specified requirements, but would require the Secretary to provide notice and an opportunity to correct the noncompliance. The section cross references specified sections of the SSA relating to the special fund and the direct billing program (see " Section 3201. Expansion of Payments under SSA Health Benefit Programs ," below). Section 402. SSA Health Benefit Programs Outreach and Enrollment Grants This section would require the Secretary to make grants or enter into contracts with ITs and TOs for programs on or near reservations, trust lands, and Alaska Native villages, including using electronics and telecommunications, to assist individual Indians to enroll in Medicare, Medicaid, and CHIP, and pay premiums and cost sharing required by the programs. Payment of premiums and cost sharing may be based on need as determined by the IT or TO. The section would also require the Secretary to place conditions as deemed necessary on the contracts and grants, including requirements to determine Indian Medicaid, Medicare, and CHIP populations, educate Indians about the programs' benefits, provide transportation, and develop and implement methods to improve Indian participation in the programs. The section would also apply the enrollment, premium, and cost-sharing assistance program to UIOs for the populations they serve, and set requirements for agreements with such organizations. The section would also require the Secretary, acting through CMS, to consult with states, IHS, ITs, TOs, and UIOs on developing and disseminating best practices to facilitate agreements between the states, ITs, TOs, and UIOs regarding enrollment and retention of Indians in Medicare, Medicaid, and CHIP. The section cross references SSA Section 1139 regarding agreements for collecting, preparing, and submitting applications for Medicaid and CHIP. The section also defines the terms "premium," "cost sharing," and "benefits." Section 403. Third Parties Reimbursements This section would permit the United States, ITs, and TOs the right to recover reasonable charges incurred (or, if higher, the highest amount a third party would pay for care and services from a non-governmental provider) for health services provided by these entities to an individual, to the same extent that the individual or any nongovernmental provider of health services would be eligible to receive reimbursement or indemnification. The section would specify that entities from whom recovery can occur include insurance companies, health maintenance organizations, employee benefit plans, third-party tortfeasors, state political subdivisions, local governments, or any other responsible or liable third parties. The section would limit the right of recovery against any state to circumstances where the health services are covered under workers' compensation laws or a no-fault automobile accident insurance plan. The section would prohibit state or local laws, contract provisions, insurance or health maintenance organization policies, employee benefit plans, self-insurance plans, managed care plans, or other health care plans or programs entered into or renewed after November 23, 1988, from preventing or hindering the right of recovery. The section would also prohibit any action by the United States, an IT, or a TO from affecting the right of an injured person to collect for the portion of their damages not covered hereunder. The section would permit the United States, an IT, or a TO to enforce the right of recovery by intervening or joining in specified civil actions or proceedings, or by instituting a separate civil action (after notifying the individual or his representatives or heirs), and require reasonable efforts to notify the individual. The section also would authorize ITs or TOs, independent of the rights of the injured or diseased person, to recover from tortfeasors or their insurers the reasonable value of health services provided or paid in accordance with the Federal Medical Care Recovery Act. The section would prohibit U.S. recovery from an IT's , TO's, or UIO's self-insurance plan, but allows recovery from a tribe if the tribal governing body provides specific written authorization for a specified time period and would allow expenditure of amounts recovered to provide additional health services. The section would require awarding of reasonable attorneys fees and costs of litigation to prevailing plaintiffs under this section, would prohibit specified health insurance and related entities from denying reimbursement of an IHS or IT's or TO's claim on the basis of the claim's format (if the format meets certain standards), and applies a specified statute of limitations. The section would apply to UIOs the same rights of recovery, for the populations they serve, as those allowed to ITs and TOs for their served populations. The section would provide that nothing in this section limits the right of the United States, an IT, or a TO to recover under any applicable federal, state, or tribal law, including medical lien laws. Section 404. Crediting of Reimbursements This section would require that—except as provided under IHCIA Section 202 regarding the CHEF or under IHCIA Section 806 regarding services to ineligible persons—all reimbursements received or recovered for provision of health service by IHS, an IT, a TO, or a UIO would be required to be credited to the respective entity (including the service unit providing the health service). The section would require that reimbursements be used as specified under IHCIA Section 401. The section would also prohibit IHS from offsetting or limiting the amounts obligated to any service unit, or any entity receiving IHS funding, because of the receipt of reimbursements under this section. Section 405. Purchasing Health Care Coverage This section would authorize ITs, TOs, or UIOs to use funds made available for health benefits for IHS beneficiaries under SSA programs and the ISDEAA (except for funds under IHCIA Section 402) to purchase health benefits coverage that qualifies as creditable coverage under PHSA Section 2701 through a tribally owned and operated health care plan, a state or locally authorized or licensed health care plan, a health insurance provider or managed care organization, or a self-insured plan. The section would exclude specified types of coverage from eligibility, namely, health flexible spending plans under IRC Section 106 and high-deductible health plans as defined in IRC Section 223. The section would permit that the coverage purchased may be based on the financial needs of the individual beneficiaries (as determined by the tribes being served) and would allow the use of funds for the expenses of operating a self-insured plan. Section 406. Sharing Arrangements with Federal Agencies This section would authorize the Secretary to enter into or expand arrangements for IHS, tribes, and tribal organizations to share medical facilities and services with the VA and the DOD, but would require consultation with affected tribes prior to finalizing an arrangement. The section would prohibit the Secretary from taking any action under this section that would impair (1) an Indian's priority access to, or eligibility for, health care services provided through IHS, (2) a veteran's priority access to VA health care services, (3) the quality of IHS health care provided to an Indian, (4) the quality of VA or DOD health care, or (5) an Indian veteran's eligibility to receive VA health care. The section would require reimbursement to the IHS, ITs, or TOs by the VA or DOD where beneficiaries eligible for VA or DOD services receive care from the IHS, ITs, or TOs. The section would prohibit construing the section as creating any right of a non-Indian veteran to IHS health services. Section 407. Eligible Indian Veteran Services This section would make a congressional finding that collaborations between the Secretary and the VA for treatment of Indian veterans at IHS facilities and increased enrollment for VA services by Indian tribal veterans should both be encouraged to the maximum extent practicable, and reaffirms the goals of a 2003 memorandum of understanding between IHS and VA's Veterans Health Administration regarding VA-authorized treatment of eligible Indian veterans at IHS facilities. The section would require the HHS Secretary to provide for payment for veteran-related, VA-authorized treatment under a local memorandum of understanding. The section would require the HHS Secretary to establish guidelines for such payments to the VA, and prohibits use of funds appropriated for IHS facilities, CHS, or contract support costs to make such payments. The section would require the HHS Secretary to consult with affected tribes in negotiating local memoranda of understanding, and define "eligible Indian veteran" and "local memorandum of understanding." Section 408. Payer of Last Resort This section would specify that IHPs and health care programs operated by UIOs would be the payer of last resort for services provided to eligible persons. Section 413. Navajo Nation Medicaid Agency Feasibility Study This section would require the Secretary to conduct a study to determine the feasibility of treating the Navajo Nation as a state for Medicaid purposes, for Indians living within the Navajo Nation's boundaries. The provision would require the Secretary to consider the feasibility of certain options and to report the results of the study to specified committees of Congress not later than three years after enactment of this act. Health Services for Urban Indians IHCIA Title V of Section 3101(a) directs the HHS Secretary to make contracts with or grants to UIOs for health projects to serve urban Indians. The purpose of this program is to make IHS more accessible and available to urban Indians. Such grants or contracts are under the authority of the Snyder Act, not the ISDEAA. There are 34 UIHPs. UIHPs may serve a wider range of eligible persons than the general IHS health care programs, such as members of terminated or state-recognized tribes and their children and grandchildren. These 34 UIHPs operate at 41 locations, with different programs offering different services, such as ambulatory health care, health promotion and education, immunizations, case management, child abuse prevention and treatment, and behavioral health services. Besides IHS grants and contracts, UIHPs receive funding from state and private sources, patient fees, Medicaid, Medicare, and other non-IHS federal programs. IHCIA Title V sets the requirements for the contracts and grants, and would expand the program by authorizing residential treatment centers for urban Indian youth, grants for diabetes prevention and treatment, and use of the Community Health Representatives program (see IHCIA Title I, Section 109). Section 502. Contracts With, and Grants To, Urban Indian Organizations This section would require the Secretary, under authority of the Snyder Act, to enter into contracts with or make grants to UIOs to establish in urban centers programs that meet this IHCIA's requirements. The section would require the Secretary, subject to IHCIA Section 506, to include in the contracts and grants such conditions as necessary. Section 503. Contracts and Grants for Health Care and Referral Services This section would include the requirements that the Secretary is subject to when making grants or contracts to UIOs for health care services. The section would specify that contracts require UIOs to estimate the population, health care needs, and status of the urban Indians; provide basic health education; make recommendations to federal, state, local, and other agencies for improving health programs; and, where necessary, provide health care services for urban Indians directly or through contracts. The section would also require the Secretary to prescribe selection criteria by regulation and require inclusion of seven specified criteria, including the urban Indians' unmet health needs, extent of duplication of services already provided by health projects funded other than by this title, and the UIO's capability to perform the contract requirements. The section would also require the Secretary, through the contracts and grants, to facilitate access to services for health promotion and disease prevention, immunization, behavioral health, and child abuse treatment and prevention. The section would also authorize the Secretary to contract with a UIO to provide health services in more than one urban center. Section 504. Use of Federal Government Facilities and Sources of Supply This section would authorize the Secretary to (1) permit UIOs carrying out contracts or grants under this title to use existing HHS facilities and equipment, (2) donate excess IHS or General Services Administration real or personal property to such organizations, or (3) acquire excess or surplus federal government real or personal property for donation to such organizations (subject to a priority for tribes and tribal organizations). The section would permit UIOs carrying out contracts or grants under this title to be deemed to be federal executive agencies under Section 201 of the Federal Property and Administrative Services Act of 1949, with access to federal prime vendors, when the organizations are carrying out IHCIA Title V contracts or grants. Section 505. Contracts and Grants to Determine Unmet Health Care Needs This section would authorize the Secretary, under authority of the Snyder Act, to enter into contracts with or make grants to UIOs in urban centers without contracts or grants under IHCIA Section 503. Under these contracts/grants, the UIOs would determine health status and unmet health care needs of the Indians in such urban centers and related information to help the Secretary determine whether to enter into a contract with or make a grant, under Section 503, to the UIO to provide services. The section would also prohibit the renewal of grants or contracts made under this section. Section 506. Evaluations and Renewals This section would require the Secretary to develop procedures to evaluate UIO compliance with and performance of contracts and grants. These procedures would be required to include either annual onsite evaluations or evidence of the UIO's accreditation by a recognized Medicare review entity. The section would authorize nonrenewal of contracts and grants and would require the Secretary, if an evaluation reveals noncompliance with or nonperformance of a grant or contract, to attempt to resolve the area of noncompliance or nonperformance before renewing the contract or grant. The section would also require the Secretary, before renewing the IHCIA Section 503 contract or grant of an organization that has completed a IHCIA Section 504 contract or grant, to review an organization's records, the onsite evaluations or accreditations, and reports under IHCIA Section 507. Section 507. Other Contract and Grant Requirements This section would require that contracts with UIOs be in accordance with federal contracting laws and regulations relating to procurement, except that the section allows, at the Secretary's discretion, contract negotiation without advertising, as well as exemptions from specified federal laws on contracts for federal buildings and works and on the sale of unneeded federal facilities to states. The provision would authorize lump-sum advance payments (with a deadline) unless the Secretary determines that the UIO is not capable of administering such a payment; would authorize semi-annual or quarterly payments or reimbursements to organizations without such capability; and would require carrying forward unexpended payments. The section also would authorize revision of contracts, if requested, and would require fair and uniform provision of services to urban Indians. Section 508. Reports and Records This section would require urban Indian contractors and grantees under this title to submit semi-annual reports to the Secretary containing specified information, including a minimum set of data using uniform elements (specified by the Secretary after consultation with UIOs). The section would make the contractors' and grantees' records subject to audit by the Secretary or GAO, and would allow the cost of an annual outside audit by a certified public accountant or firm as a cost of a contract or grant. The section would also require the Secretary, in consultation with UIOs, to submit a report to Congress by 18 months after enactment on urban Indians' health status, services provided under this title, and unmet health needs, and would permit the Secretary to contract with a national organization representing UIOs to conduct any aspect of the report. Section 510. Facilities This section would authorize the Secretary to make funds available to contractors or grantees for leasing, purchasing, renovating, constructing, and expanding facilities, including leased facilities, to comply with applicable licensure or certification requirements. The section would authorize the Secretary to conduct a study of the feasibility of a loan fund for direct loans or loan guarantees to UIOs for construction of health care facilities. Section 511. Division of Urban Indian Health This section would establish a Division of Urban Health Programs within IHS that would be responsible for carrying out IHCIA Title V and overseeing the programs and services authorized. Section 512. Grants for Alcohol and Substance Abuse-Related Services This section would authorize the Secretary to make grants to urban Indian contractors and grantees for the provision of alcohol and substance abuse services in urban centers, and would require the Secretary to establish criteria for alcohol and substance abuse grants and to develop a grant allocation methodology based on the criteria. Section 515. Conferring with Urban Indian Organizations This section would require the Secretary to ensure that IHS confers or conferences with UIOs to the greatest extent practicable. It would define "confer" and "conference." Section 516. Urban Youth Treatment Center Demonstration This section would require the Secretary to fund construction and operation of at least one residential youth treatment center in each IHS Area meeting certain requirements to demonstrate provision of alcohol and substance abuse treatment services for urban Indian youth in a culturally competent residential setting. The section would require that such residential treatment centers be in addition to facilities constructed under IHCIA Section 707. This section would also require that, for a facility to be constructed, the IHS Area must include a UIO, have urban Indian youth who need alcohol and substance abuse treatment in a residential setting, and have a significant shortage of culturally competent residential treatment services. Section 517. Grants for Diabetes Prevention, Treatment, and Control This section would authorize the Secretary to make grants to urban Indian contractors or grantees for diabetes prevention, treatment, and control. The section would specify goals for each grant and would require the Secretary to establish criteria for the grants, including the size and location of the urban Indian population served; the population's need for diabetes prevention, treatment, and control; and the organization's performance standards and capability, and its willingness to collaborate with the diabetes patient registry, if any, established by the Secretary in the IHS Area under IHCIA Section 203(e). Section 518. Community Health Representatives This section would authorize the Secretary to contract with or make grants to urban Indian organizations for the employment of Indians trained as health service providers through the Community Health Representatives Program under IHCIA Section 109. Section 521. Authorization of Appropriations Besides authorizing appropriations, this section would authorize the Secretary to establish programs, including grants, for UIOs that are identical to programs established pursuant to IHCIA Section 126 (behavioral health training), Section 209 (school health education), Section 211 (prevention of communicable diseases), Section 701 (behavioral health prevention and treatment services), and Section 707(g) (youth multidrug abuse program). Section 522. Health Information Technology This section would authorize the Secretary to make grants to UIOs under this title for the development, adoption, and implementation of health information technology (HIT) (as defined in Section 3000(5) of ARRA), telemedicine services development, and related infrastructure. Organizational Improvements IHCIA Title VI of Section 3101(a) would establish IHS's organizational position. Under current law, IHS is part of the PHS within HHS, and is administered by a director, as established by IHCIA Section 601. The sections below replace the IHS director with the new position of Assistant Secretary of Indian Health. IHCIA Title VI would also authorize contracts and agreements for enhancing information technology and systems. Section 601. Establishment of IHS as a PHS Agency This section would establish IHS within the PHS and establishes the position of Assistant Secretary for Indian Health, to be appointed by the President and confirmed by the Senate, with a term of four years. The section would specify the Assistant Secretary's duties and responsibilities, including managing funds, entering contracts, carrying out all functions relating to the management of hospitals and facilities and all IHPs under specified acts, reporting to the Secretary on Indian health policy and budget matters, interacting with other assistant secretaries and agency heads on Indian health, and coordinating department activities on Indian health. The section also would apply Indian preference under Section 12 of the Indian Reorganization Act to IHS personnel actions for new positions resulting from its establishment under this section. The section would deem any reference to the IHS director in federal laws, regulations, executive orders, rules, or delegations of authority, or in documents relating to the director, to be a reference to the Assistant Secretary. Sections 3101(b) and 3103(c) would make conforming changes to other laws based on the establishment of the position of Assistant Secretary for Indian Health in Section 601. Specifically, Section 3101(b) would make conforming amendments to U.S.C. Title 5 (regarding federal civil service) to remove the position of IHS Director from the Executive Schedule and add the new HHS assistant secretary position. Section 3101(c) would make conforming amendments to other specified laws to change references to "Director of the Indian Health Service" to "Assistant Secretary for Indian Health." Section 602. Automated Management Information System This section would require the Secretary to establish automated management information systems for IHS and for each THP, and sets requirements for the systems, including privacy regulations under HIPAA. The section would require that patients, pursuant to HIPAA, have access to their own health records held by or for IHS. The section would authorize the Secretary to enter into contracts, agreements, or joint ventures with other federal agencies, states, and private and nonprofit organizations to enhance information technology in IHPs. Behavioral Health Programs IHCIA Title VII of Section 3101(a) covers behavioral health care programs. Under current law, Title VII authorizes only alcohol and substance abuse programs; this bill would expand the program to cover all mental and behavioral health programs, to create a "comprehensive behavioral health prevention and treatment program" providing a "continuum of behavioral health care" (see IHCIA Sections 701 and 703 of Section 3101(a)). IHCIA Title VII would define a number of terms related to behavioral health care. Section 701. Behavioral Health Prevention and Treatment Services This section would include the purpose of the title, which includes directing the Secretary, acting through IHS, to develop a comprehensive behavioral health care program that emphasizes collaboration among alcohol and substance abuse, social services, and mental health programs. The section would require the Secretary to encourage ITs, TOs, and UIOs to develop tribal, local, and area-wide plans for Indian behavioral health services, to include assessments of specified behavioral problems, the number of Indians affected, the financial and human costs, the existing and necessary resources to prevent and treat such problems, and an estimate of necessary funding. The section would require the Secretary to coordinate with existing national clearinghouses to include such plans and any reports on their outcomes; ensure access to the plans and outcomes by IHS, tribes, and tribal and urban Indian organizations; and provide technical assistance in the development of these plans and related standards of care. The section also would require the Secretary to provide, through IHS, and to the extent feasible and funded, a comprehensive continuum of behavioral health care that includes nine specified services, including acute hospitalization, detoxification, and emergency shelter, as well as specified services for Indian children, adults, families, and elders. The section would authorize ITs, TOs, and UIOs to establish community behavioral health plans, require IHS and BIA cooperation and assistance in developing and implementing such plans, and authorize grants to ITs and TOs for technical assistance and administrative support for such plans. The section would require the Secretary, through IHS, ITs, TOs, and UIOs, to coordinate behavioral health planning with other federal and state agencies. The section would also require the Secretary, within one year of enactment, to assess the need, availability, and cost for inpatient mental health care and facilities for Indians, including possible conversion of existing, underused IHS hospital beds into psychiatric units. Section 702. Memoranda of Agreement with the Department of the Interior This section would require the Secretary and the Secretary of the Interior, not later than 12 months after enactment, to develop and enter into memoranda of agreement, or update memoranda of agreement required by Section 4205 of the Indian Alcohol and Substance Abuse Prevention and Treatment Act, covering eight specified activities, including a comprehensive assessment and coordination of mental health care needs and services available or unavailable to Indians, the ensuring and protection of Indians' right of access to general mental health services, and annual reviews of the agreement to be provided to Congress and tribes and tribal organizations. The section would require that the memoranda include provisions assigning to IHS responsibility for determining the scope of alcohol and substance abuse problems among Indians, assessing existing and needed resources, and estimating necessary funding. The section would also require that each memorandum, renewal, or modification be published in the Federal Register , with copies to ITs, TOs, and UIOs. Section 703. Behavioral Health Prevention and Treatment Program This section would require the Secretary to provide through IHS a program of comprehensive behavioral health, prevention, treatment, and aftercare, including "Systems of Care,"(as defined in IHCIA Section 716) for Indian tribal members, and require that the comprehensive program include prevention, education, specified treatments, rehabilitation, training, and diagnostic services. The section would authorize the Secretary, through IHS, to provide the services through contracts with public and private behavioral health providers, and would require the Secretary to assist tribes and tribal organizations to develop criteria for certification of providers and accreditation of facilities. Section 704. Mental Health Technician Program This section would require the Secretary, under the Snyder Act, to establish within IHS a mental health technician training and employment program for Indians. The section would also require the Secretary, through IHS, to provide high-standard paraprofessional training in mental health care, to supervise and evaluate these technicians, and to ensure that the program includes using and promoting traditional Indian health care practices of the tribes served. Section 705. Licensing Requirement for Mental Health Care Workers This section would require that, subject to IHCIA Section 221 (regarding licensing), any person employed as a psychologist, social worker, or marriage and family therapist to provide mental health care services to Indians in a clinic be licensed to provide the specified service. The section would provide that a trainee in psychology, social work, or marriage and family therapy may provide mental health care services if the trainee is directly supervised by someone licensed in the specified service, is enrolled in or has completed at least two years of course work in an accredited post-secondary education program for the specified service, and meets other requirements that the Secretary may establish. Section 706. Indian Women Treatment Programs This section would authorize the Secretary, consistent with IHCIA Section 701, to make grants to ITs, TOs, and UIOs to develop and implement a comprehensive behavioral health program for prevention, intervention, treatment, and relapse prevention that specifically addresses the cultural, historical, social, and childcare needs of Indian women. The section would specify uses of the grants, including community training and education, counseling, support, and development of prevention and intervention models. The section would also require the Secretary, in consultation with ITs and TOs, to establish grant approval criteria, and to allocate 20% of the program's funds for grants to UIOs. Section 707. Indian Youth Program This section would establish a number of Indian youth behavioral health programs. The section would require the Secretary, consistent with IHCIA Section 701, to develop and implement a program for acute detoxification and treatment for Indian youth, including behavioral health services, regional treatment centers with detoxification and rehabilitation services, and local programs developed by tribes or tribal organizations under ISDEAA. The section would require the Secretary, through IHS, to construct, renovate, or purchase, and staff and operate (under the Snyder Act) at least one youth regional treatment center or treatment network in each IHS area (treating the California Area as two areas), in a location agreed upon by a majority of the area's tribes; the section would also authorize funding to two specified Alaska Native entities for youth treatment facilities in Alaska. The section would authorize the Secretary to provide intermediate behavioral health services for Indian children and adolescents, and would specify that such services include pretreatment assistance; inpatient, outpatient, and aftercare services; emergency care; suicide prevention; and prevention and treatment of mental illness and dysfunctional and self-destructive behavior, including child abuse and family violence. The section would set the allowable uses of funds for intermediate behavioral health services, and requires the Secretary, in consultation with ITs and TOs, to develop grant approval criteria. The section would also require the Secretary, in consultation with ITs and TOs, to identify and use suitable federally owned structures for local residential or regional behavioral health treatment for Indian youths, and establish suitability guidelines. The section allows use of any such federally owned structure under terms agreed upon by the Secretary, the responsible federal agency, and the IT or TO operating the program. The section would also require the Secretary, ITs, and TOs, in cooperation with the Interior Secretary, to develop local community-based rehabilitation and aftercare services in each IHS service unit for Indian youths with significant behavioral health problems, including long-term treatment, community reintegration, and monitoring, to be provided by trained staff. The section would require the Secretary, in providing services under this section, to provide for inclusion of family in such services, and would specify that not less than 10% of funds for the local rehabilitation and aftercare services program would be permitted to be used for outpatient care of adult family members of an Indian youth in the program. The section would also require the Secretary, through IHS, to provide programs and services to prevent and treat multi-drug abuse among Indian youths in Indian communities, on or near reservations, and in urban areas, and provide appropriate mental health services. The section would require the Secretary to collect data on specified aspects of Indian youth mental health for the report under IHCIA Section 801. Section 708. Indian Youth Telemental Health Demonstration Project This section would authorize the Secretary to carry out a demonstration project by making four-year grants to not more than five tribes and tribal organizations with telehealth capabilities to use for telemental health services in youth suicide prevention and treatment. The section would define terms and would direct the Secretary to give priority to ITs and TOs that serve tribal communities that have a demonstrated need or are isolated and have limited access to mental health services, that enter into collaborative partnerships to provide the services, or that operate a detention facility where youth are detained. The section would describe the uses of the grants, including the use of telemedicine for psychotherapy, psychiatric assessments, and diagnostic interviews of Indian youth; the provision of clinical expertise and other medical advice to frontline health care providers working with Indian youth; training and related support for community leaders, family members, and health and education workers who work with Indian youth; the development of culturally relevant educational materials on suicide prevention and intervention; data collection and reporting; and the use of the tribe's traditional health care practices. The section would include requirements for grant applications, encourages collaboration among grantees and grantee reports to the national clearinghouse under IHCIA Section 701, and would require grantees to submit annual reports to the Secretary. In addition, the section would require the Secretary to submit a report to specified committees of Congress no later than 270 days after termination of the demonstration project. The report would include evaluations of whether the project should be made permanent or expanded to more than five grants and to UIOs. The section would authorize appropriations of such sums as may be necessary to carry out this section. Section 709. Mental Health Facilities Design, Construction, and Staffing This section would authorize the Secretary, through IHS, to provide in each IHS area, not less than one year after enactment, at least one inpatient mental health facility for Indians with behavioral health problems. The section would require that California be considered two areas and would require the Secretary to consider the conversion of existing underused IHS hospital beds into psychiatric units to meet the need for such facilities. Section 710. Training and Community Education This section would require the Secretary, in cooperation with the Interior Secretary, to develop and implement in each IHS service unit or tribal program a program of community education and involvement for specified tribal community leaders in behavioral health issues, possibly including community-based training, or to assist tribes and tribal organizations in doing so. The section would also require the Secretary to provide specified instruction in behavioral health issues to appropriate IHS and BIA employees and personnel in contracted IHS and BIA programs and schools. In addition, this section would require the Secretary, as part of the community education and employee instruction programs, to develop and provide community-based training models addressing specified aspects of behavioral health problems, in consultation with ITs, TOs, and Indian alcohol and substance abuse prevention experts. Section 711. Behavioral Health Program This section would authorize the Secretary, through IHS, to develop and implement programs to deliver innovative community-based behavioral health services to Indians, and authorize grants to tribes and tribal organizations for such programs. The section would specify criteria for awarding such grants, and would require the Secretary to use the same criteria in evaluating all project applications. Section 712. Fetal Alcohol Disorder Programs This section would authorize the Secretary, through IHS, to develop and implement fetal alcohol disorder (FAD) programs (as defined in IHCIA Section 4), consistent with IHCIA Section 701, and to establish criteria for approval of funding applications. The section would specify grant uses, including developing and providing services for the prevention, intervention, treatment, and aftercare for those affected by FAD; early childhood intervention projects; supportive services; and housing. The section would also require the Secretary, through IHS, to provide FAD prevention, treatment, and aftercare services as well as specified support services; require the Secretary to establish a Fetal Alcohol Disorder Task Force for advice on providing these services; and specify the membership of the Task Force. The section would require the Secretary to make grants through the Substance Abuse and Mental Health Services Administration (SAMHSA) in HHS to ITs, TOs, and UIOs for applied research projects to elevate the understanding of methods to prevent, intervene, treat, or provide rehabilitation and aftercare for Indians affected by fetal alcohol spectrum disorders. The section would require that 10% of appropriations under this section be used for grants to UIOs funded under IHCIA Title V. Section 713. Child Sexual Abuse and Prevention Treatment Programs51 This section would require the Secretary, through IHS, and consistent with IHCIA Section 701, to establish in every IHS Area treatment programs for child victims of sexual abuse and perpetrators of child sexual abuse who are Indians or members of Indian households. The provision would specify five uses of funding, including developing community education, identifying and providing treatment to victims, developing culturally sensitive prevention models and diagnostic tools, and providing treatment to perpetrators. The section would require that the programs be carried out in coordination with programs and services authorized under the Indian Child Protection and Family Violence Prevention Act. Section 714. Domestic and Sexual Violence Prevention and Treatment This section would authorize the Secretary to establish programs in each IHS Area to prevent and treat Indian victims and perpetrators of domestic violence or sexual violence. The section would require program funds be used for prevention and community education programs, behavioral health services and medical treatment for victims (including examinations by sexual assault nurse examiners), rape kits, development of prevention and intervention models (including traditional health care), and identification and treatment of Indian perpetrators. The section would require the Secretary to establish protocols, policies, procedures, standards, training curricula, and training and certification requirements for victim services within one year of enactment, and requires a report on these activities to specified committees of Congress within 18 months of enactment. The section also would require the Secretary, in coordination with the Attorney General, federal and tribal law enforcement agencies, IHPs, and victim organizations, to develop victim services and victim advocate training programs, for specified purposes, and it requires the Secretary to report to specified committees of Congress on such services and programs, including improvements, obstacles, costs needed to address the obstacles, and any recommendations. Section 715. Behavioral Health Research This section would require the Secretary, in consultation with appropriate federal agencies, to make contracts with or grants to ITs, TOs, and UIOs, and appropriate institutions for research on the incidence and prevalence of behavioral health problems among Indians served by IHS, ITs, or TOs and in urban areas. The section would direct that research priorities include the multifactorial causes of Indian youth suicide; the interrelationship of behavioral health problems with alcoholism, suicide, homicide, and family violence, especially on children; and the development of models of prevention techniques, especially in regard to children. Miscellaneous IHCIA Title VIII of Section 3101(a) includes a number of separate provisions covering reports, regulations, abortion, certain persons' eligibility for IHS services, criminal jurisdiction of a tribally operated hospital in Oklahoma, and a variety of other topics. Section 801. Reports This section would require the Secretary to submit to Congress each fiscal year a report containing 23 specified reports, including 18 reports required under other IHCIA sections. Among the proposed topics of specified reports are the progress made in meeting health objectives; impacts of new national programs; Indian use of health services, including CHS; funding requested under IHCIA Section 201; infectious diseases; health care and sanitation facilities status; maintenance and repair backlogs; program evaluations; effects of the movement of patients between IHS service units; and the extent of compliance with IHS credentialing and state licensing requirements. Section 802. Regulations This section would require the Secretary, within 90 days of enactment, to initiate negotiated rulemaking for regulations to carry out IHCIA, except for specified sections for which rulemaking under the Administrative Procedures Act is authorized. The section would establish a deadline of two years after enactment for the Secretary to publish proposed regulations in the Federal Register , with a minimum comment period of 120 days, and would establish a deadline of three years after enactment to publish final regulations. The section would require that any negotiated rulemaking committee under this section consist only of representatives of ITs, TOs, and the federal government, and would require the Secretary to adapt negotiated rulemaking to the context of self-governance and the government-to-government relationship. The section would prohibit lack of regulations from limiting the effect of IHCIA. Section 803. Plan of Implementation This section would require the Secretary, not less than one year after enactment, and in consultation with ITs, TOs, and UIOs, to submit to Congress a plan detailing by title and section how IHCIA would be implemented. The section would specify that lack of such a plan would not limit the effect, or prevent the implementation, of IHCIA. Section 804. Limitation on Use of Funds Appropriated to Indian Health Service This section would provide that any limitation contained in HHS appropriations on the use of federal funds for abortions would be required to apply for that period with respect to funds appropriated for IHS. Section 805. Eligibility of California Indians This section would make specified California Indians eligible for IHS health services, including members of federally recognized tribes, descendants of Indians residing in California as of June 1, 1852 (if they are members of a community served by a local IHS program and regarded as Indian), Indians holding trust interests in certain types of land allotments in California, and Indians (and their descendants) listed on the plans for asset distribution in California under the act of August 18, 1958 (terminating federal recognition of certain California tribes). The section would prohibit construing anything in the section as expanding California Indians' eligibility for IHS health services beyond their eligibility as of May 1, 1986. Section 806. Health Services for Ineligible Persons This section would authorize IHS health services for certain ineligible persons who are children or (if the governing body of the tribe or tribal organization agrees) spouses of eligible Indians. For otherwise-ineligible persons (who are not children or spouses) who reside in an IHS service unit's service area, at IHS-operated programs, the section would authorize the Secretary to provide health services, if requested by the tribes served and if the Secretary and the tribes determine that provision of such services will not result in denial or diminution of health services to eligible Indians and that there are no reasonable alternative health facilities or services in or outside the service unit. For otherwise-ineligible persons (not children or spouses) at health facilities operated by ITs or TOs under ISDEAA contracts and compacts, the section would authorize the governing body of such ITs or TOs to determine whether to provide services to such ineligible persons. The section would require reimbursement from otherwise-ineligible persons of not less than the actual costs for IHS-provided health services; direct that reimbursements, including under Medicare, Medicaid, or CHIP, be credited to the facility providing the service for the purposes listed in IHCIA Section 401; and authorize the Secretary to provide health services through IHS for indigent persons not otherwise eligible, but only if the state or local government agrees to reimburse IHS for the expenses it incurs. The section would provide that tribes may revoke their consent to provision of health services to any otherwise-ineligible persons (not children or spouses). The section also would authorize IHS to provide health services to otherwise-ineligible persons to achieve stability in a medical emergency, prevent the spread of a communicable disease, deal with a public health hazard, provide care to a non-Indian woman pregnant with an eligible Indian's child, or provide care to immediate family members if such care is directly related to the treatment of an eligible individual. The section would authorize extending hospital privileges to non-IHS health care practitioners who provide services to certain ineligible persons, and also permit such practitioners to be designated as federal employees for the purposes of the Federal Tort Claims Act, but only while providing services to eligible individuals under the conditions under which such hospital privileges are extended. Section 807. Reallocation of Base Services This section would prohibit any allocation of IHS funding in a fiscal year that reduces an IHS service unit's recurring programs, projects, or activities by 5% or more from the previous fiscal year unless the Secretary has submitted to Congress a report on the proposed change, the reasons for the change, and the likely effects. The section exempts the section from applying if total IHS appropriations for a fiscal year are at least 5% less than the previous fiscal year. Section 809. Moratorium This section would make language that has been repeated in annual IHS appropriations acts since FY1989 permanent. Specifically, this section would require IHS to provide services according to eligibility criteria effective September 15, 1987, subject to IHCIA Sections 805 and 806, until enactment of specified appropriations to pay for increased costs of new eligibility criteria issued under a final rule that was published in the Federal Register on September 16, 1987. Section 812. Use of Patient Safety Organizations This section would authorize IHS, an IT, a TO, or a UIO to use a patient safety organization to provide for quality assurance activities, in accordance with PHSA Title IX. Section 813. Medical Quality Assurance Records Confidentiality This section would make medical quality assurance records created by an IHP or a UIHP confidential and privileged, and prohibit their disclosure except to specified entities for specified purposes. The section would exempt such records from the Freedom of Information Act, require the Secretary to promulgate regulations, and define terms. Section 817. Authorization of Appropriations; Availability In addition to appropriations, this section would subject new spending authority (as described in Section 401 of the Congressional Budget Act of 1974 ) provided under IHCIA to the availability of appropriations. The section also makes funds appropriated under IHCIA available until expended. Other Sections of Title I of Division D The provisions in subsections 3101(b)-(c) of Title I would make technical corrections to other federal law as necessitated by IHCIA Section 601's creation of a new Assistant Secretary for Indian Health. These sections are discussed above. The other sections of Division D (Sections 3102 and 3103) authorize the establishment of a new foundation and require a GAO report. Section 3102. Native American Health and Wellness Foundation This section would amend ISDEAA by adding a new title, Title VIII, Native American Health and Wellness Foundation (Foundation). This new title would direct the Secretary to establish the Foundation and a committee to assist in establishing the Foundation, and would specify that the Foundation's duties would be to encourage, accept, and administer private gifts of property and income for the benefit of, or in support of, the mission of IHS; to undertake activities that will further the health and wellness activities and opportunities of Native Americans; and to participate with and assist federal, state, and tribal governments, agencies, entities, and individuals in this undertaking. The new title would establish the Foundation's powers, Board of Governors, and officers, and make the existence of the Foundation perpetual. The new title would also define terms, limit administrative costs, require audits, authorize appropriations of $500,000 for each fiscal year (to be adjusted to reflect changes in the Consumer Price Index for all-urban consumers), and direct the Secretary to transfer to the Foundation funds donated for Indian health and held by HHS. Section 3103. GAO Study and Report on Payments for Contract Health Services This section would require GAO, in consultation with IHS, ITs, and TOs, to study use of health care services provided under the CHS program. The section would require the study to include analyses of amounts reimbursed to providers, suppliers, and entities under CHS, with comparison to reimbursements through other public programs and the private sector; of barriers to access to health care under CHS; of adequacy of federal funding of CHS; and of other items GAO determines appropriate. The section would require GAO to report to Congress on the study within 18 months after enactment, with recommendations on appropriate federal funding for CHS and ways to use such funding efficiently. Title II of Division D: Improvement of Indian Health Care Provided Under the SSA Separate from the reauthorization of the IHCIA in Section 3101(a), Division D would amend several sections of the SSA, specifically those related to Titles XVIII (Medicare), XIX (Medicaid), XXI (CHIP), and XI (general provisions). H.R. 3962 would amend the SSA to define a number of Indian terms as they are defined in IHCIA Section 4. These terms include IHS, IT, TOs, and UIOs, IHPs, and THPs. These definitions would apply for all of the SSA, including Medicare, Medicaid, and CHIP. Section 3201 also includes these definitions as related to amending SSA Sections 1101, 1911, 1880, and 2107. Section 3201. Expansion of Payments under SSA Health Benefit Programs (a) Medicaid This subsection would amend SSA Section 1911(a) to provide that IHPs are eligible for Medicaid payments for all items and services provided under a state plan or under a waiver, if the provision of those services meets all the conditions and requirements generally applicable to the delivery of such care. The subsection would repeal SSA Section 1911(b) regarding IHS-funded facilities that do not yet meet all conditions and requirements. The subsection would amend SSA Section 1911(c) to permit the Secretary to enter into an agreement with a state for the purpose of reimbursing that state for Medicaid services provided by the IHS, an IT, TO, or UIO, either directly, through referral, under contracts or other arrangements between these entities and another health care provider, to Indians eligible for Medicaid under the state Medicaid plan or a waiver. The subsection strikes SSA Section 1911(d). It would add a new SSA Section 1911(c) that cross references the special fund for improvement of IHS facilities in IHCIA Section 401(c)(1) (as amended). It would also add a new Section 1911(d) that cross references direct-billing provisions in IHCIA Section 401(d) (as amended). (b) Medicare This subsection would amend and renumber sections of SSA Section 1880. It would amend SSA 1880(a), regarding Medicare payments to IHS hospitals, to specify that, subject to SSA Section 1880(e) (regarding Medicare physician payments to IHS, IT, and TO facilities) that IHPs are eligible for Medicare payments for items and services furnished by IHPs, provided that the services provided meet all the conditions and requirements generally applicable to delivery of such care under the Medicare program. The subsection would repeal SSA Sections 1880(b), regarding IHS-funded facilities that do not yet meet all conditions and requirements; 1880(c), regarding the special fund for improvement of IHS facilities; and 1880(d), regarding a compliance status report. It would add new Sections 1880(b) and 1880(c) to cross reference the special fund established under IHCIA Section 401(c) (as amended) and cross reference the direct billing authority in IHCIA Section 401(d) (as amended). The subsection would also make a conforming change to existing SSA Section 1880(e)(3) (as amended), regarding Medicare Part B payments, to specify that IHCIA Section 401(c)(1) (as amended) and the new SSA Section 1880(b), both regarding the special fund, would not apply to payments made under SSA Section 1880(e). (c) Application to CHIP This subsection would amend SSA Section 2107 (regarding Medicaid provisions applicable to CHIP) to apply all but one of the Medicaid provisions in SSA Section 201(a), as amended, to the CHIP program, including the provisions regarding eligibility of Indian entities to receive Medicaid reimbursement, compliance with conditions and requirements, agreements with states to provide Medicaid reimbursement to Indians, direct billing, and definitions of Indian terms. The provision regarding the special fund for improvement of IHS facilities (as defined in the new SSA Section 1911(c)) would not apply to CHIP. Section 3202. Outreach and Enrollment of Indians in CHIP and Medicaid This section would amend SSA Section 2102, regarding assurances required in state CHIP plans, to strike the definition of "Indian" by reference to IHCIA Section 4(c) from the requirement for a description in the plan of procedures to ensure the provision of child health assistance to targeted low-income Indian children in the state, and add to the requirement a description of how the state will ensure that payments are made to Indian health programs and urban Indian organizations providing CHIP benefits in the state. The section also would amend SSA Section 2105 regarding the prohibition of CHIP payments where other federal payments can be made, to exempt health care programs operated or financed by IHS, tribes, and TOs and UIOs from such prohibitions (currently only IHS programs are exempted). Section 3203. SSA Safe Harbor Proposals for IHPs and UIOs SSA Sections 1128 and 1128B and related provisions exclude certain activities for individuals and entities under federal health programs, but allow waivers and "safe harbors" under certain circumstances. Among the excluded activities are knowingly and willfully soliciting or receiving remuneration in return for referrals for services for which a federal health program payment may be made, or in return for purchasing, leasing, or ordering (or arranging for the same) any good, facility, service, or item for which a federal health program payment may be made. This section would direct the Secretary, through the HHS Inspector General, to publish a notice soliciting a proposal on the development of safe harbors as described for health care items and services provided by IHPs or UIOs. The section would suggest potential areas that these safe harbor may relate to. Section 3204. SSA Health Benefit Programs Annual Report on Indians Served This section would amend SSA Section 1139, as amended, to add a new subsection 1139(e), which would require the Secretary, acting through CMS and IHS, to submit an annual report to Congress covering the enrollment and health status of Indians receiving items or services under the health benefit programs funded under the SSA during the preceding year. The section would specify the information to be included in the report, including the number of Indians enrolled in or receiving items or services under each such SSA program and under programs funded by IHS; the health status of these Indians, disaggregated by diseases or conditions consistent with individual privacy; the status of IHS, IT, TO, or UIO facilities' compliance with the applicable terms and conditions under Medicare, Medicaid, and CHIP, and the progress being made by such facilities toward achievement and maintenance of compliance; and such other information as the Secretary determines appropriate. Section 3205. Interstate Coordination Study This section would require the Secretary to conduct a study to identify barriers to interstate coordination of enrollment and coverage of Medicaid- and CHIP-enrolled children who frequently change their state of residence or may temporarily be outside their state of residence for a variety of reasons (e.g., educational needs, family migration, or emergency evacuations). The section would require that the study include an examination of enrollment and coverage coordination issues faced by Medicaid- and CHIP-enrolled Indian children temporarily residing in an out-of-state BIA boarding school or peripheral dormitory. The section would also require the Secretary, in consultation with state Medicaid and CHIP directors, to submit a report to Congress, not later than 18 months after enactment, containing recommendations for legislative and administrative actions to address the enrollment and coverage coordination barriers identified in the study. Appendix. Acronyms Used in the Report

The 111th Congress has devoted considerable effort to health reform that seeks to increase health insurance coverage for more Americans and help control increasing costs while improving quality and patient outcomes. H.R. 3962, the Affordable Health Care for America Act, was passed by the House of Representatives on November 7, 2009. H.R. 3962 is based on H.R. 3200, America's Affordable Health Choices Act of 2009, which was originally introduced on July 14, 2009, and was reported separately on October 14, 2009, by three House Committees—Education and Labor, Energy and Commerce, and Ways and Means. One major difference between H.R. 3200 and H.R. 3962 is the addition of Division D, "Indian Health Care Improvement," which would reenact, authorize, and amend the Indian Health Care Improvement Act (IHCIA). Division D differs from much of the other divisions of H.R. 3962 in that it targets a specific population group—American Indians and Alaska Natives, a group that, in general, has lower health status, lower life expectancy, and higher rates of a number of diseases, including diabetes, than the U.S. population as a whole. The goal of the division—to improve the health of American Indians and Alaska Natives—is consistent with the changes proposed in other divisions that also propose to improve health care access and quality, augment the health care workforce, and increase access to mental health services. This report summarizes the provisions of Division D of H.R. 3962. The division contains two titles. Title I contains three sections (3101-3103), of which Section 3101(a) would replace current IHCIA language with new language that would reenact, amend, and reauthorize all eight titles of IHCIA. Section 3101(a) contains IHCIA's general provisions and its eight titles: (1) Indian health workforce, (2) health services, (3) health care and sanitation facilities, (4) access to federal reimbursements, (5) health services for urban Indians, (6) Indian Health Service (IHS) organizational improvements, (7) behavioral health programs, and (8) miscellaneous. Sections 3101(b) and (c) would make technical corrections to other federal law as necessitated by IHCIA Section 601's creation of a new Assistant Secretary for Indian Health. Sections 3102 and 3103 would make changes to Indian programs not in IHCIA. Title II of Division D contains five sections (Sections 3201-3205), three of which amend the Social Security Act (SSA) as related to American Indians and Alaska Natives. None of these sections amend IHCIA.

Introduction Since opening to the public on December 2, 2008, the Capitol Visitor Center (CVC) has had more than six million visitors. Located beneath the East Front Plaza, the CVC was designed to enhance the security, educational experience, and comfort of visitors to the U.S. Capitol. The decision to build a subterranean facility largely invisible from an exterior perspective was made so the structure would not compete with, or detract from, the appearance and historical architectural integrity of the Capitol. The project's designers sought to integrate the new structure with the landscape of the Capitol Grounds and ultimately recreate the park-like setting intended by landscape architect Frederick Law Olmsted Sr. in his 1874 design for the site. The cost of the center was an estimated $621 million. The footprint of the center covers approximately five acres (196,000 square feet) and is larger than that of the Capitol (175,000 square feet). The square footage of the three levels of the center (580,000 square feet) is nearly two-thirds that of the Capitol itself (780,000 square feet). A number of factors delayed the project's completion date and increased its cost. Unusually wet weather in 2003, the discovery of asbestos in the part of the Capitol connected to the center, and an undocumented century-old well under the construction site were unanticipated. Added expenses were incurred because of higher-than-expected bids; several design changes; security upgrades following the terrorist attacks of September 11, 2001; necessary changes to the air filtration system; House and Senate expansion space costs; and extra costs associated with working around the Capitol, such as security screening for the thousands of construction workers and vehicles that entered the construction site. This report addresses the rationale and planning for the CVC, an overview of construction and funding, and subsequent legislation related to its operations and design. For information on the use of the Capitol Visitor Center space for official events, see CRS Report RL34619, Use of the Capitol Rotunda, Capitol Grounds, and Emancipation Hall: Concurrent Resolutions, 101st to 112th Congress , by Matthew Eric Glassman and [author name scrubbed]. Rationale for the Center: Security and Improved Visitor Accommodations The idea for a center dates at least to the mid-1970s, when the Architect of the Capitol issued Toward a Master Plan for the United States Capitol . By the turn of the 21 st century, the Capitol faced the challenge of welcoming as many as 3.5 million visitors per year while simultaneously serving Congress and its staff as a working office building. Although the idea for a CVC had existed for more than three decades, it did not gain momentum until after a gunman with a history of mental illness killed two U.S. Capitol Police officers stationed near a public entrance to the Capitol in July 1998. The September 11, 2001, terrorist attacks at the Pentagon and in New York, and the subsequent discovery of anthrax in congressional office buildings, also highlighted concerns regarding the potential vulnerabilities of the Capitol and the need for improved security on Capitol Hill. At a hearing on security updates one year after September 11, 2001, Architect of the Capitol Alan M. Hantman (hereinafter Architect Hantman) testified that the center was designed to provide a secure environment for managing a large number of visitors while protecting the Capitol building, its occupants, and guests. Improvements to the screening of delivery vehicles and additional safety benefits of the center were also cited at subsequent House and Senate hearings. In addition to serving as the security screening entry for visitors to the Capitol, the center was designed to provide improved accessibility for disabled persons and enhanced visitor services and educational exhibits. Today, these include historic documents from the Library of Congress and the National Archives chronicling legislative achievements as well as House and Senate orientation theaters presenting brief films about the two chambers. The CVC also houses 24 statues from the National Statuary Hall Collection as well as other works of art. Planning for the Center in the 1990s In 1991, the Architect of the Capitol (AOC) was authorized to use funds to develop a design concept. In 1993, the United States Capitol Preservation Commission, an 18-member bipartisan, bicameral, board of congressional leaders, allocated $2.6 million to translate the concept into a formal design, which was prepared by RTKL Associates Inc. In November 1995, the Architect published a report reflecting RTKL's work. The 1995 report emphasized that the center had three main goals: (1) enhance the visitor experience by providing a structure, located under the East Front plaza of the Capitol, which would afford improved visitor orientation and facilities, including full accommodation for persons with disabilities, other related programs, and support services; (2) strengthen Capitol security while ensuring the preservation of an atmosphere of public access; and (3) integrate the design concepts of the center with aesthetically and functionally appropriate improvements to the East Front Plaza. Multiple attempts to authorize construction preceded the appropriations eventually provided in 1998. For example, during the 104 th Congress, bills were introduced in both the House ( H.R. 1230 ) and Senate ( S. 954 ) which would have authorized a Capitol Visitor Center, with one House hearing held on June 22, 1995. In the 105 th Congress, bills were again introduced ( H.R. 20 , H.R. 4347 , and S. 1508 ), with one House hearing held on May 22, 1997. During the FY2000 House and Senate legislative branch appropriations hearings, concern was raised about the Architect's projected construction schedule. On March 3, 1999, another CVC bill ( H.R. 962 ) was introduced, but no further action was taken. Construction Overview: Selected Issues In March 1999, the Architect received approval to use $2.8 million to review and revalidate the 1995 design study, briefing the United States Capitol Preservation Commission on its findings on October 15, 1999. The 1999 Revalidation Study reiterated the four fundamental goals for the CVC, including (1) security, (2) visitor education, (3) visitor comfort, and (4) functional improvements, including "modern, efficient facilities for such functions as truck loading and deliveries, constituent assembly rooms, and improved connection to the Senate and House office buildings." In November 1999, the United States Capitol Preservation Commission approved a revised conceptual design, and a design and engineering obligation plan was approved by the House and Senate legislative appropriations subcommittees in November 1999 and January 2000, respectively. On January 31, 2000, design development work was begun, and in mid-October 2000, the United States Capitol Preservation Commission approved the final design plan. GAO also began to serve as a permanent consultant for the project and made frequent reports to Congress on the construction schedule and project costs. On June 20, 2000, members of the commission gathered on the East Front Plaza of the Capitol for a symbolic groundbreaking ceremony. Construction Management Firm Selected According to testimony from Architect Hantman in June 2001, Gilbane Building Company, a Providence, Rhode Island, construction management firm, was selected in January 2001 to monitor and inspect the general construction process of the center. Utility Work Contract In November 2001, the William V. Walsh Construction Company of Rockville, Maryland, was awarded an $8 million contract to relocate the utility lines, which had been installed at various times during the previous 100 years, prior to beginning construction of the center. Many of the utility lines were poorly or inaccurately documented on available drawings, and their relocation proved to be a more difficult pre-construction task than anticipated. Sequence 1: Foundation/Structural Work On June 12, 2002, the Architect of the Capitol awarded a $99.9 million contract for Sequence 1 construction. Sequence 1 covered site demolition, excavation of soil, construction of the foundation and walls, installation of load-bearing elements, portions of site utility work, and completion of the roof plate for the center. In May 2004, the Sequence 1 contractor formally turned the project over to the Sequence 2 contractor to begin building out interior spaces and installing electrical, mechanical, and plumbing systems. Sequence 2: Electrical, Mechanical, Plumbing, and Finishing Work In March 2003, Architect Hantman told the Senate Committee on Rules and Administration that the bids for Sequence 2, which included the installation of electrical, mechanical, and plumbing services, and all stone and architectural buildouts and finishes, were significantly higher than had been originally estimated. As a consequence of the increased cost of Sequence 2, House Appropriations Committee Chairman C.W. Bill Young and Ranking Minority Committee Member David R. Obey sent a letter to Architect Hantman on April 14, 2003, stating that they believed he had ignored the prerogatives of the committee and exceeded budget guidelines. "We now find ourselves," they wrote, "in a situation that if we do not allow the contract for Sequence 2 to be executed by April 21, 2003, it would have significant monetary and scheduling implications." They emphasized that the funds for Sequence 2 were being provided "with serious reservations." The House appropriators established multiple requirements for the Architect to obligate funds. On April 21, 2003, the AOC awarded a $144.2 million contract for Sequence 2. Other Construction Activities Historic Preservation In March 2002, workers began removing the historic Frederick Law Olmsted Sr. landscape features, including the fountains, lampposts, and retaining walls on the East Front Plaza, and the Trolley Stop canopy structures, to clear the area for excavation. Each of these historic items was stored until they were returned to their original locations upon the completion of the new plaza. Tree Preservation In 2001, the Architect prepared a report on how the construction would affect the trees located on the East Front. Some of these had been planted as part of Frederick Law Olmsted Sr.'s 1874 plan; others were memorial or commemorative plantings, including trees sponsored by Members of Congress to commemorate and honor former First Lady Patricia Nixon, Dr. Martin Luther King, Jr., former Members of Congress, various organizations, eminent individuals, and states. Early preparation work for the center started on December 3, 2001, when workers began removing the first of the memorial trees that required relocation before the center could be built. Noise Reduction During the summer of 2002, soundproof windows were installed on the east side of the Capitol to keep the disruption to Congress at a minimum, while auger drills were used instead of pile drivers to reduce the noise generated by the project. Temporary Visitor Screening Facilities In May 2002, Capitol tour operations were shifted from the East Front to temporary screening facilities on the north and south sides of the Capitol. While the CVC was under construction, visitors passed through these facilities prior to entering the Capitol at the West Front. Alternate Media Sites In July 2002, construction of the center also required the temporary closure of both locations used by television correspondents on the East Front Plaza. Temporary sites were established in Upper Senate Park opposite the Russell Senate Office Building, and on the northwest terrace of the Cannon House Office Building. Congressional Oversight of Construction Below is an overview of some of the issues discussed at hearings of the House and Senate Appropriations Committees, the House Administration Committee, and House Transportation and Infrastructure during construction of the CVC. Role of United States Capitol Preservation Commission Defined A Senate proposal to transfer approval authority for the center to the 18-member, bipartisan, bicameral United States Capitol Preservation Commission was agreed to in the FY2000 legislative branch appropriations bill and included in the law ( P.L. 106-57 ) enacted on September 29, 1999. Oversight Hearings and Selected Issues 2005 At an April 13, 2005, Senate appropriations hearing, Architect Hantman testified that GAO had concluded that approximately 75% of the increased costs of the CVC were largely beyond his control. He enumerated several factors that had increased the costs, including (1) costs associated with completing the House and Senate expansion spaces, which were originally envisioned as unfinished "shell space"; (2) design changes that had resulted in major renovations of the Capitol's air conditioning, heating, and ventilation systems; (3) security enhancements following the 2001 terrorist attacks; (4) a significant increase in the cost of building materials; (5) a reduction in competitive bidding due to the number of other projects under construction in the District of Columbia; (6) a need for prospective contractors bidding on the project to factor in security checks of workers as well as vehicles entering the site; (7) a commitment to using high-quality materials; and (8) a Buy America requirement that precluded the option of bidding for stonework on the international market. In six additional hearings in 2005, the subcommittee, chaired by Senator Wayne Allard, focused on construction progress, changing cost estimates, and completion dates. Much of the discussion at a May 3, 2005, House Appropriations Committee hearing focused on the specifics of the unfinished House office space in the CVC. Representative David Obey, ranking minority member of the committee, announced that he intended to oppose the project unless changes were made. He could have blocked this phase of the project since, pursuant to a provision included in FY2002 Legislative Branch Appropriations Act ( P.L. 107-68 ), AOC could not obligate funds for the House expansion space without the approval of the chair and ranking minority member of the House Appropriations Committee. In subsequent action, the House on May 5, and the Senate on May 10, 2005, approved language in the conference report on the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005, that struck the "chair and ranking minority member" requirement. This revision in language was included in P.L. 109-13 , which was signed into law on May 11, 2005. 2006 From February through November, 2006, the Senate Appropriations Committee Legislative Branch Subcommittee held seven hearings on the progress of the CVC and its cost. Other issues discussed included (1) delays in the delivery and installation of the stone being used to complete the interior walls and floors of the CVC; (2) acceptance testing of the CVC's complex fire and life-safety systems; and (3) completion of a new utility tunnel, which was impacted by contractor concerns about possible asbestos contamination from an existing tunnel. The House Appropriations Committee also discussed the CVC, including its expected opening date, during a March 14, 2006, hearing on the FY2007 appropriations bill. 2007 Many of the hearings in 2007 focused on construction oversight, planning for visitors, and ensuring the continuation of staff-led tours. The House Committee on Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings, and Emergency Management and the House Administration Committee held hearings on the anticipated CVC visitor experience on June 8, 2007, and October 17, 2007, respectively. Witnesses included Terrie S. Rouse, chief executive officer, Visitor Services, Capitol Visitor Center; Capitol Police Chief Philip D. Morse; and Thomas L. Stevens, director, U.S. Capitol Visitor Service. A series of House Appropriations Committee hearings continued to monitor construction. At a February 16, 2007, hearing, Acting Architect Steven T. Ayers explained reasons for the delayed opening, including those related to the acceptance testing of the fire, security, and life-safety systems, although he also testified that no additional funding would be necessary. At hearings in March, April, July, and September 2007, Acting Architect Ayers and GAO testified regarding the estimated dates for a certificate of occupancy and public opening. In November, Acting Architect Ayers discussed plans for an advanced reservation system, developing a CVC website and transportation plan, and hiring new staff. Chief Morse testified regarding the number of new officers needed to patrol the CVC, which would vary depending upon opening hours and the number of tour entrances. Discussions on the future of staff-led tours also continued. 2008 CVC hearings in 2008 addressed construction oversight, planning for operations following the December 2, 2008, opening, and "green" building design elements of the CVC. At a series of six hearings in 2008, the House Appropriations Committee discussed how visitors in tour buses would reach the CVC, the design of its website, staffing, the advanced-reservation system, construction-related issues, safety recommendations made by the Occupational Safety and Health Administration, leaks in the tunnel between the CVC and the Jefferson Building of the Library of Congress, and restoration of the East Front Plaza. At a hearing of the House Committee on Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings, and Emergency Management, on April 1, 2008, Acting Architect Ayers testified about the "green" building design elements, including a storm water management system designed to mitigate the impact of run-off and sediment into the city's storm sewer system; compact fluorescent light fixtures; low-flow bathroom fixtures; and low-emission construction materials. Cost of the Construction Construction Cost Estimates In 2003, Architect Hantman testified that the original project budget of $265 million was established in 1999. "At that time," Architect Hantman said, "the budget provided for the core CVC facilities, including the Great Hall, orientation theaters, exhibition gallery, cafeteria, gift shops, mechanical rooms, unfinished shell space for the future needs of the House and Senate, and a truck service tunnel." Subsequent changes to the design and scope altered this assessment. At an April 2005, hearing, Architect Hantman testified that the CVC cost could reach $517 million. By May, 2005, GAO testified that cost overruns and other problems could increase the cost to "between $522 million and $559 million." In October, however, GAO's Terrell Dorn said GAO could not provide an accurate cost estimate without a completion date. At the November 2005 hearing, Dorn testified "that the CVC project is likely, at a minimum, to cost $542.9 million." This figure, he explained, did "not provide any more funds for the remaining risk and uncertainties that may materialize or cover the cost of delays that may occur. It also could change again if the [construction] schedule changes." On February 15, 2006, GAO testified that the cost would be about $555 million "without an allowance for risks and uncertainties" and "that the project could cost as much as about $584 million at completion." In March, GAO estimated that the final cost of the project would range from $556 million to $584 million. That figure was adjusted upward in September 2006, when GAO told the subcommittee the CVC project would likely "cost about $584 million without allowance for risk and uncertainties, and as much as $596 million with an allowance for risks and uncertainties." In November 2006, GAO increased its minimum estimate by $8 million, to "about $592 million." Subsequently, on September 26, 2007, Acting Architect Ayers and Terrell G. Dorn, GAO's Director for Physical Infrastructure Issues, announced during a House appropriations committee hearing that the estimated cost had risen to $621 million. Private Funding In addition to appropriated funds, in 1999, Congress approved two separate pieces of legislation aimed at raising private funds for the construction of the CVC. As a consequence of these two acts and planned contributions of the United States Capitol Preservation Commission, $65 million in private funds were ultimately made available for the project. First, Congress authorized a public commemorative coin issue in observance of the 200 th anniversary of the first meeting of Congress in the U.S. Capitol in the District of Columbia. The coins were issued in gold, platinum, and silver, and proceeds from the sale of the coins, less expenses, were deposited with the United States Capitol Preservation Commission for the specific purpose of construction and maintenance of the CVC. A total of $3,527,542 was raised from the sale of the 200 th anniversary commemorative coins. Second, conferees included language in the conference report on the Omnibus Consolidated and Emergency Supplemental Appropriations Act for FY1999 ( P.L. 105-277 ) stipulating that appropriated funds for the CVC were to "be supplemented by private funds." Early in 2000, the United States Capitol Preservation Commission responded to this requirement by directing the Clerk of the House and the Secretary of the Senate to develop jointly a fundraising plan for the center. That February, the commission approved a plan for "accepting the unsolicited offer and agreement of the Pew Charitable Trusts to establish a nonprofit 501(c)(3) foundation to solicit and receive private funds for the sole purpose of donating such funds for the visitor center project." Early in 2002, the fund announced that it had reached its $39 million fundraising goal, and all of the money would be turned over to the United States Capitol Preservation Commission. The remaining private sector funds available for construction of the center had been contributed to the commission at an earlier date. In January 2002, the United States Capitol Preservation Commission was authorized by law to transfer funds from its Capitol Preservation Fund to the Architect of the Capitol for use in the planning, engineering, design, or construction of the CVC. Appropriations History FY1999 Omnibus Appropriations Act Following a shooting at the Capitol on July 24, 1998, that left two U.S. Capitol Police officers mortally wounded, the question of Capitol security received renewed attention. H.R. 4328 , the Omnibus Consolidated and Emergency Supplemental Appropriations Act for FY1999, was enacted on October 21, 1998 ( P.L. 105-277 , 112 Stat. 2681-569) and contained funding for a CVC. The conference report to accompany H.R. 4328 stated the following: The conference agreement provides $100,000,000 to the Architect of the Capitol for planning, engineering, design, and construction of a Capitol visitor center, a facility that will provide greater security for all persons working in or visiting the United States Capitol and a more convenient place in which to learn of the work of the Congress. Each of the above-named milestones will require the approval of the appropriate authorizing and appropriations committees as the project progresses…. FY2001 and FY2002 Appropriations During a June 26, 2001, Senate hearing, Architect Hantman testified that construction documents for the center had been finalized and competitive bids were solicited for the first phase of the project. On December 3, 2001, President Bush, under authority granted him in the FY2001 Emergency Supplement Act ( P.L. 107-38 , 115 Stat. 220-221), authorized the transfer of $290.4 million to the legislative branch for "increased security measures, including constructing the Capitol Visitor Center." Of this amount, $100 million was for the completion of the center, and $38.5 million for other security enhancements. These funds were drawn from the $20 billion made available to the President following the terrorist attacks of September 11, 2001, in P.L. 107-38 . The FY2002 Legislative Branch Appropriations Act ( P.L. 107-68 , 115 Stat. 588) contained an additional $70 million for construction of the CVC. FY2004 Appropriations The House passed H.R. 2657 , with no additional funding for the CVC, on July 9, 2003. The Senate Appropriations Committee reported its version of the FY2004 bill ( S. 1383 ) also on July 9, 2003, providing $47.8 million for the CVC project. The Senate language stipulated that the AOC could not obligate any of the funds without an obligation plan approved by the House and Senate Appropriations Committees. The text of S. 1383 was incorporated into H.R. 2657 and passed the Senate on July 11, 2003. The FY2004 Legislative Branch Appropriations Act provided $48.839 million for the CVC ( P.L. 108-83 , 117 Stat. 1026). A rescission of 0.59% contained in the FY2004 Consolidated Appropriations Act ( P.L. 108-199 , 118 Stat. 457) reduced this to $48.622 million. The conference report ( H.Rept. 108-279 ) included several mechanisms designed to facilitate monitoring the project's expenditures, including (1) directing GAO to perform quarterly performance reviews; (2) limiting to $10 million the total of federal funds that could be obligated or expended for the tunnel connecting the center with the Library of Congress; (3) prohibiting the Architect of the Capitol from obligating funds for the tunnel until an obligation plan was approved by the chairs and ranking members of the House and Senate Committees on Appropriations; and (4) urging those responsible for exhibits in the center to consult with the Library of Congress "to ensure that the exhibit presents history of the Congress as well as the role of the Congress in the preservation of the cultural and artistic heritage of the American people." FY2005 Appropriations The FY2005 Legislative Branch Appropriations bill ( S. 2666 ) reported by the Senate Appropriations Committee on July 15, 2004, included $7.6 million in the Capitol Building account for CVC care and maintenance "as well as start-up activities for visitor services and the hiring of key personnel." No funds, however, were included in the House-reported and House-passed versions of the bill ( H.R. 4755 ). Legislative branch appropriations were subsequently provided in the FY2005 Consolidated Appropriations Act. The conference report accompanying H.R. 4818 stated that conferees were "distressed with the Architect's ongoing inability to provide the Committees with accurate cost estimates and delivery schedules on this very important and high-profile project." The agreement authorized the transfer of up to $10.6 million from the Capitol Building account to the CVC project. The bill was enacted ( P.L. 108-447 ) on December 8, 2004. FY2006 Appropriations On June 16, 2005, the House Appropriations Committee marked up and reported its version of the FY2006 legislative branch funding bill ( H.R. 2985 ), which included $36.9 million for the CVC project. The bill did not provide funding for the center's operations. In addition, the House bill contained $3.4 million for the House portion of expenses related to the CVC, including "carpeting, furnishings, wiring, and audio/visual requirements," and a provision establishing a "Capitol Visitor Center Governing Board." The House passed H.R. 2985 on June 22, 2005. On June 24, 2005, the Senate Appropriations Committee reported its version of the FY2006 legislative branch funding bill ( H.R. 2985 ). The approved language provided $41.9 million for the CVC project, excluding center operations. The report stated that, the amount requested by the Architect is unlikely to be sufficient to complete the CVC. Therefore, the Committee has added $5,000,000 to the budget based on GAO's recommendation. In addition, the opening is likely to be delayed well beyond the timeframe on which the budget estimate for operations was predicated. Therefore, the Committee has reduced the budget request for operations to $2,300,000. The Senate version of H.R. 2985 did not contain the House provision for a Capitol Visitor Center Governing Board, but did include a provision authorizing the Architect of the Capitol to appoint an Executive Director of the Capitol Visitor Center. On June 30, 2005, the Senate amended and passed H.R. 2985 , with the CVC funding and language contained in the Senate report, by unanimous consent. The July 26, 2005, conference report accompanying H.R. 2985 contained an appropriation of $44.2 million. This figure included $41.9 million for the CVC project, and $2.3 million for operations. The report also contained, under the House of Representatives "Allowances and Expenses" account, $3.4 million for the House-related expenses. The conference report did not include the House language establishing a Capitol Visitor Center Governing Board or the Senate language authorizing the AOC to appoint an executive director for the center. The FY2006 Legislative Branch Appropriations Act was enacted ( P.L. 109-55 ) on August 2, 2005. FY2007 Appropriations On May 25, 2006, the House Appropriations Committee marked up and ordered reported a FY2007 legislative branch funding bill ( H.R. 5521 ). During markup, the committee by a voice vote approved an amendment offered by Representative Obey to transfer the authorities of the Architect to the Comptroller General until the "confirmation of a new Architect of the Capitol." The bill reported by the House Appropriations Committee would have provided approximately $46.2 million for the CVC project, or $5 million more than the request to reflect GAO's cost estimate. In its report, the committee stated that it was "becoming increasingly concerned about the project's continuing schedule slippages and increasing costs being reported by GAO, the Architect of the Capitol's inability to fix water leaks, and the late discovery of major security and life safety issues affecting the project, including the recent disclosure that the new utility tunnel being constructed may not meet applicable life safety requirements." The House passed the FY2007 legislative branch bill ( H.R. 5521 ), on June 7, 2006. On June 22, 2006, the Senate Appropriations Committee reported its version of the FY2007 legislative branch funding bill ( H.R. 5521 ). The approved language provided $25.6 million for completion of the CVC, and $14 million for fit-out and operation costs. The Senate bill did not contain the House language transferring the Architect's duties. Funds for the legislative branch were included in the FY2007 Revised Continuing Appropriations Resolution for 2007 ( P.L. 110-5 ), which was enacted on February 15, 2007. The act provided funding for FY2007 essentially at the FY2006 account levels, except where otherwise stated. P.L. 110-5 also contained language stating that amount "under the heading 'Architect of the Capitol, Capitol Visitor Center' in the Legislative Branch Appropriations Act, 2006 may be transferred among the accounts and purposes specified in such heading, upon the approval of the Committees on Appropriations of the House of Representatives and Senate." FY2008 Appropriations During a March 1, 2007, hearing, Acting Architect Ayers discussed the FY2008 appropriations request with the House Appropriations Committee Subcommittee on Legislative Branch. The following day, he testified before the Senate Appropriations Committee Subcommittee on Legislative Branch. On June 12, 2007, the House Appropriations Committee marked up and ordered reported its version of the FY2008 legislative branch funding bill. H.R. 2771 , as reported by the House Appropriations Committee on June 19, 2007, contained $20 million in additional construction funding for the CVC and $7.545 million for CVC operational costs. The House passed H.R. 2771 on June 22, 2007. The Senate version of the FY2008 legislative branch funding bill ( S. 1686 ), as reported by the Senate Appropriations Committee on June 25, 2007, contained "$28,753,000 for the CVC, of which up to $8,500,000 could be use for CVC operations." The Senate did not consider H.R. 2771 , and it did not pass S. 1686 . The FY2008 Consolidated Appropriations Act ( P.L. 110-161 ), enacted on December 26, 2007, provided $20.3 million for the CVC project and $8.5 million for operational costs. FY2009 Appropriations The House Appropriations Committee Subcommittee on Legislative Branch held a hearing on the FY2009 CVC request on February 13, 2008, with the Senate Appropriations Subcommittee on Legislative Branch following on April 30, 2008. The House subcommittee held a markup on June 23, 2008. Neither committee reported a bill for FY2009. The FY2009 Omnibus Appropriations Act, P.L. 111-8 , was enacted on March 11, 2009. According to a committee print, this act provided approximately $31.1 million for the CVC project, $9.1 million for operations costs, and $1.9 million within the House account. FY2010 Appropriations The House-passed FY2010 bill ( H.R. 2918 ) would have provided $23.1 million for the CVC. The Senate-passed version of the bill ( S. 1294 ) contained $22.8 million. The FY2010 law ( P.L. 111-68 ), enacted October 1, 2009, provided $22.5 million, a decrease of more than 44% from the FY2009 level. Both the House report and the enacted law contained language affirming the use of staff-led tours in the Capitol and the CVC. The House Appropriations Committee Subcommittee on Legislative Branch also held a hearing on July 23, 2009, to discuss the status of CVC operations. Topics discussed included staff-led tours, signage, visitor transportation and accommodation, and GAO cost estimates. FY2011 Appropriations The AOC requested $23.9 million for the CVC for FY2011, and the Senate-reported bill ( S. 3799 ) would have provided $22.8 million. No further action was taken during the 111 th Congress. FY2011 appropriations were included in P.L. 112-10 , which was enacted on April 11, 2011. The act provided $22.4 million for FY2011 and also included a $14.6 million rescission of prior year unobligated amounts provided for the CVC. The act also continued language from the FY2010 act that was not otherwise addressed, including the staff-led tour language. FY2012 Appropriations The AOC requested $22.4 million for the CVC. The FY2011 Legislative Branch Appropriations bill, H.R. 2551 , as passed by the House on July 22, 2011, would have provided $23.0 million. The House report ( H.Rept. 112-148 ) from July 15, 2011, also contained language regarding the CVC gift shop as well as the number of tour guides assigned to the CVC. The Senate-reported version ( S.Rept. 112-80 ) from September 15, 2011, would have provided $19.4 million. The FY2012 Consolidated Appropriations Act ( P.L. 112-74 ), enacted on December 23, 2011, provided $21.3 million. The act continued language affirming the use of staff-led tours in the Capitol and the CVC. The conference report ( H.Rept. 112-331 ) also contained language requiring a report on the operations of the CVC gift shop and its revolving fund. Additional CVC Legislation Naming of "Emancipation Hall" of the Capitol Visitor Center A September 25, 2007, hearing of the House Committee on Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings, and Emergency Management held a hearing on examined H.R. 3315 , which proposed to name the "Great Hall" of the CVC "Emancipation Hall." The committee filed a report on November 8, 2007 ( H.Rept. 110-436 ). This hearing followed action in the House Appropriations Committee markup to include similar language in the reported version of the FY2008 Legislative Branch Appropriations bill ( H.R. 2771 ). On November 13, 2007, the House, by a vote of 398 to 6, approved H.R. 3315 , a bill to rename the "Great Hall" of the CVC "Emancipation Hall." The Senate, after passing its own Emancipation Hall bill ( S. 1679 ) on November 15, 2007, agreed to the House bill by unanimous consent on December 6. President George W. Bush signed the bill into law ( P.L. 110-139 ) on December 18, 2007. The Capitol Visitor Center Act of 2008 As the opening of the CVC neared, Congress considered legislation related to its administration, management, oversight, and use. On January 29, 2008, Representative Robert Brady introduced the Capitol Visitor Center Act of 2008. Provisions in the bill addressed the establishment the Office of the Capitol Visitor Center within the Office of the Architect of the Capitol, headed by the Chief Executive Officer for Visitor Services; transferred the guide service to this office; established the Office of Congressional Accessibility Services; and established a revolving fund. H.R. 5159 was referred to the Committee on House Administration, which favorably reported it on February 12. On March 5, the House passed the bill by voice vote. On September 27, the Senate adopted an amended version of H.R. 5159 . On October 2, the House concurred with the Senate amendment to H.R. 5159 . President George W. Bush signed the bill into law ( P.L. 110-437 ) on October 20, 2008. The CVC opened to the public on December 2, 2008. Resolution to Engrave the Pledge of Allegiance and the Motto of "In God We Trust" (H.Con.Res. 131, 111th Congress) On June 12, 2009, the Committee on House Administration favorably reported H.Con.Res. 131 (111 th Congress), which directed the Architect to engrave the Pledge of Allegiance to the Flag and the National Motto of "In God We Trust" in the CVC. The resolution, the committee report stated, "fulfill[ed] a commitment made by the Committee during the 110 th Congress to recommend adding an engraved inscription of the motto, which is set forth in 36 U.S.C. 302, and the Pledge, which is set forth in 4 U.S.C. § 4, in the CVC." On July 7, 2009, the House agreed to H.Con.Res. 131 under suspension of the rules. It was agreed to in the Senate by unanimous consent on July 10. Resolution to Acknowledge the Role Slave Labor Played in the Construction of the Capitol (H.Con.Res. 135, 111th Congress) On June 12, 2009, the House Administration Committee also favorably reported H.Con.Res. 135 (111 th Congress), which directed the Architect to place a marker in Emancipation Hall acknowledging the role that slave labor played in the construction of the Capitol. The report stated that, in developing the marker, the Architect was to "consider the recommendations of the Slave Labor Task Force Working Group; ensure that the marker includes stone quarried by slaves in the construction of the Capitol to the greatest extent possible; and ensure that the marker includes a plaque or inscription that describes the purpose of the marker." On July 7, 2009, the House agreed to H.Con.Res. 135 under suspension of the rules. It was agreed to in the Senate by unanimous consent on July 10. In the 112 th Congress, a Committee on House Administration semiannual report stated that the "design features a bronze plaque mounted above a block of sandstone that was quarried by slaves and originally part of the Capitol's East Front," and that a location on the "western end of the northern wall of Emancipation Hall" was selected. H.Con.Res. 99 (112 th Congress), authorizing the use of Emancipation Hall to unveil this marker on February 28, 2012, was introduced by Representative John Lewis and agreed to by unanimous consent on February 9, 2012. The Senate agreed to H.Con.Res. 99 on February 15.

The Capitol Visitor Center (CVC), which opened to the public on December 2, 2008, was designed to enhance the security, educational experience, and comfort of those visiting the U.S. Capitol. The decision to build a subterranean facility beneath the East Front Plaza, largely invisible from an exterior perspective, was made so the structure would not compete with, or detract from, the appearance and historical architectural integrity of the Capitol. The project's designers sought to integrate the new structure with the landscape of the East Capitol Grounds and ultimately recreate the park-like setting intended by landscape architect Frederick Law Olmsted Sr. in his historic 1874 design for the site. Estimates for the cost of the center were as high as $621 million, although the FY2011 appropriations act subsequently included a $14.6 million rescission. The project was financed with appropriated funds and $65 million from private donations and revenue generated by the sale of commemorative coins. In March 1999, the Architect of the Capitol was authorized $2.8 million to coordinate a team of architects, engineers, and consultants to review and revalidate a 1995 study of the site selection and project design. In order to simplify the approval process for the design and construction phases, Congress transferred authority for these functions to the United States Capitol Preservation Commission in September 1999. Three months later, a revised conceptual design for the center was approved by the commission. A design and engineering obligation plan was approved by the House and Senate legislative appropriations subcommittees in November 1999 and January 2000, respectively. On January 31, 2000, design development work began, and in mid-October 2000, the United States Capitol Preservation Commission approved the final design plan for the center. Subsequently, a construction management firm was hired to oversee the project; an $8 million contract was awarded to relocate utility lines; a $99.9 million contract was awarded for Sequence 1 (foundation/structural work); and a $144.2 million contract was awarded for Sequence 2 (electrical, mechanical, plumbing, and finishing work). Additionally, a firm also was retained to oversee the development of the CVC exhibition gallery; a tree maintenance contractor was hired to help assure the protection of trees on the East Capitol Grounds; historic preservation workers temporarily removed historic Olmsted landscape features from the grounds for their protection; and temporary visitor screening facilities and media sites were constructed. Throughout the entire construction of the nearly 580,000 square foot underground facility, the project was monitored by congressional committees, which held numerous oversight and appropriations request hearings. For information on the use of the Capitol Visitor Center space for official events, see CRS Report RL34619, Use of the Capitol Rotunda, Capitol Grounds, and Emancipation Hall: Concurrent Resolutions, 101st to 112th Congress, by Matthew Eric Glassman and [author name scrubbed].

Background The FY2001 National Defense Authorization Act ( H.R. 5408 ) enacted into law by P.L. 106-398 , established authority for the Secretary of Defense to operate a facility for the purpose of providing "professional education and training to eligible nations of the Western Hemisphere within the democratic principles set forth in the Charter of the Organization of American States...while fostering mutual knowledge, transparency, confidence, and cooperation among the participating nations and promoting democratic values, respect for human rights, and knowledge of United States customs and traditions." The name of the new facility is The Western Hemisphere Institute for Security Cooperation (WHINSEC). This Institute is the successor to the U.S. Army School of the Americas, whose authorities were repealed in the legislation establishing the Institute. The purpose of the new Institute is to help prepare mid-level civilian and military personnel of eligible countries for various challenges involved in dealing with new transnational threats to the region. The Secretary of Defense is authorized by law to designate the Secretary of a military department as the Defense Department's executive agent for carrying out the responsibilities of the Defense Secretary in administering the Institute. The person designated for this task is the Secretary of the Army. The Institute is located on the grounds of the U.S. Army base at Fort Benning, Georgia. The Institute was formally opened on January 17, 2001, and has begun to conduct training at this location since that date. Eligible Personnel Individuals who are military, civilian, and law enforcement personnel from nations of the Western Hemisphere are eligible to participate in the Institute's education and training activities. By law, the Secretary of State is to be consulted in the selection of foreign personnel for education and training at the Institute. Faculty and Staff The Institute's faculty and staff consists of United States military officers, enlisted, and civilian personnel, in addition to guest foreign instructors. The State Department, the Drug Enforcement Administration, and the International Committee of the Red Cross provide full-time and adjunct professors. The Institute also hosts up to three visiting Fellows annually. Curriculum By law, the curriculum of the Institute must include "mandatory instruction for each student, for at least 8 hours, on human rights, the rule of law, due process, civilian control of the military, and the role of the military in a democratic society." The Institute is authorized to provide instruction and other training activities in the following areas: leadership development, counterdrug operations, peace support operations, disaster relief, and "any other matter that the Secretary determines appropriate." The Institute consists of three departments: Professional Military Education (PME), Civil-Military Studies, and the Training Battalion. The Professional Military Education Department provides five professional development courses to senior military commanders, staff officers, and junior officers dealing with topics such as joint military operations, course of action analysis, and decision making. These multinational courses are taught by both U.S. and foreign guest instructors, and range from five to 49 weeks in length. The Civil-Military Studies Department provides courses for both military and civilian students, focusing on skills and knowledge that can improve civil-military cooperation. The Institute's Human Rights/International Law Division is located in this Department. This Department is under the supervision and guidance of a State Department Foreign Service Officer who is an expert in Latin American and Caribbean affairs. Army lawyers, chaplains, and Latin American guest instructors conduct the eight functionally structured civil-military courses. These courses cover a broad spectrum of areas including: operational planning for peace operations; disaster relief, tactical planning and execution of counter drug operations, and civil-military operations. These courses include large numbers of civilian students representing both governmental and non-governmental organizations. The Training Battalion at the Institute provides the organization and cadre to teach and train military leadership and tactics to junior officers and non-commissioned officers. It also provides interagency instruction in counterdrug operations and in disaster relief. The Battalion provides 16 resident courses, consisting of tactical and leadership courses for both military officers and noncommissioned officers, as well as law enforcement officers. The goals of these courses are to enhance the professionalism of Latin American and Caribbean military field units and their conduct of military and interagency operations, while developing their skills in effectively interacting with civilians and neighboring military forces during the conduct of multilateral operations. Congressional Involvement Congress has demonstrated a long-standing interest in military instruction and training of foreign students at U.S. military installations. Controversies related to activities at the former U.S. Army School of the Americas at Fort Benning, Georgia, led to attempts from 1993 through 2000 to effect changes in the nature and focus of the training at that School, and in some instances to abolish it and its functions entirely. The strongest critics of this School, inside and outside the Congress, argued that in the post-Cold War circumstances, there was no compelling reason to continue its operations. Others in Congress took a different view, arguing that a military training institution for students from nations in the Western Hemisphere had continuing utility, but that it was important to ensure that its focus and training activities were consistent with support of U.S. interests, policies and values. In this context, Congress authorized the creation of the Western Hemisphere Institute for Security Cooperation, while at the same time disestablishing the U.S. Army School of the Americas in the FY2001 Defense Department authorization , enacted into law on October 30, 2000. Through explicit statutory guidelines for the new Institute's operations, the need for funds to be appropriated annually, and the requirement for an annual report on the Institute's activities, Congress has indicated that it will continue to monitor the Institutes's progress in fulfilling its mandate. Key elements of oversight of the new Institute are described below. Funding The Institute receives funding from three sources: Operations and Maintenance Funds, Army (OMA); International Narcotics and Law Enforcement (INL) Funds; and International Military Education and Training (IMET) Funds. Such funds are annually provided through the Defense Department appropriations legislation, and the Foreign Operations appropriations legislation. By law, tuition fees charged for persons who attend the Institute may not include the "fixed costs of operating and maintaining the Institute." The Defense Department's preliminary estimate was that the initial costs of operating the new Institute would be comparable to those of the now disbanded U.S. Army School of the Americas. The Department of the Army has stated that the total cost of operating WHINSEC in FY2002 is $5.887 million. The largest portion ($3.419 million) of this total comes from the Army's Operation and Maintenance account. Another estimated $1.5 million comes from the IMET account. Board of Visitors and Oversight of the Institute The statute creating the Institute established a Board of Visitors. This Board is composed of the chairman and ranking minority member of both the House and Senate Armed Services Committees or a designee of any of these individuals; six persons designated by the Secretary of Defense, "including, to the extent practicable, persons from academia and the religious and human rights communities. The Board also includes one person designated by the Secretary of State, and additional military personnel to include the "senior military officer responsible for training and doctrine for the Army" or a "designee" of that senior military officer, as well as the "commander of the unified combatant command having geographic responsibility for Latin America," or a "designee" of that officer. The Board of Visitors is to meet at least once a year, and is charged with inquiring into the "curriculum, instruction, physical equipment, fiscal affairs, and academic methods of the Institute, other matters relating to the Institute that the Board decides to consider," and "any other matter" determined to be appropriate by the Secretary of Defense. The Board is to review the curriculum of the Institute to determine whether it: "complies with applicable United States laws and regulations," is "consistent with United States policy goals toward Latin America and the Caribbean," adheres to current United States doctrine," and that "instruction under the curriculum appropriately emphasizes" the matters mandated in law relating to instruction on human rights, the rule of law, due process, civilian control of the military, and the role of the military in a democratic society. The Board is to submit to the Secretary of Defense, not later than 60 days after its annual meeting, a "written report of its activities and of its views and recommendations pertaining to the Institute." The Institute, as a Defense Department school, receives routinely scheduled visits from standard Defense Department oversight agencies. The Defense Department, the Joint Staff, and the U.S. Army will validate the education and training needs for North American nations. In the case of Latin American and Caribbean nations, the Southern Command, as the unified command responsible for that region, will conduct annual validation reviews of courses to ensure that they support one or more the SOUTHCOM Theater Engagement Plan's objectives. Each year, not later than March 15, the Secretary of Defense, by law, must submit to Congress a "detailed report on the activities of the Institute during the preceding year. This report must be prepared in consultation with the Secretary of State.

The Western Hemisphere Institute for Security Cooperation was created pursuant to language contained in the National Defense Authorization Act for 2001 ( H.R. 5408 ), which was incorporated into the H.R. 4205 conference report ( H.Rept. 106-945 ), enacted into law on October 30, 2000 ( P.L. 106-398 ). The Institute was created by Congress in response to a legislative initiative sponsored by the Clinton Administration. When the Western Hemisphere Institute for Security Cooperation was formally established in Section 2166 of Title 10 U.S.C., the authorities of its controversial predecessor, the U.S. Army School of the Americas, were repealed. This report provides background on the purpose, structure, and other aspects of the new Institute. It will be revised as events warrant.

Introduction The Gulf of Mexico coastal region (Gulf Coast) stretches over the shoreline areas of five U.S. states: Texas, Louisiana, Mississippi, Alabama, and Florida. The coastal environment has been altered over time due to changes in hydrology, loss of barrier islands and coastal wetland habitat, issues associated with low water quality, human development, and natural processes, among other things. The federal government has addressed these changes through ecosystem restoration activities in the region over the past few decades. Major restoration projects led by the U.S. Army Corps of Engineers (Corps), the Fish and Wildlife Service (FWS), the National Oceanic and Atmospheric Administration (NOAA), and the Environmental Protection Agency (EPA) have been implemented. Significant state and local efforts to restore the Gulf Coast have also been undertaken, in some cases in consultation with the federal government. The Gulf Coast has also been affected by large-scale natural and manmade disasters that have significantly affected the environment and economy of the region. Indeed, these disasters have led to changes in restoration efforts, sometimes in a significant fashion. For example, in 2005, Hurricanes Katrina and Rita caused widespread damage to wetland and coastal areas along the Gulf, and altered the plans for restoring some parts of the coast. In 2010, a manmade disaster, the Deepwater Horizon oil spill, resulted in an unprecedented discharge of oil in U.S. waters and oiling of over 1,100 miles of U.S. shoreline. Introduction to Deepwater Horizon Restoration The oil spill had short-term ecological effects on coastal habitats and species, and is expected to result in long-term ecological effects (these effects are largely uncertain). This spill increased attention toward the Gulf Coast environment and modified perceptions about restoring the Gulf Coast ecosystem. In particular, the oil spill focused attention on the natural resources impacted by the incident and long-term natural resource restoration issues that existed before the spill. As an identified responsible party, the oil and gas company BP is liable for response (i.e., cleanup) costs, as well as specified economic and natural resource damages related to the spill. As of the date of this report, oil cleanup operations have diminished substantially, and various claims processes seeking to compensate parties for damages related to the spill have been settled. Some funds already have been released and targeted toward environmental and economic restoration. Some of the primary funding streams include the following: Clean Water Act (CWA) civil damages paid by responsible parties, 80% of which are expected to support the efforts outlined under the Resources and Ecosystems, Sustainability, Tourist Opportunities, and Revived Economies act of the Gulf Coast States Act of 2012 (Subtitle F of P.L. 112-141 , also known as the RESTORE Act); other CWA civil and criminal penalties, including funding for projects to be selected by the nonprofit National Fish and Wildlife Foundation (NFWF) under court settlements; and funding to compensate for spill impacts through the Natural Resources Damage Assessment (NRDA) process, a component of oil spill liability pursuant to the Oil Pollution Act. Each of these funding streams is subject to its own conditions, priorities, and processes, and is expected to be overseen by different entities. In some cases, funds may be spent only on restoration of habitat damaged by the oil spill. In other cases, funds can address a wider range of issues, such as economic development. Introduction to Congressional Role Congress has varying degrees of oversight and control over the dissemination of funding to restore the Gulf Coast. The RESTORE Act, enacted in July 2012, established a framework for the dissemination of expected civil penalties under the Clean Water Act. In this act, to provide for long-term environmental and economic restoration of the region, Congress authorized the creation of a trust fund to collect monies derived from these penalties, established guidelines for allocating and awarding funds for ecosystem and economic restoration, and provided for monitoring and reporting on progress of restoration. Separately, Congress also has an interest in overseeing other ongoing restoration processes, including the NRDA process (implemented by NOAA, pursuant to the Oil Spill Pollution Act) and the allocation of restoration funds to NFWF, an independent nonprofit that was established and funded by Congress and is subject to congressional oversight. In addition to these funding streams, Congress also funds (through discretionary appropriations) and oversees multiple federal agencies conducting ongoing restoration actions in the Gulf Coast region that are often related to, but in some cases undertaken apart from, activities initiated since the Deepwater Horizon spill. Restoration of the Gulf Coast is complicated from a congressional perspective because multiple restoration processes are interrelated, but largely occur outside of the traditional appropriations process (including funds being used by nonfederal sources). With multiple sources of funding for ecosystem and economic restoration, Congress may be interested in how one or more restoration processes implement their activities, how they coordinate with each other, and how they are approaching and affecting the restoration of the Gulf Coast. The remainder of this report provides information on environmental damage and restoration activities related to the Deepwater Horizon spill. It includes an overview of previous, ongoing restoration work in the Gulf Coast region and a more detailed discussion of the implementation of the RESTORE Act and other Deepwater Horizon -related processes. It concludes with a discussion of potential issues for Congress. Background on the Gulf Coast Ecosystem The Gulf Coast region is home to more than 22 million people and 15,000 species over five southern states: Texas, Louisiana, Mississippi, Alabama, and Florida. Animal, plant, and microbial populations depend on the Gulf's unique processes to survive. Overall, the Gulf Coast environment includes multiple interconnected ecosystems spanning 600,000 square miles of shoreline of the Gulf of Mexico. These ecosystems provide services that encompass aesthetic, economic, and environmental values for their residents. For instance, barrier islands and wetland complexes may provide some coastal storm damage protection benefits for coastal communities. They provide habitat for a number of commercially and recreationally important species of fish, invertebrates, mammals, and birds, including many threatened and endangered species. These ecosystems also filter water, remove and trap contaminants, and store carbon, among other functions. The Deepwater Horizon spill is one of several events and ongoing processes that have altered the Gulf Coast ecosystems over time. Prior to the spill, the ecosystems were undergoing large changes due to human development and natural processes. For example, large-scale sediment and habitat loss was occurring, in part, due to altered water flows from the Mississippi River; water pollution was being exacerbated by excess nutrients such as phosphorus and nitrogen; and waterways were being altered due to dredging and levee construction; among other things. The spill did not change many of these processes but altered perspectives on how federal and state governments approach restoration. Prespill Federal Restoration Activities in the Gulf Prior to the Deepwater Horizon oil spill, several federal agencies were involved in a number of efforts to restore and conserve ecosystems in the Gulf Coast region. These efforts ranged from large-scale restoration initiatives in particular ecosystems to grant programs and projects focusing on distinct restoration issues. For example, the Corps is involved with the state of Louisiana in an initiative that aims to restore wetlands and reduce wetland loss in coastal Louisiana. The program, termed the Louisiana Coastal Area Program, is expected to entail the construction of coastal restoration features that involve habitat restoration and dredging, among other things. The Appendix to this report outlines the major ongoing federal restoration efforts and initiatives in the Gulf. Several interagency forums coordinate federal stewardship efforts and collaborative planning for Gulf Coast projects, some in cooperation with state, nonprofit, and local entities. Over the years, the Gulf Coast region has not been addressed comprehensively as an area for restoration. There has been no overarching restoration initiative addressing the region, possibly because of the size of the region and variability in its ecosystems and governing entities. Further, there has been no central entity or program responsible for planning or implementing restoration activities. Instead, responsibilities have varied by area, timing, and scope, with various combinations of federal, state, local, and nonprofit entities implementing (and in some cases directing) restoration. For instance, Louisiana, Mississippi, and Texas have major ongoing Corps restoration plans focused on specific projects and ecosystems. These are federal/state partnerships and differ in terms of how far projects have progressed. There are no comparable coastal initiatives in Alabama or in the northern part of Florida. In these areas, states, along with other entities, have initiated restoration efforts. Further complicating a comprehensive effort to restore the region is the complexity of ecological issues in the region and their connection to ecosystems outside of the region. For example, excess nutrients that cause hypoxia in the Gulf Coast area are attributed in part to agricultural runoff in the northern reaches of the Mississippi River. Addressing restoration in the Gulf Coast cuts across regions and ecosystems, as well as departmental and agency jurisdictions within the federal government. Efforts at unifying federal agency actions and developing a process for restoring the Gulf Coast region were initiated by the Obama Administration and predated the Deepwater Horizon spill. The Obama Administration created a Gulf Coast Ecosystem Restoration Working Group, which was tasked with developing a strategy for restoring the Gulf Coast region. The strategy is termed the Roadmap for Restoring Ecosystem Resiliency and Sustainability in the Louisiana and Mississippi Coasts. The intent of the roadmap was to guide near-term restoration actions to be undertaken by agencies within the working group, and facilitate the coordination of federal restoration and protection activities. However, the Deepwater Horizon spill and resulting damages and financial compensation from litigation altered the federal government's approach to restoration and coordination. Some of the new processes that have developed as a result of the oil spill are discussed below. Deepwater Horizon Oil Spill: Environmental Impacts The explosion of the Deepwater Horizon offshore drilling rig on April 20, 2010, which took place 41 miles southeast of the Louisiana coast, resulted in an estimated 171 million gallons (4.1 million barrels) of oil discharged into the Gulf of Mexico over 84 days. An additional 35 million gallons of oil escaped the well, but did not enter the Gulf environment, because BP recovered this oil directly from the wellhead. At the time these calculations were made (July 14, 2010), approximately 50% of the oil had evaporated, dissolved, or been effectively removed from the Gulf environment through human activities. However, a substantial portion—over 100 million gallons—remained, in some form, in the Gulf of Mexico. The fate of the remaining oil in the Gulf is uncertain and might never be determined conclusively. Multiple challenges hinder determination of the fate of the oil, and as time progresses, determining the fate of the oil and related environmental impacts will likely become more difficult. Some study results indicate that microbial organisms (bacteria) consumed and broke down a considerable amount of the oil in the water column. The effects from the oil spill were spread throughout the Gulf Coast ecosystem. In the immediate aftermath of the spill, more than 88,522 square miles of coast were closed and almost 1,100 miles of shoreline and related habitat were damaged due to oiling. A map of some of the documented oiling impacts in the immediate area of the oil spill is shown below in Figure 1 . Several scientists have noted that the long-term effects of the spill are likely to persist into the future. One of the earliest reports on the oil spill, carried out by a presidential task force under the direction of former Secretary of the Navy Ray Mabus, divided the effects of the oil spill into four categories: 1. Water Column Effects: Due to the location and scale of the oil spill, the spill is expected to have impacts on the food chain in coastal areas. 2. Fisheries Effects: The oil spill led to the temporary closure of approximately 36% of federal Gulf waters, as well as in-state waters, to fishing. Although these waters have subsequently been reopened, studies on fisheries impacts are ongoing, and impacts from oil on fish eggs and larvae may be better understood over time. 3. Effects on Other Species: Animals face both short-term and long-term impacts from the oil spill, including impacts on food availability, growth, reproduction, behavior, and disease. 4. Habitat Effects: Beaches, wetlands, and other Gulf Coats habitats were exposed to oil, which could potentially exacerbate erosion issues in the region and kill plants and animals. Specific long-term effects on the ecosystem are still being studied. Documented effects have been reported by scientists for various aspects of the ecosystem. For example, scientists provided estimates on the effect of the oil plume on deep sea sediment habitat and species around the well head. They reported that the most severe reduction of biodiversity in this habitat extended 3 km around the wellhead, and that moderate impacts were observed up to 17 km southwest and 8.5 km northeast of the wellhead. Further, scientists estimated that recovery rates for this habitat could be in terms of decades or longer. The effects on the seafood industry are also being calculated economically and environmentally for the long term. Federal Restoration in the Gulf since the Deepwater Horizon Oil Spill After the oil spill, efforts were focused on addressing the immediate impacts of the oil spill and monitoring how the spill was spreading through the ecosystems. Although the Oil Pollution Act (OPA) liability provisions are meant to address natural resource damages related to the oil spill, many policymakers and stakeholders expressed an interest in also addressing prespill natural resource issues in the Gulf. Thus, to some degree, Gulf restoration activities may be divided into short-term efforts that address natural resource impacts related to the 2010 oil spill and long-term recovery efforts that address restoration issues in place well before the 2010 spill. Mabus Report and Gulf Coast Ecosystem Restoration Task Force The impetus for long-term environmental restoration and recovery efforts related to the oil spill can be traced, in part, to a September 2010 report commissioned by the Obama Administration and under the direction of former Secretary of the Navy Ray Mabus (also known as the "Mabus Report"). The report outlined existing processes as well as potential new funding sources for Gulf Coast restoration. The final report noted the multiple challenges facing the Gulf Coast and suggested incorporating them into the response to the oil spill: This is a region that was already struggling with urgent environmental challenges.... [I]t only makes sense to look at the broader challenges facing the system and to leverage ongoing efforts to find solutions to some of the complex problems that face the Gulf. Sustained activities that restore the critical ecosystem functions of the Gulf will be needed to support and sustain the region's economic revitalization. The report made a number of recommendations for future restoration actions to address this challenge. Most importantly, the Mabus Report recommended the dedication of civil penalties under the Clean Water Act toward Gulf restoration to address recovery needs that may fall outside the scope of natural resource damages under the OPA. It further recommended that "Congress establish a Gulf Coast Recovery Council that should focus on improving the economy and public health of the Gulf Coast, and on ecosystem restoration not dealt with under [OPA's Natural Resource Damage Assessment program]. These three areas are inextricably linked to the successful recovery of the region." To further the long-term restoration objectives outlined in the Mabus Report, President Obama established the Gulf Coast Ecosystem Restoration Task Force in October 2010. The task force held meetings, met with public officials, and produced a restoration strategy in December 2011, which was expected to guide future restoration efforts in the region. The task force strategy defined ecosystem restoration goals and described milestones toward reaching those goals; considered existing research and ecosystem restoration planning efforts; identified major policy areas where coordinated actions between government agencies were needed; and evaluated existing research and monitoring programs and gaps in data collection. The task force goals for Gulf Coast restoration were restore and conserve habitat; restore water quality; replenish and protect living coastal and marine resources; and enhance community resilience. Enactment of the RESTORE Act in P.L. 112-141 (discussed below) in July 2012 resulted in the creation of the Gulf Coast Ecosystem Restoration Council and led to President Obama disbanding the task force. Environmental and Economic Restoration Efforts and Funding Since the oil spill, congressional legislation, civil and criminal settlements relating to oil spill damages, and existing federal programs have initiated a number of actions intended to restore the ecosystems and economies in the Gulf Coast region. Many of these actions are related, but have different planning processes and time lines, leadership, and goals. The below sections focus on the three most significant efforts aimed at environmentally and economically restoring the Gulf Coast region: RESTORE Act funding/Gulf Coast Ecosystem Restoration Trust Fund; National Fish and Wildlife Foundation (NFWF) Gulf Coast Restoration Funding; and Natural Resource Damages (NRD) under the Oil Pollution Act. It is expected that in total, more than $18.3 billion will go to these three efforts pursuant to civil and criminal settlements with responsible parties. A summary of civil and criminal settlements to date and their required funding allocations is provided in the Appendix to this report. Although economic claims and other payments to individuals damaged by the spill may in some cases be used contribute to or complement the activities discussed below, they are not included in this discussion. In addition to these efforts, funding for Gulf Coast restoration activities also is being made available under a number of smaller settlements and through ongoing federal agency activities (as discussed above). Some of these efforts are referenced in Table A-2 , below. RESTORE Act/Gulf Coast Ecosystem Restoration Trust Fund The RESTORE Act is a subtitle in legislation (MAP-21; P.L. 112-141 ) enacted on July 6, 2012. The RESTORE Act establishes the Gulf Coast Restoration Trust Fund in the General Treasury. Eighty percent of any administrative and civil Clean Water Act (CWA) Section 311 penalties paid by responsible parties in connection with the 2010 Deepwater Horizon oil spill are deposited in the fund. Amounts in the trust fund will be available for expenditure without further appropriation. The act directs the Secretary of the Treasury to promulgate implementing regulations concerning trust fund deposits and expenditures. Pursuant to CWA civil settlements, it is expected that approximately $5.5 billion in CWA penalties will be available through the trust fund through FY2031. Fund Administration The RESTORE Act gives the Secretary of the Treasury authority to determine how much money from the Gulf Coast Restoration Trust Fund should be expended each fiscal year, and regulations from the Treasury Department have since confirmed this approach. In accordance with the RESTORE Act and Treasury regulations, for each fiscal year the Secretary of the Treasury is to release funds from the trust fund toward the required components (discussed below), and invest the remainder "that are not, in the judgment of the Secretary, required to meet needs for current withdrawals." These investments are to be in interest-bearing obligations of the United States with maturities suitable to the needs of the trust fund. The Secretary also has authority to audit and stop expending funds to particular entities (e.g., states), if the Secretary determines funds are not being used for prescribed activities. The authority of the trust fund terminates when all funds owed to the trust fund have been provided and all funds from the trust fund have been expended. Funding Distribution and Authorized Uses The RESTORE Act distributes monies from the Gulf Coast Restoration Fund to various entities through multiple processes, or "components." All of the funds—not counting authorized administrative activities—would support activities in one or more of the five Gulf of Mexico states. The different fund allotments and their conditions are discussed below and illustrated in Figure 2 . The largest component is the "Direct Component," under which 35% of Gulf Coast Restoration Trust Fund monies (an estimated $1.86 billion based on the settlements with BP, Transocean, and Anadarko) will be distributed directly by Treasury equally to the five states. Other major components include the Council-Selected Restoration Component (also referred to as the Comprehensive Plan Component ), under which the council is to receive 30% for an ecosystem restoration plan (an estimated $1.86 billion, to be supplemented by interest generated by the trust fund), and the Spill Impact Component , under which the council will receive an additional 30% but will distribute this amount to states unequally (estimated at $1.6 billion total). Two other smaller allocations go toward science and research grants (2.5%, or $133.3 million, respectively). Each of these components is discussed in detail below. Pursuant to the Treasury regulations, no more than 3% of the amount received by the council and other political subdivisions (e.g., states, counties) for any of these components may be used for administrative expenses. 35%—Direct Component: Equal Shares to the Five Gulf States The largest portion of the fund (35%, other than interest earned on investments) is to be divided equally among the five Gulf of Mexico states: Alabama, Florida, Louisiana, Mississippi, and Texas. The Treasury will provide this funding as grants to these states in a given fiscal year. The act has further requirements for specific distributions to political subdivisions in Florida and Louisiana. In Florida, the shares are to be divided among affected counties, with 75% of that state's share to be distributed to the eight "disproportionately affected" counties while the remaining 25% will go to "non-disproportionately impacted" counties. In Louisiana, 30% of its share goes to individual parishes based on a statutory formula, and the remainder goes to the state Coastal Protection and Restoration Authority Board. For other states, all of the funding will be distributed to similar state authorities or offices. The act stipulates that the state (or county) funding must be applied toward one or more of the following 11 activities: 1. Restoration and protection of the natural resources, ecosystems, fisheries, marine and wildlife habitats, beaches, and coastal wetlands of the Gulf Coast region. 2. Mitigation of damage to fish, wildlife, and natural resources. 3. Implementation of a federally approved marine, coastal, or comprehensive conservation management plan, including fisheries monitoring. 4. Workforce development and job creation. 5. Improvements to or on state parks located in coastal areas affected by the Deepwater Horizon oil spill. 6. Infrastructure projects benefitting the economy or ecological resources, including port infrastructure. 7. Coastal flood protection and related infrastructure. 8. Planning assistance. 9. Administrative costs (limited to not more than 3% of a state's allotment). 10. Promotion of tourism in the Gulf Coast Region, including recreational fishing. 11. Promotion of the consumption of seafood harvested from the Gulf Coast Region. Subsequently, the Treasury regulations for the program outlined a similar set of activities but noted that the first six activities above are eligible only to the extent that they are carried out in the Gulf Coast region. To receive its share of funds (which are to be distributed as a grant), a state must meet several conditions, including a certification (as determined by the Secretary of the Treasury) that, among other things, funds are applied to one of the above activities and that activities are selected through public input. In addition, states must submit a multi-year implementation plan, documenting activities for which they receive funding. The RESTORE Act further stipulates that each state must agree to meet conditions for receiving funds that are promulgated by the Secretary of the Treasury, and certify that requested projects meet certain conditions. These conditions include that projects (1) are designed to restore and protect natural resources of the Gulf Coast environment or economy; (2) carry out one or more of the 11 activities described above; (3) were selected with public input; and (4) are based on the best available science. Under the RESTORE Act, the states are required to develop and submit a multiyear implementation plan for the use of received funds, which may include milestones, projected completion of the project, and mechanisms to evaluate progress. States also can use funds to satisfy requirements for the nonfederal cost share of authorized federal projects. 30%—Gulf Coast Ecosystem Restoration Council Comprehensive Plan The RESTORE Act authorizes the creation of a new council to govern the majority of ecosystem restoration efforts under the bill. The council is named the Gulf Coast Ecosystem Restoration Council and contains representatives from high-level officials from six federal agencies and the governor (or his/her designee) from each of the five Gulf Coast states. The act provides for the distribution of 30% of all revenues of the Gulf Coast Restoration Trust Fund, plus one-half of the interest earned on investments, to the council to fund a comprehensive ecosystem restoration plan (termed the Comprehensive Plan ). In addition to allocating this funding toward restoration, the council also is responsible for allocating 30% of the trust fund to Gulf States under a formula established in the RESTORE Act (see " 30%—Spill Impact Component: Unequal Shares to the Five Gulf States ," below, for details). The council is authorized to conduct several actions, including developing and revising the Comprehensive Plan; identifying and conceiving projects prior to enactment that could restore the ecosystem quickly; establishing advisory committees; collecting and considering scientific research; and submitting reports to Congress. The council published its draft Initial Comprehensive Plan in August 2013, and initial projects to be included in the plan were solicited in August 2014. After a series of public meetings, on August 23, 2016, the council released a draft Comprehensive Plan Update, which included project level selections. The plan set in motion a series of subsequent public meetings and a formal comment period to update the Initial Comprehensive Plan to account for funding updates and public input. The plan was finalized by the council on December 16, 2016. The Comprehensive Plan establishes five broad restoration goals and details how the council will select and fund projects. Project selection criteria and evaluation reflects provisions under the RESTORE Act. The Comprehensive Plan is to address restoration under two components: the Restoration Component and the Spill Impact Component. Each component reflects conditions and criteria established under the RESTORE Act for funding. The Comprehensive Plan notes that selected projects under the Restoration Component might not be balanced according to the restoration goals. For example, projects that aim to restore, improve, and protect water quality (one of the goals) might outnumber projects that aim to restore and enhance natural processes and shorelines (another goal). Further, according to the Comprehensive Plan and the RESTORE Act, the responsibility for implementing a project under the plan is to be given to either a state or a federal agency. Therefore, the council may not be considered an implementing entity but rather should be considered a managing and oversight entity for restoration. The Comprehensive Plan 2016 Update includes a description of how funds from the trust fund will be allocated to implement the plan from 2017 to 2026. This element is referred to in the plan as the "10-Year Funding Strategy" and was required under the RESTORE Act. Further, the plan contains an initial project and program priority list that the council would be expected to fund over the next three years, as required under the RESTORE Act. This list is referred to as the "Funded Priorities List" and also was required under the RESTORE Act. Regulations by the Department of the Treasury have clarified that eligible activities for the Comprehensive Plan include activities in the Gulf Coast Region that would restore and protect the natural resources, ecosystems, fisheries, marine and wildlife habitats, beaches, coastal wetlands, and economy of the region. 30%—Spill Impact Component: Unequal Shares to the Five Gulf States The act directs the council to disburse 30% of Gulf Coast Restoration Trust Fund monies to the five Gulf States based on the relative impact of the oil spill in each state. The council is to develop a distribution formula based on criteria listed in the act. In general, the criteria involve a measure of shoreline impact; oiled-shoreline distance from the Deepwater Horizon rig; and coastal population. On September 29, 2015, the council published a draft Spill Impact Component regulation in the Federal Register . The final rule was published in the Federal Register on December 15, 2015, and became effective April 4, 2016, with approval from the federal court in Louisiana. Based on the formula and information determined in the final rule, the allocation of Spill Impact Component funds to each state is as follows: Alabama—20.40%; Florida—18.36%; Louisiana—34.59%; Mississippi—19.07%; and Texas—7.58%. To receive funding, each state must submit a plan for approval to the council. State plans must document how funding will support one or more of the 11 categories listed in the " 35%—Direct Component: Equal Shares to the Five Gulf States " section, above. Information and criteria for developing the state plans are included in the Comprehensive Plan Update. However, in contrast to the Direct Component, only 25% of a state's funding can be used to support infrastructure projects, which are those projects in categories six (infrastructure projects benefitting the economy or ecological resources, including port infrastructure) and seven (coastal flood protection and related infrastructure). 2.5%—Gulf Coast Ecosystem Restoration Science, Observation, Monitoring, and Technology (GCERSOMT) Program The act establishes the Gulf Coast Ecosystem Restoration Science, Observation, Monitoring, and Technology (GCERSOMT) program, funded by 2.5% of monies in the Gulf Coast Restoration Trust Fund. The NOAA administrator will implement the program, which is to support marine research projects that pertain to species in the Gulf of Mexico. Further, the program is to conduct monitoring and research on marine and estuarine ecosystems and collect data and stock assessments on fisheries and other marine and estuarine variables. There is an emphasis on coordination with other entities to conduct this work and provisions that instruct the administrator to avoid duplication of efforts. This program is to sunset when all funds in the trust fund are expended. 2.5%—Centers of Excellence The act disburses 2.5% of monies in the Gulf Coast Restoration Trust Fund to the five Gulf States to establish—through a competitive grant program—centers of excellence. The centers would be nongovernmental entities (including public or private institutions) and consortia in the Gulf Coast Region. Centers of excellence are to focus on science, technology, and monitoring in at least one of the following areas: coastal and deltaic sustainability and restoration and protection; coastal fisheries and wildlife ecosystem research and monitoring in the Gulf Coast region; sustainable and economic growth and commercial development in the region; and mapping and monitoring of the Gulf of Mexico water body. Interest Earned by the Fund Interest earned by the Gulf Coast Restoration Trust Fund would be distributed as follows: 50% would fund the Gulf Coast Ecosystem Restoration Council to implement the Comprehensive Plan. 25% would provide additional funding for the Gulf Coast Ecosystem Restoration Science, Observation, Monitoring, and Technology program mentioned above. 25% would provide additional funding for the centers of excellence research grants mentioned above. Funding Levels Amounts of approximately $816 million and $128 million have been deposited in the Gulf Coast Restoration Trust Fund pursuant to 2013 and 2015 settlements with Transocean and Anadarko Petroleum Company. The April 2016 settlement with BP stated that BP would pay $5.5 billion to resolve CWA claims, 80% ($4.4 billion) of which is to be distributed to the trust fund according to the RESTORE Act. Together with the Transocean and Anadarko settlements, total funding would be $5.3 billion. Status As of spring 2017, the RESTORE Act components had distributed the following amounts: Under the Direct Component, the Treasury Department has awarded approximately $26.7 million in funds to eligible entities. It also has allocated more than $200 million in "Multiyear Implementation Plans" under the Direct Component, a process required by the RESTORE Act and the Treasury final rule for eligible state, county, and parish applicants to prioritize activities for funds and to obtain public participation as part of preparing their multiyear plans. Under the Comprehensive Plan Component, the council has approved approximately $156.6 million in initial Funded Priorities List (FPL) projects. During 2016, 10 initial FPL projects totaling $34.68 million completed the application phase and were awarded funding. Approximately $6 million in grants have been awarded for planning activities related to the Spill Impact Component. Spill Impact Component funds are to be invested in projects, programs, and activities identified in approved State Expenditure Plans (SEPs). Based on the formula established by the council, each state will develop one or more SEPs describing how it will use the allocated amount. The NOAA RESTORE Act Science Program completed its first round of funding in September 2015, awarding approximately $2.7 million to seven research teams. The next funding round is expected to make awards later in 2017, with $17 million available for research projects. The Centers of Excellence Research Grants Program had awarded $16.816 million in grant program awards to eligible applicants as of April 2017. As noted above, the Gulf Coast Ecosystem Restoration Council voted to approve the Comprehensive Plan Update on December 16, 2016. The plan established overarching goals based on the aforementioned Mabus Report, and it noted broad evaluation and selection criteria on which it plans to base its decisions. In accordance with the RESTORE Act, the plan includes project selections under the FPL as well as the 10-Year Funding Strategy. The Comprehensive Plan Update anticipated developing future FPLs approximately every three years. National Fish and Wildlife Foundation Funding Pursuant to the criminal settlements between BP and the Department of Justice (DOJ) and between Transocean and DOJ in early 2013, National Fish and Wildlife Foundation (NFWF) was scheduled to receive more than $2.5 billion for Gulf Coast restoration over the five-year period from 2013 to 2017. NFWF was established by Congress in 1984. It is an independent 501(c)(3) nonprofit organization governed by a 30-member board of directors. The NFWF board is approved by the Secretary of the Interior and includes the Director of the Fish and Wildlife Service. In the past, it typically received limited federal funds, which it used to leverage grants for conservation purposes. NFWF also administers mitigation funds targeted to specific sites or projects, including roughly 160 different funds nationally as of June 2013. For purposes of the Deepwater Horizon oil spill recovery settlements, both criminal settlements direct NFWF to use the funds in the following manner: 50% (approximately $1.3 billion) of the funding is to support the creation or restoration of barrier islands off the coast of Louisiana and implementation of river diversion projects to create, preserve, or restore coastal habitats. These projects will "remedy harm to resources where there has been injury to, or destruction of, loss of, or loss of use of those resources resulting from the [ Deepwater Horizon ] oil spill." 50% of the funding is to support projects that "remedy harm to resources where there has been injury to, or destruction of, loss of, or loss of use of those resources resulting from the [ Deepwater Horizon ] oil spill." NFWF will support such projects in the Gulf states based on the following proportions: Alabama, 28% ($356 million); Florida, 28% ($356 million); Mississippi, 28% ($356 million); and Texas, 16% ($203 million). Of these funds, the vast majority are expected to be made available to NFWF in the fourth and fifth years (2017 and 2018). The payment schedule and allocations to individual states are shown below in Table 1 . For both the BP and Transocean settlement allocations, NFWF is directed to consult with "appropriate state resource managers, as well as federal resource managers that have the statutory authority for coordination or cooperation with private entities, to identify projects and to maximize the environmental benefits of such projects." For the Louisiana projects, NFWF is directed to consider the State Coastal Master Plan, as well as the Louisiana Coastal Area Mississippi River Hydrodynamic and Delta Management Study, as appropriate. Status NFWF established the Gulf Environmental Benefit Fund (Gulf Fund) to receive funding to carry out Gulf Coast restoration efforts under the settlement. NFWF also reported that it is consulting with state and federal natural resource management agencies involved in other Gulf Coast restoration efforts (e.g., RESTORE and Natural Resource Damage processes). The first projects under the Gulf Fund were announced in November 2013. As of July 2017, NFWF reported that it had funded 101 Gulf Coast restoration projects worth approximately $880 million. Natural Resource Damages Under the Oil Pollution Act The Oil Pollution Act of 1990 (OPA; P.L. 101-380 ), which became law after the Exxon Valdez oil spill of 1989, allows state, federal, and tribal governments to act as "trustees" to recover damages to natural resources in the public trust from the parties responsible for an oil spill. Under the OPA, responsible parties are liable for damages to natural resources, the measure of which includes the following: cost of restoring, rehabilitating, replacing, or acquiring the equivalent of the damaged natural resources; diminution in value of those natural resources pending restoration; and reasonable cost of assessing those damages. NOAA developed regulations pertaining to the process for natural resource damage assessment under the OPA in 1996. Natural resource damages may include both losses of direct use and passive uses. Direct-use value may derive from recreational (e.g., boating), commercial (e.g., fishing), or cultural or historical uses of the resource. In contrast, a passive-use value may derive from preserving the resource for its own sake or for enjoyment by future generations. The damages are compensatory, not punitive. Collected damages cannot be placed into the General Treasury revenues of the federal or state government but must be used to restore or replace lost resources. Indeed, NOAA's regulations focus on the costs of primary restoration—returning the resource to its baseline condition—and compensatory restoration—addressing interim losses of resources and their services. The Deepwater Horizon NRDA Trustees are the United States Department of the Interior; NOAA, on behalf of the United States Department of Commerce; the state of Louisiana's Coastal Protection and Restoration Authority, Oil Spill Coordinator's Office, Department of Environmental Quality, Department of Wildlife and Fisheries, and Department of Natural Resources; the state of Mississippi's Department of Environmental Quality; the state of Alabama's Department of Conservation and Natural Resources and Geological Survey of Alabama; the state of Florida's Department of Environmental Protection and Fish and Wildlife Conservation Commission; and for the state of Texas, Texas Parks and Wildlife Department, Texas General Land Office, and Texas Commission on Environmental Quality. NRDA Process When a spill occurs, natural resource trustees conduct a natural resource damage assessment to determine the extent of the harm. Trustees may include officials from federal agencies designated by the President, state agencies designated by the relevant governor, and representatives from tribal and foreign governments. The trustees' work occurs in three steps: the preassessment phase, the restoration planning phase, and the restoration implementation phase. As of 2017, the Deepwater Horizon NRDA process is in the restoration implementation phase. During this phase, the trustees develop project-specific restoration plans and implement the projects in compliance with federal and state environmental laws. This process can take years, especially for complex incidents such as the Deepwater Horizon spill. However, during the NRDA process, early restoration projects can be completed to begin restoration of natural resources sooner than might otherwise be possible. This has been the case during the Deepwater Horizon NRDA process (see next section). Status The NRDA evaluation process is ongoing; however, as noted above, early restoration projects may be initiated in the meantime to allow for expedited restoration activities. On April 21, 2011, the trustees for the Deepwater Horizon oil spill announced an agreement with BP to provide $1 billion toward early restoration projects in the Gulf of Mexico to address injuries to natural resources caused by the spill. The agreement, known as the Framework for Early Restoration Addressing Injuries Resulting from the Deepwater Horizon Oil Spill (or the Framework Agreement), provided the basis for subsequent early restoration actions. Under the Framework Agreement, a proposed early restoration project may be funded only if all of the trustees, DOJ, and BP agree on, among other things, the amount of funding to be provided by BP and the Natural Resources Damages Offsets (or NRD Offsets) that will be credited for that project against BP's liability for damages resulting from the spill. Following announcement of the Framework Agreement in 2011, the NRDA trustees solicited projects from the public. Dissemination of early restoration funds has been divided into five phases as of July 2017. The first two phases of early restoration, announced in 2012, were completed and resulted in 10 projects at an estimated cost of approximately $71 million. On May 6, 2013, the trustees issued a notice in the Federal Register that included additional projects under a proposed Phase III. The plan for these projects, finalized in June 2014, proposed funding an additional 44 early restoration projects at a cost of approximately $627 million. On May 20, 2015, the trustees published a draft Phase IV plan proposing 10 early restoration projects with an estimated cost of $134 million. For Phase V, the trustees have selected the first phase of the Florida Coastal Access Project, which intends to enhance public access and recreational opportunities in the Florida Panhandle. The first part of that project, as described in the draft Phase V plan, estimates a cost of approximately $34.4 million, with a second phase of the project to be included in a future restoration plan. Thus, as of July 2017, the total funding allocated or spent on early restoration projects was $866 million for 65 projects. The funding for the early restoration projects will be credited against BP's liability for natural resource damages resulting from the spill. Further, in early 2016, NOAA released a final damage assessment and restoration plan, which plans to fund a total of $8.8 billion in natural resource damages (i.e., early restoration projects) that were approved under the 2016 settlement with BP. Other Settlement Funding for Gulf Coast Restoration In addition to the major restoration processes and funding mechanisms, civil and criminal pleas also have provided funding to other programs. This funding is generally of lesser magnitude than the RESTORE Act funding, the NFWF funding, and the NRDA funding, but it is expected to inform and complement this funding. To date, these funding allocations include $500 million to the National Academy of Sciences from the Transocean and BP criminal plea agreements, to be used for research on human health and environmental protection in the Gulf Region. It is also to be used for research on oil spill prevention and spill response strategies in the Gulf. $100 million to the North American Wetlands Conservation Fund from the BP criminal plea agreement for wetlands restoration, conservation, and projects benefiting migratory birds. Potential Issues and Questions for Congress Many of the ongoing Gulf Coast restoration efforts discussed above have yet to be finalized, and the planning processes and funds available for deposit into the Gulf Coast Restoration Trust Fund have yet to be fully determined. Further, project priority lists, state implementation plans, and other required restoration planning documents are still being developed. Nevertheless, a number of issues may be of interest to Congress in its oversight role related to Gulf Coast restoration. Some of these issues include the coordination of restoration activities among implementing entities; the development and implementation of a comprehensive plan for restoration; governance of restoration activities; and the balancing of the dual goals of ecological restoration and economic development in the Gulf Coast region. Coordination The coordination of restoration efforts among the multiple implementing entities in the Gulf Coast region is one likely area of congressional interest. As discussed above, several disparate streams of funding and resources are going toward new and existing restoration activities in the Gulf. These restoration activities are to be planned and implemented according to multiple planning documents and processes. For example, efforts conducted by NFWF will be done under its planning process after consultation with state and federal entities, while the council will be conducting its own coordination with state and federal agencies and governments for disbursing funds from the Gulf Coast Restoration Trust Fund pursuant to the RESTORE Act. Although the primary entities have highlighted coordination of their efforts, there is no formal entity that oversees all ongoing restoration in the Gulf nor is there a formal coordination process required among the implementing entities. This lack of formal requirements may cause concerns among some related to the potential duplication of projects, implementation of restoration projects that address the same issue yet promote different solutions, or projects with conflicting goals at local and regional levels. However, others may argue that formal coordination has not been necessary, as the informal coordination among the multiple restoration entities has thus far been effective. The 2016 Comprehensive Plan Update under the RESTORE Act acknowledges some of these potential shortfalls and discusses the council's intention to coordinate among implementing entities. For example, the Comprehensive Plan states that the council will strive to coordinate with other partners involved in restoration activities to "maximize ecological and socio-economic benefits and avoid duplication." The RESTORE Act itself also includes some requirements related to coordination, although it does not provide for a congressionally authorized coordinating entity with authority over all relevant processes going forward. The act authorizes memoranda of understanding between the council and federal agencies to establish integrated funding and implementation plans, which could reduce project duplication and promote an integrated restoration effort among federal entities. It also addresses duplication of efforts in relation to monitoring the Gulf Coast ecosystem. The RESTORE Act requires the Gulf Coast Science Program to avoid duplication of other research and monitoring activities and requires the NOAA administrator to develop a plan for the coordination of projects and activities between the program and other similar state and federal programs and centers of excellence. Broader questions of coordination among restoration activities go beyond the RESTORE Act and may include, in addition to NRDA and NFWF activities, existing federal and state projects and activities, as well as activities conducted in other states that might have an effect in the Gulf Coast region. Some potential questions addressing coordination include the following: How are restoration plans and projects coordinated among implementing entities? Is there a need for a congressionally authorized mechanism for coordination? How are new restoration activities authorized under the RESTORE Act integrated with existing restoration programs and efforts, without causing overlap? Will there be assurances that project monitoring and oversight are measured with similar metrics? Will data and results from restoration activities be comparable to similar activities implemented by another entity? Will baseline ecosystem restoration activities continue under their authorities and funding or will they be integrated into efforts authorized under the RESTORE Act and other Deepwater Horizon -related restoration activities? Planning Another potential issue for Congress is the status and content of multiple planning processes related to Gulf restoration. Although the planning process and implementation progress under the RESTORE Act may receive significant attention from Congress, planning under the NFWF and NRDA processes may be of interest to some in Congress, as well. As discussed previously, the Gulf Coast Ecosystem Restoration Council published a Comprehensive Plan Update in December 2016. The stated intent of the plan is to provide a framework to implement restoration activities in the Gulf Coast region. When it was published, the council noted that the updated plan was intended to "provide strategic guidance that will help the Council more effectively address these complex and critical challenges and supersedes the Initial Plan approved by the Council in August 2013." The Comprehensive Plan Update published by the council included some of the elements required by Congress that were not in the Initial Plan. Among these, it included a description of the process underpinning project selection and state expenditure plans, as well as congressionally required elements, such as the 10-Year Funding Strategy and the 3-year FPL. Additionally, other elements that are related to Gulf Coast restoration were not required by Congress to be included in the report. For instance, Congress did not require that the report cover the Direct Component under the RESTORE Act (i.e., funding which goes directly to states). Similarly, activities under the Gulf Coast Science Program and centers of excellence were not included in this plan. The two other Gulf Coast restoration planning processes discussed herein are those coordinated by NFWF and NRDA trustees, respectively. Notably, neither is governed by RESTORE Act planning processes. NFWF restoration actions are governed first by the criminal settlements between DOJ and BP and DOJ and Transocean (and subsequent guidance from NFWF), whereas the NRDA planning process is governed by NOAA regulations, pursuant to the OPA. These planning processes may be more targeted than those under the RESTORE Act and are expected to proceed independently. Another issue for Congress is whether the current approach to ecosystem restoration in the Gulf is effective and whether or not it would be better implemented under alternative organizational structures. For instance, in the Everglades, restoration is federally led and ostensibly guided by a centralized, "comprehensive" plan, known as the Comprehensive Everglades Restoration Plan (CERP). Authorized in the Water Resources Development Act of 2000 ( P.L. 106-541 ), CERP outlined 68 distinct projects that are intended to comprise a large amount of the restoration effort. Generally speaking, CERP is more centralized and detailed than the comprehensive planning process that has been carried out for the Gulf under the RESTORE Act to date. However, it is similar to the current planning process in the Gulf in that it is dependent on other restoration efforts that are not formally covered by CERP or led by the federal government. In the case of the Everglades, planning for these activities is coordinated by a separate congressionally authorized body, the South Florida Ecosystem Restoration Task Force. A complete comparison and assessment of the disparate planning processes in the Gulf is made difficult by the absence of some information from the processes. For instance, to date no plans have provided an estimated time frame for completing restoration, nor have the plans addressed the maintenance of restoration activities when funding has been exhausted and governance structures have been dissolved. The Comprehensive Plan Update discusses consideration of regional planning frameworks, with collaboration meetings and workshops to begin in 2017, but as of July 2017 no such documentation is available. Potential questions Congress may have related to planning for restoration may include the following: How is the planning process under the RESTORE Act incorporating other processes, such as those related to prespill restoration activities or restoration activities conducted by states and other entities such as NFWF or under NRDA? What is the anticipated time line for the implementation of the individual elements of the RESTORE Act? Will a vision or set of criteria for defining what a restored ecosystem will look like be created or required under RESTORE Act and other planning processes in the Gulf? Will it include an estimate of how long restoration will take or how much it will cost? Who will be responsible for providing future funding to continue restoration activities in the Gulf after activities funded under the Deepwater Horizon settlements are complete? In addition to the 3% limit on administrative expenditures, will there be limits for other expenditure types? What internal and external controls procedures or processes are overseeing Gulf Coast restoration planning, and how effective have they been? Implementation Implementation and governance of restoration activities in the Gulf is another important aspect of restoration that is still under development by various entities involved in the Gulf Coast. Several questions related to implementation of activities could be posed, including questions on the division of labor between federal and state activities, how progress will be measured, and the timing of activities going forward. As discussed previously, restoration activities in the Gulf Region will be implemented by several federal, state, and nongovernmental entities under different structures. The RESTORE Act does not specify an overarching entity that would monitor and report on the implementation of all aspects of restoration. The council's responsibility appears to be focused on the implementation of the Comprehensive Plan and state plans pursuant to the Spill Impact Component, while NRDA and NFWF plans will focus on those elements separately. This could raise questions about how restoration activities derived from various funding streams relate to each other. For example, Will any entity be responsible for evaluating and reporting on the overall status of restoration activities in the Gulf, or will reporting be conducted separately? If restoration crosses state borders, will there be oversight to determine if restoration activities among states are complementary or contrasting? How will conflicting implementation objectives be handled among the various initiatives? Monitoring the implementation and progress of all restoration activities and actions does not appear to be the objective of any one entity in this restoration initiative. The Gulf Coast Ecosystem Restoration Council is responsible for reporting on the progress of projects or programs to protect the Gulf Coast region under the Comprehensive Plan and State Plans, but it appears to have limited authorities over other activities. Two projects on the initial FPL include the Council Monitoring and Assessment Program and the Gulf of Mexico Alliance Monitoring Community of Practice. These projects would fund the development of Gulf region-wide monitoring, create a data management plan, and collaborate with other restoration entities. This could lead to questions such as the following: Is the council considered the overarching entity for measuring the progress of restoration based on all restoration actions or those just associated with the Comprehensive Plan? Does it have authorities that it is not using? Will the council be measuring the progress of individual projects and programs or addressing the overall, holistic view of restoration? What indicators and metrics are being used? When the fund is empty and the council is dissolved, who will be responsible for maintaining the restoration initiative or measuring its progress? Is adaptive management being used to evaluate and guide restoration actions? Is there a process or entity that could change the direction of restoration efforts, and would they have the authority to initiate and carry out holistic changes or just changes to individual projects and programs? Balancing Goals Restoration in the Gulf Coast is different from some other restoration initiatives around the nation, primarily because a considerable amount of funding is expected to be provided up front toward the dual objectives of restoring the ecosystem and the economic vitality of the Gulf Coast. Some in Congress might seek to weigh in on how efficiently funds are used to satisfy the dual goals of restoration and economic vitality, and may conduct oversight on balance of resources used for restoring the ecosystem versus restoring the economy of the region. Under the RESTORE Act and Treasury regulations, there are no formulas or provisions that address the exact balance of efforts to restore the ecosystem and the economy. Acknowledging that these two objectives are not mutually exclusive, preliminary questions could include the following: How will funding allocated from the Gulf Coast Restoration Trust Fund balance the dual goals of ecosystem restoration and economic restoration? Under state plans, will there be guidance on how funds should be split among economic and ecosystem-related projects? Is restoration funding derived from the trust fund intended to replace state funding for ecosystem restoration and economic vitality or add to existing restoration funding in state budgets? The Comprehensive Plan Update contains seven objectives and notes that funding for these objectives will not be equally distributed. How will the funding be distributed? Are the objectives prioritized? Is the Comprehensive Plan Update prioritizing ecological activities over economic activities? Will the concept of ecosystem services be used to determine the priority of projects to be implemented? If so, how will the assessment of ecosystem services be conducted? Concluding Remarks Although implementation has progressed on several fronts, several aspects of Gulf Coast restoration planning, implementation, and funding are uncertain or still being developed. Some funding under the RESTORE Act, NFWF, and NRDA early restoration efforts has been released. Developments, such as the BP settlement, and the release of funding under NFWF, NRDA, and RESTORE Act processes, have increased the attention on Gulf Coast restoration. As the multiple processes governing these efforts move forward, Congress might consider questions related to their coordination, planning, and implementation and may look to other comparable initiatives for lessons learned that could be incorporated into work on the Gulf Coast. Questions aimed at addressing adaptive management, governance, and striking a balance between restoration and the economy could be among the issues raised in congressional oversight of Gulf Coast restoration. Appendix. Sources of Funding and Ongoing Federal Efforts for Gulf Coast Restoration

The Gulf of Mexico coastal environment (Gulf Coast) stretches over approximately 600,000 square miles across five U.S. states: Texas, Louisiana, Mississippi, Alabama, and Florida. It is home to more than 22 million people and more than 15,000 species of sea life. Efforts are ongoing to restore this environment, which has been damaged by specific events such as the Deepwater Horizon spill and hurricanes as well as by disturbances to wetlands and water quality from human alterations and other impacts. The issue for Congress is the implementation, funding, and performance of congressionally sanctioned restoration efforts for the Gulf Coast. Ongoing Efforts to Restore the Gulf Coast. The Gulf Coast environment has been degraded over time due to, among other things, altered hydrology, loss of barrier islands and coastal wetland habitat, issues associated with low water quality, and other human impacts and natural processes. Preexisting environmental issues throughout the Gulf Coast have been affected and in some cases exacerbated by natural hazards and manmade catastrophes. Among other events, Hurricanes Katrina and Rita caused widespread damage to wetland and coastal areas along the Gulf. A number of federal agencies—the Army Corps of Engineers, the Fish and Wildlife Service, the National Oceanic and Atmospheric Administration, and the Environmental Protection Agency, among others—are engaged in ongoing efforts to restore areas or aspects of the Gulf Coast environments. Significant state and local efforts to restore the Gulf Coast also have been undertaken, in some cases in consultation with the federal government. The Deepwater Horizon oil spill resulted in a new set of restoration efforts and funds. Restoration in Response to Deepwater Horizon. The Deepwater Horizon explosion on April 20, 2010, resulted in an unprecedented discharge of oil in U.S. waters, eventually oiling more than 1,100 miles of U.S. Gulf Coast shoreline. As an identified responsible party, the energy company BP is liable for response (i.e., cleanup) costs, as well as specified economic damages and natural resource damages related to the spill. Efforts to mitigate and recover from the Deepwater Horizon spill have initiated several new processes that are expected to supplement ongoing Gulf Coast restoration work. In particular, three major processes are likely to significantly affect restoration work going forward: first, the dissemination of approximately $5.3 billion in Clean Water Act penalties, as required in the RESTORE Act (P.L. 112-141); second, the dissemination of $2.55 billion in criminal penalties from responsible parties by the nonprofit National Fish and Wildlife Foundation (NFWF), as required under relevant court settlements; and third, the assessment and provision of $8.8 billion in Natural Resources Damage Assessment (NRDA) penalties under the Oil Pollution Act of 1990, as amended (P.L. 101-380). Initial funding under NFWF and NRDA early restoration efforts was first released in 2013 and 2014, respectively, whereas the Treasury Department and Gulf Coast Ecosystem Restoration Council began to release funding for certain planning activities under the RESTORE Act in 2015. Issues for Congress. Congressional interest in Gulf Coast restoration may include oversight of previously passed legislation (P.L. 112-141 and P.L. 101-380), including progress to date and any related legislative changes that may be required. Congress also may be interested in the effect of these efforts on ongoing Gulf Coast restoration, coordination between the multiple aforementioned processes, and the effectiveness of these efforts going forward. As a result of differences in the origins and implementation of each effort, Congress has varying degrees of oversight and control over the dissemination of funding to restore the Gulf Coast. Restoration of the Gulf Coast is complicated from a congressional perspective because multiple restoration processes are interrelated but occur largely outside of the traditional appropriations process (including funds being used by nonfederal sources).

Introduction Congress is again debating how to promote work in the context of programs to aid poor and low-income people and families, including the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) and federal rental housing assistance programs (public housing and the Section 8 Housing Choice Voucher program). A number of factors have combined to heighten Congress's interest in this topic. Concerns have been expressed about continued "dependency" of families on government assistance as well as the amount of federal spending on these programs, work disincentives inherent in program design, and the effectiveness of our current social safety net in adequately addressing poverty. The last major debate over the role of work in social assistance programs culminated in the 1996 welfare reform law (the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, P.L. 104-193 ), which created the Temporary Assistance for Needy Families (TANF) block grant. Policies enacted in the 1990s, including those in the welfare reform law, focused on assistance for low-income families with children, particularly those headed by single mothers, and reduced the availability of assistance for families without workers, but expanded aid to low-income families with wage earners. Following enactment of the 1996 welfare reform law, the number of families with children receiving cash assistance declined dramatically, employment of single mothers increased, and poverty among children declined. However, in the 2000s—even before the onset of the 2007-2009 recession—some of these gains were eroded and even reversed. Overall, household incomes were relatively stagnant during the decade, and the economic circumstances of some populations (e.g., poor men with low levels of educational attainment) continued to deteriorate. The House Budget Committee, in reporting the Concurrent Resolution on the Budget ( H.Con.Res. 25 ) for FY2014, called for creating work participation standards in SNAP. It also called for reforms of need-tested assistance programs in general, by devolving them to the states and with the goal of building on the welfare reforms of the 1990s. Work requirements for SNAP were part of the 2014 "Farm Bill" debate ( P.L. 113-79 , Agricultural Act of 2014); ultimately Congress retained existing SNAP work rules but required and funded up to 10 pilot projects to test alternative employment and training strategies, including some features similar to those of TANF work programs. This report focuses on work requirement, time limit, and work incentive policies in three programs: the TANF block grant, SNAP, and housing assistance programs. TANF is sometimes touted as a model program with work requirements and time limits that can be applied to other low-income aid programs. However, as will be explored in this report, its policies and lessons are complicated and may not be fully applicable to other social assistance programs. Thus, policy makers considering expanding these policies face a number of considerations, which are discussed later in this report. Background Government benefit programs help families and individuals avoid destitution and provide a measure of economic security for them. The generosity of such benefits, and the terms and conditions placed on their receipt, can also affect labor markets, by potentially affecting participation in the labor force as well as the wages for which workers are willing to accept employment. Work is a central feature of government benefit programs in the United States. The largest benefit programs are social insurance programs, such as Social Security, Medicare, and Unemployment Insurance, which provide benefits earned through work in covered employment. Low-income assistance programs—with benefits based on financial need, not past work—also can affect participation in the workforce, particularly for those who can command only low wages. Rationales for Work-Related Provisions in Low-Income Assistance Programs In order to understand the current set of policies in TANF, SNAP and federal rental housing assistance, it is useful to be familiar with the rationales for work-related requirement and incentive policies, including time limits, in social assistance programs. Four primary rationales for such policies have historically been put forth: offsetting work disincentives inherent in social assistance programs; promoting a culture of work rather than one of dependency; rationing scarce taxpayer dollars to the truly needy; and combating poverty. Offsetting Work Disincentives in Social Assistance Programs One rationale for work incentives and requirements in government assistance programs has been to combat the work disincentives inherent in means-tested benefit programs. Some argue that assistance programs allow individuals and families to consume goods and services independent of work, lessening the pressure to search for employment and go to work. Additionally, benefits based on need usually are reduced by some amount as an individual's earnings increase, eventually ending when the individual, family or household is no longer financially needy under a program's rules. This means the individual faces a relatively high implicit "tax" rate, as part or all of a worker's increase in earnings is offset by a decrease in social assistance benefits. Empirical studies have generally confirmed that providing social assistance has a work disincentive, though the size of that disincentive has historically been in dispute. "Work requirements" counteract the work disincentives of government benefits by requiring a recipient to engage in a labor market-related activity—rather than nonmarket activity, such as homemaking, child-rearing or leisure—as a condition of receiving government benefits. That is, they create a mandated activity, which may potentially be non-paid (e.g., job search), that affects the decision of individuals to work or accept a job offer. Failure to engage in that mandated activity can result in a reduction or end of the government benefit. "Work incentives" are a set of policies designed to reduce the high implicit "tax rate" on earnings inherent in low-income assistance programs. They usually take the form of disregarding a portion of a recipient's earnings ("earnings disregards") in determining means-tested eligibility and benefits. Culture of Dependency Versus Culture of Work Another rationale for work requirements or incentives involves the centrality of work to the nation's economic and social organization. Work is a social norm that the work disincentives inherent in means-tested programs might undermine. The argument has been made that if the social norm of work is not reinforced, an alternative norm of dependency on government programs can take its place. "Dependency" on government programs implies an inability to function in society without government assistance. This dysfunction can lead to behaviors beyond simply responding to economic incentives and disincentives. Dependency has historically been discussed in conjunction with other social ills such as out-of-wedlock births, crime, and drug abuse. Thus, by counteracting work disincentives inherent in social programs, work incentives and requirements may promote a culture of work rather than a culture of dependency. Time-limiting public benefits is one way policymakers may choose to address concerns about dependency. Another is by supporting, encouraging, or requiring families to increase their work effort, so that their incomes increase and they are no longer in need of public benefits. Prioritizing Limited Federal Resources A third rationale involves a desire to effectively distribute scarce federal resources. Time limit and work requirement or incentive policies that move families out of federal assistance can free up federal resources for other priorities. The requirement to be engaged in an activity imposes a "time cost" on benefit receipt, and for some individuals, the value of the benefit may not exceed the cost of having to engage in a work or job preparation activity. It has been argued that work requirements "screen" out those not in true need of benefits, limiting benefits to those who have little alternative. In the case of housing assistance programs, the concern is more acute because the programs are only funded at a level sufficient to serve roughly one in four eligible families. Therefore, in most communities, there are very long waiting lists for assistance. New families can be assisted, generally, only when currently-assisted families leave the program. TANF block grant funds are capped, and states (rather than the federal government) have the incentive to minimize their cash assistance caseloads to permit them to spend their funds on other benefits and services. While SNAP funding is not capped, the argument has been made that federal tax dollars are scarce and aid should only be prioritized for those who are truly needy. Combating Poverty In most cases, without income from work, a person and his or her family members are almost certain to be poor. Almost all persons who are not poor are in families who either have a worker or receive work-related benefits. Reliance solely on means-tested benefits almost always relegates a person and his or her family to poverty. Thus, a rationale for requiring or incentivizing work in social assistance programs is to promote what is effectively the only route out of poverty for a family. However, as is explored later in this report, while work is almost always necessary for a family to advance out of poverty, it is not always sufficient without other income supports, such as the Earned Income Tax Credit. Work and Cash, Food, and Housing Assistance: Brief History A review of the legislative histories of cash, food (food stamps, in particular), and housing assistance, illustrates the different ways that beneficiaries' employment status and employment services became an issue for the programs. Furthermore, as each program has different authorizing statutes (reauthorized or extended at different intervals), authorizing committees and appropriating subcommittees, and political stakeholders, it may be challenging to coordinate the work-related policies among the programs and assure that all consider current economic needs and research findings. The federal role in providing cash assistance to the needy dates to the Social Security Act of 1935 (P.L. 74-271), which created both social insurance programs to provide protection against old age and unemployment as well as federal grants to help states pay public assistance benefits for the aged, blind, and needy families with children. The public assistance programs provided benefits based on financial need and only to those categories of the poor considered by policymakers at the time as not expected to work. For needy families with children, benefits were provided to permit mothers to stay home and raise children through the Aid to Dependent Children program, later renamed Aid to Families with Dependent Children (AFDC). Over time, with increases in the labor force participation of mothers in the general population, policymakers changed their expectations of work for poor mothers, leading to the establishment of work requirements in AFDC. The cash public assistance programs for the aged, blind, and disabled were federalized into the Supplemental Security Income (SSI) program by legislation enacted in 1972. SSI does not have a work requirement as these populations are not expected to work. The cash public assistance program for needy families with children was eventually converted into the TANF block grant, with work requirements and time limits that apply with respect to recipients of cash assistance. Food and housing aid also date back to the Great Depression, but these programs served policy purposes aside from just helping the needy. Domestic food aid programs, including the Food Stamp Program, were established, in part, to support the U.S. agricultural economy. Housing assistance was established, in part, to promote economic activity in the form of construction. The Food Stamp Program (renamed SNAP in 2008) originated with a 1961 Kennedy Administration pilot program, with the Food Stamp Program first legislated in the Food Stamp Act of 1964 (P.L. 88-525). Initially a program that served localities at state option (in lieu of distributing excess commodities), the 1971 amendments to the Food Stamp Act (P.L. 91-671) created uniform federal rules for eligibility and benefits. Though Food Stamps were still considered part of agricultural economic policy as well as a program to alleviate hunger, as a means-tested program it raised concerns about how its benefit would impact participants' employment, and the 1971 law began to make many of the work-related rules that are in current SNAP law today. P.L. 91-671 required able-bodied adults to register for work, and it disqualified those who quit jobs or refused employment. The Conference Committee on the legislation noted that other "welfare reform" proposals were pending, and it endorsed a uniform "workfare" requirement that would also apply to food stamps. The Food Stamp Act of 1977 ( P.L. 95-113 ) permitted limited "pilots" of food stamp workfare programs; "workfare" became a state option in 1981 ( P.L. 97-98 ). Federal funding for Food Stamp employment and training activities (E&T) was added to the law in 1985 ( P.L. 99-198 ). The 1996 welfare reform law ( P.L. 104-193 ) added the time limit for nonworking able-bodied adults without dependents and amended some of the work registration requirements. The current financing of E&T dates to the 2002 farm bill ( P.L. 107-171 ). Housing aid evolved from programs supporting the construction of public housing to programs providing rental assistance to low-income families. The Housing and Community Development Act of 1974 ( P.L. 93-383 ) created the Section 8 program, although the voucher aspect of the program was not added until the Housing and Urban-Rural Recovery Act of 1983 ( P.L. 98-181 ). Both the public housing and Section 8 voucher programs were significantly reformed by the 1998 Quality Housing and Work Opportunity Reconciliation Act (QHWRA) ( P.L. 105-276 ). Work and self-sufficiency policies did not become part of assisted housing programs until the mid-1980s, and the initiatives that were adopted were generally small demonstrations. This may be, in part, because for the first several decades of public housing, the program primarily served working poor families. As a result of both policy changes and demographic changes, the number of nonworking and very poor families in public and assisted housing grew over time. It was not until the 1998 reforms ( P.L. 105-276 ) that the first work requirement for housing was put into place, which was a requirement that certain public housing tenants participate in community service or economic self-sufficiency activities for 8 hours per month. Overview of Work-Related Policies in TANF, SNAP, and Housing Assistance This report examines the work-related policies of TANF, SNAP, and housing assistance. As noted in the previous section, these programs have different purposes and different histories. Though there is overlap in populations served by the three programs, there are also differences in the populations they serve. This section provides a series of program comparison tables to illustrate the similarities and differences at-a-glance. TANF is a broad-based block grant that helps fund public assistance benefits to families with children who have little in the way of financial resources at application. Benefits are restricted to the very poor, with income thresholds typically low enough so that cash assistance programs admit mostly the nonworking poor. Benefit amounts are a fraction of poverty-level income in all states. Its work requirements generally apply only to those who receive "assistance" (on-going, monthly cash aid). SNAP and housing assistance are programs designed to help individuals and households afford economic necessities (food and housing, respectively). Their premise is that low-income households should not have to spend more than a specified percentage of their income for their food or for their housing (30% in each case). These programs serve low-income households who do not work, as well as those who do and they serve a more heterogeneous population than TANF, including elderly and disabled individuals, singles and couples without children, as well as families with children. Additionally, the income eligibility thresholds for these programs are generally higher than those for TANF. Table 1 provides an overview comparison of the basic features of each of the programs. The work-related policies in TANF, SNAP and federal housing assistance fall into three categories: 1. Work requirements. This approach makes the engagement in work or work activities (such as training or job search) a condition of eligibility for, or ongoing receipt of, benefits. TANF requires state governments to engage participants in work and requires states to sanction—reduce or end benefits—families that fail to comply with work requirements. Federal law requires most able-bodied adults receiving SNAP benefits to engage in work activities (e.g., register for work). Federal housing law has an 8-hour per month community service or economic self-sufficiency requirement for public housing residents not otherwise exempted or engaged in work; no such requirement exists for recipients of Section 8 Housing Choice Vouchers. 2. Time limits . This approach limits the eligibility for benefits to a specific duration, in some cases dependent on whether or not the program participant is working. A time limit alone does not necessarily directly help participants enter or re-enter the labor market, but it may provide incentive for them to do so. TANF limits federally-funded cash assistance to five years. SNAP has a time limit for able-bodied adults without dependents; these participants are limited to three months of SNAP benefits in a 36-month period if they are not working or engaged in work activities for 20-hours per week. The law governing federal housing assistance contains no time limit policy. 3. Work incentives in benefit design . While means-tested programs generally reduce the level of assistance as household income rises, which may be construed as a disincentive to work, benefit programs may be designed to lessen that disincentive or to reward employment. In TANF, states can determine whether to disregard any participant earnings. SNAP has an earned income deduction that results in slightly higher benefits for SNAP participants with wages. Public housing has an earned income disregard for two years; the Section 8 Housing Choice Voucher program has the same disregard, but only for households with disabilities. Certain families in the Section 8 voucher program may also participate in a work incentive program that provides for escrowed savings accounts. These policies may differ significantly in their implementation. In some cases, federal policy may apply directly to individual program participants. For example, the 8-hour per month community service requirement applies to each nonexempt individual residing in public housing. However, in other cases, the federal policy may set performance standards for states or other program administrators based on the work engagement profile of their caseload. In TANF, for example, a state's "work participation rate" can lead to a "caseload reduction credit" reward or a financial penalty levied on the state. The following tables review the work-related policies that are in place for the TANF, SNAP, and housing assistance programs, providing comparisons of the ways in which these concepts are included in the respective programs. Work Requirement Policies Table 2 compares the work requirement policies in TANF, SNAP, and housing assistance. As shown in the table, the major work requirement that applies in TANF is the federal work participation standard—a performance measure that applies to states, not directly to individuals. The TANF work participation standard requires that states engage a specific percentage of families receiving assistance in activities; its detailed rules determine both the minimum hours and types of activities that count as being "engaged" in activities. These rules promote a "work-first" welfare-to-work approach, emphasizing activities for rapid job attachment (job search), performing community service or engaging in an unpaid program to provide work experience in exchange for benefits, and short-term rehabilitative activities. Long-term education and training is limited. (For a discussion of the research on the effectiveness of "work-first" versus education and training, see " Research on Effective Strategies " in this report.) Though the TANF participation standard has detailed rules, states have the flexibility to determine what requirements apply to individual recipients and families. They can engage families in other activities for fewer hours, though they cannot count that engagement toward the federal participation standards. In contrast, SNAP work requirements apply to individuals (although some requirements vary based on state options). With respect to housing assistance, a community service or economic self-sufficiency requirement applies to individuals in public housing, but there is no federal work requirement for individuals in Section 8 voucher-assisted households. However, some public housing authorities participating in the "Moving-to-Work" demonstration can place work requirements on individuals and/or households (see "Housing Assistance: The Moving to Work Demonstration"). Time Limit Policies Table 3 compares time limit policies for TANF, SNAP, and housing assistance. TANF limits federally-funded assistance for families with an adult member to five years. The time limit does not apply to families without an adult member; e.g., families with the children in care of (a) a nonparent relative, such as an aunt, uncle, or grandparent; (b) a parent receiving disability benefits; or (c) a parent who is an ineligible noncitizen. It also does not apply to state funds that must be expended under a TANF state spending requirement. SNAP has a time limit for able-bodied adults without dependents (ABAWDs) who are not working or who are not engaged in a work program. Such participants are limited to receiving 3 months of benefits in a 36-month period. There are no federally-required time limits in housing assistance programs. However, public housing authorities operating a "Moving to Work" demonstration program may impose time limits on their assisted families. Work Incentive Policies Table 4 compares the work incentive policies within the TANF, SNAP, and housing assistance programs. All three programs disregard a portion of earnings for assisted families and households. TANF's earnings disregards are determined by the states. SNAP and housing assistance earnings disregards are federally-determined. In addition to earnings disregard policies, these programs also sometimes disregard certain accumulated savings. While not necessarily a work incentive, to the extent that such accumulated savings come implicitly or explicitly from earnings, these policies may help alleviate some disincentive for working families to save. Lessons from TANF As described in the previous section of this report, the TANF program has a more robust set of work requirement and time limit policies than either SNAP or housing assistance. Those TANF policies are often cited as a model of effective program reforms. Therefore, it may be useful to look a little more closely at TANF's policies and their outcomes, as presented in the next section of this report. Engagement in Work Activities and Caseload Reduction The popular perception is that most TANF families are required to work in order to continue to receive benefits; however, a large portion of the caseload is not engaged in work or work activities in a given month. The main TANF work requirement is actually one that applies to states, not individuals, and represents a performance standard. A state may meet TANF's work participation standards by having families engaged in activities and achieving a target participation rate and/or by receiving credits that reduce its target rate. Figure 1 shows the trend in both the number of families engaged in TANF work activities and the number of families on the rolls. The bars at the bottom of the figure show engagement in activities: the bottom bar shows engagement in unsubsidized employment (having a job while on the benefit rolls); the top bar shows engagement in all other activities. The two lines on the figure show the trend in the number of families receiving assistance: the top line shows all families, the bottom line shows the total number of TANF families subject to the work participation standard. Under TANF, the rate of participation in work and related activities has been relatively modest. The official TANF work participation rate has hovered in the vicinity of 30% during the life of the program. (The official participation rate is the number of families engaged in activities divided by the number of families subject to the rate.) Additionally, the most common activity for recipients was engagement in unsubsidized employment. Far fewer families had members participating in activities that states placed recipients into, such as job search, vocational educational training, and work experience. In FY1998, close to 700,000 TANF families had members who were counted as engaged in work or participating in activities: 491,000 employed in unsubsidized jobs while receiving assistance, 209,000 in other activities. With the decline in the caseload, these numbers diminished. In FY2014, 321,000 TANF families had members engaged in work or activities: 225,000 families in unsubsidized employment and 95,308 families in other activities. Despite modest rates of work participation, there has been a large decline in the cash assistance caseload. The AFDC caseload began to decline in FY1994, prior to the enactment of the 1996 welfare reform law. During the pre-welfare reform period, states were experimenting with welfare-to-work programs of their own design, and states came under TANF rules beginning in FY1997. In FY2008, the number of families receiving assistance was one-third of what it was in FY1994. How did modest rates of participation in work translate into large caseload declines? In part, the booming economy of the late 1990s reduced the number of needy families, reducing the number of families financially eligible for aid. However, while there were fewer families eligible for assistance, the share of total eligible families actually receiving assistance also declined. Figure 2 shows the estimated number of families eligible for, and the actual number of families receiving cash assistance for 1994 to 2009, and Figure 3 shows this information as the percent of eligible families actually receiving benefits. As shown on Figure 2 , the population eligible for cash assistance did decline in the 1990s (see top line of Figure 2 ). Still, the share of the eligible population actually receiving aid declined in that period too (see Figure 3 ). In 1994, 82% of eligible families were estimated to have received benefits. By 2001, this percentage declined to 48%. In the 2000s, even before the 2007-2009 recession, the number of families eligible for cash assistance began to rise (top line in Figure 2 ), but the caseload did not. By 2007, just before the onset of the recession, the share of the eligible families who received assistance had declined to 36%. In 2009, with the sharp increase in the number of eligible families and a relatively small increase in the caseload, that share had declined to 32%. In 2012, the percent of eligible families who received assistance was essentially unchanged from 2009, 32%. The enactment of TANF was preceded by a large amount of experimentation and research on welfare-to-work programs, and, while this research might have predicted that caseloads would decline, it would likely not have predicted this magnitude of decline. Research on the impact of welfare-to-work programs showed that mandatory work programs can increase employment and reduce receipt of government assistance, though the impacts of welfare-to-work programs per se tend to be relatively modest (see " Research on Effective Strategies " in this report). Research subsequent to the enactment of TANF has found that the decline in the cash assistance caseload resulted both from families leaving the rolls more quickly and also from a decline in the number of families entering the program. In terms of reasons families left TANF quicker, work requirements and time limits are part of the story. These policies might have led to behavioral change: recipients responded to them by more quickly finding employment or other means of support. However, some families were removed from the rolls by sanctions for failure to meet work requirements and time limits. Removal of families from the benefit rolls because of sanctions for failure to comply with work and activity requirements is far more commonplace than removal because of time limits. For example, in FY2015, 134,000 families had their TANF cash benefits ended because of refusal to comply with work requirements. In contrast, 23,000 families had their benefit ended by time limits. In terms of families coming on to the rolls, one study, using national survey data, found that about 40% of the decline in the cash assistance caseload came from fewer entries onto the rolls. Again, there might have been behavioral changes as welfare reform policies might have deterred some from applying. Some policies also might have directly diverted families from the rolls. For example, states are free to condition TANF eligibility on any factor they choose. Many states have adopted "applicant job search" policies, requiring applicants for TANF cash to complete a job search before they receive their first benefit check. Some states also offer families short-term aid to address immediate emergencies in lieu of ongoing cash assistance. Such policies can divert potential TANF cash assistance families into employment, or deter families from completing requirements needed to receive cash assistance. The caseload continued to decline in the period from 2000 to the beginning of the 2007-2009 recession, albeit at slower rates than the decline of the late 1990s. The caseload increased—though not as sharply and not to levels seen in previous periods of caseload growth—during the 2007-2009 recession and its aftermath. Economic Well-Being of Families with Children The sharp caseload decline of the late 1990s promoted interest in how those leaving the assistance rolls were faring. Many states conducted studies to determine the share of welfare leavers that were employed, their level of earnings, and whether they continued to receive benefits from other programs, such as SNAP (then food stamps) and housing. In general, the research found the majority of those who left welfare did so for work. A multi-state study funded by the Department of Health and Human Services (HHS) found that about 57% of leavers were working in the first quarter after exiting from the rolls. However, the earnings of welfare leavers were typically low, and employment was often not steady. Additionally, a high proportion of welfare leavers continued to receive SNAP after leaving cash assistance. In examining the economic trends among single parent families with children since 1996, a Congressional Research Service (CRS) analysis concluded: In the years immediately preceding 1996 welfare reform, and in the years since, the nation's income safety net has been transformed into one supporting work. Cash-welfare work requirements, the end of cash welfare as an open-ended entitlement by limiting the duration that individuals may receive federally funded benefits, and expanded earnings and family income supplements administered through the federal income tax system have helped to change the dynamics between work and welfare. The transformed system has helped to both reduce single mothers' reliance on traditional cash welfare and reduce poverty among their children. However, as that CRS report discusses, TANF is only a part of that story. The 1996 welfare law was one of a series of changes made to low-income assistance programs in the mid-1990s. This is discussed further in a later section of this report (see " Additional Work Supports "). Considerations in Extending Work Requirements and Time Limits to SNAP and Housing Assistance As noted at the beginning of this report, work requirement, time limit, and work incentive policies are designed to meet any or all of several objectives, including offsetting work disincentives inherent in the benefit design of social programs; promoting a culture of work rather than a culture of dependency; prioritizing limited federal resources; and increasing the anti-poverty effectiveness of social assistance programs. Concern about all of these objectives helped drive the 1996 reform of cash assistance and the creation of TANF. As discussed at the beginning of this report, the same concerns remain for other social assistance programs, which has led some policy makers to consider expanding these policies, including to SNAP and housing assistance. When deciding whether or how to extend new work requirement, time limits, and work incentive policies modeled after those used in TANF to SNAP and housing assistance, policymakers may wish to take several considerations into account. They include program-specific considerations, such as the different populations served by the programs, the different missions of the programs, and the different administrative structures. There are also technical considerations, such as how the policies should be applied, including how much flexibility to provide program administrators and the consequences for a family's failure to comply. Finally, there are a set of broader considerations, such as the relevance of research findings on the effectiveness of such policies, as well as the current state of the economy. The following section of this report explores some of those considerations. Different Populations: Men An important distinction between TANF and SNAP or housing assistance is that TANF serves very few men, whereas SNAP and housing assistance serve many more men. This is relevant because TANF's emphasis has primarily been to get single mothers off assistance and into employment. Historically, men have had higher labor force participation and employment rates than have women. However, over much of the post-World War II period, labor force participation rates among men have declined, in contrast to the labor force participation and employment rates of women, which increased from 1948 until the early 2000s. The decline in work among men has been associated with the declining fortunes of men who have lower levels of educational attainment Disadvantaged men face other social and economic barriers. At the end of 2010, 1.6 million persons, of whom 1.5 million were men, were imprisoned in federal or state facilities. Incarceration rates in the United States have increased in recent decades, owing at least in part to the federal "War on Drugs." Men re-entering society from prison face barriers in finding employers who will hire them. Researchers have only recently begun to explore ways to reengage men successfully in the workforce, so consistently effective models for SNAP or housing assistance programs to adopt for working with the men in their populations are not currently available. Further, the largest work support available to single mothers exiting TANF—the Earned Income Tax Credit (discussed later in this report)—is either not available or available at a greatly reduced level to single men and noncustodial fathers. If work-related policies were expanded in SNAP and housing assistance, additional research on how those policies worked or did not work for men may be useful. Different Populations: Workers TANF's work requirements and time limits were particularly designed to combat welfare "dependency." The AFDC program of the late 1980s and early 1990s primarily aided families headed by a single mother who did not work. In FY1994, a monthly average of 9% of AFDC families reported earnings. The work requirements—and the work-first philosophy adopted in the TANF participation standards and by many states in their TANF programs—were designed to obligate recipients to function in society through work, not necessarily to raise their earnings capacities through education and training. The SNAP and housing assistance programs serve much more heterogeneous populations than TANF. It is possible to qualify for both SNAP and housing assistance at higher income levels than cash assistance. As discussed, families that left cash assistance for work often continued to qualify for and receive SNAP. Receipt of either SNAP or housing assistance may not be associated with chronic nonwork, but rather with the use of the benefit as an income supplement for those who command low wages in the labor market. In FY2011, a monthly average of 43% of SNAP households without elderly or disabled members had earnings. In FY2010, among households receiving housing assistance headed by a nonelderly, nondisabled member, 53% had at least some income from earnings. Since SNAP and housing assistance often aid households with workers, albeit low-wage workers, another goal of extending work requirement and incentive policies to these programs could be to provide additional education and training to improve these workers' employability and upward mobility prospects. However, that goal may be difficult to accomplish. Evaluations of post-employment services of former welfare recipients or low-income workers have yielded little evidence that such programs have an impact on raising the employment and earnings of those already in the workforce. Funding and Administrative Structure Under current law, TANF presents greater funding, or at least capacity for funding, for employment and job training. SNAP and housing programs have many fewer resources available for or devoted to such efforts. When the TANF program was created, it consolidated funding from both the prior law cash assistance program and the employment and job training program for welfare recipients, known as the JOBS program. In FY1996, JOBS was federally-funded at $1.2 billion. It also had associated state funds. In FY2015, combined federal and state funding for TANF employment and training activities totaled $2.1 billion, though it is unknown how much of those funds were used to enforce TANF's work requirements for cash assistance recipients versus other employment and training activities for low-income parents. In contrast, SNAP has a relatively small employment and training program. In FY2012, $334 million in federal funding was provided for SNAP E&T. Federal housing programs do not receive any dedicated funding for employment and training programs, although some PHAs do receive funding to hire case managers for their Family Self Sufficiency programs. Many HUD housing assistance programs are subject to the "Section 3" requirement, which mandates that a portion of certain HUD program funds be used to provide job training, employment and contract opportunities to residents of assisted housing and other low-income members of the community. However, the Section 3 requirement does not include any additional resources to fund education and training activities or to support connecting residents with jobs created. In terms of the administration of the programs, SNAP is generally administered in the same state offices as is TANF. Therefore, the administrative structure for imposing work requirements and time limits on SNAP households could potentially be coordinated with TANF. Housing assistance, on the other hand, is administered at the local level, disconnected from the TANF and SNAP state systems. This leaves PHAs administering housing assistance with less obvious support and expertise for developing and implementing work supports. Providing comprehensive employment supports in conjunction with new work-related policies would likely require additional resources. Those costs raise several questions for SNAP and housing assistance. In both cases, the programs serve a significant number of participants who are likely to be exempted from any new work-related policies, namely those who are elderly or have disabilities. After accounting for the participants who are not expected to work, and the remaining recipients who already have income from work, the remaining participants likely subject to any such policies would be only a share of the total caseload of each program. In terms of housing assistance, this raises questions about whether the cost of administering the requirement and/or providing supports to make the requirement successful, would be worth the benefit. In SNAP, given the very large caseload relative to TANF and housing assistance, if the requirement applied to even a relatively small share of the caseload, it could still account for a fairly large number of people, and thus a large administrative cost. Performance Measures Versus Individual Requirements As discussed, the centerpiece of TANF work requirements is the federal TANF work participation standard – a numerical performance standard that states must meet or risk being penalized through a reduction in their block grants. Proposals to extend work requirements to SNAP and housing assistance could follow the example of TANF and create work participation standards for states or public housing agencies, or could establish federal standards that must be met by individuals. Performance measures would give those entities operating programs (e.g., states, public housing authorities) flexibility in designing individual work requirements. They could determine exemptions, have flexibility in the activities emphasized by the program, and make these decisions based on their own caseload, local labor market needs, and other factors. Further, implementing a work requirement using a performance measure like the work participation standard may require engagement of only a portion of the caseload—allowing the costs of imposing work requirements to be controlled and the efforts directed to a target population. A performance measure approach might also increase accountability for operating entities to provide employment and training opportunities. Performance measures, including the current TANF work participation standard, can have intended and unintended consequences. Performance measures in general have been criticized as creating incentives that are "hitting the target but missing the point." For example, focusing on rapid job entry might lead states to engage in "cream skimming"—focusing on the easier-to-employ to increase their job entry rate, and failing to serve the hard-to-employ. Using an individual mandate—requiring individual recipients to meet federal work requirements and time limits—may be more effective than performance standards in ensuring that all recipients are subject to the requirement. However, individual mandates limit the flexibility of program administrators to consider individual circumstances. They may also present greater administrative costs since they apply more broadly. Sanctioning Government assistance programs generally enforce mandatory work requirements by imposing a financial sanction on those who do not comply. The financial sanction is either a reduction in benefits provided to the family or household, or a complete ending of benefits. Sanctions can act as a motivation for recipients to comply with work requirements; yet families and households do lose benefits because of sanctions. Sanctioning represents one of the most difficult conundrums in social policy—families receive aid precisely because they cannot otherwise meet basic needs, yet reducing or ending that aid is the available way in which policymakers can enforce program requirements. (Current work requirement sanction policy was summarized in Table 2 .) Despite the central role of sanctions in enforcing work requirements, little research focuses on the implications of sanction policy, even in TANF. Sanctions are an economics-based tool, and are premised on the notion that recipients make rational decisions about whether to achieve compliance with program rules, such as work requirements. However, as discussed earlier in this report (" Culture of Dependency Versus Culture of Work "), "dependency" on government benefits can represent dysfunctional behavior that fails to rationally respond to economic incentives and disincentives. Noncompliance with program rules might reflect deeper behavioral issues that are not affected by the presence of economic sanctions. Federal TANF law requires states to sanction the benefit of families with a member who refuses to comply with work requirements. States determine the size of the sanctions. Over time, states have increasingly adopted full-family sanctions, ending benefits entirely for families that do not comply with requirements placed on them by states. Additionally, the rate at which families are sanctioned off the TANF cash assistance rolls increased in the 2000s. In July 2014, 46 states ultimately ended benefits for families that fail to comply. However, the two states with the largest TANF cash assistance caseloads—California and New York, which have a combined 47% of the national caseload—reduce but do not end benefits for noncomplying families. SNAP law allows states to determine work-requirement sanctions, but it limits "full household sanctions" to a period of 180 days. Failure to comply with the public housing community service requirement can ultimately lead to the eviction of the household. Implementing time limit and work requirement policies, along with TANF-like sanctions, in SNAP and housing assistance may raise unique considerations specific to those programs, given that food and shelter (which are provided by SNAP and housing assistance) are considered basic needs in a way that cash (as provided by TANF) is not. Under current policy, while cash benefits may be ended in TANF, the availability of other noncash medical, food, and (if the family received it) housing benefits means the family may still have some of its economic necessities addressed. If a policy of ending all benefits for noncomplying recipients of SNAP and assisted housing as well as TANF were adopted, concerns about hunger, malnutrition, and homelessness may arise, not just for the noncompliant adult recipient, but also for the children or elderly or disabled members of the family. There are several considerations about sanctioning unique to housing assistance. When housing assistance benefits are suspended the consequences are clear and generally involve a family losing their home. In public housing, in order to suspend a benefit to a family, the family must generally be evicted. In the case of the Section 8 voucher program, payments on behalf of the family to the landlord cease, and presumably, the landlord will evict the family, assuming the family cannot make up the lost rent payments. Eviction can be lengthy, costly for landlords, and traumatic for families who may have difficulty securing other housing. Termination of assistance and eviction may be pursued as a last resort among housing assistance providers, given these considerations and the fear of causing a family to be homeless without other options. Another consideration unique to housing assistance is the household nature of the benefit. Housing benefits are provided to households, yet a sanctioning policy could be applied to an individual. An individual sanctioning policy could have the effect of putting families in the difficult position of staying together in the same household and facing eviction, lying about the composition of the household and risking eviction for fraudulently obtaining benefits, or breaking up the family by forcing the noncompliant member to leave the household in order to retain housing assistance. Research on Effective Strategies Welfare reform, of different varieties, was the subject of a series of social experiments, beginning with the 1960s and lasting through the 1990s. The first set of experiments were begun in the 1960s and tested various forms of negative income tax proposals, which guaranteed annual incomes for nonworkers, expanded aid to the working poor, and extended aid to families other than those headed by single mothers. The basic conclusion of those experiments was that the guaranteed income did in fact reduce work effort. Moreover, expanding aid beyond single mothers would also reduce work effort, with no clear evidence that it prevented family breakup. Beginning in the 1970s, social experiments were used to test the provision of employment services and then mandatory work requirements for AFDC recipients (who were mostly single mothers). The welfare-to-work experiments produced a large body of research evidence—with experiments conducted over a period of more than 30 years in many different settings. The major findings of this research were the following: Mandatory work-related programs for AFDC recipients could increase employment and reduce welfare receipt. The impacts were often modest. Programs with "work-first" (job search and other strategies to promote rapid job attachment) as well as programs with education-focused services produced positive impacts, though education-focused programs did not produce better job impacts than "work-first" programs, even over the long-term. These experiments did not produce evidence that welfare-to-work programs per se could reduce poverty, as often incomes of participants remained well below the poverty line, and increased earnings were often offset by reductions in AFDC and other government means-tested benefits. The programs that reduced poverty also included provisions for continued government-funded earnings supplements. Thus the 1996 welfare reform law was preceded by a long era of research and experimentation on "what works." This comprehensive research basis does not exist for SNAP and housing assistance or their unique populations. Further, the welfare body of research is quite old now, and questions remain about how relevant it is under today's labor market conditions, including the challenges of post-recession recovery as well as the skills required for the jobs available in today's economy. Effectiveness of Work in Reducing Poverty As noted earlier, one reason for promoting work in social policy programs is to increase the programs' anti-poverty effectiveness, since the benefits provided through most social assistance programs alone are not sufficient to raise a family above poverty. Income from work is typically the only way for a family to escape poverty. Table 5 shows the 2015 poverty rate for persons. Overall, 13.5% of all persons were officially in poverty. However, for those in families without a worker and who also lacked work-related benefits, 9 in 10 (90.8%) were classified as poor. As shown in the table, while work or work-based benefits are usually necessary to avoid poverty, work alone is not always sufficient to do so. An estimated 8.7% of all persons in families with workers were officially poor in 2015. The lowest poverty rates were for those in families with a full-year, full-time worker. Poverty rates were higher for those in families with workers, but lacking a full-year, full-time worker. This includes people who were unemployed or out of the labor force part of the year, and for those who worked part-time schedules. Additionally, poverty rates remained high for families with children headed by a single mother who worked. Three out of ten such families had earnings insufficient to raise their incomes above the poverty level. Additional Work Supports to Boost Family Income In considering the welfare reforms that were enacted in the mid-1990s, work requirements and time limits were only one set of changes made to low-income assistance programs affecting families with children. The other major set of changes were those intended to "make work pay" more than welfare. As discussed in the previous section of this report, while work is usually necessary to escape poverty, it is not always sufficient to do so. The "make work pay" policies included the following: Major expansions of the Earned Income Tax Credit (EITC) in 1986, 1990, and 1996. The EITC provides a supplement to the earnings of low-income wage earners. In 2017, the maximum EITC for a taxpayer with three dependent children was $6,318—a significant income boost for low wage working parents. Legislation in 1997 also created the Child Tax Credit. It became refundable for families with earnings in 2001, and substantially expanded later in that decade. For 2017, families with earnings can receive up to $1,000 per child—an additional boost in earnings. Major expansions of federal funding for state programs that subsidize child care. The Child Care and Development Block Grant (CCDBG) was established by legislation in 1990 and its funding substantially increased in the 1996 welfare reform law. Extended health insurance coverage. Before health care expansions, mothers who left cash welfare risked losing Medicaid health insurance coverage for themselves and their children. In the 1980s, legislation was enacted to phase-in coverage for all poor children, regardless of whether they received cash welfare or not. The Family Support Act of 1988 (P.L. 100-485) created "transitional Medicaid," which extended coverage for a limited period of time to families leaving cash welfare. In 1997, the State Children's Health Insurance Program (CHIP) was created to aid low-income families with income too high to receive Medicaid. These benefits and services–outside of the "work incentives" of the cash assistance program itself—have been considered a key part of the reforms of the 1990s. However, they focus on families with children, particularly those headed by a single mother. Childless individuals and couples—who might be subject to work requirements in SNAP and housing assistance if such policies were adopted—benefit less from the policy changes made through the 1990s to "make work pay" more than receipt of assistance. A small EITC was available for childless tax filers. In 2017, the maximum EITC available for a tax filer without a child is $510, though a single person working full-year, full-time at the minimum wage would earn too much to qualify for an EITC. Proposals have been offered in the past that would expand and increase the EITC for childless tax filers. Conclusion The creation of TANF, with work requirements and time limits, marked a visible, major change in social policy. The record of TANF, particularly the sharply reduced caseloads following welfare reform, has sparked interest in extending TANF policies of work requirements and time-limited aid to other social assistance programs, including SNAP and housing assistance. TANF's experience may have some useful lessons for policymakers considering expanding TANF's policies to other programs. It appears that the TANF caseload reduction generally resulted from fewer eligible families actually receiving benefits. Is this a desired goal for SNAP? In the case of housing assistance, which is only funded at levels sufficient to serve a portion of the caseload, a time limit or work requirement policy could allow the program to serve more families, albeit for shorter periods of time. Further, it appears that the enactment of TANF policies, along with other income supplement policies and the strong economy of the 1990s, led to increased work for a population (single mothers) who were not previously engaged in the labor force. Whether these same policies, in the absence of new income supplement policies and in a less robust economy, would have the same effect for the subpopulation of SNAP and housing assistance recipients who are not working and are expected to work, is an outstanding question. Additional research, either as a part of any reforms or in advance of any reforms, might prove helpful in answering that question.

Congress is again debating work requirements in the context of programs to aid poor and low-income individuals and families. The last major debate in the 1990s both significantly expanded financial supports for working poor families with children and led to the enactment of the 1996 welfare reform law. That law created the Temporary Assistance for Needy Families (TANF) block grant, which time-limited federally funded aid and required work for families receiving cash assistance. Work requirements, time limits, and work incentives are intended to offset work disincentives in social assistance programs, promote a culture of work over dependency, and prioritize governmental resources. Another rationale for such policies is that without income from work, a person and his or her family members are almost certain to be poor. For many of these same reasons, some policymakers recently have expressed interest in extending mandatory work requirements and related policies—similar to those included in TANF—to the Supplemental Nutrition Assistance Program (SNAP) and housing assistance (public housing and the Section 8 Housing Choice Voucher program). Some work rules and related policies already exist for SNAP and housing assistance. For example, SNAP time-limits aid for able-bodied adult recipients without dependents who do not work. However, for other able-bodied, nonelderly adults, for the most part, states are only required to have those who are unemployed or underemployed register for work. States may opt to make other SNAP employment and training mandatory or voluntary for recipients. Public housing has an eight-hour-per-month community service and economic self-sufficiency requirement for nonworking, nonexempted individuals. No work requirements apply to those receiving rent subsidies through the Section 8 Housing Choice Voucher program, and neither program has statutory time limits. However, public housing authorities that administer public housing and/or the Section 8 Housing Choice Voucher program may impose work requirements and time limits if they are participating in the Moving to Work (MTW) demonstration program. Further, all three programs—TANF, SNAP, and housing assistance—include some form of earnings disregard policy intended to alleviate the work disincentive inherent in the structure of the benefits provided. Over time, TANF data have reflected relatively modest participation among recipients in work or related activities. However, the cash assistance caseload declined substantially after enactment of TANF, owing mostly to a decline in the share of eligible families actually receiving benefits. TANF work requirements and time limits are likely a part of the cause of that decline, contributing to the behavioral changes of recipients leaving the rolls quicker and some eligible households not coming onto the rolls in the first place. In addition to TANF changes, other policies were put in place in the 1980s and 1990s that helped "make work pay" more than welfare. If Congress considers extending the "lessons" of TANF through additional work-related policies in food and housing assistance programs, policymakers face numerous considerations, including the various ways in which TANF differs from SNAP and housing programs. The populations differ: TANF requirements apply mostly to single mothers with children, while SNAP and housing assistance programs serve more men. Additionally, TANF work requirements were intended to spur nonworking recipients into the labor force. SNAP and housing programs often serve households that already include workers, albeit those who earn low wages, as well as a substantial number of individuals not typically expected to work, such as the elderly and persons with disabilities. Additional considerations include whether to implement any new requirements as performance measures applicable to states or other administering entities (like TANF) or as direct requirements for individual recipients. Enforcing these policies, and/or offering supports to ensure their success, also costs money and requires an administrative structure. TANF requirements were put into place following a decades-long period of experimentation and research on "welfare-to-work" programs. The 2014 "Farm Bill" (P.L. 113-79) requires USDA to conduct pilot projects to test work and job readiness strategies for SNAP participants. These pilots will provide information in future years on the impact of SNAP work pilots; it is too soon for research results from these pilots to be available. The existing MTW program, while called a demonstration, was not originally implemented in a way that would allow it to be rigorously evaluated. Therefore, there is not sufficient information to evaluate the effectiveness of the various reforms adopted by MTW agencies. However, in the FY2016 appropriations law (P.L. 114-113) Congress directed HUD to expand the MTW demonstration and added new evaluation requirements.

Background Medicaid is a state-administered program that is jointly financed by states and the federal government. The federal and state shares of program costs vary for each state based on a formula that takes into consideration each state's per capita income compared with the national per capita income. The formula is designed so that states with per capita income that is relatively lower than other states will pay a lower state share of Medicaid program costs. Nonetheless, many states have found raising their state share of Medicaid program costs to be challenging, particularly during economic downturns. Intergovernmental transfers (IGTs) are one of the methods used by some states to finance the non-federal share of Medicaid costs. Certain IGTs are specifically allowed for funding the state share of program costs. For example, units of government, such as counties, are able to contribute to the state's share of Medicaid. At least three states currently require counties to fund some part of the state share. Congress specifically protects the ability of states to use funds derived from state or local taxes and transferred or certified by units of government within a state. Some states have instituted programs where all or portions of the Medicaid state share is paid by hospitals or nursing homes that are public providers, however, not units of government; or are units of government, but the state share is returned to the provider sometimes through inflated Medicaid payment rates. The purpose of such financing arrangements is generally to draw additional federal funds for which a state share may not otherwise be available. While the funds often help to pay for Medicaid or other health care services, those arrangements effectively raise the federal share of Medicaid program spending. These "intergovernmental transfers" are often repaid through Medicaid disproportionate share hospital payments or through inflated Medicaid payment rates for which federal matching amounts are claimed. Alternately, states can make Medicaid payments to the providers, and the providers transfer a portion or all of those payments back to the state through what is claimed as an IGT. Either way, the net impact is to effectively raise the federal matching rate in the state to levels beyond those specified in law. In May of 2007, the Department of Health and Human Services issued a regulation tightening the administrative procedures and clarifying the vague definitions that allow these types of financing mechanisms to operate. The regulation tightens the definitions of governmental entities and CPEs for the purpose of Medicaid financing, and establishes a ceiling on payment rates for governmental providers equal to the cost of providing Medicaid services. Existing rules that establish ceilings on Medicaid payments to privately owned and operated facilities would not be affected by this rule. The Provisions of the Rule Defining a Unit of Government Section 1903(w)(7)(G) of the Social Security Act (SSA) identifies five types of units of government that may participate in the non-federal share of Medicaid payments: a state, a city, a county, a special purpose district, or other governmental units within the state. The rule would elaborate on those units of government in the following ways. It would include as a state or local governmental entity (including Indian tribes), a unit of government that can demonstrate having generally applicable taxing authority or is a state-operated, city-operated, county-operated, or tribally operated health care provider. Health care providers that assert to be a "special purpose district" or "other" local governmental entity must demonstrate that they are operated by a unit of government by showing that they have generally applicable taxing authority or that the health care provider is able to access funding as a integral part of a governmental unit with taxing authority , and that a contractual relationship with the state or local government is not the primary or sole basis for the health care provider to receive tax revenues. The explanation of the regulation goes on to state, "If the unit of government merely uses its funds to reimburse the health care provider for the provision of Medicaid or other services, that alone is not sufficient to demonstrate that the entity is a unit of government." Sources of State Share and Documentation of Certified Public Expenditures Prior regulations, in defining the types of public funds that may be available to fund the state share of Medicaid costs, establish that funds "transferred from other public agencies" to the state or local agency and under the state's administrative control can be used to fund the state share of Medicaid. The term "public agency" has been interpreted by some states to include health care providers that are not governmental in nature, but have a public-oriented mission, such as not-for-profit hospitals. The rule would remove the term "public agency" from prior regulations and replace it with the phrase "other units of government (including Indian tribes)" reflecting the statutory language of Section 1903(w)(7)(G) of the SSA. The rule also would require a governmental entity using a CPE to submit a certification statement to the state Medicaid agency and have additional documentation available. It would require that a CPE used to fund Medicaid be supported by auditable documentation in a form approved by the Secretary of Health and Human Services (HHS) and subject to periodic state audit and review. The documentation must at least identify the category of spending under the state Medicaid plan, explain whether the contributing unit of government is exempted from the current law limits on the use of provider taxes or donations, identify actual costs incurred by the unit of government in providing Medicaid services, and demonstrate that the funds are not from federal funds nor are authorized by federal law to be used to match other federal funds. Cost Limit for Providers Operated by Units of Government and Elimination of Payment Flexibility to Pay Public Providers in Excess of Cost A number of reports issued by the HHS Office of the Inspector General (OIG) and Government Accountability Office (GAO) have identified questionable Medicaid financing practices in states in which supplemental payments to providers in excess of Medicaid costs have been made. Prior regulations have placed limits on such practices, which are referred to as upper payment limit (UPL) financing arrangements. Under such UPL arrangements, states make Medicaid payments to public hospitals and other public long-term care institutional providers at inflated payment rates set at the statutory ceiling known as the Medicare upper payment limit. The payments generate federal matching. The hospitals or other providers return some or all of the amounts in excess of the usual Medicaid rate to the state through intergovernmental transfers. The preamble to the proposed rule explains that the excess payments violate another statutory rule requiring Medicaid payments to be consistent with economy and efficiency (42 U.S.C. 1396a(a)(30)(A)). Consequently, the rule would limit reimbursements to governmentally operated providers to amounts that do not exceed cost. This limit would not apply to Indian Health Service facilities and tribal facilities, nor to disproportionate share hospital payments. The Secretary would be required to determine a reasonable method for identifying allowable Medicaid costs. It would also require that Medicaid costs be supported by auditable documentation in a form approved by the Secretary that meets the same standards as for the CPE documentation (see above). If it is found that a governmentally operated provider received an overpayment, those amounts would be credited to the federal government under normal procedures. The regulation would also require governmental providers to submit an annual cost report to the Medicaid agency that reflects their cost of services to Medicaid recipients during the year. Finally, the rule would make conforming changes, including eliminating 42 CFR 447.271(b) to conform with the limit on payments to governmental providers that do not exceed cost. Retention of Payments A provision intended to prevent public providers from receiving Medicaid payments and then transferring, through an IGT or other mechanism, some or all of those payments back to state Medicaid agencies is included as well. The rule would require that providers receive and retain the full amount of the Medicaid payments provided to them for Medicaid services. The rule states that the Secretary will determine compliance with this provision by examining any related transactions. HHS estimated that the imposition of the rule would reduce federal Medicaid outlays by $3.87 billion over a five-year period starting in (and assuming the rule went into effect) 2007. In early 2008, the Congressional Budget Office estimated the impact to be a reduction in federal outlays of $9 billion over a five-year period starting with FY2008. States, however, in responding to a 2008 survey conducted by the staff of the House Committee on Oversight and Government Reform, estimated their loss of federal Medicaid funds to be over $21 billion for same five-year period beginning in 2008, an amount that is more than five times the HHS estimates. Opposition to the Rule States, public and governmental providers, and advocacy organizations have expressed opposition to the rule. All agree that the rule would significantly reduce Medicaid payments in certain states, and concerns are raised about whether those states would be able to fill the funding gap and, if not, what the implications would be for Medicaid beneficiaries and providers. Aside from the concerns about the impact of the considerable loss of federal funds on Medicaid providers and beneficiaries, the rule has been viewed by some as CMS overstepping its authority to limit intergovernmental transfers, when Congress explicitly allows such transfers. Governors' concerns were expressed in a letter from the National Governor's Association to House and Senate leadership dated February 25, 2008. The letter calls on Congress to take immediate action to delay implementation of the rules, fearing that their implementation would inappropriately shift costs to states at a time when some states are facing particularly difficult fiscal situations. The governors point out that the new rules reflect a departure from past practices and are based on new and unsupported interpretations of Medicaid law. Finally, the letter reminds members of the Congress that some of the rule changes were considered and rejected when the Deficit Reduction Act of 2005 (DRA) was deliberated. On March 11, 2008, a lawsuit was filed in the United States District Court for the District of Columbia by a coalition of provider groups led by the National Association of Public Hospitals and Health Systems, the American Hospital Association, and the Association of American Medical Colleges. . The lawsuit asked the court to reject the rule on three grounds: that CMS has overstepped its authority in limiting intergovernmental transfers, that Congress has barred the agency from imposing a cost limit on Medicaid payments to governmental providers, and that CMS improperly issued the rule. From NAHP's website: The litigants make three major claims: (1) The rule defines "units of government" more narrowly than permitted under law and severely restricts options for states to finance the non-federal share of their Medicaid program expenditures. The CMS definition usurps states' ability to determine the governmental status of entities within states, severely limiting the type of governmental entities that can make intergovernmental transfers to fund the non-federal share of the program; (2) CMS does not have the authority to limit Medicaid payments to public providers to cost while continuing to allow private providers to be paid under a different methodology. Congress rejected cost-based reimbursement and payment limits in the early 1980s in favor of granting states flexibility to tailor Medicaid reimbursement to their unique needs. A cost limit imposed solely on governmental hospitals is counter to clear Congressional intent and is arbitrary and capricious in violation of the Administrative Procedure Act. It also upends decades of Medicaid payment policies established by CMS and relied on by states. (3) The moratorium signed by the President on May 25, 2007 effectively prevented CMS from issuing a final rule the same day. Indeed, a ruling in this case, filed on May 23, 2008, found the latter claim compelling. U.S. District Court Judge James Robertson has prohibited the implementation of the final rule. The rule was vacated and the matter returned to the agency. In response to the ruling, a spokesman for CMS suggested that the judge's finding is technical in nature only and that the substance of the rule will ultimately be upheld. Congress has taken action as well. In May of 2007, Congress enacted a one-year moratorium on the implementation of the rule. That moratorium was extended until April 1, 2009, as part of H.R. 2642 , The Supplemental Appropriations Act of 2008 (the War Supplemental), signed by the President on June 30, 2008. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) includes a Sense of the Congress that the Secretary of HHS should not promulgate a final rule on cost limits on public providers (nor on two other rules regarding graduate medical education and rehabilitative services). The Congressional Budget Office and the Joint Committee on Taxation estimate that this Sense of the Congress, in combination with new and extended moratoria on other Medicaid rules (affecting case management services, school-based services, provider taxes, and outpatient hospital services), would increase federal spending by $105 million in FY2009. Separate cost estimates for the provisions affecting each individual regulation were not provided.

On May 29, 2007, the Centers for Medicare and Medicaid Services (CMS) issued a rule intended to establish control over the use and misuse of intergovernmental transfers in financing the states' shares of Medicaid costs. The rule clarifies the types of intergovernmental transfers of funds allowable for financing a portion of Medicaid costs, imposes a limit on Medicaid reimbursements for government-owned hospitals and other institutional providers, and requires certain providers to retain all of their Medicaid reimbursements. In addition, the rule would establish documentation requirements to substantiate that a governmental entity is making a certified public expenditure (CPE) when contributing to the state share of Medicaid. The rule has raised considerable concern among states and health care providers that its impact on Medicaid services, providers, and beneficiaries could be severe. In response, Congress placed a moratorium on the implementation of its provisions. The moratorium was recently extended until April 1, 2009. Further, in May of 2008, a federal judge ruled, in a lawsuit brought by a coalition of provider groups, that the rule was "improperly promulgated" and vacated the rule, and remanded the matter back to the agency. The American Recovery and Reinvestment Act of 2009 (P.L. 111-5) includes a Sense of the Congress that the Secretary of Health and Human Services should not promulgate a final rule on cost limits on public providers.

Introduction Both chambers of Congress have passed comprehensive legislation to reauthorize expiring programs at the Food and Drug Administration (FDA) and to expand the agency's authority to help ensure the safety of certain medical products. The bills are the Food and Drug Administration Revitalization Act ( S. 1082 ) and the Food and Drug Administration Amendments Act of 2007 ( H.R. 2900 ). S. 1082 and H.R. 2900 represent the most comprehensive FDA legislation since the Food and Drug Administration Modernization Act of 1997 (FDAMA; P.L. 105-115 ). The primary driver of the legislation is the renewal of FDA's authority for two key user fee programs set to expire at the end of FY2007: the Prescription Drug User Fee Act (PDUFA; P.L. 107-188 ) and the Medical Device User Fee and Modernization Act (MDUFMA; P.L. 107-250 ). FDA had reportedly urged Congress to complete its reauthorization efforts before August 1, 2007 (rather than by the program's termination date of October 1, 2007), because of a requirement that FDA notify employees at least 60 days in advance of layoffs, which would be necessary without PDUFA and MDUFMA funds. The media report that FDA has switched to reserve funds to forestall the issuance of layoff notifications, the effect of which is a hiring freeze at FDA. In addition, the FDA Commissioner has reportedly stressed that the funding uncertainty is harming the morale of employees—30% of which are at a point where they can retire. The bills also would reauthorize two other expiring authorities, which are related to pediatric pharmaceuticals: the Best Pharmaceuticals for Children Act (BPCA; P.L. 105-115 ), reauthorized in P.L. 107-109, and the Pediatric Research Equity Act (PREA; P.L. 108-155 ). In addition, the bills address a number of other issues of concern to Congress and the public. This report presents a side-by-side analysis of S. 1082 and H.R. 2900 , highlighting the differences between the bills. It contains individual tables on topics covered by the bills, including prescription drug user fees, medical device user fees, medical device regulation, pediatric exclusivity incentives (BPCA), mandatory pediatric assessments (PREA), pediatric medical devices, drug safety, antibiotic drugs, clinical trials databases, conflicts of interest, importation of prescription drugs, a new Reagan-Udall Foundation, food safety, domestic pet turtle market access, and other provisions. In general, provisions in the two bills amend FDA's authorities in the Federal Food, Drug and Cosmetic Act (FFDCA) or the Public Health Service Act (PHSA). Unless otherwise noted, mention of "the Secretary" in the following tables refers to the Secretary of Health and Human Services (HHS). For background information on the impetus for this legislation and for an overview of the two bills, see CRS Report RL34089, FDA Legislation in the 110 th Congress: A Guide to S. 1082 and H.R. 2900 , by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

Both the House and the Senate have passed comprehensive legislation to reauthorize existing Food and Drug Administration (FDA) programs and expand the agency's authority to ensure the safety of prescription drugs, medical devices, and biologics. The Senate passed the Food and Drug Administration Revitalization Act (S. 1082) on May 9, 2007. The House passed the Food and Drug Administration Amendments Act of 2007 (H.R. 2900) on July 11, 2007. At its core, the legislation renews authority for two key user fee programs that are set to expire on October 1, 2007: the Prescription Drug User Fee Act (PDUFA; P.L. 107-188) and the Medical Device User Fee and Modernization Act (MDUFMA; P.L. 107-250). These account for 87% of FDA's user fee revenue and 19% of FDA's total FY2008 program level budget. Without the reauthorizations, and absent a substantial increase in FDA's annual appropriations, the agency would lose a significant source of funding. FDA had warned that a failure to reauthorize the user fee programs before August 1, 2007, would require the agency to issue layoff notices, but the agency has reportedly forestalled that necessity by switching to reserve funds. In addition to user fee programs, the bills reauthorize two other FDA authorities related to prescription drugs for pediatric populations, which are also set to expire on October 1, 2007: the Best Pharmaceuticals for Children Act (BPCA; P.L. 107-109) and the Pediatric Research Equity Act (PREA; P.L. 108-155). These laws provide marketing exclusivity incentives and requirements for studying pediatric use of on-patent and off-patent drugs. S. 1082 and H.R. 2900 also contain provisions related to drug safety, pediatric medical devices, clinical trial registration, and the creation of a new nonprofit entity to assist FDA with its mission. The bills' overlapping provisions are similar, but not identical. S. 1082 contains some additional provisions that are not present in H.R. 2900, on the topics of food safety, prescription drug importation, and domestic pet turtle market access. Attempts to expand the legislation to address several other FDA-related issues, for example, follow-on biologics and genetic testing, have thus far been unsuccessful. Differences between the bills may be addressed in conference. This report contains a side-by-side comparison of S. 1082 and H.R. 2900, and includes links to relevant CRS reports. It will be updated as further legislative events warrant.

Introduction The federal government levies an excise tax, at the manufacturer and importer level, based on the per unit production or importation of alcoholic beverages (e.g., distilled spirits, wine, and beer) for sale in the U.S. market. Alcohol excise taxes in the United States have a history almost as old as the federal government itself, as alcohol taxes were among some of the first federal revenue sources in the early republic. For much of U.S. history, alcohol excise taxes have served as one means to help fund emergency levels of spending (such as during wartime) and to reduce rising budget deficits (such as in 1990). The modern-day interest in alcohol taxes is broad, with arguments presented to either raise or decrease current alcohol excise tax rates. Various approaches could be taken, such as follows: Increasing excise taxes could serve as a source of revenue as part of a larger budget deficit reduction package or as an offset, Reducing excise taxes could benefit firms in the alcoholic beverage manufacturing industry, or Increasing excise taxes could discourage the negative spillover effects associated with alcohol consumption (health, safety, crime, etc.). First, this report provides a recent history of alcohol excise tax rates and a description of current law. Second, this report provides a revenue analysis, with a particular focus on the effect of inflation on the real, inflation-adjusted value of alcohol excise tax revenue over time. Third, this report provides an overview of the U.S. alcoholic beverage manufacturing industry. Fourth, alcohol excise taxes are analyzed with a particular focus on market structure, the effects of alcohol excise taxes on negative spillover effects from alcohol consumption, and how the distribution of these excise taxes affect various measures of equity in the federal tax code. Lastly, this report briefly summarizes relevant bills introduced in the 114 th Congress. A Brief History of Federal Alcohol Excise Tax Rates Federal alcohol excise tax policy has largely been driven by periodic demand for additional revenue. Alcohol excise taxes were first introduced in 1791 by Treasury Secretary Alexander Hamilton as a means to fund the early republic, and they were reimposed, raised, and repealed over the next two centuries surrounding periods of wartime. Public sentiment and empirical research that often assert that higher alcohol taxes reduce the negative spillover effects of alcohol consumption on society. However, this public health argument for increasing alcohol taxes has been less prominent in debates to increase taxes on alcohol compared with other "sin taxes" on tobacco. Shortly after the end of Prohibition in December 1933, Congress enacted a comprehensive alcohol excise tax system in 1934. These taxes were re-enacted during an era of federal budget deficits brought on by the economic stagnation of the Great Depression and federal spending under the New Deal. Although revenue was a major concern, Congress initially sought to set excise tax rates at a level that would enable legal alcohol producers to be competitive with the underground, bootlegging economy that emerged during Prohibition. Tax rates gradually increased from 1934 to 1951 and helped to fund spending associated with World War II and the Korean War. Distilled Spirits The tax rate on distilled spirits remained unchanged from the middle of the Korean War in 1951 to 1985. In October 1985, the rate was raised from $10.50 to $12.50 per proof gallon (ppg). The Deficit Reduction Act of 1984 ( P.L. 98-369 ), enacted on July 18, 1984, increased the rate of tax on distilled spirits from $10.50 to $12.50 ppg, effective October 1, 1985. Under the Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508 ), the rate was increased by $1.00 to $13.50 ppg, effective January 1, 1991. The legislative history seems to indicate that excise taxes on alcohol (and tobacco) were raised in OBRA 1990 primarily to raise revenue. Wine The taxes on wine are levied at a variety of rates. The tax rates that applied to wine had remained unchanged from 1951 until the passage of OBRA90. Pre-OBRA90 tax rates ranged from 17 cents per wine gallon for still wine to $3.40 per wine gallon on sparkling wines. Post-OBRA90, these rates now range from $1.07 per wine gallon to $3.40 per wine gallon. The tax rates on champagne and sparkling wines were not increased. A small domestic wineries credit equal to 90 cents per wine gallon is provided for the first 100,000 gallons of wine production, with a phase-out of the credit for wineries producing between 150,000 and 250,000 wine gallons. Beer The Revenue Act of 1951 increased the tax rate on beer from $8.00 to $9.00 per barrel (a barrel contains 31 gallons). A second, reduced rate structure was enacted in 1977 specifically for small brewers. The regular tax rate on beer remained unchanged until OBRA90, which doubled the existing rate, effective January 1, 1991, to the current rate of $18 per barrel. OBRA90 authorized the Secretary of the Treasury to establish regulations that would prevent larger brewers (who produce more than 2,000,000 barrels of beer per year) from paying lower rates intended for small brewers. The current rate for small brewers, enacted by OBRA90, is $7.00 per barrel for the first 60,000 barrels and the regular rate of $18 for barrels 60,001 to 2,000,000. Any brewer making more than 2,000,000 barrels per year must pay the full tax rate of $18 per barrel on their total annual production. Current Law The tax rates that went into effect in 1991 remain current law, as summarized in Table 1 . In addition to listing the tax per volume, as defined in statute, Table 1 also shows the Alcohol and Tobacco Tax and Trade Bureau's (TTB, within the Department of the Treasury) conversions of these tax rates into common package measures. For example, the excise tax on a 12 oz. can of beer is approximately $0.05, or $0.30 for a six-pack of beer (at the regular rate). The alcohol content of beer and wine is taxed at a lower rate than the alcohol content of distilled spirits when converted to equivalent measures of alcoholic content, as shown in Figure 1 . The current excise tax levied on those spirits, $13.50 per proof gallon, translates to about 21 cents per ounce of pure alcoholic content. Beer is taxed at $18 per gallon, which translates to about 10 cents per ounce of alcohol (assuming an alcohol content of 4.5%). The current excise tax on wine is $1.07 per wine gallon, or about 8 cents per ounce of alcohol (assuming an average alcohol content of 11%). Figure 1 also shows that consumers of different types of alcohol also face different tax rates per standard drink, depending on what type of alcohol they consume. When converted to standard drink measures liquor drinks are generally subjected to a federal excise tax of approximately 13 cents per 1.5 ounce shot, wine is taxed at 4 cents per 5 ounce glass, and beer is taxed at 5 cents per 12 ounce can or bottle. The excise tax is deductible as an ordinary cost of doing business for firms subject to an income tax. In economic terms, a manufacturer or importer's effective tax rate is increased by less than the full magnitude of the tax because they can reduce the amount of their income that is subject to tax (assuming they have income to tax). Other Former Federal Taxes on the Alcohol Industry In the past, TTB has enforced two other forms of taxes on the alcohol industry. Neither tax, however, currently applies to the alcoholic beverages industry: Floor stocks tax is a one-time tax on untaxed, current inventories and is typically imposed as part of legislation that increases excise tax rates. Floor stocks taxes are a transitional measure that prevents taxable entities from stockpiling the product after the announcement of a tax increase, but prior to its effective date, as a means to reduce their exposure to the higher rates. Special occupational tax (SOT) is a tax that is imposed on manufacturers, importers, wholesalers, and retailers in a certain industry subject to registration and excise taxation under TTB's jurisdiction (e.g., tobacco, firearms). In 2005, Section 11125 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ( P.L. 109-59 ) permanently repealed the SOT for the business of selling, manufacturing, importing or wholesaling of beverage alcohol products or manufacturing non-beverage alcohol products (effective July 1, 2008). Recordkeeping and registration requirements for these businesses were not repealed. These taxes amounted to a relatively small share of TTB's annual tax collections. For example, total SOT collections comprised less than 0.001% in 2007 ($2.8 million). State and Local Alcohol Excise Tax Rates In addition to federal excises, all 50 states and some localities levy their own excise taxes on alcoholic beverages. These tax rates vary by state (or locality) and by the type of alcohol. Although some states and localities have increased their alcohol excise tax rates more recently, these policy changes are relatively infrequent. In addition, some states have controlled sales of certain types of alcoholic beverages via state-run retailers. Retail sales in control states typically include some sort of wholesale "markup" in addition to a sales tax. In general, state and local excise tax rates are also greater on distilled spirits than on beer or wine. States with controlled sales on beer or spirits tend to have higher tax rates than states without controlled sales, but this is not always the case. Differences in tax rates between states could lead some consumers to cross state lines to purchase alcoholic beverages. Revenue In FY2015, federal excise tax collections on distilled spirits, wine, and beer totaled approximately $10.4 billion. As shown in Figure 2 , distilled spirits accounted for 55.1% of FY2015 alcohol excise tax collections, beer accounted for 34.5%, and wine accounted for 10.3%. The majority of alcohol excise taxes are collected on products that were manufactured in the United States, particularly beer. As shown in the tables in the Appendix , the historical share of taxes collected on imported alcohol products varies by the type of alcohol: 16%-27% for distilled spirits, 18%-32% for wine, and 5%-16% for beer. Effects of Inflation on Tax Rates and Revenue Alcohol excise tax rates are levied on a dollar per unit basis and are not automatically adjusted for inflation. Past increases in alcohol excise tax rates, however, were justified by Congress as a means to partially account for the effects of inflation and to raise general revenue. Despite periodic increases in the statutory tax rates, the inflation-adjusted values of these tax rates have declined over time. Table 2 lists the tax rate increases since 1951 in the major product categories and what those rates would be if they were converted to 2015 constant dollars. For example, the distilled spirits tax rate of $10.50 ppg in 1951 would be equivalent to levying a tax of $95.85 ppg in 2015. If the 1991 rate of $13.50 ppg on spirits were adjusted for inflation, then the tax rate would be $23.52 in 2015. Since the last excise tax rate increase in 1991, the inflation-adjusted value of tax collections on alcohol has declined. The decline in real tax rates on alcohol has been a major factor in the decline in the inflation-adjusted revenue raised by the taxes, since 1991. The last alcohol tax rate increases went into effect on January 1, 1991. As shown in Figure 3 , nominal alcohol excise tax collections increased from $7.2 billion in FY1991 to $10.4 billion in FY2015 (an increase of 44.4%). However, after taking inflation into account, real excise tax collections declined by 10.1% over that same time period. In addition, alcohol excise tax collections have declined as a share of all of TTB's excise tax collections over time, as shown in Figure 4 . The decline in the share of alcohol excise tax revenue collections as a share of all of TTB's excise tax collections is due to three main factors: (1) the decline in real (inflation-adjusted) value of the alcohol excise tax rate over time, (2) multiple increases in the statutory, per-unit tax rates on tobacco products, and (3) firearms and ammunition tax collections automatically adjust for inflation because they are levied as a percentage of the manufacturer's price (i.e., an ad valorem tax). As shown in Figure 4 , alcohol excise tax collections accounted for 57.7% of TTB's excise tax collections in FY1990 and approximately 60% following the tax rate increases in OBRA90. In FY2015, alcohol excise tax collections were 40.7% of all of TTB's excise tax collections. Sharp declines in the share of TTB taxes collected on alcohol were caused, in part, by the increase in taxes on tobacco products in the late 1990s and in 2009. Summary of the U.S. Alcoholic Beverage Industry This section provides a brief overview of the U.S. alcoholic beverages industry both at the retail level and the manufacturing level, with the latter being the stage of production that is directly responsible for filing federal excise tax reports to TTB. According to analysis conducted by S&P Capital IQ ("S&P"), alcoholic beverage sales accounted for $211.6 billion in retail sales in 2014—their highest annual levels to date. As shown in Table 3 , beer sales accounted for the largest share (48.7%) of alcoholic beverage retail sales in 2014. The alcoholic beverage manufacturing industry can be summarized by two characteristics: (1) a large degree of market sales concentration either by firm (as in the case of distilled spirits and beer) or geography (as in the case of wine); and (2) a rapid rate of new entrants at the craft distilling/brewing/winemaking market. Data on the number of alcoholic beverage manufacturers is dynamic, given the flux in the craft market. It is easier to count and estimate sales statistics in the alcoholic beverage manufacturing industry than it is to count or estimate the net growth of firms in the industry. The Department of the Treasury's Alcohol and Tobacco Tax and Trade Bureau (TTB) publishes the number of firms holding permits to manufacture, import, or wholesale alcoholic beverages, but much of this data is available only via a Freedom of Information Act (FOIA) request. Quantifying the exact, economic scale of the alcoholic beverage manufacturing industry is further complicated by the rapid rise of craft manufacturers in addition to particular classification issues that arise within each category of alcohol. Given the limitations of government data sources, industry trade associations provide an alternative estimate of the number of firms operating in the industry, as their member rosters and directories are typically updated more frequently than publicly available government data. Table 4 illustrates the geographic concentration of alcoholic beverage manufacturers in the United States, by product category. California tops each product category list, and has a particularly large concentration of U.S. wineries (47%). By comparison, distilleries and beer breweries and brewpubs are more evenly distributed across the nation (beer more than spirits). In summary, alcoholic beverage production tends to be concentrated in some states more than others (e.g., California, Washington, New York, Oregon). Alcoholic beverage manufacturers are more dispersed across the states compared to cigarettes, which tends to be more geographically concentrated in states such as Virginia and North Carolina. Analysis of employment in the alcoholic beverage manufacturing industry is also limited by similar methodological issues that affect analysis of the number of manufacturers as well as a lack of data on alcoholic beverage importers. Figure 5 illustrates a simplified analysis of employment in the alcoholic beverage manufacturing industry, from 2002 to 2014. Total employment in alcoholic beverage manufacturing categories was 75,247 in 2014 according to the U.S. Census Bureau's Annual Survey of Manufactures (ASM). In the aggregate, alcoholic beverage manufacturing accounted for less than 1% of total U.S. employment in manufacturing in 2014. Figure 5 suggests that net employment in breweries and distilleries has been relatively flat (or negative) over the period observed, despite the rapid entry rate of craft manufacturers, and employment levels have increased among wineries. Economic Analysis In addition to the issue of revenue adequacy, discussed previously, efforts to increase or decrease alcohol excise taxes have generally involved the following three issues: 1. What effect, if any, do excise taxes have on supply and demand conditions in the alcoholic beverage manufacturing industry and the consumer market? 2. From an economist's perspective, is the current alcohol excise tax rate justified by the estimated social costs (i.e., spillover effects) of alcohol consumption? 3. Are taxpayers bearing a disproportionate share of the alcohol excise tax, based on their income level or their choice in the type of alcoholic beverages they purchase (or don't purchase)? 4. This section of the report analyzes each of these issues in detail. Supply and Demand Responses to Changes in Alcohol Tax Rates Advocates of reducing alcohol excise taxes (or not adjusting them for inflation) often claim that higher tax rates will lead to contractionary supply and demand conditions and job losses in the industry. Sometimes these claims are backed with historical examples of job losses in the alcohol industry following past increases in excise tax rates, although there are few academic studies of this potential effect. However, these claims have been criticized both based on expectations of behavior under economic theory and empirical analysis of past alcohol excise tax increases. Economic theory suggests that excise tax increases could be borne by producers or consumers in the short run, but are generally passed on to the consumer in the long run. For competitive markets with constant marginal costs of production, excise taxes are predicted to be fully passed through to prices, but in imperfectly competitive markets a one-cent increase in taxes may increase prices by less than or more than one cent, depending on the responsiveness of producers and consumers. Multiple empirical studies suggest that previous alcohol excise tax increases are usually passed along to consumers at least in full (and sometimes more) and within a relatively short timeframe. Past analyses suggest that even if producers bear some of the economic burden of the tax in the short run, it is unlikely that this cost would be sufficiently large to result in employment losses in the industry, much less on a macroeconomic level. Recent history also suggests that past changes in excise tax rates do not have a clear relationship with employment levels in the alcoholic beverage manufacturing industry. A significant decline in the number of employees in the industry began in the mid-1980s and only began to reverse in the mid-1990s. An increase in the spirits tax rate and a doubling of the rate on wine and beer in the Revenue Reconciliation Act of 1990 ( P.L. 101-508 ) does not appear to have had a clear effect on these pre-existing trends. The decline of industry employment in the 1980s could have been due to a general slowdown in the overall economy, but it is also unclear to what extent technological advances contributed to these trends (i.e., "labor-saving" increases in productivity). Spillover Effects from Alcohol Consumption Some economists justify the imposition of taxes and regulations on alcohol consumption based on the principle of economic efficiency, because alcohol consumption has negative spillover effects on society. Economists call these spillover effects, "externalities." Products with positive externalities (i.e., spillover benefits to society) tend to be undersupplied in the market while products with negative externalities (i.e., spillover costs to society) tend to be oversupplied, from a societal perspective, in the market —absent policies that adjust individual prices to reflect these spillover effects. The negative externalities associated with alcohol consumption has been studied by researchers in a variety of fields, including economics, health, and public safety and crime. Examples of the externalities most often featured in studies include the effects of alcohol consumption on: motor vehicle crashes, public health, domestic violence, and other crimes. In addition, many researchers have studied these effects among youth, as some of these effects are disproportionately concentrated among younger consumers of alcohol (e.g., involvement in motor vehicle crashes and violent crime). Understanding the externalities is important because of the possible social cost of alcohol consumption that is not accounted for in the market. Some economists concluded that excise tax collections on individual alcohol consumers are less than the total external costs alcohol imposes on society. This is not to say that researchers are unanimous in advocating for higher alcohol excise taxes; the findings of a wide range of studies indicate that the social issues related to alcohol consumption are quite complex from a public policy perspective. This section of the report attempts to highlight several of the key findings and debates. One of the most prominent studies on the external costs associated with alcohol consumption was conducted by Manning et al. (1991), and is hereafter referred to as the "Manning study." Unlike many other studies estimating the "total costs" of alcohol consumption, the Manning study focused solely on external costs, and also incorporated some offsets against some of these costs that are associated with excessive drinking (defined as averaging more than two drinks per day). The Manning study acknowledges that most of these costs could be due to heavy drinkers, but they also understand that it is difficult to differentiate between excessive and non-excessive drinking for any one individual. Thus, the Manning study averages the external costs over all alcohol consumption to arrive at an estimate of 48 cents per ounce (in 1986 dollars) of alcohol consumed. Even if it is accepted that more could be done to compensate for the social costs of alcohol consumption, some might be skeptical as to whether across-the-board increases in federal excise tax rates are the most appropriate remedy. For example, some could argue that casual drinkers rarely impose the types of negative externalities tabulated by Manning et al., and thus efforts should be targeted toward prevention and treatment of alcohol abuse. To some extent, this notion is supported in the research. Studies from Columbia University's National Center on Addiction and Substance Abuse find that over half of inmates in prison for either committing a violent crime or for property damage had a history of alcohol treatment or had an alcohol-use disorder. Still, researchers have not come to the consensus that heavy drinkers are the primary source of these negative externalities. In addition, non-tax alternatives could mitigate some of these externalities. In the past, many of these non-tax alternatives have been implemented at the state and local level. For example, changes to state-based minimum legal drinking age laws have been credited with reducing youth-related incidents related to alcohol abuse. Similarly, some researchers have found that severe legal deterrents and fines have reduced drunk driving. Overall though, empirical evaluations of some non-tax alternatives to address specific externalities are subject to some debate among researchers. In contrast to policies that try to reduce specific externalities (e.g., drunk driving), research indicates that increases in tax rates have the broadest ability to affect the negative externalities of alcohol consumption mostly because changes in taxes affect the widest range of alcohol consumers. Elasticity measures of changes in the symptoms of alcohol dependence and abuse in response to changes in price are generally high enough (generally more than one in value) in the literature to suggest that alcohol price increases provide a significant reduction on the societal effects of problematic drinking (even amongst youth and underage drinkers). Federal rate increases could be preferable to state increases as the former reduces opportunities for consumers to seek across-the-border purchases as a means to reduce their exposure to the tax. Some could argue that alcohol taxes should be increased at different levels across alcoholic beverage categories, based on their respective contributions to overall social costs. According to this logic, beer would bear the largest share of any excise tax increases as research indicates that it is most linked with various outcomes related to excessive drinking. There could be diminishing returns to such a policy if consumers adjust their preferences to substitute spirits and wine for beer. Beer is often linked to excessive drinking because of its lower price, relative to wine and distilled spirits. Beer also generally accounts for the largest share of alcoholic sales in the United States, as shown in Table 3 . Equity Economists generally measure tax equity using two criteria: vertical equity and horizontal equity. Vertical equity generally implies that households with a greater ability to pay the tax (i.e., a higher income) pay a greater share of their household income in taxes than households with a lesser ability to pay the tax. A tax system is progressive if higher-income households pay a greater share of their income in tax than lower-income households, whereas the converse is true in a regressive tax system. Horizontal equity indicates that households with similar abilities to pay actually pay similar amounts in tax. For example, all households earning a particular amount of income would pay the same amount in taxes in a tax system with perfect horizontal equity. Vertical Equity Excise taxes are generally regressive, as lower-income households tend to pay a higher share of their income in tax than higher-income households. Alcohol excise taxes are no exception to this general trend. Because alcohol excise taxes are levied on manufacturers, and not consumers, TTB does not collect data on the amount of excise taxes paid by individual consumers based on their income level. Thus, consumption data on alcoholic beverages, as shown in Figure 6 , serves as an indirect measurement of the regressivity of alcoholic beverage taxes. Although lower-income households tend to spend a higher share of their pre-tax income on alcoholic beverages, average household spending on alcoholic beverages is more evenly distributed than spending on non-alcoholic beverages or food. The actual excise tax is likely to be more regressive than spending because higher-income consumers are likely to buy more expensive forms of alcohol where the tax is a smaller component of price. Still, alcohol excise taxes appear to be less regressive than taxes on tobacco. Horizontal Equity Consumers pay different amounts of federal excise tax on the same amount of alcohol content, based on the type of alcoholic beverages they purchase. At current rates, distilled spirits are taxed at about 21 cents per ounce of alcohol, whereas wine and beer are taxed at 8 cents and 10 cents per ounce of alcohol, respectively. When converted to standard drink measures (each containing 0.6 oz. of alcoholic content), liquor drinks are subjected to a federal excise tax of 13 cents per 1.5 oz. shot, wine is taxed at 4 cents per 5 oz. glass, and beer is taxed at 5 cents per can. Legislative Activity 113th Congress BEER Act The Brewers Excise and Economic Relief Act of 2013 ( S. 958 , H.R. 1918 ), or BEER Act would have reduced tax rates on both small and large breweries. Under the BEER Act, small brewers (producing 2 million barrels or fewer annually) would have paid no federal excise tax on the first 15,000 barrels; $3.50 on barrels 15,001 to 60,000; and $9 per barrel for every barrel over 60,000 and up to 2 million barrels. For brewers producing more than 2 million barrels annually and for all beer importers, regardless of size, the federal excise tax rate would have been reduced from $18 to $9 per barrel for every barrel. Small BREW Act The Small Brewer Reinvestment and Expanding Workforce Act of 2013 ( S. 917 , H.R. 494 ), or Small BREW Act, would have modified the existing beer excise tax regime. The rate for the smallest brewers would have been reduced from $7 to $3.50 per barrel on the first 60,000 barrels. For production between 60,001 and 2 million barrels the rate would have been $16.00 per barrel. Any brewer that exceeded 2 million barrels would have begun paying the full $18 rate. Breweries with an annual production of more than 6 million barrels would have not qualified for these reduced tax rates. CIDER Act The Cider Investment and Development through Excise Tax Reduction (CIDER) Act ( H.R. 2921 ; S. 1531 ) would maintain the $0.226 rate on hard cider, but reduce the likelihood that some products marketed as "ciders" would face higher tax rates due to their alcohol and carbonation content. Critics of the status quo taxation of hard cider argue that producers have a difficult time predicting what their tax burden will be in future years because variations in the sugar content of the fruit fermented into cider affects the alcohol content of the final product. In addition, "over-carbonating" could lead to additional layers of taxation on cider products. The CIDER Act would enable products taxed as "hard ciders" to contain up to 8.5% ABV and carbonation up to 6.4 grams per liter. Distilled Spirits Several bills have been introduced recently in Congress to reduce the excise tax rate on "small distillers." For example, the Distillery Excise Tax Reform Act of 2013 ( H.R. 1806 ) would lower the excise tax rate from $13.50 to $2.70 per proof gallon for those distillers or controlled groups that produce 60,000 proof gallons or less of distilled spirits annually. Proponents of the bill argue that it would create "parity" with current reduced excise tiers for small beer and wine producers. 114th Congress Several bills from the 113 th Congress have been reintroduced, with modifications, in the 114 th Congress. As described below, support from many of these different alcoholic beverage interests eventually converged behind one legislative proposal. Changes to other provisions related to alcohol excise taxes were also enacted in broader tax and budget legislation. Proposed Beer Excise Tax Reductions (Fair BEER and Small BREW Acts) As seen during the 113 th Congress, alcohol excise tax reduction bills were introduced in the 114 th Congress that represented a divide between small and large beer producers. The Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act; H.R. 232 ; S. 375 ) would modify the reduced rate for small brewers so that it would have a graduated rate structure. It would also raise the cap on producers eligible for the reduced rate. Under the Small BREW Act, qualified small brewers would be taxed $3.50 per barrel on the first 60,000 barrels of production and $16 per barrel on barrels 60,001 to 2,000,000. Barrels number 2,000,000 to 6,000,000 would be taxed at the current law rate of $18 per barrel. Once a producer hits 6,000,001 barrels, then all barrels would be taxed at the current law rate of $18 per barrel. In contrast, the Fair Brewers Excise and Economic Relief Act (Fair BEER Act; H.R. 767 ; S. 807 ) would modify the current excise tax rate structure by eliminating the reduced rate for small brewers and creating a new, graduated excise tax rate structure for all brewers: $0 on barrels 0 to 7,143; $3.50 on barrels 7,144 to 60,000; $16 on barrels 60,001 to 2,000,000; and $18 on barrels 2,000,001 and above. Proposed Distilled Spirits Excise Tax Reductions The Distillery Excise Tax Reform Act of 2015 ( H.R. 1172 ; S. 1444 ) would reduce the current law excise tax rate of $13.50 per proof gallon to $2.70 per proof gallon on the first 100,000 proof gallons produced by a distillers under a common control group in a given year. This tax rate structure would apply to all distillers, regardless of their total annual production. Similarly, the Distillery Innovation and Excise Tax Reform Act ( H.R. 2520 ) would also impose an excise tax rate of $2.70 on the first 100,000 proof gallons produced by distillers under a common control group, but would also reduce the tax rate on production greater than 100,000 proof gallons from $13.50 to $9.00 per proof gallon. Hard Cider Definitions The CIDER Act was also reintroduced in the 114 th Congress. One version of the CIDER Act ( H.R. 600 ; S. 1459 ) was the same legislative text as the versions introduced in the 113 th Congress, while another version of the bill in the Senate ( S. 906 ) added a Medicare-related provision (not pertaining to alcohol excise taxes) to the same hard cider taxation reform proposals in the other bills. The hard cider definitions found in the versions of the CIDER Act were eventually enacted as Section 335 of Protecting Americans from Tax Hikes (PATH) Act of 2015 ( P.L. 114-113 ). Craft Beverage Modernization and Tax Reform Act of 2015 In June 2015, legislators struck a compromise to benefit both small and large beer producers, as well as other alcoholic beverage interests, in the legislative text of the Craft Beverage Modernization and Tax Reform Act of 2015 ( H.R. 2903 ; S. 1562 ). Provisions were included that reduce excise tax rates for both large and small producers of different types of alcoholic beverages are included in the bill: For beer, the bill would repeal the reduced rate for small brewers and create a three-tier excise tax rate schedule for all brewers: $3.50 per barrel on the first 60,000 barrels produced annually, barrels 60,001 to 2,000,000 would be subject to a tax rate of $16 per barrel, and barrels greater than 2,000,000 would be subject to the current law rate of $18 per barrel. For wine, the existing credit for qualified small wineries would be amended such that the first 30,000 wine gallons produced annually would be eligible for a credit against excise tax liability of up to a $1.00 per wine gallon, and wine gallons 30,001 to 130,000 would be eligible for a credit up to a $0.90 per wine gallon. For distilled spirits, the two-tier excise tax rate schedule in the Distillery Excise Tax Reform Act of 2015 would be imposed: $2.70 per proof gallon on the first 100,000 proof gallons produced annually and the current law rate of $13.50 per proof gallon on all units produced in excess of 100,000 proof gallons. Other excise-tax related provisions in the Craft Beverage Modernization and Tax Reform Act of 2015 include: Expansion of the definition of the hard cider category to include products with higher levels of alcohol and carbonation and to include products made from apple or pear juice or concentrate. These provisions were included in the versions of the CIDER Act. Removal of bonding requirements for beer, wine, and spirits producers with limited excise tax liability, such that they could choose to file their excise payments quarterly, rather than semi-monthly. These provisions, which were previously introduced as part of the Craft Beverage Bond Simplification Act of 2015 ( H.R. 2238 ; S. 904 ), would reduce administrative burdens on smaller alcoholic beverage producers and excise tax administrators. Tax Extenders and the Rum Excise Tax Cover-Over The rum "cover-over" extends as far back as 1917 for Puerto Rico and 1954 for the U.S. Virgin Islands. Both territories receive transfers from the federal government based on excise tax revenue collected on rum. The law does not impose any restrictions on how Puerto Rico or the U.S. Virgin Islands can use the transferred revenues. Both territories use some portion of the revenue to promote and assist the rum industry. On December 18, 2015, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 ( P.L. 114-113 ), which made many tax extender provisions permanent and temporarily extend others. Among the provisions in the law, the rum cover-over to Puerto Rico and the U.S. Virgin Islands was extended through 2017 at the temporary rate of $13.50 per proof gallon. Potential Approaches to Increasing Alcohol Excise Tax Rates Most of the legislation introduced in the 114 th Congress, described above, would reduce tax rates on alcoholic beverages. However, if either raising revenue or reducing negative externalities is the main policy goal, then potential approaches to increase alcohol excise tax rates could be proposed. This is not meant to be an exhaustive list of approaches and multiple options could also be combined. This section of the report discusses these approaches in descending order, based on their respective magnitude of increases to current rates. Policymakers could also increase the tax rate commensurate with the estimated costs of alcohol consumption to society, and possibly increase economic efficiency. Based on estimates of the combined government tax rates at the federal, state, and local level are less than the level that could account for all external economic costs of alcohol consumption. After adjusting for inflation and assuming that these costs remain constant over time, Manning's 1986 estimate of 48 cents per ounce of alcohol would equal $1.02 in 2013 dollars. A rough estimate in the Appendix of this report measures the combined federal, state, and local taxes between 25 cents and 28 cents per ounce (in 2013 dollars) of alcohol compared with Manning's inflation-adjusted rate of $1.02 per ounce (in 2013 dollars). In other words, current combined taxes on alcohol are roughly one-quarter of the Manning study's calculations of the external costs of alcohol consumption (adjusted for inflation). As one option to raise revenue and address concerns over horizontal equity, the Congressional Budget Office (CBO) has regularly included an option to equalize alcohol tax rates in its periodically-published report on deficit reduction. CBO estimated in 2013 that increasing all taxes on alcoholic beverages to a $16 per proof gallon equivalent (or 25 cents per ounce of alcohol) would raise $64 billion in revenue over 10 years. Table 5 illustrates how this option would affect per-unit prices, based on the type of alcoholic beverage. The differences in tax rates on beer and wine under this option would be quite large, in percentage terms. However, consumers could interpret these excise tax increases differently based on the product. Although there are bottles of wine that are priced comparatively to a six-pack of beer, many bottles of wine are priced much higher than a six-pack of beer. Put differently, a 48 cent-price increase (33 cents to 81 cents) is generally a larger price markup on a six-pack of beer than a 49 cent-price increase (21 cents to 70 cents) is on a bottle of wine. Appendix. Historical Tax Rates, Supplemental Figures, Technical Calculations Alcohol Excise Tax Collections, Imports vs. Exports, FY1990-FY2015 Review of Price Elasticities of Demand for Alcohol The price elasticities are interpreted in the following manner (using Fogarty's findings): "a 1% increase in the price of spirits results in a 0.60% decrease in the demand for spirits, a 1% increase in the price of wine results in a 0.55% decrease in the demand for wine, and a 1% increase in the price of beer results in a 0.52% decrease in the demand for beer." These price elasticities do not control for changes in price of other categories of alcoholic beverages. As shown in in Table A-1 , beer tends to be more inelastic than either wine or spirits, meaning that increases in beer prices tend to correspond with smaller changes in demand than either wine or spirits. Variations in elasticities depend on the number of studies analyzed in each meta-analysis, the countries studies (if cross-national), and the time periods studied. Calculation of Average, Combined (Federal, State, and Local) Tax Rate on Alcohol This section estimates current average combined excise tax rates on alcohol so that these levels can be compared with the level of taxation needed to correct for external costs of alcohol consumption, according to Manning et al. (1991). First, the average federal tax rate weighted by product is equal to 15 cents per ounce of alcohol, as derived in Table A-2 . Next, the average state and local tax rate per ounce of alcohol can be calculated using the following Census Bureau data. By multiplying the ratios of state and local tax collections to federal tax collections in Table A-3 by the average weighted federal tax rate per ounce of alcohol of $0.15, the average state and local tax rate per ounce of alcohol can be calculated as 10 cents using only collections from state and local excise taxes, and 13 cents when adding the net revenue from state-run liquor stores. The U.S. Census Bureau data does not disaggregate these collections based on the type of alcoholic beverage that they were collected from (i.e., TTB's revenue reports). The methodology used, above, thus serves as an approximate estimate of the state and local average tax rate. By combining the average weighted federal tax rate with the state and local rates, the combined, average tax rate per ounce of alcohol can be calculated as 25 cents when only using excise taxes, and 29 cents when incorporating net revenue from state-run liquor stores.

The federal excise tax on alcoholic beverages is imposed at the manufacturer and importer level, based on the per unit production or importation of alcoholic beverages (e.g., distilled spirits, wine, and beer) for sale in the U.S. market. When converted to standard drink measures liquor drinks are generally subjected to a federal excise tax of approximately 13 cents per 1.5 ounce shot, wine is taxed at 4 cents per 5 ounce glass, and beer is taxed at 5 cents per 12 ounce can or bottle. Alcohol excise tax collections totaled $10.4 billion in FY2015, with collections from distilled spirits comprising 55.1% of that amount. Congressional interest in alcohol excise taxes is broad, given a variety of policy motivations and the industry's wide geographic distribution. Since their inception in 1791, federal excise taxes on alcohol have been imposed or increased throughout history primarily to fund emergency spending during wartime or in response to concerns over the growth of budget deficits. Today, three main approaches drive interest in alcohol taxes: (1) tax rates could be decreased to benefit firms in the industry, (2) excise tax rates could be increased for deficit reduction, or (3) excise tax rates could be increased to discourage the negative spillover effects of alcohol consumption (e.g., drunk driving fatalities, property damage, domestic violence). This report provides a brief historical overview of alcohol excise tax policy and a description of current law. Next, the report analyzes alcohol excise tax rates based on some of the standard criteria for tax evaluation: revenue, economic efficiency, and equity. Lastly, this report discusses bills introduced in the 114th Congress that would reduce current excise tax rates as well as possible approaches to raising alcohol excise tax rates. Despite three tax rate increases since 1951 (with the last increase in 1991), alcohol excise taxes have declined in inflation-adjusted value over time. Excise tax reductions would reduce excise tax collections, reduce some of the regressivity in the federal tax code, and provide owners of the affected alcohol producers with a temporary increase in their profits (due to lower tax rates). Economists typically justify imposing excise taxes on alcohol consumption to better reflect the costs of an individual's consumption of alcohol to society. While there is much debate surrounding the technical measurement of these linkages, most researchers argue that alcohol excise tax rates are set below the economically efficient level to compensate for social costs. One estimate finds the combined federal, state, and local taxes between 25 cents and 29 cents (in 2013 dollars) per ounce of pure alcohol compared with the external cost of $1.02 per ounce. Analysis suggests that excise tax increases are usually passed forward to consumers through higher prices and are not borne by the owners of alcoholic beverage manufacturers or importers. Excise taxes are generally regressive, alcohol included. Lower income households tend to spend a higher share of their pre-tax income on alcoholic beverages, but this distribution is not as uneven as spending on non-alcoholic beverages or food. Consumers also pay different amounts of federal excise tax on the same amount of alcohol content, based on the type of alcoholic beverages they purchase. At current rates, the federal tax per ounce of pure alcoholic content for spirits, wine, and beer is 21 cents, 10 cents, and 8 cents, respectively.

Introduction Since shortly after the establishment of limited Palestinian self-rule in the West Bank and Gaza Strip in the mid-1990s, the United States has periodically provided assistance to the Palestinian Authority (PA) for civil security and counterterrorism purposes. Following the death of Yasser Arafat in late 2004 and the election of Mahmoud Abbas as his successor as PA president in early 2005, then-U.S. Secretary of State Condoleezza Rice created the office of U.S. Security Coordinator (USSC) for Israel and the Palestinian Authority to help reform, train, and equip PA security forces which had been personally beholden to Arafat and his political allies. The USSC has been charged with helping professionalize and consolidate PA forces and with coordinating their activity with Israeli officials pursuant to both sides' obligations under the 2003 "Performance-Based Roadmap to a Permanent Two-State Solution to the Israeli-Palestinian Conflict" (or "Roadmap"—see "Roadmap Obligations" text box below). These obligations are predicated on the understanding that security is a core issue upon which Israeli-Palestinian peace depends. Previous Israeli-Palestinian efforts at security cooperation collapsed during the second Palestinian intifada (also known as the Al Aqsa intifada , or "uprising") that took place earlier this decade. Since Hamas gained control of the Gaza Strip in June 2007, Lieutenant General Keith Dayton, head of the USSC since December 2005, has provided guidance to the Jordanian Public Security Directorate (JPSD) and international contractors in connection with their U.S.-funded "gendarmerie-style" training of West Bank-based PA security personnel. The funding has come through the State Department's INCLE account, managed by the Bureau of International Narcotics and Law Enforcement Affairs ("INL Bureau" or "INL"), which coordinates with the USSC. As of January 2010, approximately 400 Presidential Guardsmen and 2,200 National Security Forces (NSF) troops (comprising four NSF battalions) have been trained at the Jordan International Police Training Center (JIPTC) near Amman (see " U.S. Training Assistance to PA Forces " below). Dayton envisions that a total of ten 500-man NSF battalions will eventually be trained for the West Bank, and USSC/INL seeks funding from the 111 th Congress to that end. See Figure 1 above for a map of West Bank governorates and of zones of PA security responsibility (so-called "Area A" under the Oslo agreements of the mid-1990s). Dayton also has accepted a request from the U.S. Special Envoy for Middle East Peace, former Senator George Mitchell, that Dayton remain in his post at least through 2010. Most reports note that law and order have improved where U.S.-sponsored, JIPTC-trained PA forces have been deployed in the West Bank, and operations featuring these forces in places such as Jenin, Hebron, and Qalqilya have resulted in some success in countering militant groups such as Hamas and Palestinian Islamic Jihad (PIJ)—both of which are U.S.-designated Foreign Terrorist Organizations. Yet questions regarding the USSC mission persist. Might the PA forces establish a sustained pattern of success in countering and dismantling militant and terrorist networks, despite the facts that the United States may only supply non-lethal equipment to PA forces and that U.S.-sponsored training in Jordan has not concentrated heavily on counterterrorism techniques? Some Palestinians and outside observers assert that the effectiveness and credibility of PA operations are undermined by Israeli restrictions—including curfews, checkpoints, no-go zones, and limitations on international arms and equipment transfers—as well as by Israel's own security operations in the West Bank and its control over land, air, and sea access to Gaza. Israel claims that its continuing operations in the West Bank are necessary in order to reduce the threat of terrorism emanating from the territory. These operations underscore the fact that the Israeli-Palestinian agreements that authorized the creation of Palestinian security forces in the 1990s in areas of limited Palestinian self-rule contained clauses that preserve Israel's prerogative to conduct operations in those same areas for purposes of its own security. Additionally, how might short-term operational success translate into permanent consolidation of competent, defactionalized civilian control over the PA forces and the broader criminal justice sector? Can this occur in a complex political environment featuring (1) the continuing presence of Israeli occupying forces and settlers; (2) other overt and/or possible covert assistance from, among others, Arab and other Muslim-majority states, Russia, the United States, and Europe; (3) possibly competing goals of (a) convincing the Palestinian populace to view—and unify around—PA forces as legitimate, nonpartisan protectors and as a potential bellwether of statehood and (b) thwarting terrorist/militia activity against Israel; and (4) historical obstacles posed by institutional inertia, Palestinian factionalism, and region-wide political trends? If it can, what are the long-term implications vis-à-vis Hamas-controlled Gaza? Political complexity and attempts to address the demands of multiple stakeholders have troubled other U.S. security assistance and police training missions this decade—including those in Iraq, Lebanon, and Afghanistan. It is unclear to what extent similarities and differences between the Palestinian context and these other situations are likely to influence outcomes. It is also unclear how U.S. security assistance to the PA might lead to overall progress on (1) the Israeli-Palestinian political track (including Israel's willingness to halt settlement building in the West Bank and East Jerusalem and to contemplate West Bank redeployments in connection with final-status negotiations), (2) Palestinian civil society, governance, and economic development, and (3) efforts to end geographical and factional divisions between Palestinians in the West Bank and in Gaza. Background and Overview Oslo-Era Security Assistance U.S. security assistance to the Palestinian Authority was first provided after the Oslo agreements of the mid-1990s between Israel and Yasser Arafat's Palestine Liberation Organization (PLO) allowed for the establishment of Palestinian internal security forces in the Gaza Strip and parts of the West Bank as part of the plan for limited Palestinian self-rule in the two Israeli-occupied territories. Concerns existed from the forces' inception over potential threats to Israel's security from the blurring of the line between the new PA forces' policing functions and their potential for military use—as the forces were largely drawn from the PLO's Palestinian Liberation Army and from Arafat's personal security detail. Additionally, Arafat approved the establishment of several security and/or intelligence organizations personally accountable to him that were not officially mandated under Oslo agreements, such as the Preventive Security Organization (PSO). Israeli leaders tolerated the creation of these organizations partly because they believed that their less formal nature might give Arafat a freer hand to neutralize terrorist activity by Palestinian groups that rejected the Oslo peace process. Partly as a result of these concerns, the United States allowed other international actors—particularly Jordan, Egypt, Japan, the European Union and individual European states—to take leading roles in providing the forces' training and funding. Until 1996, the United States provided the PA little more than approximately $5 million for police salaries and some non-lethal equipment (mainly trucks and boots from military surplus stocks), although it did maintain influence over the international security assistance effort through various mechanisms that were established to coordinate donor activities. U.S. involvement reportedly increased in March 1996 as political pressure to foster Israeli-Palestinian security cooperation rose following several terrorist attacks by Hamas in Israel. Likely determining that the organizations with personal ties to Arafat and patronage networks were more relevant than the official police, the Clinton Administration reportedly began providing these organizations with tens of millions of dollars in covert assistance to "increase the professionalism of the Palestinian security services and help combat terrorism," according to the New York Times . The European Union also reportedly began a counterterrorism program. According to Norwegian analyst Brynjar Lia, the United States and other donors generally bypassed PA and international mechanisms that had been established to coordinate security assistance, instead dealing directly with their preferred organizations. By fostering a fiefdom mentality among competing security chiefs to address short-term objectives, these donors might have undermined their own calls for a more consolidated PA security sector answerable to civilian control and the rule of law. U.S. and European security assistance programs continued despite the Hasmonean/Western Wall Tunnel riots in September 1996, which featured fatal clashes between Palestinian police and Israeli soldiers in and around Jerusalem. The role of the U.S. Central Intelligence Agency (CIA) in mentoring leaders from the Preventive Security Organization and helping coordinate Israeli-Palestinian security activities was reportedly formalized (although the CIA was not mentioned by name) in the October 1998 Wye River Memorandum. Over the next 23 months, there were no major suicide attacks inside Israel, leading Israeli officials to praise Palestinian counterterrorism efforts. Backslides and Delays in Reform: 2000-2007 The outbreak of the second intifada in September 2000 followed the unsuccessful efforts by the United States to broker an Israeli-Palestinian peace agreement at Camp David in July. During the intifada, some members of Palestinian security forces engaged in activities aimed at Israeli soldiers and, in some cases, civilians. Palestinians generally characterized these actions as "resistance," but most Israelis perceived them to be acts of militancy and/or terrorism. Some beneficiaries of U.S. aid were alleged to have been involved in or to have acquiesced to the violence. Israeli-Palestinian security cooperation essentially ceased, despite U.S. efforts to revive it as a means of reducing or halting violence through proposals such as the Sharm al Sheikh Fact-Finding Committee Report (also known as the "Mitchell Report") of April 2001, the "Tenet Work Plan" and the "Zinni Paper" of March 2002, and the Roadmap (which was introduced by the international Quartet—the United States, United Nations, European Union, and Russia—in 2002 and formalized in 2003). Also, much of the PA security forces' infrastructure was destroyed by Israel. Covert U.S. counterterrorism assistance programs to the Preventive Security Organization reportedly continued during the intifada, and reports suggest that they probably remain in existence. Following Arafat's death in 2004 and Mahmoud Abbas's election to succeed him as PA president in 2005, the Bush Administration believed that an opportunity had arrived to achieve progress on Palestinian security reform. To that end, the United States created the office of the U.S. Security Coordinator within the State Department and appointed Lieutenant General William ("Kip") Ward as its first commander. While waiting for funding to arrive, Ward—and Dayton when he succeeded Ward in December 2005—consulted with Israeli and Palestinian authorities in connection with the PA's assumption of responsibility for security in the Gaza Strip following Israel's August 2005 withdrawal. Plans for the USSC were hampered by the victory of Hamas in 2006 Palestinian Legislative Council elections and the establishment of a Hamas-led government from March 2006 to June 2007. The USSC advised and helped train Presidential Guardsmen loyal to President Abbas during that time—including with respect to border duties and ultimately unsuccessful efforts to stave off Hamas attacks at Gaza's Karni crossing—but, with no budget, the USSC's capabilities were severely limited. There have been reports that arms were supplied to Abbas's forces by Arab states (with Israeli approval) as a result of U.S. facilitation. USSC/INL Mission: 2007-2010 When Hamas's forcible takeover of the Gaza Strip in June 2007 led to the establishment of a more moderate PA government in the West Bank under Prime Minister Salam Fayyad, the way was opened for the United States to provide more substantial overt assistance, coordinated by the USSC and the State Department's INL Bureau. Since then—with approximately $395 million in U.S. funds reprogrammed or appropriated to INL through the International Narcotics Control and Law Enforcement (INCLE) account (see Table 1 below for a detailed breakdown)—there has been a rapid expansion in security assistance to the Palestinians to support the PA's Security Sector Reform and Transformation program (part of the 2008-2010 Palestinian Reform and Development Plan that is meant to help the PA meet its Roadmap obligations), particularly for the Ministry of Interior (MoI), the Presidential Guard (PG), and the National Security Forces. For more detailed information on funding for U.S. security assistance to the PA, see CRS Report RS22967, U.S. Foreign Aid to the Palestinians , by [author name scrubbed]. U.S. security assistance efforts in the West Bank take place in a context featuring continuing Israeli occupation; Palestinian factional conflict and geographical separation (between the West Bank and Hamas-controlled Gaza); extensive overlap and redundancy among different PA security organizations; a historical lack of centralization; and the provision of security assistance by other international actors, such as the European Union (EU), Russia, and various Muslim-majority countries. The EU is particularly involved with reform and train-and-equip efforts with the Palestinian Civil Police (PCP) and in the criminal justice sector through the EU Police Co-ordinating Office for Palestinian Police Support (EUPOL COPPS) program headquartered in Ramallah (see " Deployment of U.S.-Sponsored, JIPTC-Trained PA Forces " and " Criminal Justice Sector Reform " below). EUPOL COPPS has indicated to CRS that individual EU member states, plus Norway and Canada, have contributed $47 million to EUPOL COPPS since June 2008 for specific projects aimed at strengthening and reforming the PCP and the PA criminal justice sector. Due to the involvement of many other actors and the interplay of several variables, judging the impact of U.S. efforts may be difficult. For example, the push since 2007 to heighten West Bank security may have been aided by Hamas's decision to concentrate resources on consolidating its rule in Gaza, as well as by heightened determination on the part of PA leaders such as President Mahmoud Abbas and Prime Minister Salam Fayyad to improve West Bank security in the wake of Hamas's Gaza takeover. It may also have been helped by other militants' calculation that they had more to gain at the time by laying their weapons aside, particularly in light of their weariness following several years of the second intifada and intensified Israeli security operations in the West Bank. Despite the inability of Israel and the PLO thus far to reach a final-status agreement, U.S. security assistance efforts of the past two years appear to have yielded some favorable results, both in establishing law and order among West Bank populations and in countering terrorism. Still, it is uncertain what lasting value the tactical successes claimed might deliver to the Palestinian people. There is political support for the continuation of USSC/INL's efforts, although it is possible that the consensus among the United States, Israel, and the PA to continue the USSC/INL mission is intended by each party to advance a political agenda different from the others'. During the spring and summer of 2009, tensions between the USSC and the PA (particularly between Dayton and Fayyad) reportedly emerged, partly as a result of public remarks Dayton made in May about the success of PA crowd control measures in the West Bank during the December 2008-January 2009 Gaza conflict (the quote is included below—see " During the Gaza Conflict "). The PA believed that these remarks might lead Palestinians to conclude that the PA was indirectly helping the Israelis prosecute the conflict. There were also reports that some might interpret as showing that the PA was concerned about maintaining effective and ultimate control (as well as maintaining the perception that it, and not any outside—particularly U.S.—authority, maintains control) over its internal affairs and the chain of command involving its various security organizations and regional units. Thus, Dayton's direct and informal contacts with PA commanders throughout the West Bank were reportedly reduced in favor of more formalized and centralized communications with PA Ministry of Interior and security officials. The USSC also lowered its public profile over the last half of 2009. Yet, at the beginning of 2010, a senior Western official based in the region told CRS that the working relationship between the USSC and the PA remained intact and that INCLE security and criminal justice sector assistance programs continue and have been expanded with PA support. Integrating the USSC/INL mission's efforts with the overall political effort to resolve the Israeli-Palestinian conflict is the responsibility of Special Envoy George Mitchell and his staff, with assistance from the State Department's Bureau of Near East Affairs. Future Prospects Whether the United States can help the PA build its capacity to further consolidate its separate security organizations under unified, defactionalized civilian control that is accountable to rule of law and to human rights norms is an open question. At the same time, the United States will be challenged to persuade the Israelis that permitting increased freedom and exclusivity of operation for the PA forces will not compromise Israeli security. Despite the successes claimed, the extent to which U.S. efforts have contributed to the PA's competencies (which remain disputed) to establish the rule of law and to permanently and comprehensively neutralize and dismantle militant and terror networks remains unclear. Some believe that much of the success thus far could be largely attributable to factors other than the efforts of the USSC/INL and EUPOL COPPS programs. These factors could include the willingness of PA Prime Minister Salam Fayyad and PA President Mahmoud Abbas to deploy security forces more assertively in the West Bank in the wake of the 2007 Hamas takeover of Gaza. They could also include security operations by the intelligence organizations within the PA security structure—the PSO and the General Intelligence Service (GIS, also known as the Mukhabarat). The PSO and the GIS do not participate in USSC-overseen training from INCLE funds—except in Senior Leaders courses (see " Substance of Training " below)—and are criticized for alleged human rights violations for their treatment of prisoners and interrogation methods. Another major factor that might account for security successes in the West Bank thus far is operational and intelligence support from Israel. Some are concerned that it is hard to discern whether the PA forces' targeting of Hamas members is better characterized as a professional security effort by a nascent state-building institution to rein in militants who operate outside of the law, or as a means of political leverage for PA President Abbas and his associates against factional opponents such as Hamas. According to reported figures from the Independent Commission for Human Rights, an ombudsman organization for the PA, over 400 people arrested "primarily for reasons of political affiliation" were in detention in the West Bank as of May 31, 2009. Some analysts have asserted that the process of PA security reform being led by Prime Minister Fayyad is at least partly aimed at neutralizing Fatah (Abbas's political movement and Hamas's main rival) partisans within and/or outside of the security forces. This could be a helpful development if it is seen primarily as a move toward greater defactionalization, but could exacerbate infighting within the security forces and government if efforts to reduce Fatah's profile are seen as driven by personal political agendas. In this light, it is unclear whether the May 2009 replacement of PA Interior Minister (the cabinet minister with direct responsibility for security matters) Gen. Abdel Razeq al Yahya with Abbas loyalist and experienced bureaucrat Said Abu Ali in the new Fayyad-led PA government might be more accurately characterized either as progression toward greater civilian control or as sliding back toward greater factionalism (replacing a relatively apolitical minister with a partisan from Fatah). There also are obstacles and challenges to comprehensive reform and consolidation of the security organizations (i.e., corruption, personal loyalty and patronage networks, potential infiltration by militants ), and outstanding concerns over translating short-term success with security into political progress in negotiating with Israel for peace and a Palestinian state. For example, some believe that U.S.-sponsored PA security reform is a necessary precondition for bringing about a Palestinian state at peace with Israel, but also believe that a Palestinian consensus or unity government including Hamas—which could potentially reunite the West Bank and Gaza under credible, unified leadership—is necessary. The pursuit of either of these goals could make the other one less likely to achieve, largely because of the sensitivity of addressing the question of how Hamas's militia and security forces for Gaza might coexist with or be integrated into the PA security forces. Some observers might say that the PA forces' task is too formidable—with or without security assistance from the United States or other international donors. These observers' skepticism about continued U.S. security assistance might stem from their perception of the limitations, restrictions, conditions, and disadvantages the forces face under continued Israeli occupation; or from a concern that security assistance to the PA might contribute to future violence—either among Palestinian factions or between Israelis and Palestinians. They may prefer either to have the PA depend on itself or third parties for assistance or to transfer primary security responsibility in the West Bank to an international peacekeeping force. PA Security Organizations Overview Currently, there are five separate organizations that constitute the Palestinian Authority Security Forces (PASF): the National Security Forces (which includes an autonomous military intelligence branch), the Palestinian Civil Police, the Preventive Security Organization, the Presidential Guard, and the General Intelligence Service (see Figure 2 below). According to the State Department's 2008 Country Report on Terrorism for the West Bank and Gaza, all of them are "under the Interior Minister's operational control and follow the Prime Minister's guidance." However, a June 2008 international security assessment provided to CRS through a U.S. government official indicated that the PG and the GIS remain subordinate to the PA president, and that the president and Ministry of Interior each maintain a form of direct command over the PSO. An October 2009 statement by the NSF commander, Major General Diab al Ali (also known as "Abu Fatah"), indicates that the PA president retains ultimate control over the NSF and other PASF branches: "The [NSF] coordinates with the Interior Ministry but falls under the command of Palestinian President Abu Mazen [Mahmoud Abbas], supreme commander of our security forces." Therefore, solidifying fully integral command and control within the MoI is an aspiration that has not been fully realized. The Roadmap contemplates having three organizations—NSF, police, and intelligence—under the common authority of the MoI. Some might assert that the United States has sent conflicting signals on this issue—encouraging consolidation pursuant to the Roadmap from 2003-2006 and again from June 2007 through the present, but encouraging President Abbas to bypass the MoI in his direct command of key security forces when Hamas controlled the government from 2006 to 2007. In October 2008, Abbas removed GIS chief Gen. Tawfiq al Tirawi from his position, and subsequently the PA announced that the GIS would merge into the PSO, although this has not yet occurred and the timetable for the merger remains unknown. The PASF are deployed throughout 10 of the 11 West Bank governorates (for PA security purposes, there are only nine governorates—Jenin and Tubas are combined, and there is no official Palestinian security presence in the Jerusalem governorate over which the PA claims authority). Of these governorates, Jenin, Nablus, Hebron, and Ramallah are designated as priority areas, and, as a result, generally have greater security presences than the others. See Figure 1 above for a map of West Bank governorates and of zones of PA security responsibility (so-called "Area A" under the Oslo agreements). "Policing Primacy" The question of "policing primacy," or of which organization bears the most visible and/or primary responsibility for law and order in the West Bank, remains an ambiguous one. The National Security Forces (with approximately 8,000 active personnel), the organization that receives the greatest amount of training and other resources as a result of U.S. INCLE assistance, is considered by many Palestinians to be analogous to a national army—housed in barracks, classified by military rank, and subject to a military-style command structure. NSF commander Diab al Ali has characterized the NSF's mission as follows: "We're building a force to defend our people, and also to help the Palestinians build a nation." Each NSF area commander heads all PA security operations in his respective governorate. The Presidential Guard also is structured according to a military-style model. Nevertheless, the PG's main purposes are to protect the PA president and other VIPs, to respond to crises, and to protect official PA facilities. However, because neither the NSF nor the PG personnel possess the legal authority to make arrests when tasked with law-and-order missions, they generally operate as strategic reinforcements and force protection for the organizations empowered to make arrests—the Palestinian Civil Police (with approximately 7,200 active personnel) and the two intelligence organizations (the PSO and the GIS, which are less visible than the PCP and NSF in day-to-day law and order tasks). Some analysts believe that the arrest powers of the intelligence organizations (given their alleged loose regard for due process) undermine the PCP's opportunity to become the most influential organization in shaping public perceptions about the PASF. How U.S. Efforts Are Coordinated The USSC is a multinational organization of military officers and civilians with a core staff of approximately 45 personnel—16 Americans based at the U.S. consulate general in Jerusalem and approximately 29 Canadians, Britons, and Turks based in Jerusalem and Ramallah. One of the advantages of having non-U.S. persons among the USSC staff is that they are not subject to the same limitations on travel to and within the West Bank that Americans working for the U.S. government face. INCLE funding for security assistance for security and criminal justice sector assistance to the PA comes from the INL Bureau. INL maintains an office in the Jerusalem consulate (approximately 12 persons, including a contractor based in Jordan) staffed by one foreign service officer, four contractors, and seven foreign service nationals (generally, local resident Palestinians employed by the State Department). INL coordinates its activities and funding decisions with the USSC. Historically, INL is largely known for its work assisting Latin American countries and Afghanistan and Pakistan with their counternarcotics capabilities. INL's involvement in the West Bank is part of a trend over the past five years for INL to expand beyond counternarcotics assistance to more general assistance for the internal security forces of Middle Eastern countries (such as Iraq and Lebanon ). Contractors working in concert with USSC/INL are hired by INL to staff Mobile Training Teams (MTTs) and to staff the Strategic Planning Directorate (SPD), an office created in 2007 with the intent that it would spearhead strategic planning tasks for the Palestinian Ministry of Interior to prepare it to help reform, strengthen, and assert consolidated civilian control over the PASF. The U.S.-based company DynCorp International is the primary contractor in charge of training, strategic planning, and equipment delivery. Approximately 22 U.S. and foreign law enforcement and security training specialists work on the MTTs. Approximately seven U.S. and foreign technical advisors—with expertise in subjects such as national security and Middle Eastern affairs, strategic planning and organizational development, contracts and grants, procurement and logistics, and finance —have been hired to support the SPD and MoI in the PA's West Bank seat in Ramallah. USSC/INL and its associated contractors are available to consult with PA security officials on recruitment, strategic planning, and deployment issues. The most significant U.S.-sponsored training efforts for the PASF are carried out by Arabic-speaking Jordanian Public Security Directorate police trainers, assisted by the Mobile Training Teams, at the Jordan International Police Training Center. Contractors also furnish U.S.-funded and supplied non-lethal equipment to the PG and NSF with Israeli approval, and this equipment is subject to end-use monitoring (see " Equipment " below). In addition, some INCLE assistance is being used to construct training facilities and bases for the PG and the NSF in the West Bank (see " Facilities " below). See Table 1 below for a breakdown of how the $295 million in funds directed to the INCLE account from FY2007-FY2009 have been apportioned (an additional $100 million—bringing the FY2007-FY2010 total to $395 million—were appropriated for FY2010 in December 2009 pursuant to the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ), but have not been officially apportioned). U.S. Training Assistance to PA Forces Forces Being Trained $118.7 million (see Table 1 above) have been apportioned toward U.S.-sponsored training activities for the PASF. In addition to the JIPTC training, some funding goes toward focused training courses for the PG.. The USSC also plans to train PA Civil Defense personnel (first responders such as firemen, paramedics, and hazardous materials remediation experts) in 2010. U.S.-sponsored "gendarmerie-style" training at JIPTC is generally supplied to newly-formed NSF Special Battalions constituted from recruits culled from various West Bank regions. These special battalions are to form the vanguard of the NSF, to be deployed as strategic reserves and reinforcements wherever needed. However, the first two battalions to complete training at JIPTC were the existing PG Operations & Support Battalion (PG 3 rd ) (about 400 men) from February-March 2008, and the NSF 2 nd Special Battalion (about 700 men)—made up of existing NSF troops—from February-May 2008. The NSF 3 rd and 4 th Special Battalions were the first two battalions to be trained that consisted entirely of new recruits—500 each. The NSF 3 rd was trained from September-December 2008, and the NSF 4 th from February 2009-June 2009. The NSF 1 st (another existing battalion of over 500 men) completed training in December 2009, and the NSF 5 th (another battalion of about 500 new recruits) is set to be the fifth NSF battalion and sixth PASF battalion overall to begin U.S.-funded training at JIPTC (training is expected to begin in early 2010). In the long term, Dayton envisions that ten NSF battalions can be trained in Jordan—one for each of the nine governorates designated for official PA security purposes, and one as a strategic reserve. There are questions about whether approximately 5,000 new U.S.-sponsored, JIPTC- trained NSF troops, alongside existing PA security forces, could be sufficient to maintain order and dismantle militant/terror networks in the West Bank (with its population of approximately 2.5 million). There is also the question of whether 5,000 new NSF troops are likely to be in harmony with the concept of a "demilitarized Palestinian state" presented by Israeli Prime Minister Benjamin Netanyahu in his June 2009 speech at Bar-Ilan University in Tel Aviv. As mentioned above, some Palestinians, including PASF commanders, may view the NSF as more of a "proto-army" than as law-and-order gendarmes, despite the fact that the United States provides only non-lethal equipment and Israel only allows PA forces to possess "light arms." Continued ambiguity regarding the true nature of the NSF could be problematic for its future coordination with Israeli counterparts, for its stance vis-à-vis Hamas-controlled forces in Gaza, and for its simultaneous amenability to (1) reform under accountable, defactionalized civilian control and (2) progression in counterterrorism capabilities. Trainee Recruitment and Vetting In early 2008, the PA instituted a financially attractive early retirement scheme meant to sift out less-motivated and undesirable officers and to free up places for new recruits for the PG, the NSF, and the police. By the end of March 2008, approximately 6,000 officers left the PA security forces under this scheme, aiding recruitment efforts for new battalions. Over 3,500 additional personnel have reportedly retired since then. Becoming a member of the PASF provides the promise of steady employment to many young men in the West Bank. Thus, there has been high demand when recruiting calls have gone out. USSC officials believe that the competition allows the new battalions to select top-notch recruits. All troops, new or existing, are vetted before they are admitted to U.S.-sponsored training courses at JIPTC. The State Department has said: [Potential trainees'] names [are run] through various data bases at post and in Washington for potential foreign terrorist organization affiliation and for gross human rights violations [so-called "Leahy Amendment vetting"]. If the Department finds credible evidence that members of the NSF or PG ... have committed gross violations of human rights or have been affiliated with terrorist organizations, then those members are excluded from the training. The names also are checked against data maintained by the Israel Security Agency (commonly known as the Shin Bet) and Israel Police, the Jordanian government, and the Palestinian Authority to guard against the recruitment of any with criminal records or terrorist backgrounds or links. According to a senior Western official in the region, less than 4.4% of new recruits are turned away. The average age of new recruits is 20 to 22. Substance of Training New recruits and newly-formed battalions generally undergo basic training at PA facilities in or around Jericho, then travel to JIPTC for 19 weeks of U.S.-sponsored training. The curriculum is provided by INL with input from the USSC, the Jordanian Public Security Directorate, and PA security officials. By arranging for the new Palestinian recruits to leave the West Bank for four months of training at JIPTC, USSC officials believe that they provide a unique environment—away from the family, clan, and factional affiliations of home as well as from the indicia of Israeli occupation—that fosters cohesion, morale, and a willingness to embrace professionalism, discipline, and non-chauvinistic Palestinian patriotism over politicization. An added benefit of training in Jordan is that trainees are permitted to use firearms (which are supplied by Jordan during the training, but not taken back to the West Bank by trainees afterwards) without Israeli restriction or limitation. Nevertheless, some PA officials have reportedly stated that the benefits of training in Jordan are not necessarily worth the costs, which they claim are several times greater than they would be if training were held within the West Bank. However, moving training from JIPTC does not appear to be planned for the immediate future. Specialized courses also are offered at JIPTC and in the West Bank, usually immediately before or after basic training. Some of these courses train entire platoons in a particular set of skills, while others are meant to diffuse specialized knowledge throughout the battalion. Additionally, since October 2008, multiple two-month Senior Leaders courses have been held in Ramallah, with additional courses planned on a continuing basis. Each U.S.-funded course features training from international contractors (the commandant who leads the training is a Palestinian major general from the NSF), and trainees include 36 commanding officers (with the rank of major, lieutenant colonel, and colonel). These officers come from all PA security organizations, including the PSO and GIS, which—as mentioned above—have been criticized for alleged inattention to and/or disregard for human rights norms. All senior leaders participating in the courses undergo vetting for human rights, terrorist links and criminal records in the same manner as the PA forces undergoing training at JIPTC (see " Trainee Recruitment and Vetting " above), except that the Jordanians do not participate in this particular vetting process. Similar courses for intermediate leaders (i.e., majors and captains) are beginning in January 2010. Additionally, junior officers for each NSF battalion go through one month of training in basic leadership skills at JIPTC before the four-month general training program begins. By training key leaders across the PA security system, USSC/INL hopes that the impact of its efforts to impart important skills and a commitment to discipline, rule of law, and human rights can be maximized through the leaders' top-down transmission of these principles. Yet, upon finishing the Senior Leaders course, the individual trainees are returned to their respective organizations, each of which have ingrained institutional cultures that may in turn influence them. Many of the trainees have been assigned to positions in areas deemed crucial to the PA's law-and-order and counterterrorism efforts. U.S. Equipment and Facilities Assistance Equipment $72.6 million worth of non-lethal equipment assistance from the State Department have been apportioned for PG and NSF troops (see Table 1 above). The equipment furnished by DynCorp includes "uniforms, field gear (tents, tarps, canteens, etc), vehicles, surveillance equipment [(scopes and binoculars)], first aid/medical gear, riot control gear, computers and other standard items." The equipment is subject to specific controls to ensure that the contractor carries out procurement and delivery securely. Additionally, the equipment is subject to end-use monitoring (EUM) to make sure it is used "by the intended recipients for its intended purposes," described as follows by the State Department: The Department has signed a Letter of Agreement with the Palestinian Authority that provides the US Government the right to examine the property we provide the PA and to inspect the records that govern its use and management. We have also provided the PA with hardware, software, and training to implement and maintain an automated inventory system that they have begun to use to record and track the delivery and disbursement of US-supplied equipment. Finally, we have provided follow-up guidelines to post instructing it to conduct a comprehensive annual EUM survey that, among other things, will result in an inventory of this equipment, an assessment of its condition and status, and an explanation if any equipment cannot be accounted for. To ensure the effectiveness of EUM practices, the contractor reportedly provides on-site oversight and training at time of delivery to the PA representatives responsible for cataloguing the various equipment items, and reportedly directs two people to act as "procurement mentors" to assist with procurement, delivery system management, and cataloguing. As a rule, no equipment is provided to PA forces without prior approval by Israel. For example, flak jackets were delivered to PA forces in August 2008 following Israeli approval. They had previously been withheld due to Israeli government concerns that allowing PA forces to have protective gear might increase their willingness to attack Israelis. Delays in furnishing equipment to the PA forces have caused frustration for international security assistance providers—such as Colin Smith, the former head of EUPOL COPPS. In his October 2009 DefenseNews interview, NSF commander Diab al Ali asserted that the NSF needed more equipment and light arms in order to carry out its mission: "We need vehicles, communication gear, and most importantly, we need personal weapons for each soldier. Right now, we have one weapon for every five soldiers, and we sometimes have to fight with our hands." He said that Israel had confiscated most of the PASF's weapons during the second intifada, and that Hamas gained possession of many of their remaining weapons, presumably when it seized control over Gaza. He said further that "whatever weapons we do receive from Jordan, Egypt and other places must be approved by the Israelis, and they are not in a hurry to provide for our needs." As stated above, USSC/INL and its associated contractors do not provide the PASF with weapons of any kind. The following exchange between Al Ali and his interviewer gives voice both to those who are reluctant to arm the PASF because of concerns that the weapons might fall into the wrong hands or be turned on Israel, and to PA officials who believe that the PASF cannot neutralize factions and terrorists if personnel lack access to firearms and ammunition that are standard issue for other countries' forces: Q. Considering the ease with which Hamas overran Fatah forces in Gaza back in 2007, can you blame the Israelis for being cautious? How can you ensure that weapons and the operational know-how you are acquiring won't again fall into the hands of Hamas? A. If people want to think this way, we will have nothing. A good security force needs to be supplied with basic needs and also heavy equipment. I am not afraid that anything will fall into the hands of Hamas. The most they might do is try to penetrate into our groups, but this is not a great threat, and I think we will find them out in the end. Facilities U.S. INCLE funds ($68 million – see Table 1 above) also have been apportioned for ongoing construction of training facilities and NSF barracks in the West Bank. The Presidential Guard College, a training center in Jericho that has the capacity to train 700 troops, opened in early 2009 (built at a cost of $10.1 million through the U.N. Office for Project Services (UNOPS)). Additional facilities under construction are being built by Palestinian contractors under INL and PA supervision. The Nuweimeh training facility for the NSF in Jericho is located on a site that the PA hopes to develop into a larger PASF "academy" (including a PCP training facility) with capacity to train 2,000 personnel. NSF barracks in Jericho have been partially completed and are already in use, with additional capacity expected in 2010. NSF barracks are also being constructed for Jenin and are planned for the other PA governorates (other than Jerusalem). One factor delaying the construction of these barracks is gaining approval from Israel to build in so-called "Area B" zones (see Figure 1 above), which PA officials believe to be necessary because of a lack of proper construction space in most "Area A" zones. According to Israeli officials, discussions on this subject are ongoing between Israel and USSC/INL. Deployment of U.S.-Sponsored, JIPTC-Trained PA Forces Perhaps the best measure of U.S. training assistance offered to PA security forces is how the battalions receiving training have performed. Most notable have been efforts made by U.S.-sponsored, JIPTC-trained PA forces (National Security Forces and Presidential Guard) in cities such as Jenin and Hebron, and these forces' participation in PA operations to permit but regulate demonstrations held in the West Bank during the December 2008-January 2009 Gaza conflict between Israel and Hamas. A July 2008 International Crisis Group report stated that Nablus and Jenin, "which once stood as archetypes of security dysfunction[,] have come to exemplify progress against criminality." U.S.-sponsored, JIPTC-trained forces in the West Bank also have participated in the apprehension or killing of militants and conspirators affiliated with U.S.-designated Foreign Terrorist Organizations such as Hamas and Palestinian Islamic Jihad. Palestinian Civil Police trained through the EUPOL COPPS program have joined the U.S.-sponsored, JIPTC-trained forces in many of their operations. Jenin, Hebron, Qalqilya, and Other Key Areas The PA's campaign to establish law and order in areas under its control began most visibly in Nablus in November 2007, but the first major test case for the U.S.-sponsored PA forces was the PG 3 rd Battalion's role in the Jenin operation from May-June 2008, code named "Operation Hope and Smile." Partly by virtue of its JIPTC training, the PG 3 rd —a battalion of approximately 400 men normally headquartered in Ramallah—was designated as the specialized counterterrorism unit within the PG and as a strategic reserve for all other PA forces. Most observers agree that the Jenin operation was considerably successful in establishing law and order, and that the PG 3 rd made a significant contribution to its success as a quick reaction force and as backup during high-risk arrests. The streets have reportedly been mostly cleared of illegal weapons and cars, and armed gangs can no longer roam the streets openly. Some have reported an increase in public morale as a result of the improvements in law and order in Jenin and elsewhere. The PA hopes that these improvements can be sustained and accompanied by visible economic betterment, and that public commitment to sustaining the improved living conditions might erode the popular base of support from which Hamas and other militants derive strength. Some economic development has occurred, but questions persist about prospects for its long-term sustainability and effects on West Bank stability. Eventually, once Israeli consent was obtained, the decision was made by the PA to step up operations in Hebron—the most populous West Bank governorate, the unofficial West Bank headquarters of Hamas, and a hotbed of tensions involving Israeli settlers and Palestinian clan rivalries—following the Jenin model. A deployment of approximately 600 PA security personnel (including 250 U.S.-sponsored, JIPTC-trained NSF troops and some PCP personnel trained through the EUPOL COPPS program) to supplement the existing security presence begun in October 2008. The operation was code named "Homeland Rising." The forces' improvement of law and order in neighborhoods that had not seen public policing for years, avoidance of being drawn into a battle when Israeli settlers clashed with Palestinian residents in December, and apprehension of a number of suspected Hamas militants led many among U.S., Israeli, and Palestinian officials and media to declare the operations a major success. In an August 2009 conversation with CRS, a U.S. official cited anecdotal evidence from the Hebron operation indicating that, although most of the PASF contingent performed well, the JIPTC-trained personnel involved in the operation were even more disciplined and competent than their non-JIPTC-trained counterparts. Hamas, other Palestinian militant groups, and others skeptical of Abbas's and Fayyad's agendas protested that the PA forces had targeted and unlawfully abused Hamas members and affiliated institutions for purely political reasons and therefore could not be trusted by Palestinians at large to uphold the law impartially. They also have sought to cultivate the image of the PASF as puppets of Dayton and as collaborators with Israel. Yet, the complaints voiced by Hamas might be interpreted by some as a self-serving attempt to distract attention from the PA forces' success. Contingents of U.S.-sponsored, JIPTC-trained PASF personnel (accompanied in places by PCP personnel trained through the EUPOL COPPS program) have been stationed throughout the West Bank's major urban areas in the hopes that they can sustain and further the progress that has been made. In April 2009 in Qalqilya, PA forces uncovered and dismantled a weapons laboratory (located in the basement of a mosque) and a workshop that together contained 80 kilograms of explosives, arresting seven people in connection with its raids. According to a senior Western security official in the region, leads developed in the mosque/weapons lab raid, combined with alert police work, led to a series of confrontations between PA forces and Hamas militants in late May and early June. This resulted in the killing of Hamas's chief military commander in Qalqilya (who had eluded capture for 10 years on Israel's wanted list), his assistant, and three other Hamas militants, although at the cost of the lives of four PASF personnel and one civilian. The Washington Post referred to one of the incidents, which involved some U.S.-sponsored, JIPTC-trained troops, as "the kind of counterterrorism activity more typically carried out by Israeli forces in the occupied territory." Hamas has condemned the targeting of its militants in Qalqilya as "traitorous" and has vowed to avenge them. A sign that Hamas is actively seeking to undermine the PA in the West Bank was the June 2009 arrest by PA forces of a man in Nablus who admitted to receiving €1.5 million from Hamas's Gaza leadership in order to fund attacks on PA officials and buildings in and around Nablus. Hamas also has used PASF operations in Hebron and Qalqilya as justification for suspending or threatening to suspend Egyptian-brokered Palestinian unity talks with Fatah. Hamas might be appealing to a political constituency that does not necessarily advocate current militant activity, but that is suspicious of Israeli, U.S., and other international interactions with PA security forces. This constituency might fear that these interactions could defang what it views as Palestinians' legitimate right to turn to resistance in the event of continued occupation of the West Bank by Israeli forces and settlers. During the Gaza Conflict When the Israeli air force began its bombing of Gaza in December 2008, there were fears that Palestinian anger would boil over and lead to violence aimed at Israel from the West Bank. Hamas leader Khaled Meshaal called for a "third intifada" from his Damascus, Syria headquarters, and many braced for the worst. Just having finished their U.S.-sponsored training at JIPTC, troops from the NSF 3 rd Special Battalion were deployed throughout the West Bank during the conflict to help other PA forces (approximately 1,600 total security personnel) handle public order as Palestinians began to demonstrate in protest of the Israeli military action in Gaza. PCP personnel trained by EUPOL COPPS also had a hand in crowd control during the conflict. EUPOL COPPS has trained approximately 1,000 PCP personnel to handle such situations. Given its own problematic position vis-à-vis the demonstrators, the Israel Defense Forces (IDF) in the West Bank ceded direct responsibility for crowd control to the PA and made sure that the PA forces had unhindered access to areas of concern. Recounting the situation, Dayton said the following: The IDF also felt—after the first week or so—that the Palestinians were there and they could trust them. As a matter of fact, a good portion of the Israeli army went off to Gaza from the West Bank—think about that for a minute—and the commander was absent for eight straight days. That shows the kind of trust they were putting in these people now. The result was seen by the PA, Israel, and the USSC as a success, at the very least because the demonstrations did not escalate into general West Bank violence. The PA forces permitted people to gather and to demonstrate—for the most part peaceably—yet took measures to contain the demonstrations' intensity and factional character. In Hebron, where the tensions ran highest, at least one demonstrator was killed and others were wounded by gunfire from PA forces, but the overall security situation remained stable. Some analysts believe that Palestinians' confusion or hesitancy over whether to side with Hamas against the PA and general weariness and/or despair over relations among themselves and with Israel may have lessened the demonstrations' potential to lead to violent uprisings. Assessing the Impact of U.S. Assistance As successful as some of the PA security forces' publicized operations may have been, it may be premature to determine the impact U.S.-sponsored training (and the related EUPOL COPPS program) has had on their performance. Several intervening causes can be seen as contributing to the successes—including the distraction or exhaustion of militants, the emphasis on security by PA leaders following the loss of Gaza, the special attention given to sophisticated strategic and tactical planning, the employment of large PASF personnel levels, and the time- and area-specific lifting of restrictions on the PA forces' freedom of action by the IDF. On the other hand, one might argue that the PA and Israel would not have been willing to take the measures seen as possible intervening causes without the coordinating role played by the USSC or the hopefulness engendered by the resources and expertise provided by the United States to help organize, train, and discipline several new NSF battalions. To the extent that successes have been spearheaded by existing troops and battalions as opposed to new recruits, skeptics could argue that the PG 3 rd that assisted in the Jenin operation was a capable battalion to begin with and that the NSF 2 nd was successful in the late-2007 Nablus surge operation before its JIPTC training. Nevertheless, if operational successes such as those apparently achieved in Jenin, Hebron, and Qalqilya and during the Gaza conflict can be sustained and consistently replicated throughout the West Bank, it seems likely that the training will be viewed as successful, or at least viewed as an integral part of an improved strategic approach. Criminal Justice Sector Reform Issue Overview and Challenges PA and Western officials alike maintain that the permanent success of PA security reform depends on accompanying reform of and improvements to the PA criminal justice sector. Concerns are routinely expressed that improvements in the PASF's capacity to identify and arrest criminals has outpaced the criminal justice sector's capacity to detain, prosecute, and provide due process and humane treatment for those arrested. Consequently, there are many reports of a lack of confidence in the efficiency, transparency, fairness, and humaneness of the system, rendering the PA vulnerable to charges from Hamas and other opponents that it improperly politicizes matters of criminal law and violates prisoners' human rights. Reform of the criminal justice sector is a key component of the plan PA Prime Minister Salam Fayyad rolled out during summer 2009 to establish "de facto Palestinian statehood" in two years: We are talking about security capability, law and order, including a well-functioning judiciary. Security is not complete unless there is a widespread belief on the part of the public that there is due process.... Additionally, [we need] physical infrastructure to provide services effectively to our people in all areas—social services, health, education.... The idea behind this is to ensure that in a couple of years, it will not be difficult for people looking at us from any corner of the universe to conclude that the Palestinians have a state. Some are concerned that, without a functioning Palestinian legislature and with the prospect of future PA elections uncertain, the rule of President Abbas and Prime Minister Fayyad is becoming less legitimate and more authoritarian. This could undermine efforts at gaining the confidence of the public in matters of security and criminal justice sector reform, and also potentially lead to problems within the PA in the event of future security policy disagreements among executive branch actors and/or PASF commanders without functioning legislative (or judicial) mechanisms to set legal parameters for the PASF's developing mandate. Partly in response to a particularly troubling incident of alleged prisoner abuse in Hebron in June 2009 (reportedly by officials from a PA intelligence organization that does not receive U.S.-sponsored JIPTC training) that resulted in the death of a man with suspected ties to Hamas, the PA has publicly insisted that it is taking steps to prevent future incidents. In August 2009, Interior Minister Said Abu Ali issued a directive pertaining to treatment of prisoners "forbidding 'physical or psychological punishment,' ordering medical care for those who need it and holding commanders responsible." Reportedly, three PA intelligence officials directly responsible for the June 2009 incident are going through a process analogous to court martial, several others have been suspended, and permanent personnel changes are planned for the Hebron area command. The "Jenin Pilot Program" and Other U.S. and International Efforts The European Union—particularly EUPOL COPPS—has assumed a major role in overseeing international assistance to the PA in matters of criminal justice reform. The EUPOL COPPS mission was expanded to include a rule of law section in October 2007. EUPOL COPPS, the INL Bureau of the State Department, the European Commission, individual European states, Canada, and Japan have put forward donor assistance plans to improve professionalism and accountability and to more properly outfit PA law enforcement, judicial, and prison personnel and refurbish/construct associated facilities. According to the State Department, "most Palestinian prisons were destroyed in Israeli military operations during the second intifada and have not been rebuilt." Largely due to concerns that the PA was unable to adequately process criminals arrested in association with heightened PASF operations in Jenin, then-U.S. National Security Advisor Stephen Hadley reportedly requested in late 2008 that the United States initiate a program to address the issue. The concept was that such a program could buttress progress on security and economic development. In response, the State Department's INL Bureau has used $2 million in FY2009 INCLE funding for a "Jenin pilot program" contracted out to the U.S.-based company DPK Consulting and aimed at training prosecutors, improving technical capacities (such as electronic case file management), and facilitating coordination between police and various law enforcement and judicial organs. The project manager secured the participation of a Jordanian appeals court judge, who has "extensive experience in the training of Palestinian prosecutors, police, and judges," to better accommodate the particularities of the situation in Jenin. The judge's participation has involved one-on-one mentoring with each of the nine Jenin public prosecutors, customized feedback and instruction to the prosecutors and local police, and suggestions for improving office administration. The Jenin pilot program is scheduled to last until spring 2010, but its influence on the larger criminal justice reform picture remains unclear. A small amount of FY2010 INCLE funding might be available for similar projects, and other international donors might choose to use some aspects of the program as a model for their efforts. However, some have expressed concern that the structuring of INL's initial efforts with criminal justice reform as a one-off program in a single locality could undermine coordination and harmonization of international programs that are intended to be implemented West Bank-wide. One of the more significant international initiatives is a Canadian pledge of—reportedly—$250 million over five years toward (1) training and support for PA legal prosecutors and (2) construction of three new court houses and of forensic/forensic medicine laboratories. A senior Western official has told CRS that U.S. officials believe their relations with Canada on PA criminal justice reform are "strong and improving," and remain good with the Europeans. Although USSC/INL and other relevant donors coordinate activities and share information and best practices, some analysts have raised concerns that PA criminal justice reform has proceeded too slowly. In June 2009 correspondence with CRS, a senior international security official based in the region said: As a result of increasing donor pressure (incl[uding from] General Dayton), the PA leadership (Fayyad and Pres Abbas) have recently shown increasing interest in solving the main problems in the justice sector and in committing to drafting a comprehensive justice sector strategy to address the current obstacles to reform (and development) of the system. With Palestinian State-building firmly back on the political agenda and from statements by Fayyad and the MoI it is clear that the justice sector has surfaced as a genuine concern and it is expected to stay a priority. I definitely expect more progress soon with a strengthened EUPOL COPPS mission and many [donor programmes] to get started. Future Prospects One possibility for the future might be for INL to involve itself more in the criminal justice sector. That said, it is uncertain whether greater U.S. resources and/or involvement could improve or expedite the reform process, given the difficulties inherent in changing entrenched realities in and reversing public distrust of the PA's criminal justice system. In June 2009, A European official based in the region told CRS: [Challenges to criminal justice reform] won't necessarily be solved by more money. I see structural problems in the PA's system that PM Fayyad is well aware of and in dialogue with the EU on how to solve. The US adding their weight to this dialogue may increase its impact. This is an area where core systemic problems on the Palestinian side have to be solved in order for any additional money to have positive effect. If there is progress then we may need to scale up funding, but there are actually already a lot of donors in this sector so the US should be cautious not to duplicate existing work but bolster what's already happening through careful coordination. For example, even with greater application of resources and political will by U.S. and/or international donors/trainers, Western officials say that key actors within the PA judicial sector—including the PA attorney general (currently Ahmed al Mugani), minister of justice (currently Ali Khashan), and Supreme Court chief justice/Supreme Judicial Council chair—have had problems coordinating their actions. The appointment of a new Supreme Court chief justice/Supreme Judicial Council chair, Farid Jallad (formerly Abbas's presidential legal advisor and PA minister of justice), in late 2009 has raised the hopes of U.S. and international officials that, through leverage and/or better relations with his counterparts in the PA judicial sector leadership, Jallad can help make the sector more amenable to reform. U.S. officials claim that the Jenin pilot program has been a notable exception to these coordination problems. The USSC's core areas of expertise—supervising the training of security forces, providing strategic planning and advice, and facilitating Israeli-PA coordination—may not translate into a similar level of expertise in the PA criminal justice sector. A senior international security official based in the region told CRS that the USSC "is only slowly starting to understand the sector." Yet, a facilitative USSC role may be beneficial on matters that necessitate Israeli-PA coordination, such as addressing the need for greater freedom of movement for PA law enforcement, judicial, and prison personnel and for transit of prisoners. The Road Ahead: Challenges, Obstacles, and Limitations Will Israel Allow Greater Coordination and Freedom of Action? The PA has been encouraged by the improvement in public safety and morale as a result of its forces' operations in places such as Jenin and Hebron, and Israeli experts and officials have spoken in praise of the PA forces' performance. Israeli Defense Minister Ehud Barak's chief of staff, Brig. Gen. Michael Herzog, said in May 2009 that Dayton is "doing a great job.... We're very happy with what he's doing. I think for the first time, those three battalions that have already finished their training and deployed in the West Bank are doing a good job.... And for the first time, I see some sense of professional pride there that we've never seen in these forces." Yet, actual Israeli confidence in the forces' capabilities may be better measured by the level of willingness to grant them increased freedom and exclusivity of operation, including within so-called "Areas B and C," over which the Israelis retain security authority under the Oslo agreements (see Figure 1 above). In public statements, Dayton has alluded to at least one context in which Israeli authorities have permitted U.S.-sponsored forces to operate in Area B. Nevertheless, IDF Chief of Staff Lt. Gen. Gabi Ashkenazi said in May 2009 that the PASF's "fight against terror" is improving, but that it was still too early to give them full security responsibility. A December 2009 incident, in which IDF operatives killed three alleged Al Aqsa Martyrs' Brigades affiliates in Nablus following the fatal shooting of an Israeli settler (an apparent terrorist attack) without consulting the PASF, has highlighted Israel's insistence on acting alone when it sees fit, which frustrates PA officials. In a January 2010 interview, PA President Abbas said, "Frankly speaking, we are not guards; we are not Israel's security guards. We are partners. If they want us to cooperate, then we stand ready to do that within the limits of our national interests." Israel's flexibility will likely determine whether the U.S.-sponsored, JIPTC-trained forces (and their EUPOL COPPS-trained counterparts) will be allowed sufficient opportunity to prove their capabilities. In early/mid-2009, Israel announced that it was lifting curfews on PASF activity in four West Bank cities—Jenin, Ramallah, Jericho, and Qalqilya—to allow 24-hour operations. However, by giving the PASF this prerogative in "Area A" locations over which the PASF already were supposed to have primary security responsibility under the Oslo Accords, Israel was not discontinuing its own operations in these cities. The PASF, accustomed to the previous pattern, were not logistically ready to work around the clock in these cities and are still readying themselves to assume this responsibility. Reportedly, however, PASF personnel in Bethlehem are operating on or close to a 24-hour basis, having been given the go-ahead by Israel after its announcement with respect to the other four cities. In June 2009, manned Israeli roadblocks to general Palestinian movement in the West Bank were scaled down—particularly in the northern West Bank and in Jericho—in response to the improved security situation and to international pressure. Some observers might counter that the improvements made, although significant in a relative sense, are too incremental and conditional to instill confidence among Palestinians and key third parties (such as would-be investors) that might lead to sustainable economic, political, and civil society development and institution-building that the United States and the international community see as important precursors to Palestinian statehood. Some have said that, relatively speaking, the level of Israeli-PA security coordination is encouraging, given the depth of distrust that resulted from the collapse of coordination during the second intifada. Some might contend that the PA simply needs to give its forces and the USSC more time to help the Israelis overcome any residual doubts. Others believe that coordination has been set back since Prime Minister Binyamin Netanyahu's government came to power, claiming that the IDF is less willing to allow PASF personnel to operate in proximity to its troops in urban areas than it was under former prime minister Ehud Olmert. Some might conclude that waiting for an increased Israeli comfort level is unacceptable because of political reasons or because of the possibility that another crisis might scuttle existing prospects in the meantime. A reason for skepticism is the so-called "chicken-egg" security dilemma—that Israel might not leave the West Bank to the PASF until they have the capacity and willingness to suppress attacks on Israel, but that the PA forces cannot develop the necessary capacity and willingness while Israeli occupation forces stir Palestinian resentment and undermine the PA forces' ability to take independent action. The IDF routinely restricts the scope of PASF operations—through curfews (as mentioned above), checkpoints, and limitations on international arms and equipment transfers—and by refusing to make arrests requested by the PA in areas under Israeli control. Moreover, the effectiveness of the IDF in apprehending terror suspects reinforces a common Israeli belief that handing over control of anti-terror operations to the PA is not worth the risk of having such operations fail. Many PASF personnel feel, however, that IDF operations undermine Palestinians' willingness to perceive PA forces as their legitimate, independent protectors and as foundational building blocks for a future state. In such a context, can any amount of training, strategic advice, and coordination instill public confidence in the PA forces' efforts against militant networks? Counterterrorism and Consolidation: Comprehensiveness of USSC Role Before Israelis will agree to IDF withdrawal (partial or full) from the West Bank, a final peace agreement, and the creation of a Palestinian state, they may need to be convinced that the PA forces are capable of suppressing and dismantling terrorist infrastructures designed to stage attacks against Israel—not least, against Jewish settlements in the West Bank (which necessitate much of the IDF presence there). It is uncertain whether PA forces, particularly JIPTC-trained NSF and PG forces, currently have this capability or are likely to acquire it soon. Training at JIPTC focuses more on establishing law and order than on counterterrorism techniques. It may be too early to tell whether recent PASF operations against Hamas militants (such as in Hebron and Qalqilya) are indications of general progress on the counterterrorism front—in terms of (1) the PA's competence, (2) the Israelis' willingness to step aside, and (3) the impact on militant groups' hierarchies, weapons caches, and supply chains. Some might say that if success in building the PA's counterterrorism capacity within a consolidated security structure subject to civilian control is the key to enabling progress in political negotiations with Israel, then the United States might consider giving the USSC—the mission that is publicly tasked with helping effect PA security reforms—broader authority over U.S. efforts with PASF organizations across the board. Neither the Preventive Security Organization, which reportedly received U.S. training in counterterrorism during the Arafat era and may still receive such training (as discussed above—see " Oslo-Era Security Assistance " and " Backslides and Delays in Reform: 2000-2007 "), nor the General Intelligence Service currently falls under the USSC's train-and-equip mandate (with the exception of a few senior leaders from both organizations—see " Substance of Training " above). By limiting the USSC's involvement with these PA intelligence organizations, the risk exists that allowing exceptions to the security reform mission could eventually—through these organizations' lack of accountability—undo and reverse whatever successes might be achieved. According to Yezid Sayigh, a longtime analyst of Palestinian security forces, the Palestinian public increasingly blames [Dayton] and the National Security Forces he is rebuilding for the human rights abuses and growing atmosphere of political intimidation generated by the intelligence agencies. Yet relations with the intelligence agencies are handled exclusively by the CIA and he is not privy to them. This only underlines the continuing lack of harmonization in the U.S. approach, and explains the conviction among Dayton's Palestinian counterparts that it is the U.S. Consulate and the CIA, not he, who lead on U.S. policy and keep the money flowing. One objection to involving the USSC directly with the PA intelligence organizations is that the U.S. could bring upon itself the appearance of impropriety by drawing closer in its ties to groups with questionable human rights records. On the other hand, one might counter, if the goal of PA security reform and consolidation is as important as its proponents say it is, then avoiding perceptions of impropriety might be less of a priority than working to help the PSO and/or the GIS rectify concerns they face on accountability and human rights issues, particularly given that U.S. ties to these organizations may already exist. Historical Analogies and the Question of Political Progress It is virtually impossible to avoid drawing analogies between current U.S. security assistance efforts and efforts made during the Arafat era. Those who believe that matters are fundamentally different this time point to the fact that the PA is recruiting new, thoroughly vetted troops for its U.S.-sponsored NSF battalions, as opposed to recycled militiamen with checkered pasts. They also point to the fact that a U.S. three-star general (Dayton) has been personally based in the region for four years, lending his efforts and prestige to the mission, and that the four-month training program at JIPTC provides advantages to PA security personnel that Arafat-era personnel never had (see " Substance of Training " above). Yet, some observers question whether the improvements are sufficiently decisive. It is possible that undisciplined elements in the PA security forces, provocations from Israel, and/or demoralizing economic or political developments could contribute to one or more incidents that fan the flames of conflict, even though the forces' discipline has held thus far. There are those who are skeptical that the differences cited above are sufficient to ensure a better outcome. They point to similarities between the two time periods, as well as to other differences that might actually make the U.S.'s job more difficult than it was during the Arafat era. Even though there are fewer extant PA security organizations, complete consolidation under civilian control remains more of an aspiration than a fact, and the "competing fiefdoms" mentality continues. Much of the international assistance provided still bypasses the Ministry of Interior (although that is not the case with the USSC/INL program or EUPOL COPPS, which coordinate with the MoI) and is routed directly to the separate security organizations —likely including the less transparent intelligence organizations. Can the United States and other Western donors help the PA counter the institutional inertia that they appear to have helped create? Skeptics also might note that the positive characterizations of PA security efforts by Israeli officials in recent months bear resemblance to similar statements of praise made during the Arafat era in the two years following the 1998 Wye River Memorandum. In both cases, U.S. efforts at brokering Israeli-Palestinian security cooperation have been tied to hopes that the United States could facilitate progress between Israel and the PLO on final-status peace negotiations at the same time. These hopes were frustrated in the Arafat era when the two sides failed to reach an agreement at Camp David in July 2000, and the collapse in security cooperation began soon after with the outbreak of the second intifada in September 2000. Might comparable damage be done to Israeli-PA security cooperation in the event significant political progress toward a two-state solution cannot be achieved under the auspices of the Obama Administration? If that might be the case, what is the risk that members of the PA forces might use their training and equipment against Israel—either with or without provocation—despite the steps being taken to avoid such an eventuality? Might motivating young PA security recruits through talk of a state raise the risk of negative unintended consequences by inflating expectations more than they are merited by socioeconomic and political developments? The prospects of reaching a successful political resolution might even be more difficult in the current situation because of Hamas's control over Gaza and the questions of legitimacy and political motivation that hang over Abbas, Fayyad, and the PASF's operations. Arafat faced no comparable factional challenge to his leadership of the Palestinian people. Between the collapse of Arafat-era security efforts and now, lessons from intervening U.S. military operations and training missions in Iraq and Afghanistan have led several military officers and political actors—from the Iraq Study Group and commanding generals such as David Petraeus to several Members of Congress and members of the Bush and Obama administrations—to conclude that tactical successes in the security sphere can only be made permanent if reinforced by economic and political progress that draws support away from violent extremist groups such as Al Qaeda and the Taliban. Might the same logic apply to this situation—linking the ultimate success of PA security reform to progress on economic development and on outstanding disputes with Israel, in hopes of drawing support away from Hamas and other militant groups? In a May 2009 interview with New York Jewish Week , Dayton himself acknowledged, "Security by itself won't result in a Palestinian state," noting political and economic dimensions to the issue. "But security is an important first step." Additionally, in March 2009, the National Journal quoted a "senior U.S. officer knowledgeable about the West Bank operations" as follows: What we've learned in counterinsurgency operations in Iraq and Afghanistan is that you have to follow up that security piece with economic development that promotes jobs, and restores personal pride, dignity, and hope to local citizens so that they turn away from radicalism and violence. The Israelis just don't think in those terms, which is one reason they haven't stopped settlement activities. Until they do that, Israel will continue to undermine the credibility of the more professional Palestinian security forces we're trying to create, by making it seem that they are only doing the bidding of Israel and the settlers. Another factor to consider is that the Palestinian rocket threat that has materialized since the second intifada may have made satisfying Israeli expectations on security more difficult than it would have been during the Arafat era. A December 2008 report by three U.S. defense policy experts that was published by the Washington Institute for Near East Policy said that Israel might be reluctant to withdraw from the West Bank unless it can reasonably guarantee that rocket attacks will not threaten Israel from there as they do from Gaza. Options for Congress The 111 th Congress, through its capacities to provide oversight and to authorize and appropriate funds, has the opportunity to monitor the statements and activities of the Obama Administration (including U.S. Special Envoy for Middle East Peace George Mitchell) closely and to fulfill its constitutionally distinct but co-equal role on this subject. Yet, Congress might also consider to what extent it is advisable to involve itself in the details of security assistance efforts, and to what extent it is advisable to accord deference to those who are tasked with the efforts on a day-to-day basis. There also could be calls for Congress to take into account how U.S. security assistance might lead to progress on (1) the Israeli-Palestinian political track (including Israel's willingness to halt settlement building in the West Bank and East Jerusalem and to contemplate redeployment from the West Bank in connection with final-status negotiations), (2) Palestinian civil society, governance, and economic development, and (3) efforts to end geographical and factional divisions between Palestinians in the West Bank and in Gaza. Concerns Going Forward One concern is whether U.S. involvement in Palestinian affairs is enhancing the legitimacy of Abbas and the PA or detracting from it by allowing Hamas and others to gain political traction with their long-time argument that the PA is too beholden to the United States. Another is whether U.S. involvement in strengthening and reforming PA security forces is feeding a perception that the PA forces are more "Israel's cops" than focused on state-building from a Palestinian perspective. Opponents of an emphasis on PA security reform and on measures promoting incremental progress in civil society, governance, and economic development at the expense of a more expeditious political resolution with Israel might argue that efforts to bolster Palestinian moderates in the 16-plus years since Oslo have appeared to make Hamas stronger, not weaker. (Yet, Hamas is also politically vulnerable to charges that it is the proxy of an external power—in its case, Iran.) In the final calculus, some believe that these possible political liabilities, when considered together with doubts that U.S. assistance can enable the PA to overcome the challenges and obstacles it faces on security matters—including the difficulties posed by Israeli occupation—militate against continued assistance. Others might argue against continued assistance out of concerns that it could contribute to future intra-Palestinian or Israeli-Palestinian violence. At minimum, periodic reevaluations might be advisable with regard to the cost-efficiency and effectiveness of (1) venues for and types of training, (2) methods and types used in furnishing equipment and constructing facilities, and (3) provision of strategic and tactical assistance. Yet another concern is the possibility that U.S. security assistance efforts might be publicized by either or both the Israelis and/or the Palestinians to fit a political narrative that may not be in U.S. interests of promoting a lasting, peaceable two-state solution. Examples could include Israeli support for PA security reform efforts as part of a movement toward an "economic peace" that downgrades the importance of final-status negotiations or eventual Palestinian sovereignty, or PA/PLO claims that a supposed lack of Israeli reciprocity in response to PA security efforts is a sign of Israeli bad faith. An additional concern is the economic and logistical sustainability of the PASF infrastructure. Given the PA's current dependence on the international donor community (on which it relies to defray its annual budget deficit of over $1 billion), some have queried whether the international community should be actively assisting the PA to (1) assume salary obligations for new PASF personnel and pay substantial pensions for retirees, (2) build new facilities with considerable fixed costs and maintenance obligations, and/or (3) acquire additional vehicles and equipment from widely different sources that call for different types of specialized maintenance. Some believe that this may prolong the PA's dependence on external assistance, and that the onus is on the United States (and other donors) to identify and cut unsustainable or unnecessary assistance because, although the recipient (in this case, the PA) may recognize that the assistance is suboptimal in one or more respects, the temptation to take what is offered might be too strong to refuse. Expanding U.S. Mandate and/or Capabilities Some recommend both improving the quality and increasing the quantity of USSC staff members. The Washington Institute for Near East Policy, in a lengthy report on U.S. security assistance to the PA, stated: The USSC should be staffed to capacity immediately and augmented beyond its current unsatisfactory level now that it has developed a concrete mission and demonstrated success. Assigned personnel should have Arabic-language skills and military experience and qualifications appropriate to the assignments they will be performing. What sufficient "capacity" might be for the USSC to proceed in its duties more robustly and expeditiously is open to debate. A senior Western official in the region has suggested that an ideal number of full-time staff (not including State Department contractors) might be between 50 and 80 (up from the current number of approximately 45). Others might seek to advance the U.S. interest in strengthening Palestinian moderates while at the same time keeping the U.S. "footprint" more modest. A European official in the region has suggested that "Any expansion of the USSC should tally with PA needs and complement other donor commitments. Once this is gauged the mission will have a better picture of what it could do beyond what it is already doing. It would then follow to look at what resources are needed." As discussed at various points above (see " Counterterrorism and Consolidation: Comprehensiveness of USSC Role " and " Criminal Justice Sector Reform "), some maintain that the U.S. mandate in security assistance matters should be expanded to give the USSC more comprehensive reach over all PA security organizations (including intelligence organizations), along with authority to help train and outfit these organizations more directly for counterterrorism operations, and perhaps also to give the State Department's INL Bureau an enhanced role in criminal justice sector reform. Expanding the USSC/INL mandate could involve increases both in personnel and in funding. On the other hand, giving USSC/INL too many tasks could hinder rather than help the security assistance effort by, among other things, spreading the USSC's resources too thin and distracting its attention from its core objectives of helping train and outfit the National Security Forces, helping the Ministry of Interior with strategic planning, and facilitating Israeli-Palestinian security coordination. One option may be to encourage USSC/INL to increase its emphasis on (and possibly to apportion greater resources toward) strategic planning and consultation aimed at further consolidating accountable, defactionalized civilian control within the MoI (see " How U.S. Efforts Are Coordinated " above). Thus far, $13.5 million out of the initial $295 million appropriated through the INCLE account has been apportioned to these efforts (see Table 1 above). Alternatively or concurrently, measures might be taken aiming to ensure that no other assistance programs to the PA security forces—U.S. or foreign—are obstructing the ability of USSC/INL (and partner programs such as EUPOL COPPS) to carry out its current mandate. Some have protested the strict limitations on travel by American staff members of the USSC to and within the West Bank. They assert that the USSC's effectiveness is likely to increase if its U.S. contingent is given greater freedom to travel to PA deployment areas, bases, and political offices and to regularly monitor the level of Israeli-PA coordination and PA freedom and exclusivity of operation. Others might say that this change might invite more risk than is advisable in light of the progress the mission has achieved under current operating standards. Some have called for executive action to exclude USSC staff from West Bank travel limitations, and have even proposed legislative action to transfer authority over the USSC mission from the State Department to the Defense Department in order to get rid of the limitations on both travel and on other matters relating to assistance. Yet, formally militarizing the mission could upset the current balance, under which the U.S. security assistance mission operates within a larger diplomatic context. Moreover, with the Defense Department's attention still very much focused on its military operations in Iraq and Afghanistan, it might not be eager to assume full responsibility for this mission as well. U.S. interagency consultation and coordination does take place, and it is possible that, as it continues, this process can draw upon the interagency experiences and best practices of other international donors. Contingency Plans Another way for Members and committees of Congress to carry out their responsibilities with respect to U.S. security assistance to the PA might be to insist on sound contingency planning, given the possibility that unforeseen events in the region could have a major impact in the future. Congress might choose to confer closely with the Obama Administration (including the President himself, the National Security Council, the Defense Department, the State Department, Special Envoy Mitchell, and USSC/INL) on this subject. One way to do so would be to challenge the Administration to disclose whether it has options, and what those options are, in the event that one or more of the following short-, mid-, or long-range contingencies come to pass (listed in no particular order): The conclusion of a final-status Israeli-Palestinian peace agreement and/or the establishment of a Palestinian state The formation of a PA consensus or unity government that includes Hamas (either with or without the approval of the so-called "Quartet conditions" by all members of the government) A full or partial return of PA authority to the Gaza Strip (such as with regard to the border crossings) A Hamas victory in legislative and/or presidential elections The clear establishment of authoritarian rule in the West Bank and further segregation of the West Bank and Gaza from each other The clear pursuit by any key party of an alternative to a negotiated two-state solution An outbreak of factional Palestinian conflict within the West Bank and/or the Gaza Strip An outbreak of Israeli-Palestinian conflict An outbreak of war in the wider region Depending on the contingency, response options might include cessation, reduction, or suspension of all U.S. assistance or various types of assistance, expansion of various types and levels of assistance, possible continuation of security assistance exclusively through either the PA president or the PA government (if one or the other is an unacceptable partner due to terrorist associations and/or its failure to meet the Quartet conditions), possible plans for coexistence/integration of PA forces and Hamas forces (assuming Hamas has met the Quartet conditions), and/or possible contribution to and/or coordination with a potential Arab and/or international peacekeeping/monitoring force. The Israeli daily Ha'aretz reported that Secretary of State Hillary Rodham Clinton warned PA President Abbas during their March 2009 meeting in Ramallah that U.S. pledges of assistance for the PA would likely be withdrawn if a PA consensus or unity government including Hamas did not meet the Quartet conditions. According to the article, the USSC/INL program "would be the first to be axed." Congressional insistence on sound contingency planning could be communicated to the Obama Administration through public hearings or conferences, private consultations, information-gathering visits to key actors in the region, or some combination of these means. It might be well for Congress to weigh the pros and cons of publicity carefully, given that many of these contingencies touch upon politically and diplomatically sensitive issues. Benchmarks and/or Periodic Reports/Accountings A further option for Congress is to regularly and continually evaluate the progress of security assistance efforts and to tailor parameters for appropriations based on these periodic evaluations. Having benchmarks and reporting on progress under them are conditions precedent to obligating security assistance to the PA under current appropriations legislation. Possible parameters for benchmarks could include terrorist attack frequency; specific levels of criminality; and progress in dismantling terror networks, in consolidating accountable civilian control over all PA security organizations, and/or in coordination with Israel. Parameters could be tied to performance benchmarks for the PA and its security forces (with or without specific timetables) that could be verified through executive branch certification, direct congressional observation, or a third party specifically dedicated to the purpose. Whether proposed benchmarks are more quantitative/objective or qualitative/subjective in nature, they might not be particularly useful in charting progress if they are unable to isolate the impact of U.S. assistance on PA security reform discretely from possible intervening variables. Another question to consider is whether and how benchmarks might be considered in the larger Israeli-Palestinian context. For example, might there be a way to have benchmarks that vary depending on the extent to which Israel might loosen restrictions on PA freedom and exclusivity of action in key areas and remove obstacles to movement (i.e., checkpoints)? Perhaps more qualitative evaluations of PA security progress could take into account reciprocal moves taken by Israel toward its Roadmap obligations (specifically, ceasing settlement activity) or on other measures of progress on the political track (such as progress on negotiations). Yet, benchmarks have their limitations in a complex environment where multiple and unforeseen variables might impact outcomes. An alternative to setting benchmarks, while still allowing for a measure of heightened accountability, might be to require periodic reports and/or accountings of U.S. assistance and PA security activities from the executive branch similar to those that have been required in the past. These reports and accountings likely would require detailed information on a variety of subjects, but, by leaving out specific benchmarks, could allow each Member of Congress greater flexibility in drawing his/her own conclusions regarding the success of U.S. security assistance and in determining whether and how to continue it. Additionally or alternatively, an option for Congress is for it to require periodic audits of U.S. security assistance to the PA by the Comptroller General/Government Accountability Office (GAO), much as it periodically requires GAO to audit the USAID West Bank and Gaza program and U.S. contributions to the U.N. Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). An initial report from GAO on U.S. security assistance to the PA is expected to be published sometime in spring 2010.

Since shortly after the establishment of limited Palestinian self-rule in the West Bank and Gaza Strip in the mid-1990s, the United States has periodically provided assistance to the Palestinian Authority (PA) for civil security and counterterrorism purposes. Following the death of Yasser Arafat in late 2004 and the election of Mahmoud Abbas as his successor as PA President in early 2005, then-U.S. Secretary of State Condoleezza Rice created the office of U.S. Security Coordinator (USSC) for Israel and the Palestinian Authority to help reform, train, and equip PA security forces which had been personally beholden to Arafat and his political allies. Previous Israeli-Palestinian efforts at security cooperation collapsed during the second Palestinian intifada that took place earlier this decade. Since Hamas gained control of the Gaza Strip in June 2007, Lieutenant General Keith Dayton, head of the USSC since November 2005, and the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) have helped with the "gendarmerie-style" training of West Bank-based PA security personnel. As of June 2009, approximately 400 Presidential Guardsmen and 2,200 National Security Forces troops have been trained at the Jordan International Police Training Center (JIPTC) near Amman. All troops, new or already serving, are vetted for terrorist links, human rights violations, and/or criminal records by the State Department, Israel, Jordan, and the PA before they are admitted to U.S.-sponsored training courses at JIPTC. Approximately $395 million in U.S. funds have been reprogrammed or appropriated through the International Narcotics Control and Law Enforcement (INCLE) account for training, non-lethal equipment, facilities, and strategic planning assistance for the PA forces, and for PA criminal justice sector reform projects, including $100 million for FY2010 pursuant to the Consolidated Appropriations Act, 2010 (P.L. 111-117). The performance of the U.S.-sponsored forces in law-and-order operations—including crowd control assignments during the December 2008-January 2009 Gaza conflict between Israel and Hamas—and in some operations aimed at countering militant and/or terror organizations has appeared to produce some positive results. Yet questions regarding the USSC/INL mission persist. How might short-term operational success translate into (1) a general pattern of sustained success in countering and dismantling militant and terrorist networks in the West Bank and (2) permanent consolidation of competent, defactionalized civilian control over the PA forces and the broader criminal justice sector? Can this occur in a complex political environment featuring the continuing presence of Israeli occupying forces and settlers, as well as other overt and/or possible covert PA security assistance from, among others, Arab states, Russia, the United States, and Europe? If it can, what are the long-term implications vis-à-vis Hamas-controlled Gaza? There could be calls for Congress to take into account how U.S. security assistance might lead to progress on (1) the Israeli-Palestinian political track, (2) Palestinian civil society, governance, and economic development, and (3) efforts to end geographical and factional divisions between Palestinians in the West Bank and in Gaza. Some argue that the USSC's staff should be increased and that movement restrictions on U.S. members of the USSC staff should be lifted. Some maintain that the U.S. mandate in security assistance matters should be expanded to give the USSC across-the-board authority to train and outfit PA security organizations, including for counterterrorism operations, and perhaps also to give INL an enhanced role in criminal justice sector reform. Others support a more modest U.S. "footprint" in the region, or question the advisability of U.S. security assistance altogether—preferring either to have the PA depend on itself or third parties for assistance or to transfer primary security responsibility in the West Bank to an international peacekeeping force.

Introduction A Brief History of U.S. Aid to North Korea For four decades after the end of the Korean War in 1953, U.S. strategy toward the Democratic People's Republic of Korea (DPRK, commonly referred to as North Korea) was relatively simple: deter an attack on South Korea. This included a freeze on virtually all forms of economic contact between the United States and North Korea in an attempt to weaken and delegitimize the North Korean government. In the 1990s, two developments led the United States to rethink its relationship with the DPRK: North Korea's progress in its nuclear weapons and missile programs and the onset of massive, chronic food shortages there. In response, the United States in 1995 began providing the DPRK with foreign assistance, which to date has totaled over $1.2 billion. This aid has consisted of energy assistance, food aid, and a small amount of medical supplies. (See Table 1 .) The United States has provided virtually no assistance since early 2009, though episodically there have been discussions about resuming large-scale food aid. Additionally, the Obama Administration, like the George W. Bush Administration, has said that it would be willing to provide "significant" energy and economic assistance to North Korea if Pyongyang takes steps to irreversibly dismantle its nuclear program. However, due to the deterioration in U.S.-North Korea relations, at the time of this writing there is little likelihood the Obama Administration will provide assistance to North Korea in the near future. Energy and Denuclearization Assistance In 1994, the United States and North Korea negotiated an Agreed Framework, under which Pyongyang agreed to shut down its nuclear program in exchange for two light water nuclear reactors (LWRs) and heavy fuel oil (HFO). Between 1995 and 2003, the United States provided over $400 million in HFO, which was channeled through the Korean Peninsula Energy Development Organization (KEDO), the organization established to implement the Agreed Framework. The George W. Bush Administration halted energy assistance in the fall of 2002, following North Korea's reported admission that it had secretly been developing a uranium-based nuclear program. The Bush Administration resumed energy assistance to North Korea in 2007. In July of that year, progress was made in multilateral negotiations, called the Six-Party Talks, over North Korea's nuclear programs. As a result, the United States and other countries once again began providing HFO in return for Pyongyang freezing and disabling its plutonium-based nuclear facilities in Yongbyon. By December 2008, the United States had shipped its promised 200,000 tons of HFO. From July 2007 to April 2009, the United States provided technical assistance to North Korea to help in the nuclear disablement process. North Korea's May 2009 nuclear test—its second—effectively halted discussion of U.S. energy assistance to North Korea. North Korea again tested a nuclear device in February 2013. Food and Other Humanitarian Aid Since the 1980s, North Korea has experienced massive food shortages of varying degrees of severity. For a decade after DPRK authorities' 1995 appeal for outside help, the United States was one of the largest providers of food assistance. The request was unprecedented; by choice, North Korea was and still remains one of the world's most reclusive countries. U.S. and United Nations aid officials have continuously wrestled with DPRK authorities over how much freedom foreign workers should be allowed to distribute and monitor food assistance. The regime's restrictions have ebbed and flowed, usually in accordance with the government's desperation for outside food. Twice since 1995 Pyongyang has significantly tightened restrictions. In both periods—FY2006-FY2007 and from the beginning of FY2010 until the time this report was being written—the United States responded by providing virtually no food aid. In February 2012, the Obama Administration agreed to resume large-scale food assistance in return for North Korean promises to take certain steps on its nuclear and long-range missile programs. As described in the text box below, however, the agreement unraveled less than a month after it was reached. In March 2014, Assistant Secretary of State for East Asia and Pacific Affairs Danny Russel testified before the Senate Foreign Relations Committee that the Obama Administration and the South Korean government of Park Geun-hye believe that "humanitarian actions can be pursued" with North Korea. Russel, however, gave no indication that the United States is considering food or other humanitarian assistance. As discussed in the U.S. Food Assistance section below, Members of Congress have a number of tools they could use to influence the implementation of future aid programs with North Korea. According to the WFP and the U.N.'s Food and Agriculture Organization, in 2013, an improved harvest appeared to reduce North Korea's chronic grain shortfall to some of the lowest levels since the 1990s. Despite the improved harvest, and signs that North Korea's economy is improving, especially in Pyongyang, the WFP has reported that malnutrition rates remain high, particularly among young children. The WFP and FAO reports, if they reflect the actual situation in North Korea, indicate that the malnutrition problem is likely due less to food shortages and more to inequities in the distribution system and governmental priorities. On the latter point, Economist Marcus Noland, a North Korean expert with the Peterson Institute of International Economics, estimates that the roughly 40,000 MT gap in grain supply and demand could be filled by less than $20 million in imported food. South Korean Food and Other Humanitarian Aid One development Members of Congress may want to monitor is the food aid policy adopted by the government of South Korean President Park Geun-hye. Park has called for creating a "new era" on the Korean Peninsula by adopting confidence-building measures with Pyongyang, including the delinking of humanitarian assistance from other diplomatic developments. In 2013, Seoul donated around $6 million (around $12 million in total) to both the United Nations Children's Fund (UNICEF) and the World Health Organization (WHO), to help fund their programs that provide North Korean children, breast-feeding women, and senior citizens with vaccines, medicine, and food. The Park government has also adopted greater leniency in allowing South Korean non-governmental organizations (NGOs) to provide aid to North Korea; in 2013 and the first two months of 2014, over a dozen groups were allowed to provide around 9 billion won (more than $8 million) in assistance to North Korea. In a variety of settings, President Obama and other senior Administration officials have indicated their support for Park's general approach toward North Korea, which she has called "trustpolitik," including its humanitarian aid policy. The fact that as of March 2014, such South Korean government aid has been relatively small-scale and has not been provided directly to North Korea may be a factor in U.S. support for South Korea's policy. Park also has held out the prospect of South Korean investments in North Korean infrastructure projects, to help lay the groundwork for an eventual reunification of the two Koreas. She appears to have linked such large-scale to a North Korean decision to "choose the path of denuclearization." Medical Assistance From time to time, the United States also has provided small amounts of medical assistance to North Korea. In 2008, for instance, the Bush Administration allocated $4 million in assistance to U.S. NGOs to help several North Korean rural and provincial hospitals by improving their electrical supplies and by providing medical equipment and training. More recently, following localized floods in North Korea in the summer of 2010, the Obama Administration spent about $600,000 on the provision of relief items, such as medicine, to North Korea. U.S. Energy Assistance Korean Peninsula Energy Development Organization (KEDO) From 1995 to 2002, the United States provided over $400 million in energy assistance to North Korea under the terms of the U.S.-North Korean 1994 Agreed Framework, in which the DPRK agreed to halt its existing plutonium-based nuclear program in exchange for energy aid from the United States and other countries. After Washington and Pyongyang reached their agreement, the United States, Japan, and the Republic of Korea formed an international consortium, the Korean Peninsula Energy Development Organization (KEDO), to manage the assistance. The planned aid consisted of the construction of two light-water nuclear reactors (LWRs) and the provision of 500,000 metric tons of heavy fuel oil annually while the reactors were being built. U.S. contributions covered only heavy fuel oil shipments and KEDO administrative costs. In October 2002, KEDO board members decided to halt fuel oil shipments following a dispute over North Korea's alleged clandestine uranium enrichment program. In December, North Korea expelled inspectors from its Yongbyon nuclear site, withdrew from the Nuclear Non-proliferation Treaty (NPT), and resumed operations at Yongbyon. The Bush Administration thereafter sought to permanently end the KEDO program. In 2003 and 2004, KEDO's Executive Board (the United States, South Korea, Japan, and the European Union) decided to suspend construction on the LWRs for one-year periods. In the fall of 2005, the KEDO program was formally terminated. In January 2006, the last foreign KEDO workers left the LWR construction site at Kumho, North Korea. Assistance Related to the Six-Party Talks After the collapse of the Agreed Framework arrangement in 2002, the Bush Administration and the Chinese government worked to create a multilateral forum of the six major countries in Northeast Asia to discuss and resolve the North Korean nuclear problem. As with KEDO, the Bush Administration and other members of the Six-Party Talks—South Korea, Japan, China, and Russia—promised energy assistance to North Korea as an inducement to end its nuclear program. In September 2005, the six parties issued a joint statement agreeing to "promote economic cooperation in the fields of energy, trade and investment, bilaterally and/or multilaterally." The United States, China, South Korea, Japan, and Russia also stated their "willingness to provide energy assistance to the DPRK." The agreement said that the parties would discuss the provision of a light water nuclear power reactor to North Korea "at the appropriate time." This document serves as the foundation for subsequent agreements. Talks were stalled after North Korea tested a nuclear device in October 2006. After a return to talks, a Denuclearization Action Plan was reached in February 2007. It called for a first phase to include the shut-down of key nuclear facilities and initial provision of 50,000 metric tons of heavy fuel oil to North Korea. In the second phase, the parties agreed to provide North Korea with "economic, energy and humanitarian assistance up to the equivalent of 1 million tons of heavy fuel oil, including the initial shipment of 50,000 tons of heavy oil." Heavy Fuel Oil Shipments The shipments of fuel oil or equivalent (e.g., steel products to renovate aging power plants) assistance were to happen on an "action for action" basis, as North Korea made progress on denuclearization. The shipments of 1 million MT of heavy fuel oil or equivalent were to be divided equally by the five parties (i.e., 200,000 MT each). HFO shipments were delivered in a start-and-stop manner, slowed primarily by disagreements between Pyongyang and Washington over how and whether to verify North Korea's disablement, and over whether the United States would remove North Korea from its State Sponsors of Terrorism list. Before the Six Party Talks broke down in March 2009, the DPRK had received 500,000 MT of heavy fuel oil and equipment and 245,110 MT of fuel equivalent assistance. Congress and Energy Assistance Over time, Congress has influenced administration policy by placing conditions on aid to North Korea. From 1998 until the United States halted funding for KEDO in FY2003, Congress included in each Foreign Operations Appropriation requirements that the President certify progress in nuclear and missile negotiations with North Korea before allocating money to KEDO operations. To support the Six-Party Talks, Congress provided funds for energy assistance in the FY2008 Supplemental Appropriations Act ( P.L. 110-252 ). This act also gave the President authority to waive Arms Export Control Act sanctions on Pyongyang for the purpose of providing aid in connection with denuclearization (see " "Glenn Amendment" Restrictions " below). However, this waiver was not used, and was no longer in effect following the May 2009 North Korean nuclear test. Congress has supported funding for the denuclearization of North Korea, for example in the FY2008 Defense Authorization Act (see " U.S. Denuclearization Assistance " section below). No energy assistance for North Korea was proposed in the Administration's FY2011-FY2015 budget requests. Previously, in its FY2009 Supplemental Appropriations budget request, the Obama Administration sought over $150 million for North Korea-related energy and denuclearization assistance to use in the event of a breakthrough with North Korea. In separate committee actions, House and Senate appropriators rejected these requests, in large part due to North Korea's withdrawal from the Six-Party process and subsequent missile and nuclear tests in the spring of 2009. Since the 2009 tests, Congress has specifically prohibited energy assistance to North Korea. Section 8042 of the FY2014 Consolidated Appropriations Act ( P.L. 113-76 ) says that "None of the funds appropriated or otherwise made available in this Act may be obligated or expended for assistance to the Democratic People's Republic of Korea unless specifically appropriated for that purpose." U.S. Denuclearization Assistance Nuclear Disablement Expenditures As part of Phase Two under the Six-Party agreements, the Departments of State and Energy worked on disabling the nuclear facilities at the Yongbyon complex in North Korea until April 2009. This effort was funded through the State Department's Nonproliferation and Disarmament Fund (NDF). The State Department paid the North Korean government for the labor costs of disablement activities, and related equipment and fuel. Approximately $20 million in FY2007 and $25 million in FY2008 was approved for this purpose. NDF funds may be used "notwithstanding any other provision of law," and are available until expended. The Department of Energy's (DOE) National Nuclear Security Administration (NNSA) contributed personnel as technical advisors to the U.S. Six-Party delegation and as technical teams on the ground at Yongbyon overseeing disablement measures. NNSA spent approximately $15 million by July 2008 in support of Phase Two (Yongbyon disablement) implementation. NNSA estimated that disablement costs could have totaled up to $360 million if North Korea had agreed to the packaging and disposition of separated plutonium and spent fuel at Yongbyon. The Congressional Budget Office estimated that full nuclear dismantlement in North Korea would cost approximately $575 million and take about four years to complete. "Glenn Amendment" Restrictions North Korea's 2006 nuclear test triggered sanctions under Section 102 (b) (the "Glenn Amendment" 22 U.S.C. 2799aa-1 ) of the Arms Export Control Act, which prohibits assistance to a non-nuclear weapon state under the NPT that has detonated a nuclear explosive device. Due to this restriction, DOE funds could not be spent in North Korea without a waiver. Therefore, funding for the disablement efforts came from the State Department's NDF fund which has "notwithstanding" authority. Congress passed language in the FY2008 Supplemental Appropriations Act ( P.L. 110-252 ) that would have allowed the President to waive the Glenn Amendment restrictions and stipulated that funds may only be used for the purpose of eliminating North Korea's WMD and missile-related programs. The waiver's purpose was to allow DOE "to procure, ship to North Korea, and use equipment required to support the full range of disablement, dismantlement, verification, and material packaging and removal activities that Phase Three will likely entail." The Bush Administration notified Congress of its intent to waive these sanctions for the purpose of denuclearization aid on November 14, 2008, but did not exercise the waiver authority. Because North Korea conducted an underground nuclear test on May 25, 2009, the waiver may no longer be issued under P.L. 110-252 . The law stipulates that a nuclear test after the date of enactment would nullify the waiver authority. Cooperative Threat Reduction Funds As with the Department of Energy and State Department funding, there are no proposals for Department of Defense funds to be used in North Korea in FY2015. In 2008, Senator Richard Lugar proposed that the Department of Defense's Cooperative Threat Reduction (CTR) program be granted "notwithstanding authority" for denuclearization work in North Korea. Authorization was given for CTR funds to be used globally for the first time in the FY2008 Defense Authorization Act ( P.L. 110-181 , see §1305), which expressly encourages "activities relating to the denuclearization of the Democratic People's Republic of Korea." The FY2010 Defense Authorization bill ( P.L. 111-84 ) gave the CTR program notwithstanding authority for a limited amount of funds to be used globally in response to urgent proliferation threats, which could include work in North Korea. Any DOD CTR work in North Korea would need to have the concurrence of the Secretary of State. To date, no DOD CTR funds have been used in North Korea. Assistance to the IAEA The United States provided $1.8 million in 2007 and $1.5 million in 2008 to the International Atomic Energy Agency (IAEA) for its monitoring activities at Yongbyon. Japan has provided the agency with $500,000 for this purpose. The European Union in 2008 contributed approximately $1.6 million (1.025 million euros) to the IAEA for Yongbyon monitoring and verification activities. North Korea expelled the IAEA inspectors in April 2009. North Korea had initially invited the IAEA to monitor the moratorium of enrichment activities at Yongbyon as part of the February 29, 2012, agreement with the United States. If IAEA verification is required in the future, the agency might need extra-budgetary contributions for this work. Congress and Denuclearization Assistance The last time the Obama Administration requested funds specifically for denuclearization work in North Korea was in the FY2009 Supplemental Appropriations Request: $47 million for the State Department's Nonproliferation and Disarmament Fund (NDF) "to support dismantlement of nuclear facilities in North Korea" and $34.5 million for Department of Energy (DOE). The House Appropriations Committee halved the NDF request to $23.5 million, but did not exclude the use of these funds in North Korea. The Senate Appropriations Committee report also did not specifically mention North Korea in its description of NDF funding, but also did not exclude it. The committee approved $77 million for the NDF, of which $50 million is for border security in Gaza. The NDF could choose to use other funds in North Korea. Since then, funding requests for NDF have not referenced North Korea. The FY2009 Supplemental request for the Department of Energy's work in North Korea included $25 million for the Global Threat Reduction Initiative to "complete disablement tasks and to initiate spent fuel disposition and other denuclearization efforts" in North Korea, and $9.5 million for the Nonproliferation and International Security Program's "disablement and dismantlement support" in the DPRK. The House and Senate Appropriations Committees deleted all the DOE monies for North Korea, saying in reports that should North Korea reverse its policies, then denuclearization assistance could be considered. The FY2011-FY2015 budget requests did not provide specifically for any denuclearization funding for North Korea. The 2010 Consolidated Appropriations Act ( P.L. 111-117 ) and the continuing appropriations for FY2011 forward did not address denuclearization assistance to North Korea since the process was stalled. Sections 8042 of the FY2014, FY2013, FY2012, FY2011, and FY2010 appropriations bills say that, "None of the funds appropriated or otherwise made available in this Act may be obligated or expended for assistance to the Democratic People's Republic of Korea unless specifically appropriated for that purpose." U.S. Food Assistance Since 1995, the international community has donated over 12.5 million MT of food aid to North Korea to help North Korea alleviate chronic, massive food shortages that began in the early 1990s. A severe famine in the mid-1990s killed an estimated 600,000 to 3 million North Koreans. As Figure 1 shows, the amount of food aid has varied from year to year and has declined dramatically since a decade ago. Over 90% of U.S. food assistance to Pyongyang has been channeled through the WFP. The United States has been by far the largest cumulative contributor to the WFP's North Korea appeals. Four countries, China, South Korea, the United States, and Japan, have dominated the provision of food aid, contributing over 75% of the total since 1995, though only China has provided assistance since 2009. In 2012, according to the World Food Programme (WFP), China provided nearly two-thirds of the 372,000 MT in food assistance provided to North Korea. North Korea has been adept at turning from one donor to another, opportunistically seeking out the least stringent terms. For instance, unlike the WFP, Beijing historically has made few requests for access and monitoring. The same was true of South Korea for much of the 1995-2008 period. When both countries increased their food contributions to North Korea in the mid-2000s, this arguably allowed North Korea's central government authorities to roll back the highly intrusive (from North Korea's perspective) WFP in the mid-2000s (see " North Korea's 2006 Restrictions and the Decline in the WFP's Program " below). Conversely, in 2008, when inter-Korean relations began to sour and humanitarian assistance from South Korea dried up, North Korea turned back to the United States for food aid and accepted Washington's demands for expanded access and improved monitoring conditions. Congress and Food Assistance Over the years some Members of Congress have supported continued donations to help the North Korean people, on humanitarian grounds, regardless of the actions of the North Korean regime. These voices, which were perhaps loudest during North Korea's famine years, have dwindled over time. Other Members have voiced their opposition to food aid to the DPRK. In the 112 th Congress, the House passed an amendment by voice vote ( H.Amdt. 453 ) in June 2011 that in effect would have prohibited the U.S. government from providing food assistance to North Korea. The amendment was included in the House version of H.R. 2112 , the FY2012 Agriculture Appropriations Act. The Senate version of the bill, passed on November 1, contained no such measure. Participants in the House-Senate conference committee decided to strip the amendment's tougher restrictions, replacing it with language (§741) that food assistance may only be provided if "adequate monitoring and controls" exist. President Obama signed H.R. 2112 ( P.L. 112-55 ) into law on November 18, 2011. In 2012, the Senate passed by a vote of 59-40 an amendment to S. 3240 , the Agriculture Reform, Food, and Jobs Act of 2012 (the "farm bill"), that prohibited federal food aid to North Korea (amendment no. 2454, roll call vote 144). The amendment, incorporated into the bill as Section 3015, would allow the President to waive the prohibition if he finds that providing food aid to North Korea is in the "national interest." The same day, by a vote of 43-56, the Senate rejected a similar amendment that lacked waiver authority (amendment no. 2354, roll call vote 145). The House version of the farm bill, the Federal Agriculture Reform and Risk Management Act of 2012 ( H.R. 6083 ) contained no provisions related to food aid to North Korea. The 112 th Congress ended without the House-reported bill ever being brought to the floor of the House for a vote. In the 113 th Congress, the Senate again passed a version of the farm bill ( H.R. 2642 ) that included a prohibition on food aid to North Korea (once again, contained in Section 3015). The House version of the bill contained no such provision, and in February 2014 the conference committee to the bill adopted the House position. Both chambers passed the bill, and President Obama signed it into law ( P.L. 113-79 ) on February 7, 2014. Over the past decade, many Members have called for food assistance to be conditioned upon North Korean cooperation on monitoring and access. The 111 th Congress included in the FY2010 omnibus appropriations act ( P.L. 111-117 ) language that called for the State Department to determine how much Pyongyang "owes" the United States for the approximately 21,000 MT in U.S. food aid that the North Korean government had distributed after it had halted a U.S. food assistance program being implemented by a consortium of U.S. nongovernmental organizations (NGOs). The act also required the State Department to reduce any aid to North Korea by this amount unless it was found that the North Korean government provided the food to the intended recipients (generally, vulnerable women and children in the northwestern parts of the country). If the Obama Administration resumes food aid to North Korea, two options would be to use food aid that has not been committed or to tap the Bill Emerson Humanitarian Trust. The latter, which was used for the original 2008 program, is a financial reserve that may be used when the United States Agency for International Development (USAID) Administrator makes a determination that other statutory sources of aid are unavailable. While the Administrator is not required by law to notify Congress of such a determination, he very likely would consult with House and Senate agriculture and foreign affairs committees as this decision is made. U.S. Food Aid Policy Officially, U.S. policy de-links food and humanitarian aid from strategic interests. Although diplomatic factors have always affected decisions over aid to North Korea, the degree to which they have been linked has varied over time. It has been well documented that the Clinton Administration used food aid to secure North Korea's participation and increased cooperation in a variety of security-related negotiations. The George W. Bush Administration arguably weakened the linkage and made improved monitoring and access one of three explicit conditions for providing food aid to North Korea. The other two were the need in North Korea and competing needs for U.S. food assistance. Although Obama Administration officials say that these three criteria remains their policy, diplomatic factors appear to be rising in importance alongside humanitarian considerations. In the eyes of many observers, the Obama Administration's February 2012 understanding with North Korea on the resumption of food assistance appears to have been directly linked to the concessions that North Korea was expected to make on the nuclear issue before the death of supreme leader Kim Jong-il. The Food Aid Dilemma Providing food to North Korea poses a number of moral and policy dilemmas for the United States. Pyongyang has resisted making economic reforms that would help pay for food imports or increase domestic production, as well as the political reforms that would allow for a more equitable distribution of food. Additionally, the North Korean government restricts the ability of donors to monitor shipments of aid. Multiple sources have asserted that a sizeable amount of the food assistance going to North Korea is routinely diverted for resale in private markets or other uses. Although there has been much public concern about diversion to the North Korean military, WFP officials and other experts said they have seen little to no evidence that the military is systemically diverting U.N. food donations, and further, that the North Korean military has no need for WFP food, since it receives the first cut of North Korea's national harvest. Moreover, the assistance is fungible, in that funds that the government otherwise would have spent on food can be spent on other items. Compounding the problem, China, currently believed to be North Korea's largest source of food aid, has no known monitoring systems in place. The North Korean government's desire to maintain control over the country is inextricably linked to the food crisis and its chronic reliance on food aid. Residency in North Korea is tightly controlled and highly politicized, with the elite permitted to live in or around Pyongyang, where food shortages are less acute than in the country's more remote areas, where politically less desirable families live. Additionally, North Korea is believed to expend little of its foreign currency to import food, relying instead upon the international community. Moreover, since 2007, the government episodically has taken many steps to reimpose state controls over farmers and markets. In a February 2014 report, a United Nations Commission of Inquiry on North Korea's human rights conditions stated that the North Korean government "has used food as a means of control over the population." The Commission argued that the "decisions, actions, and omissions" by North Korea's leaders and government "caused the death of at least hundreds of thousands of people and inflicted permanent physical and psychological injuries on those who survived." North Korea's rulers, according to the Commission, by "knowingly causing prolonged starvation" were found to have committed to crimes against humanity. In part because of the North Korean government's unwillingness or inability to ensure a more equitable distribution of food, some contend that it is likely that food aid has helped feed millions of North Koreans who may not otherwise have had sufficient access. According to this line of reasoning, food aid possibly staved off a repeat of the famine conditions that existed in the mid- to late 1990s. A number of observers argue that the North Korean people should not be unduly punished for their government's behavior, that diversion to markets helps ordinary North Koreans by lowering food prices, and that measures can be taken to limit the Kim Jong-il regime's abuses of food aid. For instance, the United States generally has shipped its food aid to the Northern provinces, where less desirable classes of people tend to live. In another example, Obama Administration officials said in late 2011 that if they decided to resume food aid, the shipments would be "nutritional" products such as high-protein biscuits that are less likely to be diverted than traditional food staples. Additionally, some contend that a well-designed food aid program can facilitate the expansion of markets, which over time will erode the Kim regime's hold over the country, while helping to reduce food prices in North Korea's most vulnerable provinces. Providing food aid also can be used to serve larger diplomatic goals, though many experts caution against explicitly linking food to concessions in the security arena, such as in the Six-Party Talks over North Korea's nuclear programs. The Ebbs and Flows of U.S. Food Aid to North Korea, 2006-2010 North Korea's 2006 Restrictions and the Decline in the WFP's Program After peaking at over 900,000 MT in 2001, assistance provided by the WFP fell dramatically over the following years until 2008, when a large U.S. contribution brought up the WFP total. There were two primary reasons for the decline in WFP assistance. The first was "donor fatigue," as contributing nations objected to the North Korean government's continued development of its nuclear and missile programs as well as tightened restrictions on donor agencies' monitoring of shipments to ensure that food is received by the neediest. The emergence of other emergency food situations around the globe also stretched the food aid resources of the United States and other donors. Whatever the causes, the WFP was unable to fill its goal of 150,000 MT for the 2006-2008 period. During this time, increased bilateral assistance—outside the WFP's program—that China and South Korea shipped directly to North Korea, as well as improved harvests in North Korea, appear to have made up much of the gap, which generally is estimated to be in the range of 1 million MT per year. In 2006, the WFP drastically scaled down its program after the North Korean government imposed new restrictions, constraining the organization's size and ability to distribute and monitor its shipments. The WFP and Pyongyang then negotiated a new agreement that would feed 1.9 million people, less than a third of the 6.4 million people the WFP previously had targeted. North Korea's total population is approximately 22 million. In the deal, the WFP expatriate staff was cut by 75%, to 10 people, all of whom were based in Pyongyang. Before 2006, the WFP had over 40 expatriate staff and six offices around the country conducting thousands of monitoring trips every year. The North Korean government did not allow any Korean speakers to serve on the WFP's in-country staff. The U.S. Resumes Food Aid in 2008 In 2008, the WFP warned that food shortages and hunger had worsened to levels not seen since the late 1990s, because of decades of poor agricultural planning, large-scale floods in 2007, and also the significant decline of aid from the two largest bilateral food providers, China and South Korea. North Korea began seeking a new outside source of food. In May 2008, the United States Agency for International Development announced that the United States would resume food assistance to North Korea by providing 500,000 MT for one year beginning in June 2008. Of this amount, 400,000 MT was to be channeled through the WFP. Approximately 100,000 tons would be funneled through nongovernmental organizations (NGOs), including World Vision, Mercy Corps, Samaritan's Purse, Global Resource Services and Christian Friends of Korea. The announcement stated that the resumption was made possible by an agreement reached with Pyongyang that allowed for "substantial improvement in monitoring and access in order to allow for confirmation of receipt by the intended recipients." The U.S. move came not long after a breakthrough was reached in the Six-Party Talks. Bush Administration officials repeatedly stated their policy that decisions on food assistance were unrelated to the nuclear negotiations. In June 2008, the WFP signed an agreement with Pyongyang that stipulated terms for increased WFP personnel and access for monitoring the delivery of the food aid. It allowed WFP to expand its operations into 131 counties, versus an earlier 50, in regions at particular risk of famine. The agreement also expanded the WFP's rights and ability to monitor the shipments of food aid, in order to better ensure that the food was not diverted from its target recipients. Following the agreement, the WFP issued a new emergency appeal for over 600,000 MT for 6.2 million North Koreans. The NGO consortium, which targeted around 900,000 people, operated in the country's two northwestern provinces. Cessation of the 2008-2009 Program The WFP Component Beginning in the late summer of 2008, operating conditions for the WFP appear to have worsened. The North Korean government reportedly did not allow the U.N. agency to fully implement parts of its WFP agreement. In particular, the Bush Administration disagreed with Pyongyang over the number of Korean speakers and Americans allowed in the country. Due in part to these difficulties, after August 2008 the United States halted shipments of food to the WFP's North Korea appeal. In March 2009 the WFP announced it was scaling back its program to "a core minimum" that would allow the organization to rapidly expand its operations if it receives more donations in the future. The announcement stated that the WFP was feeding incomplete rations to only 2 million of the 6.2 million people it had originally targeted. Ultimately, donors provided the WFP with less than 25% of the target for its 2008-2010 emergency appeal. There have been reports that the WFP program suffered from lapses in the management of the North Korea office's finances and commodities. The charges followed incidents of misuse and diversion of funds during the mid-2000s by the North Korea offices of another U.N. agency, the U.N. Development Program (UNDP). The NGO Component According to U.S. officials and representatives of the NGO consortium, the NGO portion of the U.S. program continued to proceed smoothly, with marked improvements in cooperation between the aid providers and their North Korean counterparts. For this reason, throughout the winter of 2008-2009, the United States continued to send shipments via the consortium. However, in March 2009, North Korea asked the United States and the NGOs to shut down their portion of the U.S. program by the end of the month. The program had been scheduled to run until May 2009. Many speculated that North Korea had closed the program in part due to the overall deterioration in relations with the United States and South Korea. The consortium delivered 71,000 MT of food during its 10-month tenure, reaching more than 900,000 people. WFP Programs from 2010-2014 In 2010, the WFP began a new food aid operation in North Korea to help vulnerable populations deal with North Korea's chronic food gap. Several months later, however, reports began emerging from North Korea that the food situation was worsening considerably. North Korea then began asking outside donors—including the United States and South Korea—for additional aid. A number of groups operating inside North Korea reported that the prices for staples in semi-official markets, which are the main source of food for those outside the cadre of elite, were soaring due to a severe winter and drops in commercial food imports and bilateral food donations. Some observers speculated that the North Korean government was also motivated by a desire to stockpile food in preparation for celebrations in 2012 to celebrate the 100 th birthday of the late founder of the country, Kim Il-sung (the grandfather of the current leader, Kim Jong-un). While the Obama Administration, as well as many Members of Congress, began debating whether to resume U.S. food aid to North Korea, the WFP in April 2011 launched a new, one-year emergency appeal for over 300,000 MT to feed over 3.5 million vulnerable people. The WFP negotiated a new agreement with its North Korean counterpart that was similar to the 2008 agreement between the two sides in terms of access and monitoring. However, due to a lack of support from donors, the WFP provided approximately 100,000 MT, less than one third the original target. After the one-year emergency operation concluded in 2012, the WFP resumed its 2010 operation, targeting about 2.4 million women and children. In early June 2013, three weeks before the program's expiration date, the WFP reported that it was 40% short of its funding goals for the North Korea appeal. Later that month, the WFP decided to launch a new two-year operation in North Korea. Its goal is to help 2.9 million people, primarily children as well as pregnant and breastfeeding women, with slightly over 200,000 MT of food. In a February 2014 report on the status of the program, the WFP stated that donations continued to less than 40% of targeted amounts. Options and Considerations for Future Food Aid to North Korea Along the spectrum of continuing the status quo (i.e., no food aid) and providing food without any conditions, the Administration and Congress face a number of options and considerations when deciding whether and how to resume food aid to North Korea, including the following: Establish explicit "diplomatic" linkages by conditioning food aid on progress in security-related talks, such as negotiations regarding the North's nuclear programs. As mentioned above, this appears to be the direction the Obama Administration was following until the breakdown of the Leap Day deal, although officials insist the linkage was made by North Korea, not the United States. In the past, emphasizing geostrategic concerns as a condition for food aid has led to some short-term successes, such as persuading North Korea to return to the bargaining table. However, in nearly all of these cases, it is not clear that the provision of food has induced significant changes in North Korea's long-term behavior on security issues. Additionally, this approach runs the risk of encouraging the North Korean government to believe that concessions on other issues, such as the denuclearization talks, are more important to the United States than demands for improved monitoring of the delivery of food aid. Yet another variant of this approach would be to link food aid to North Korean concessions in the human rights sphere, such as releasing political prisoners. Set explicit "humanitarian" linkages by conditioning future food aid on improvements in access and monitoring. For instance, after several years where the United States did not provide food to North Korea, the 2008 program was initiated after Pyongyang and Washington reached an agreement on improved monitoring that provided greater confidence that the food was being received by the intended recipients, women and young children. The U.S. program also shipped only to North Korea's historically poorer and politically marginalized Northern provinces, to help ensure that even if diversion did occur, food would be diverted to markets likely to be used by the most vulnerable, rather than to markets in the wealthier and politically connected locations of Pyongyang and its surroundings. The Administration could also insist that Pyongyang abide by concessions made in 2008, but apparently not fully implemented, such as granting relief workers the ability to bring emergency communications equipment into the country. Decide on whether and how to harmonize policy with Seoul. U.S. and South Korean approaches on food aid to North Korea have not always been in harmony. For much of the 2000s, attempts to convince North Korean authorities to conform to international aid standards were often undermined by large-scale, largely unconditional food aid from Seoul (as well as from Beijing). In contrast, the former South Korean government of Lee Myung-bak (2008-2013) made tougher humanitarian demands on North Korea. It also asked North Korea to make improvements in North-South relations before it would consider providing large amounts of food and fertilizer, a demand that has become firmer in the aftermath of North Korea's November 2010 shelling of a South Korean island that killed four South Koreans. Park Geun-hye's government has indicated that it is willing to provide humanitarian assistance to the North Korean people regardless of the diplomatic situation. It is not clear to what extent Seoul would continue the Lee government's insistence on improved access and monitoring of its assistance. Members of Congress may want to probe whether U.S. and South Korean officials have discussed developing minimum requirements for any humanitarian assistance the two countries provide. Should China be pressured on food aid? Members of Congress and Obama Administration officials could publically and/or privately urge China to insist on some monitoring for its food aid, a topic that does not appear to have been on either the Obama or Bush Administration's crowded list of talking points with China. A fallback position with Beijing could be to call for a continuation of its current policy, which appears to be to provide food assistance only at a subsistence level needed to maintain stability in North Korea. According to the WFP, in 2012, China provided North Korea with over 240,000 MT in food assistance, after providing less than 3,000 MT in 2010 and 2011 combined. Select the mix between the WFP and NGO Channels. If the Obama Administration decides to resume food aid to North Korea, about 30,000 MT will remain from the 2008 program's NGO component and 300,000 from the WFP component. U.S. officials may wish to change this allocation. Since 1995, more than 90% of the 2.2 million MT of food aid the U.S. has provided to North Korea has been shipped via donations to the WFP. One reason the Bush Administration decided to channel one-fifth of the 2008 aid package through NGOs was because several of these private groups appear to have had more success than the WFP in monitoring their assistance, particularly in gaining access to aid recipients and using their own Korean-speaking staff. The smaller operations of these NGOs allow them to deal principally with local North Korean officials, who often have greater incentives to be more cooperative than the central government. The WFP operates nationally and targets millions more. Other Forms of U.S. Assistance Medical Assistance From time to time, the United States has responded to humanitarian disasters in North Korea by sending medicines and other emergency equipment. For instance, after floods struck parts of North Korea in the summer of 2010, the Obama Administration sent North Korea about $600,000 worth of pharmaceuticals and other assistance. The aid was channelled through two U.S. NGOs: Samaritan's Purse and Mercy Corps. The aforementioned 2011 $900,000 flood relief package was distributed by Samaritan's Purse, which along with other NGOs paid for the costs of transporting the assistance. In an example of a broader aid program, in 2008, the Bush Administration allocated $4 million in assistance to U.S. NGOs to help several North Korean rural and provincial hospitals by improving their electrical supplies and by providing medical equipment and training. The four recipient NGOs are Mercy Corps, the Eugene Bell Foundation, Global Resource Services, and Samaritan's Purse. Development Assistance During the Bush Administration, various officials, including the President, issued vague pledges of more extensive U.S. assistance that might be forthcoming if North Korea dismantled its nuclear programs and satisfied other U.S. security concerns dealing with missiles and the deployment of conventional forces. The Obama Administration has indicated a "comprehensive" aid package would be forthcoming if North Korea takes positive steps on the nuclear front. With regard to U.S. development assistance programs, in the near term, the President has considerable flexibility to offer some forms of development assistance. The Foreign Assistance Act of 1961, for instance, allows the President annually to provide up to $50 million per country for any purpose. Longer-term initiatives, however, would likely require changes in U.S. law and thereby require congressional action. For instance, the 2014 Consolidated Appropriations Act ( P.L. 113-76 ) specifically bans many forms of direct aid to the North Korean government. Many health and emergency disaster relief aid programs are exempt from such legislative restrictions because they have "notwithstanding" clauses in their enacting legislation. Additionally, if the Administration were to designate North Korea as a country involved in drug production and trafficking—as some have advocated—then by law North Korea would be ineligible for receiving most forms of U.S. development assistance. Finally, by law, U.S. representatives in the international financial institutions (IFI) are required to vote against any support for North Korea due to its nuclear weapons programs.

Between 1995 and 2008, the United States provided North Korea with over $1.3 billion in assistance: slightly more than 50% for food aid and about 40% for energy assistance. Since early 2009, the United States has provided virtually no aid to North Korea, though episodically there have been discussions about resuming large-scale food aid. Additionally, the Obama Administration officials have said that they would be willing to consider other types of aid if North Korea takes steps indicating that it will dismantle its nuclear program, a prospect that most analysts view as increasingly remote. As of March 2014, barring an unexpected breakthrough, there appears little likelihood the Obama Administration will provide large-scale assistance of any type to North Korea in the near future. Members of Congress have a number of tools they could use to influence the development and implementation of aid programs with North Korea. Food Aid. Large swathes of North Korea's population have suffered from chronic malnutrition since the mid-1990s. Food aid—largely from China, South Korea, and the United States—has been essential in filling the gap between North Korea's supply and demand, though since 2009 donations from all countries except China have dwindled to a minimal amount. Observers and activists attribute the North Korea's malnutrition and occasional starvation problems to food shortages—which at times have been massive—and more fundamentally to the unequal distribution of food caused in large measure by the North Korean government's deliberate decisions and policies. In 2013, an improved harvest appeared to reduce North Korea's chronic grain shortfall to some of the lowest levels since the 1990s. Yet outside food groups reported continued malnutrition among vulnerable sectors of the population, especially children. In 2014, a United Nations Commission of Inquiry on North Korea's human rights conditions found that the North Korean government's "act of knowingly causing prolonged starvation" amounted to crimes against humanity. Providing food to North Korea poses a number of dilemmas. Pyongyang has resisted reforms that would allow the equitable distribution of food and help pay for food imports. The North Korean government restricts the ability of donors to operate in the country. Additionally, multiple sources have asserted that some of the food assistance is routinely diverted for resale in private markets or other uses. However, it is likely that food aid has helped feed millions of North Koreans, at times possibly staving off a repeat of the famine conditions that existed in North Korea in the mid-late 1990s, when 5%-10% of the population died. South Korean President Park Geun-hye's government has indicated that it would be willing to offer North Korea food aid as part of her plan to foster a "new era" in inter-Korean relations. In 2013, the South Korean government donated around $12 million to United Nations humanitarian organizations that supply humanitarian aid, including some food, in North Korea. Energy Assistance. Between 1995 and 2009, the United States provided around $600 million in energy assistance to North Korea. The aid was given over two time periods—1995-2003 and 2007-2009—in exchange for North Korea freezing its plutonium-related nuclear facilities. In 2008 and 2009, North Korea also took steps to disable these facilities. However, no additional energy assistance has been provided since 2009, when Pyongyang withdrew from the Six-Party Talks—involving North Korea, the United States, China, Japan, and Russia—over North Korea's nuclear program. The move followed condemnation and sanctions by the U.N. Security Council for North Korea's April 2009 launch of a suspected long-range missile and May 2009 test of a nuclear device. Denuclearization Assistance. In 2007 and 2008, the United States gave technical assistance to North Korea's nuclear disablement process. In 2008, Congress took steps to legally enable the President to give expanded assistance for this purpose. However, following North Korea's actions in the spring of 2009, Congress rejected the Obama Administration's requests for supplemental funds to use in case of a return to denuclearization. Since then, Congress has not approved and the administration has not requested any funds for denuclearization since North Korea has not agreed to return to the nuclear disarmament process.

Overview The European Union (EU) is a political and economic partnership that represents a unique form of cooperation among sovereign states. It is the latest stage in a process of European integration begun after World War II, initially by six Western European countries, to promote peace and economic recovery. Its founders hoped that by pooling sovereignty in certain sectors (primarily economic ones at first), integration would foster interdependence and make another war in Europe unthinkable. The EU currently consists of 28 member states, including most of the formerly communist countries of Central and Eastern Europe (see map in the Appendix ). The EU has been built through a series of binding treaties, and has characteristics of both a supranational entity (in specified areas, sovereignty is shared and EU institutions hold executive authority) and an intergovernmental organization (in other areas, cooperation is based on consensus among the member state governments). Over the years, member states have sought to harmonize laws and adopt common policies on an increasing number of issues. EU members share a customs union; a single market in which goods, services, people, and capital move freely (known as the "four freedoms"); a common trade policy; a common agricultural policy; and a common currency (the euro), which is used by 19 member states (collectively referred to as the "eurozone"). Twenty-two EU members (and four non-EU countries) participate in the Schengen area of free movement, which allows individuals to travel without passport checks. (See Table 1 for eurozone and Schengen membership.) In addition, the EU has taken steps to develop common foreign and security policies and has sought to build common internal security measures. Various European policymakers and analysts have likened the European integration project to a bicycle, which must keep going forward to avoid falling over. Currently, however, the EU faces a range of political and economic pressures—including successful populist, antiestablishment political parties in many EU countries—and multiple internal and external challenges, which have raised questions about the EU's future shape and character. Although many experts maintain that the EU will continue to pedal along, others worry that the EU bicycle appears wobbly. Perhaps the most prominent challenge for the EU is the United Kingdom's (UK's) expected exit from the EU (known as "Brexit"). In a public referendum in June 2016, British voters favored leaving the EU by 52% to 48%. The UK has been engaged in withdrawal negotiations with the EU but remains a member of the EU until it formally exits the bloc (which is widely expected to occur in March 2019). In addition, the EU faces a number of other salient issues; these issues include addressing concerns about democratic backsliding in some member states (especially Poland and Hungary), managing migratory pressures and integration of newcomers, dealing with a resurgent Russia, and combating a heightened terrorism threat. Despite Brexit, the other 27 EU member states appear committed to sustaining the EU and are considering further EU reforms. In the longer term, some analysts suggest the EU likely faces a fundamental choice between those supporting further integration as the solution to the bloc's woes and those contending that integration has gone too far and should be put on hold (or possibly even reversed in certain areas). Whereas some experts argue that "more EU" is necessary to deliver robust economic growth and ensure security, others are skeptical that national governments will be inclined to cede more authority to a Brussels bureaucracy viewed as opaque and out of touch with the problems of average citizens. Successive U.S. Administrations and many Members of Congress have strongly supported the European integration project as a key pillar of the transatlantic relationship. In the aftermath of World War II, the United States viewed European integration as a way to entrench democratic systems and free markets, and the creation of NATO was meant to provide collective defense and security. With the end of the Cold War, the United States was a key advocate for EU enlargement to the countries of Central and Eastern Europe, believing it would help to promote stability and prosperity in the region. Today, the United States and the EU share a dynamic political partnership and a huge trade and investment relationship. Although U.S.-EU relations have experienced numerous ups and downs in the past and political and economic tensions have arisen periodically, U.S. and EU policymakers have tended to view the overall partnership as mutually beneficial. During the Obama Administration, the numerous challenges facing the EU worried many U.S. officials who feared that a politically divided, economically weak, and internally preoccupied EU would threaten European stability, jeopardize U.S.-EU economic relations, and make the EU a less robust and effective global partner. In the 114 th Congress, several hearings addressed some of the specific issues facing the EU, including the Greek debt crisis, the conflict in Ukraine, Europe's migration and refugee crisis, and potential threats to Europe posed by the Islamic State terrorist organization. Some hearings also considered the EU's future development more broadly and its possible strategic and economic implications for the United States. Many in the EU are concerned about the future trajectory of U.S.-EU relations under the Trump Administration and about whether the United States will continue to be a reliable partner in the years ahead. President Trump's reported questioning of the EU's value and utility is largely unprecedented and in contrast to long-standing U.S. support for the European integration project. EU leaders have been taken aback by what they regard as President Trump's hostility toward the bloc. U.S.-EU divisions have emerged on a growing number of issues, from trade to climate change to the 2015 nuclear deal with Iran. Some analysts suggest that managing relations with the United States under the Trump Administration has emerged as another, somewhat unexpected, challenge for the EU. At the same time, the EU hopes to preserve close U.S.-EU ties, and EU policymakers continue to seek to cooperate with the Trump Administration where possible on issues of common interest and concern. Congressional interest in the EU, its ongoing challenges, and the state of U.S.-EU relations has persisted in the 115 th Congress. Various congressional hearings have focused on Brexit, EU policy toward Russia, and European efforts to address societal and security concerns posed by continued migration. In the 115 th Congress, some House and Senate Members also have sought to reassure EU officials and member state governments of continued U.S. support for the EU, in part through visits to Brussels and key European capitals, the reestablishment of the EU Caucus in the House, and the introduction of resolutions reaffirming the importance of a strong U.S.-EU partnership. Evolution of the European Integration Project and Internal Dynamics The Past as Prologue In the aftermath of World War II, leaders in Western Europe were anxious to secure long-term peace and stability in Europe and to create a favorable environment for economic growth and recovery. In 1951, six countries—Belgium, the Federal Republic of Germany, France, Italy, Luxembourg, and the Netherlands—decided to establish the European Coal and Steel Community (ECSC), which is regarded as the first step in the European integration project. The ECSC was envisioned as a single market in which sovereignty over coal and steel would be pooled and production controlled by an independent supranational authority. In embarking on this plan, the six founders hoped to greatly diminish the chances of another catastrophic conflict in Europe by binding their economies together, controlling the raw materials of war, and promoting political reconciliation (especially between France and Germany). The ECSC began operations in 1952; over the next five years, coal and steel trade among the six members increased 129%. In light of the ECSC's success, in 1957, the six ECSC countries signed two new treaties in Rome: one treaty established the European Economic Community (EEC) to develop common economic policies and merge the separate national markets into a single market for goods, people, capital, and services; the other created a European Atomic Energy Community (EURATOM) to ensure the use of nuclear energy for peaceful purposes. These two treaties, commonly referred to as the "Treaties of Rome," came into force in 1958. In 1967, the ECSC, the EEC, and EURATOM collectively became known as the European Community (EC). The EC first added new members in 1973, with the entry of the United Kingdom, Ireland, and Denmark. Greece joined in 1981, followed by Spain and Portugal in 1986. The Single European Act modified the EC treaties in 1987 to facilitate the creation of the single market and ultimately resulted in the mostly free movement of goods, people, capital, and services (known as the "four freedoms") within the EC. On November 1, 1993, the Treaty on European Union (also known as the Maastricht Treaty) went into effect, encompassing the EC and establishing the modern-day European Union. The EU was intended as a significant step on the path toward not only greater economic integration but also closer political cooperation. The Maastricht Treaty contained provisions that resulted in the creation of the eurozone, in which participants share a common currency, a common central bank (the European Central Bank, or ECB), and a common monetary policy (there is no common fiscal policy, however, and member states retain control over national spending and taxation, subject to certain conditions designed to maintain budgetary discipline). The Maastricht Treaty also set out a blueprint for greater coordination on foreign policy and internal security issues. Since the mid-1990s, EU member states have worked to forge a Common Foreign and Security Policy (CFSP), including a Common Security and Defense Policy (CSDP), and sought to establish common policies in the area of Justice and Home Affairs (JHA). In the late 1990s, the Schengen Agreement of 1985—which established the framework for eliminating border controls among participating states—became EU law. With the end of the Cold War, the EU pursued further enlargement. Austria, Finland, and Sweden joined in 1995. Enlargement to Central and Eastern Europe was an especially key priority viewed as fulfilling a historic pledge to further the integration of the continent by peaceful means and promote stability and prosperity throughout Europe. In 2004, eight formerly communist countries (the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) acceded to the EU, along with Cyprus and Malta. Bulgaria and Romania joined in 2007. Croatia became the EU's newest member on July 1, 2013. Inherent Differences and Persistent Tensions The European integration project has long been viewed as a way for participating countries to magnify their political and economic clout (i.e., the whole is greater than the sum of the parts). European publics have historically been favorably inclined toward the EU, with many citizens valuing the freedom to easily travel, work, and live throughout Europe. Nevertheless, tensions have always existed within the EU between those member states that seek an "ever closer union" through greater integration and those that prefer to keep the EU on a more intergovernmental footing in order to better guard their national sovereignty. As a result, some EU countries have "opted out" of certain aspects of integration, including the eurozone and the Schengen area. In addition, different histories and geography often influence member states' policy preferences. The EU's enlargement to the east has brought in many members with relatively recent memories of Soviet domination, which may make some of them more wary of EU ties with Russia. Meanwhile, southern EU countries that border the Mediterranean may have greater political and economic interests in North Africa than EU members located farther north. Questions have also existed for years on whether EU "deepening" (i.e., further integration) is compatible with EU "widening" (i.e., further enlargement). In the 1990s and 2000s, the EU engaged in several efforts to reform its institutions, simplify often cumbersome decisionmaking processes, and thereby allow a bigger EU to function more effectively. These efforts culminated with the entrance into force of the Lisbon Treaty in 2009 (which also sought to enhance the EU's global role and increase democratic accountability within the EU). Nevertheless, critics charge that EU decisionmaking processes remain extremely complex, lack transparency, and are still too slow and unwieldy. Others note that differences in viewpoint are inevitable among so many countries and that decisions thus take time in what remains a largely consensus-based institution. The EU maintains that the enlargement door remains open to any European country that fulfills the political and economic criteria for membership. Since 2003, the EU has recognized and welcomed the EU aspirations of all the countries of the Western Balkans. At the same time, some European leaders and publics worry about the implications of additional EU expansion on the EU's institutional capacities, its finances, and its overall identity. This is especially true with respect to large, culturally distinct countries, such as Turkey, or the poorer countries of "wider Europe" (usually considered to include Ukraine, Moldova, Georgia, Armenia, and Azerbaijan) that may harbor EU aspirations in the longer term. Some observers suggest that should the EU ultimately enlarge to encompass an even wider array of countries, further integration in the economic and financial fields may be unlikely, and forging a common foreign policy could become more difficult. Others contend that EU enlargement is already reaching its limits, both geographically and in terms of public enthusiasm for further expansion. Current Political and Economic Context A number of political and economic factors are contributing to the current uncertainty surrounding the future of the EU. To varying degrees, they are also challenging the legitimacy and structure of the EU and its institutions. Improving Economies but Lingering Concerns The 2008-2009 global recession significantly affected EU economies, and the subsequent eurozone debt crisis sparked concerns about the fundamental structure and viability of the 19-member eurozone, the EU's flagship integration project. For almost a decade, many EU countries struggled with weak economic growth and persistently high unemployment. Some EU governments imposed unpopular austerity measures in an effort to rein in budget deficits and public debt. To stem the eurozone crisis, European leaders and EU institutions responded with a variety of policy mechanisms. To avoid default, Greece, Ireland, Portugal, and Cyprus received financial assistance from the EU and the International Monetary Fund (IMF). The eurozone crisis also put pressure on Europe's banking system, leading to the collapse of insolvent banks in several countries and an EU recapitalization plan for Spanish banks. In 2015, amid ongoing financial difficulties and disputes with its EU creditors, prospects grew that Greece might exit the eurozone (dubbed "Grexit"). Although Grexit was averted when the Greek government acceded to eurozone demands for more austerity and economic reforms in exchange for a new financial assistance package, the fraught negotiations generated significant acrimony within the EU. While France and Italy emphasized the political importance of maintaining the integrity of the eurozone, Germany (and others such as the Netherlands, Finland, Slovakia, and Slovenia) stressed the need to adhere to eurozone fiscal rules. Tensions also persisted between Greece, its eurozone creditors, and the IMF over the terms of Greece's assistance program and the need for debt relief. Some suggest that given how close the EU came to Grexit, the crisis called into question the eurozone's irreversible nature. Others contend that the eurozone has emerged stronger from its debt crisis and near-Grexit experience. Since 2010, the EU has taken steps to bolster the eurozone's architecture and improve fiscal discipline among member states. Following the Greek crisis in 2015, both France and Germany have sought to work together on some measures to strengthen the eurozone's economic governance, although reaching agreement between themselves and among all eurozone members remains challenging. Since early 2017, the EU's overall economic prospects have improved, with a sustained economic recovery taking hold across most of the EU. Although some concerns exist about an unfavorable external environment amid growing trade tensions (including with the United States), the European Commission predicts EU growth will remain resilient. Recent estimates forecast roughly 2% average growth in both the EU and the eurozone in 2018 and 2019. Some economic anxieties linger, however. Several EU countries continue to struggle with sluggish growth and high unemployment (especially among young people in countries such as Spain and Italy). Although Greece received a degree of debt relief in June 2018 (its eurozone creditors agreed to extend loan maturities due in 2023 by 10 years to ease Greece's repayment burden) and officially exited its financial assistance program in August 2018, Greece's economy remains fragile. Austerity measures are still in place, the country faces a long road to a full economic recovery, and questions persist about the strength of Greece's banking system. Increasingly, some experts voice renewed concerns about financial stability in Italy, the eurozone's third-largest economy. Following Italian elections in March 2018, a new coalition government took office composed of two largely antiestablishment, populist parties that are critical of the EU and believe eurozone fiscal rules have constrained Italy's economic growth. In September 2018, the Italian government unveiled a new budget for 2019 that rejects austerity measures and foresees significantly higher public spending. This proposed budget has become a point of tension between Italy and the European Commission, which believes the Italian government's plans will do little to reduce what many view as Italy's unsustainable debt load of around 130% of gross domestic product (GDP). The European Commission has demanded that the Italian government revise its budget plans, but Italy has so far declined to do so and is expected to face EU disciplinary action for breaching EU fiscal rules. Italy ultimately could face financial sanctions. Some experts worry that this budget dispute could reignite investor concerns about Italy's debt sustainability and threaten the eurozone's integrity and stability again. Since the release of its 2019 budget, Italy's borrowing costs have risen and key credit rating agencies have downgraded Italy's debt rating. Rise of Anti-EU or "Euroskeptic" Political Parties Over the last several years, many EU countries have seen a rise in support for populist, nationalist, antiestablishment political parties. These parties are often termed "euroskeptic" because many have also been fueled by worries that too much national sovereignty has been relinquished to Brussels. Although not a completely new phenomenon in the EU, the uptick in support for such parties largely began in response to Europe's economic difficulties, austerity measures, and the eurozone crisis. For some voters, how Brussels handled the eurozone crisis renewed long-standing concerns about the EU's "democratic deficit"—a sense that ordinary citizens have little say in decisions taken in faraway Brussels. Increasingly, heightened fears about immigration amid a sizeable influx of migrants and refugees in Europe appear to be driving rising poll numbers for populist and/or euroskeptic parties. Fears about globalization and a loss of European identity also have been factors in the growth in support for such parties. Populist and euroskeptic parties, however, are not monolithic. Most are on the far right of the political spectrum, but a few are on the left or far left. The degree of euroskepticism also varies widely among them, and they hold a range of views on the future of the EU. While some advocate for EU reforms and a looser EU in which member states would retain greater sovereignty, others call for an end to the eurozone or even to the EU itself. Austria, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, the Netherlands, Poland, Spain, and Sweden are among those EU countries with prevalent populist, and to at least some extent, euroskeptic parties. A range of euroskeptic parties did well in the 2014 European Parliament elections (see text box ), and euroskeptic parties have made significant gains in national and local elections in some countries. For example, parties with varying degrees of euroskeptic views lead the government or are part of coalition governments in Italy, Poland, Hungary, Austria, and Finland. In Denmark, a minority government relies on a euroskeptic party to provide parliamentary support. In Germany, the anti-immigrant and euroskeptic Alternative for Germany party secured enough support in federal elections in 2017 to enter parliament, becoming the first far-right German political party to do so since the end of World War II. Such euroskeptic parties are challenging the generally pro-European establishment parties and have put pressure on mainstream leaders to embrace some of their positions. The UK government's decision to hold the June 2016 public referendum on continued EU membership was driven largely by pressure from hard-line euroskeptics, both within and outside of the governing Conservative Party. Some euroskeptic parties may hope to influence the formation of EU policies and stem further EU integration. At the same time, opinion polls indicate that a majority of EU citizens remain supportive of the EU. According to one recent EU-wide survey, 68% of respondents believe their country has benefitted from being in the EU. Some observers note that many of the most stridently anti-EU parties did not do as well as predicted in key elections in 2017, including France's former National Front party (renamed National Rally) and the Netherlands' Freedom Party, and are not part of their respective national governments. Lack of Strong Leadership and Decreased Solidarity Historically, the development of the EU has been driven forward largely by several key countries acting as an "engine." French and German leadership was essential to establishing the common currency, and France and the UK were instrumental in forging EU common foreign and security policies. Many experts suggest, however, that a strong EU "engine" has been lacking over the last few years. Although German Chancellor Angela Merkel has played a central role in responding to the eurozone crisis, Russian aggression in Ukraine, and the migrant and refugee flows, critics view her as being too hesitant and tactical in many instances, rather than acting as a leader of Europe writ large. Other analysts argue that too much power in the EU has been concentrated in Germany alone, in part because leaders of other key European countries have been hindered by domestic politics and economic preoccupations. Following the 2017 election of French President Emmanuel Macron, EU supporters hoped that France would resume its traditional role as a strong leader of the EU alongside Germany. Many viewed this as crucial for the EU's future, especially in light of Brexit. Although Macron is a committed European integrationist and has proposed ambitious EU reforms, Merkel's tenure is drawing to a close. Now in her fourth term of office, Chancellor Merkel is increasingly facing domestic opposition and challenges to her authority, including from within her own center-right political grouping, amid growing tensions over migration and asylum policy. In late October 2018, Merkel announced she will step down as her party's leader in December and will not run for reelection in 2021. Various commentators contend that Merkel has been too constrained domestically to pursue significant new EU initiatives along the lines advocated for by Macron. Furthermore, some observers assert that European leaders do not have a robust or shared strategic vision for the EU. Those of this view point to what they consider to be ad hoc, piecemeal responses that eschew hard decisions about further integration or fail to address issues with an eye to ensuring a strong, stable, united, economically vibrant EU in the long term. Differences also have emerged between Germany and France on certain aspects of key issues, including potential eurozone reforms and the future of EU defense policy. A number of analysts suggest that smaller EU members, such as the Netherlands, Sweden, Denmark, and the Baltic countries, are not keen to see a reinvigorated Franco-German engine in the absence of the UK, which often served as a check on more federalist impulses. Meanwhile, as noted above, Italy's current government harbors euroskeptic views and is considered unlikely to champion EU reforms. Observers contend that the crises over Greece and migration have produced significant divisions, a high degree of acrimony, and a lack of trust among EU member states. Moreover, these crises threatened the core EU principle of solidarity. While horse-trading and protecting national interests have always been part of EU politicking, analysts assert that narrow national agendas are increasingly taking priority over European-wide solutions. Some commentators also have begun to question the commitment of some European leaders and publics to the European integration project in light of demographic and generational changes. For younger Europeans, World War II and even the Cold War are far in the past, and some may not share the same conviction as previous generations about the need for a strong and united EU. Simultaneous Challenges Against this complex political and economic backdrop, the EU is grappling with several major challenges. Many observers contend that the breadth and difficulty of these multiple issues are unprecedented. How the EU responds may have lasting implications not only for the EU itself, but also for its role as an international actor and as a key U.S. strategic and economic partner. The UK Decision to Leave the EU11 The UK has long been considered one of the most euroskeptic members of the EU, with many British leaders and citizens traditionally cautious of ceding too much sovereignty to Brussels. As a result, the UK chose to remain outside the eurozone and the Schengen free movement area, and it negotiated the right to participate in only selected justice and home affairs policies. Amid the challenges to the EU over the last few years, former UK Prime Minister David Cameron faced growing pressure from hard-line euroskeptics, both within his own Conservative Party and outside of it, to reconsider the UK's relationship with the EU. In response, the Cameron government announced it would renegotiate the UK's membership conditions with the EU and hold an "in-or-out" public referendum on the UK's continued membership in the EU. In February 2016, Cameron reached a deal with other EU governments on measures that sought to better guard British sovereignty and economic interests in the EU. The Cameron government set June 23, 2016, as the date for the referendum on the UK's continued membership in the EU. As noted previously, UK voters decided in favor of a British exit from the EU (or "Brexit") by a relatively narrow margin of 51.9% to 48.1%. Several factors heavily influenced this outcome, including economic dissatisfaction (especially among older and middle- to lower-income voters), fears about globalization and immigration, and anti-elite and antiestablishment sentiments. The "leave" campaign appears to have successfully capitalized on arguments that the UK would be better off if it were free from EU regulations and from the EU principle of free movement, which had led to high levels of immigration to the UK from other EU countries. The UK government, led by Prime Minister Theresa May, enacted the results of the referendum in March 2017 by invoking Article 50 of the Treaty on European Union—the so-called exit clause, which outlines procedures for a member state to leave the EU. The invocation of Article 50 triggered a two-year period for withdrawal negotiations to be concluded. The UK remains a full member of the EU until the withdrawal process is completed, and EU law continues to apply in the UK until that time. EU-UK negotiations on the UK's pending withdrawal, which is widely expected to occur in March 2019, have been contentious. In December 2017, the EU and the UK reached an agreement in principle covering main aspects of three priority withdrawal issues (the Irish border, the rights of UK and EU citizens, and the financial settlement). In March 2018, talks began on the UK's future relationship with the EU. The UK government and public remains largely divided on whether it wants a "hard" or "soft" Brexit. As such, and despite the December 2017 accord with the EU, fleshing out many of the details related to the UK's withdrawal—including on customs arrangements and trade relations—has proved difficult. A key sticking point has been devising a "backstop" for Northern Ireland—a sort of insurance policy to guarantee there will be no "hard" land border (with customs and security checks) between Northern Ireland and Ireland. Although UK and EU officials have repeatedly pledged to avoid a hard border to protect the Northern Ireland peace process, reaching precise agreement on how a backstop would function has not been easy. The protracted negotiations have prompted fears of a "no deal" scenario in which the UK would "crash out" of the EU in March 2019 without settled arrangements in place. In mid-November 2018, UK and EU negotiators announced they had concluded a draft withdrawal agreement (outlining the terms of the "divorce") and a draft political declaration (setting out the broad contours of the future UK-EU relationship). The draft withdrawal agreement includes a 21-month transition period in which the UK would no longer be an EU member but would continue to apply EU rules while negotiations continue on the details of the UK's future political and economic relationship with the EU. The backstop arrangement in the draft withdrawal agreement essentially would keep all of the UK in a customs union with the EU (with areas of deeper regulatory alignment between Northern Ireland and the EU) pending agreement on a more preferable solution in the forthcoming negotiations on the future UK-EU relationship. UK officials maintain that it will never be necessary to implement the backstop. EU leaders approved the withdrawal agreement and political declaration on November 25, but concerns are growing that Prime Minister May's government may not have sufficient votes to secure the necessary approval in the UK Parliament. The backstop and other elements of the draft withdrawal agreement face opposition from a diverse group of UK parliamentarians with varying concerns. Some critics argue that the proposed withdrawal agreement ties the UK too closely to the EU and leaves the UK in a "half in, half out" situation where it will be forced to accept many EU rules without having a say in EU decisionmaking. Northern Ireland's Democratic Unionist Party (DUP)—which lends parliamentary support to May's minority government—and others worry that the potential backstop could ultimately threaten the constitutional integrity of the United Kingdom. Fears of a "no deal" scenario thus persist. Some observers view the EU as taking a tough line in Brexit negotiations—refusing to allow the UK to "cherrypick" the benefits of the EU without assuming the required obligations—in part to discourage other member states and euroskeptic publics from contemplating a break with the EU that would further fracture the bloc. Euroskeptic parties, including in France, the Netherlands, Italy, and Sweden, have been encouraged by the British decision and called for similar referendums on either EU and/or eurozone membership. Although conventional wisdom holds that most EU countries are simply too small to "go it alone," some EU officials worry that Brexit could undermine the EU if it prompts other countries to demand special membership conditions or additional policy opt-outs. Other experts note that the considerable difficulties the UK is facing in pursuing Brexit have served as a cautionary tale for publics in other EU countries and contributed to increased support for the EU in most other member states. EU leaders maintain that "the Union of 27 countries will continue," but the departure of a member state is unprecedented in the EU's history. Brexit will have political and economic repercussions for both the UK and the EU. The UK is the EU's second-largest economy and a key diplomatic and military power within the EU. Along with Germany and France, the UK has long been viewed as one of the EU's "big three" and has served as a key driver of certain EU initiatives, especially EU efforts to forge more common foreign and security policies. Some experts suggest that given the UK's foreign policy clout and defense capabilities, Brexit could diminish the EU's role as an international actor. At the working level, EU officials are aggrieved to be losing British personnel with significant technical expertise and negotiating prowess on issues such as sanctions and dealing with countries like Russia and Iran. Brexit also might dampen prospects for further EU enlargement, in part because the UK had long been one of the staunchest supporters within the EU of continued expansion, including to Turkey. At the same time, some contend that Brexit could ultimately lead to a more like-minded EU, able to pursue deeper integration without UK opposition. For example, Brexit could strengthen the prospects for closer EU defense cooperation because the UK traditionally served as a brake on certain measures in this area. The UK typically sought to circumscribe EU initiatives (such as establishing an EU military headquarters) that the UK viewed as infringing too much on national sovereignty or on NATO's role in European security (also see " Possible Future Scenarios for the EU and Next Steps "). Democracy and Rule-of-Law Concerns Concerns have grown over the last few years about what many EU officials and observers view as democratic backsliding in some member states, particularly Poland and Hungary. EU leaders and civil society organizations have criticized both countries for passing laws and adopting policies that appear to conflict with basic EU values and democratic norms. In Poland, EU concerns center on judicial and media reforms undertaken since 2015 by the ruling conservative-nationalist Law and Justice Party (PiS) that opponents charge increase government control over the courts and public broadcasters. Many observers contend that there has been a similar erosion of checks and balances in Hungary under Prime Minister Viktor Orban and his conservative-nationalist Fidesz party. Since 2010, Orban's dominant political position has allowed Fidesz to adopt a new national constitution and to reform state institutions in ways that critics argue have centralized power around the prime minister's office and have entrenched Fidesz as the dominant political party. Many experts also assert that Orban and Fidesz increasingly are targeting media and civil society groups that oppose their policies. Both the Polish and the Hungarian governments largely dismiss EU criticisms of democratic backsliding in their countries, and both have defended their respective policies vociferously. In Poland, PiS maintains that judicial reforms were necessary to root out Communist-era judges and improve efficiency and that granting the government power to hire and fire management at public broadcasters has helped to correct political bias. In Hungary, supporters of Orban and Fidesz argue that constitutional and electoral reforms seek to address government corruption and mismanagement. Government officials also note that public support for PiS in Poland and Fidesz in Hungary remains steady, citing this as an indication of their democratic legitimacy. Over the past year, however, EU concerns have continued to mount and both Poland and Hungary are now subject to Article 7 proceedings —an infringement process outlined in Article 7 of the Treaty on European Union for member states accused of violating EU fundamental rights. Ultimately, Article 7 could lead to a loss of a country's voting rights in the Council of Ministers. The European Commission initiated Article 7 proceedings against Poland in December 2017, and the European Parliament triggered Article 7 against Hungary in September 2018. EU officials maintain that the goal of the Article 7 proceedings is not to sanction Poland or Hungary but rather to encourage dialogue and revisions to practices that pose concerns. Most EU officials and outside analysts view the prospects of either country actually losing its voting rights as highly unlikely, given that this would require unanimous agreement among all other EU member states and it is expected that Poland and Hungary would each block consensus for such action against the other. News reports suggest that additional countries such as Bulgaria and the Czech Republic also would oppose suspending the voting rights of a fellow member state. In addition, EU officials have voiced concerns recently about the rule of law and corruption in Romania and Malta. The EU is currently debating its next seven-year budget, and the European Commission has proposed tying the disbursement of EU development and other assistance funds to member states' records in upholding the rule of law. Although some member states support doing so, others—including Poland and Hungary—are opposed. Some experts worry that EU tensions with Poland and Hungary reflect broader divisions within the EU. Poland and Hungary bristle at what they see as EU interference in their national sovereignty, in part because they believe that member states have ceded too much sovereignty in certain areas to Brussels. Both Poland and Hungary appear skeptical of further EU integration in some policy fields, such as migration, and charge that they are being unfairly targeted for their different views on the bloc's purpose and future shape. Hungarian officials, including Prime Minister Orban, also contend that the initiation of Article 7 proceedings is "Brussels' revenge" for Hungary's hard-line migration policies. Other analysts contend that Poland and Hungary's apparent disregard for core EU values endangers the character of the union and undermines the trust among member states upon which the EU ultimately rests. Some criticize the EU for addressing rule-of-law concerns belatedly, especially with respect to Hungary. Others note that the EU has few options, as there is no mechanism for expelling a country from the EU. Migratory Pressures and Societal Integration Challenges20 Over the last few years, Europe has experienced significant migrant and refugee flows as people have fled conflict and poverty in Syria, Iraq, Afghanistan, Africa, South Asia, and elsewhere. According to the United Nations, more than 1 million refugees and migrants reached Europe by crossing the Mediterranean Sea in 2015, roughly 363,000 did so in 2016, over 172,000 in 2017, and over 105,000 thus far in 2018. Greece and Italy have been major arrival and transit points, and Spain has seen an uptick in arrivals since 2017. Many refugees and migrants are eager to travel onward to northern EU member states. Germany and Sweden traditionally have been preferred final destinations due to their strong economies and perceptions that they are more likely to grant asylum and provide better welfare benefits. During the height of the migrant and refugee flows in 2015, various EU initiatives to manage the crisis proved largely unsuccessful. In 2016, the EU began to focus on discouraging people from undertaking the journey as a way to stem the flows and save lives. In March 2016, EU leaders agreed to end the "wave-through approach" that was allowing individuals arriving in Greece (primarily across the Eastern Mediterranean from Turkey) to transit the Western Balkans to seek asylum in other EU countries. At the same time, the EU also announced an agreement with Turkey to curtail the flows to Greece. In 2017, Italy and the EU introduced new measures to help the U.N.-backed Libyan government curb migration across the Central Mediterranean. Since these arrangements with Turkey and Libya went into effect, the number of migrants and refugees reaching Europe has decreased substantially. Nevertheless, the EU deals with both Turkey and Libya have been controversial, as human rights advocates charge they violate international law and the rights of refugees. Meanwhile, Spain has experienced a surge in migrant and refugee arrivals across the Western Mediterranean since mid-2017, and some reports suggest that migrant smugglers are seeking to exploit new transit routes in the Western Balkans. The EU has faced considerable criticism for lacking coherent, effective migration and asylum policies, which have long been difficult to forge because of national sovereignty concerns and sensitivities about minorities, integration, and identity. Despite the overall reduction in migrants and refugees currently seeking to enter Europe, the influxes continue to have significant political and societal ramifications for the EU. These include the following: Challenges to EU S olidarity. The migrant and refugee flows have exposed deep divisions within the EU. Frontline states Greece and Italy and key destination countries farther north express dismay at what they view as insufficient EU burden sharing in managing the flows and processing asylum requests. Other EU countries complain that authorities in frontline countries are often lax about registering new arrivals properly, enabling many to leave and seek asylum elsewhere. This is in contravention to the EU's "Dublin regulation"—the EU rules on asylum processing, which usually deem the first EU country an asylum-seeker enters as responsible for examining that individual's asylum application, with some exceptions. Governments in Central Europe have been particularly vocal opponents of efforts to redistribute asylum-seekers throughout the EU, fearing that migrants and refugees, many of whom are Muslim, could alter the primarily Christian identities of their countries. Some Central European officials also have objected to accepting migrants and refugees because of their relatively less affluent economic positions within the EU. Threats to the Schengen Area of Free M ovement. The migration and refugee flows have strained the Schengen area—regarded as central to the European integration project. The area largely depends on confidence in the security of the bloc's external borders. Schengen has been tested not only by the magnitude of the migration flows but also by concerns that some terrorists may have been able to slip into Europe as part of the flows (see " European Security Concerns ," below, for more information). In 2015, several Schengen countries (including Germany, Austria, Denmark, and Sweden) instituted temporary border controls in some areas in response to the migratory pressures. These temporary controls remain in effect, and some experts worry that repeated extensions could make them permanent, at least on a de facto basis. In June 2018, mounting German concerns about ongoing "secondary movements"—or flows of asylum-seekers who already had applied for asylum in another EU country—prompted fears of new border closures in Germany, Austria, Italy, and other Schengen countries. Renewed Concerns About Integrating Minorities . The influxes of refugees and migrants have rekindled questions about EU countries' ability to integrate minorities into European culture and society. Such anxieties have become more pronounced amid reports of criminal activity and sexual assaults allegedly committed by some migrants and asylum-seekers and by revelations that many of the recent terrorist attacks in Europe were carried out by extremists of Muslim background born and/or raised in Europe. Some member states in Central and Eastern Europe cited potential terrorism or other security risks in arguing against accepting migrants and refugees into their countries. At the same time, concerns exist about increasing societal tensions and xenophobia in the EU. Germany, Sweden, Italy, and other EU countries have seen an increase in the number of violent incidents against migrants and refugees. Economic Implications. Debate has arisen over the economic impact of the migrant and refugee flows in the EU. The surge in migrants and refugees in 2015-2016 strained welfare, education, and housing systems in many European countries. Some segments of the public worry that the newcomers could take jobs or reduce wages. In the longer term, some leaders and analysts contend that the influxes of migrants and refugees could be economically beneficial and help offset unfavorable EU demographic developments (such as aging populations and shrinking workforces), thus strengthening fiscal sustainability. Many experts point out, however, that much will depend on how well migrants and refugees are integrated into the labor market in European host countries. The EU continues to work on developing a more comprehensive migration and asylum policy and on measures to better manage both legal and irregular migration. However, progress has been slow, and many EU national governments face considerable domestic pressure for ever-stricter policies designed largely to curb continued and future migration. A particularly contentious issue centers on revising the Dublin regulation. Proposed reforms to the Dublin regulation include a "fairness mechanism" to relieve some of the burden on frontline states facing heightened asylum pressures during times of increased migratory flows, as well as measures to curb secondary movements that can strain favored destination countries. Various EU member states oppose different elements of the proposed Dublin regulation revisions, and agreement has proven elusive to date. In the absence of EU consensus, Germany has sought to strike "bilateral or trilateral agreements" among a subset of EU countries to stop secondary movements of asylum-seekers into Germany. The German government has concluded deals on secondary movements with Spain and Greece and is reportedly working on one with Italy. Chancellor Merkel contends that she remains supportive of an EU-wide solution on secondary movements and other asylum issues, but some analysts believe these separate deals could reinforce fractured migration and asylum policies among EU member states and further inhibit agreement on common EU measures. EU member states are divided on other potential migration policies, and implementation of agreed policies is often difficult. In June 2018, EU leaders announced they would set up "controlled centers" within the EU for housing asylum-seekers, processing asylum claims, and speeding repatriations of rejected asylum-seekers; they also decided to explore developing "regional disembarkation platforms" outside the EU for people saved at sea. However, some analysts note that these plans were vague and efforts to flesh them out have produced additional disagreements. Reportedly, no EU country has offered to host a "controlled center" on its territory, and some member states question whether it is feasible and legal to establish "disembarkation platforms" outside the EU. The latter would require the EU to persuade non-EU countries (primarily in Africa) to host such facilities; press reports indicate that some countries, such as Morocco, Tunisia, and Libya, have ruled out doing so. EU officials assert that they remain strongly committed to Schengen and have sought to improve EU border controls. Among other measures, in October 2016, a new European Border and Coast Guard became legally operational. It reinforces Frontex (the EU's border management agency) and seeks to bolster member states' capacities at the external borders through joint operations and rapid border interventions. European Commission President Juncker has called for strengthening Frontex further by increasing its staff from 1,500 currently to 10,000; news reports suggest, however, that this proposal may be encountering resistance from some member states that worry about a larger agency with potentially new powers encroaching on national sovereignty. European Security Concerns Over the past several years, the EU has struggled with how best to address significant changes in Europe's security environment. The most prominent concerns relate to the ongoing conflict in Ukraine, a more militarily assertive Russia, and terrorist activity in Europe linked to the Islamic State organization. Such issues have challenged the EU's ability to forge common foreign and security policies (often complicated by the need to reach consensus among all member states) and to advance integration in the area of Justice and Home Affairs. The heightened terrorism threat also poses risks to the Schengen area of free movement. Managing a Resurgent Russia Like the United States, the EU has been forced to reconsider its relationship with a more assertive Russia and the implications for European security and stability. The EU has sought to support Ukraine's political transition, condemned Russia's annexation of Crimea in March 2014, and strongly urged Russia to stop backing separatist forces in eastern Ukraine. The EU has worked both to engage Russian President Vladimir Putin in promoting a political solution to the conflict in Ukraine and to impose a series of sanctions on Russia (including those targeting the financial, energy, and defense sectors of the Russian economy). Crafting common EU policies has been arduous, however, given the different national histories and economic relations with Russia among the EU's various member states. The EU has tied lifting its Ukraine-related sanctions on Russia to the full implementation of the Minsk peace agreements for Ukraine, and the EU appears committed to maintaining sanctions. At the same time, questions persist in some EU countries about the sanctions' effectiveness, especially amid concerns that they could be hindering EU relations with Russia on other global priorities and harming European business interests. The EU sanctions (and Russian countersanctions) have come with financial costs for certain industries in some EU member states, including Germany, Finland, and the Baltic states. Some European officials have periodically floated ideas about restructuring EU sanctions. Other EU members—including the UK, Poland, and the Baltic states—firmly reject suggestions to relax or recalibrate EU sanctions and have urged the Trump Administration to uphold U.S. sanctions. Beyond Ukraine, the EU and many member states are concerned about a range of other Russian activities, including Russian disinformation efforts and potential election interference in Europe, Russian actions in Syria, cyber threats, and alleged human rights abuses. EU leaders condemned the March 2018 nerve agent attack that Russia allegedly carried out in the United Kingdom against former Russian intelligence officer Sergei Skripal and his daughter. In October 2018, the EU approved a new legal framework that will allow it to impose sanctions on persons and entities involved in the development and use of chemical weapons. Although this measure is not aimed at Russia specifically, observers largely view the Skripal attack as providing political impetus. The EU has not yet named individuals or entities subject to these new sanctions, but many analysts expect that the two Russian intelligence officers suspected of carrying out the Skripal attack will be among those ultimately designated. At the same time, fundamental differences exist among EU countries about how best to manage Russia in the longer term. Some still hope that Russia can be a partner for the EU, maintaining that Russia is too big to isolate or ignore and that, ultimately, Europe's stability and security depend on forging good relations with Moscow. Many EU countries have extensive commercial ties with Russia (including Germany and Italy) and rely on Russia to help meet their oil and gas needs. Some European policymakers also argue that Russian cooperation is essential to solving key international challenges, including the ongoing conflict in Syria. Other EU countries are more inclined to view Russia as a potential threat and appear to favor a harder stance toward Russia. Many EU governments have been alarmed by the uptick in Russian military exercises and incursions by Russian fighter jets into the airspace of countries such as Sweden and Denmark. Some European leaders and EU officials—including several dozen Members of the European Parliament—advocate for an "EU Magnitsky Act" to impose sanctions on Russians complicit in human rights abuses, money-laundering activities, and other "anti-democratic" activities (similar to U.S. legislation named for Russian lawyer Sergei Magnitsky, who died in police custody in Russia in 2009). The UK and the Netherlands also reportedly are pressing for new EU sanctions against people and organizations that carry out cyberattacks, which could be used against Russian individuals and groups. EU countries with histories of Soviet domination are particularly wary of Russia and President Putin's intentions. Poland and most Central European members, for example, strongly oppose a proposed Russian gas pipeline project—the so-called Nord Stream 2, which would increase the amount of Russian gas delivered to Germany and other parts of Europe via the Baltic Sea. EU members opposed to Nord Stream 2 contend it would undercut Ukraine (the pipeline would bypass the country and thereby deny Ukraine transit fees), increase rather than decrease European reliance on Russian gas, and do little to improve European energy security. Supporters of Nord Stream 2 include Germany, Austria, and France; these countries primarily view Nord Stream 2 as a commercial project and argue that it would help increase the supply of gas to Europe. Some experts in Europe and the United States contend that Brexit may be a "win" for Putin's Russia, potentially leading to a more accommodating EU approach. Although the UK has been a staunch supporter of EU sanctions on Russia and vocal in its concerns about Russia's more assertive military posture, it is not the only EU member state to hold such views. Thus, arguments suggesting that without the UK, the EU would automatically seek to recalibrate its policies toward Moscow may be overblown. However, Brexit could further complicate efforts to forge and maintain any common EU stance toward Russia given the diplomatic and military capabilities the UK brings to the EU table and its frequent leadership role in building EU consensus on major foreign policy and security issues. Observers also note that Brexit and other divisions within the EU, especially if they weaken the EU as an institution, could provide an assist to Putin's broader goal of challenging the Western-oriented, post-Cold War order in Europe. Countering Terrorism38 European governments and the EU are alarmed by the Islamic State terrorist organization's connections to and influence in Europe. Many recent terrorist incidents in Europe—including the November 2015 attacks in Paris and the March 2016 bombings in Brussels—were carried out by European citizens who had trained and/or fought with the Islamic State in Syria or Iraq. Experts believe that the Islamic State may have steered the Paris and Brussels attacks from Syria. The May 2017 suicide bombing at a music concert in the UK—carried out by a young British citizen of Libyan descent—raised concerns that the Islamic State also could be seeking to direct attacks from Libya, given the group's presence and activities there. The Islamic State's ability to attract European followers and its use of social media and violent extremist propaganda to inspire "lone wolf" attacks also trouble European authorities. Following several incidents in 2016 and 2017 in which cars or trucks were used as weapons—in France, Germany, the United Kingdom, Sweden, and Spain—the Islamic State claimed that those responsible were its "soldiers." However, evidence suggesting a direct connection with the Islamic State varies and is absent in some cases. Analysts note that that the Islamic State has heightened calls for its followers to attack in Europe amid territorial losses in Syria and Iraq and as travel to these conflict zones has become more difficult. The uptick in terrorist activity has reinforced long-standing anxieties about the integration of Muslims in Europe and the potential for radicalization among some segments of Europe's Muslim populations. Although EU leaders warn against equating refugees with terrorists, they acknowledge that terrorists could make use of migration routes to gain entrance into Europe. Two of the November 2015 Paris assailants may have entered Europe through Greece several weeks before the attacks by posing as refugees with fake Syrian passports. Press reports suggest that a Swedish national charged in both the Paris and Brussels attacks may have traveled back to Europe from Syria as part of the refugee flows. In addition, several lone wolf incidents over the last three years perpetrated by asylum-seekers or refugees in Germany, Sweden, and Finland have elevated fears that some refugees or immigrants (especially youths) could be particularly vulnerable to radicalization due to trauma and feelings of dislocation and marginalization. European governments have employed a range of tools to combat Islamist terrorism and foreign fighters, including increasing surveillance and prohibiting travel, and have thwarted a number of plots. The EU also has sought to play a leading role given the cross-border nature of the threat and the weaknesses in European intelligence sharing and border controls exposed by many of the recent terrorist incidents. Efforts to improve EU-wide counterterrorism capacities include enhancing information-sharing among national and EU authorities; strengthening the Schengen area's external border controls; bolstering counter-radicalization measures (including online and in prisons); and augmenting efforts to curb terrorist financing. Nevertheless, agreeing upon and implementing common EU policies to combat terrorism has proved challenging. This is largely because such initiatives often relate to police, judicial, and intelligence prerogatives viewed as central to a state's sovereignty. The imperative to balance promoting security with protecting human rights and civil liberties also has complicated the formulation of certain EU-wide policies. For example, data privacy and protection concerns slowed progress for years on a proposal for an EU-wide system to collect airline Passenger Name Record data (the proposal was formally adopted in April 2016). Some analysts suggest that the EU's collective response to the broader crisis in Syria and Iraq and its ability to counter the Islamic State in the region has been constrained by differing views among its national governments, especially regarding the use of force. While some EU countries have participated militarily in the U.S.-led air campaign against the Islamic State, for example, others have not. Following the November 2015 attacks in Paris, the EU invoked its "mutual defense clause" (Article 42.7 of the 2009 Lisbon Treaty) at France's request, obligating other member states to provide France with unspecified "aid and assistance." Invoking this clause, however, was viewed largely as an act of political solidarity, and EU officials asserted that it did not imply the establishment of an EU security mission. Possible Future Scenarios for the EU and Next Steps In light of the internal and external challenges facing the EU, the future shape and character of the bloc are being questioned. Considerable debate exists on whether more or less EU integration is necessary going forward. Although most experts consider a complete dissolution of the EU unlikely, advocates worry that for the first time in the EU's history, some aspects of integration could be stopped or reversed. Others contend that the multiple crises currently facing the EU could produce some beneficial reforms and ultimately transform the bloc into a more effective and cohesive entity. Possible scenarios for the EU in the years ahead include the following: Muddling Through . The EU would largely continue to function as it currently does, without any significant treaty changes or decisionmaking reforms, and find some degree of common solutions to crises such as those posed by migration or terrorism. The EU would continue to pursue integration and common policies where possible, although doing so could be increasingly difficult. Establishing a Two- S peed or Multispeed EU. The EU would become a two-speed entity, consisting of a strongly integrated group of "core" countries and a group of "periphery" countries more free to select those EU policies in which they wish to participate. A multispeed variant could see further integration pursued by some member states in selected fields, such as European defense or eurozone governance, and other EU members could choose to opt out. Some European policymakers and analysts suggest that such a multispeed EU already exists in practice, with varying membership on a range of EU initiatives—including the eurozone, Schengen, justice and home affairs issues, and defense policy—and thus it is unclear how formalizing a multispeed EU would differ from existing practice. A Looser , More Intergovernmental Configuration . Further EU integration essentially would be put on hold, and possibly reversed in some areas, with sovereignty on certain issues reclaimed by national capitals. This outcome may be most likely should reform-minded euroskeptic parties come to power in more EU countries. A looser structure may make it easier for the EU to expand to include Turkey, the remaining aspirants in the Western Balkans, and other countries such as Georgia and Ukraine. A Tighter, More Integrated Configuration . The EU would emerge from its current challenges more united and integrated. Some suggest such an outcome could actually be more likely as a result of Brexit, resulting in an EU of member states more aligned on the need for further political and economic integration. This configuration likely would not encourage further EU enlargement. Following the UK's Brexit referendum in June 2016, EU leaders acknowledged that it could no longer be "business as usual" and announced that the other 27 member states would launch a "political reflection" to consider the EU's future. In September 2016, the EU-27 leaders held an initial discussion in Slovakia. The resulting Bratislava Declaration asserted that "although one country has decided to leave, the EU remains indispensable for the rest of us." Despite the attempt to demonstrate unity in Bratislava, some EU officials and experts reportedly were disappointed that measures proposed were not bold enough, did not offer a future strategic vision for the EU, and mostly focused on implementing tactical responses to the various crises or recommitting support to existing initiatives. The EU concluded its reflection process in March 2017 during its commemoration of the 60 th anniversary of the Treaties of Rome. In the 60 th -anniversary Rome Declaration, the leaders of the EU-27 renewed their commitment to the European integration project, acknowledged the challenges facing the EU, and pledged to "make the European Union stronger and more resilient, through even greater unity and solidarity amongst us." Ahead of the 60 th anniversary meeting, press reports indicated that some EU governments were in favor of developing a multispeed EU. A reported German-led effort to commit to a multispeed EU in the Rome Declaration, however, ultimately was unsuccessful. Poland and other member states were concerned that making the multispeed concept central to the EU's identity would be divisive, undermine EU solidarity, and potentially lead to different classes of EU membership (essentially, one for richer, more prosperous EU countries in the west and another for relatively poorer EU members in the east). Regardless of a formal decision to move toward a multispeed EU, the EU appears to be pursuing greater integration in certain areas, with varying degrees of success. Over the past two years, EU leaders have announced several new initiatives to bolster security and defense cooperation, including a new European Defense Fund to support joint defense research and development activities. In late 2017, 25 EU member states agreed on a new defense pact (known officially as Permanent Structured Cooperation, or PESCO) aimed at spending defense funds more efficiently, developing military capabilities jointly, and increasing interoperability. French and German leaders also continue to discuss measures to bolster the eurozone's stability and improve its economic governance. In June 2018, French President Macron and German Chancellor Merkel announced a proposed road map for eurozone reforms. Other eurozone members, however, subsequently voiced significant reservations about some aspects of the German-French plan. A potential common eurozone budget remains particularly controversial. Many analysts note that such policy debates are common in the EU and to be expected, but suggest that implementing any significant EU reforms or restructuring likely will be a years-long endeavor subject to continuous debate and prolonged negotiations. Issues for the United States U.S. Policy Considerations The United States has resolutely supported the European integration project since its inception in the 1950s as a way to help keep European nationalism in check, promote political reconciliation and economic interdependence, and encourage stability and security on the European continent. Successive Administrations and many Members of Congress have long viewed the EU (and its predecessors) as fostering democratic allies and strong trading partners in Europe. During the Cold War, U.S. policymakers considered the European integration project—and the peace and prosperity it helped to engender in Western Europe—as essential to helping deter the Soviet threat and keeping Western Europe out of the Soviet orbit. Since the end of the Cold War, the United States has often looked to the EU for partnership on common foreign and security concerns worldwide. Many analysts assert that the United States and the EU have a strong track record of cooperation. The United States and the EU have promoted peace and stability in various regions and countries (including the Balkans, Ukraine, and Afghanistan), enhanced law enforcement cooperation, worked together to counter terrorism, and sought to tackle cross-border challenges such as cybersecurity. The United States and the EU also share an extensive and interdependent trade and investment relationship. The EU accounts for about one-fifth of U.S. total trade in goods and services, and the United States and the EU are each other's largest source and destination for foreign direct investment. Despite some periodic disagreements on issues such as the 2003 U.S.-led war in Iraq and a number of U.S.-EU trade disputes, U.S. officials and analysts mostly have regarded the U.S.-EU partnership as serving their respective political and economic interests. Over the years, some U.S. officials and analysts occasionally have suggested that a potentially stronger, more united EU could rival U.S. power and prestige. Such views, however, traditionally have not shaped broad U.S. policy toward the EU in any significant way. Some U.S. policymakers, analysts, and Members of Congress have expressed concern that the various challenges currently facing the EU could have negative implications for the EU's ability to be a robust, effective U.S. partner. Those of this view worry that internal preoccupations could prevent the EU from focusing on key U.S. priorities, such as Russian aggression in Ukraine, the conflicts in Syria and Iraq, and countering terrorism. Some observers also have suggested that a politically unstable and economically fragile EU could take U.S. attention and resources away from managing strategic challenges elsewhere, including the rise of China and continued instability in the Middle East. A number of analysts posit that Brexit in particular could change U.S.-EU dynamics in the years ahead. The United States has long valued the UK's role in the EU in light of the UK's political and economic clout, its Atlanticist orientation, and the fact that U.S. and UK views traditionally align on most major foreign policy issues. Some observers suggest the United States is losing its best advocate within the EU for policies that bolster U.S. goals and protect U.S. interests. Those of this view are concerned that in the longer term, the UK's absence could lead to greater U.S.-EU divergence on issues such as managing Russia or the centrality of NATO to European security. Others contend that the United States has close bilateral ties with most EU countries and shares common political and economic preferences with many of them. Those of this view argue that the U.S.-EU partnership is broader than U.S. relations with any one member state and thus the UK's departure will not significantly alter U.S.-EU relations. Does the United States Pose a Challenge for the EU? Since the earliest days of the European integration project, European leaders have valued U.S. support and recognized the U.S. role in helping to ensure European security and prosperity. EU and European officials widely view NATO and the U.S. security guarantee as central to maintaining peace and stability on the European continent. Many consider U.S.-EU trade and investment ties, by virtue of their size and interdependence, as crucial to European economic well-being. Furthermore, as asserted in a September 2018 European Parliament resolution, many EU policymakers regard a cooperative U.S.-EU partnership as "the fundamental guarantor for global stability" and as being in "the interest of both parties and of the world." U.S.-EU relations traditionally have been undergirded by shared common values and a commitment to the post-World War II international order based on alliances and a rules-based, multilateral trading system. Given the long-standing U.S. backing for and partnership with the EU, President Trump's largely critical views of the EU have surprised many Europeans and raised concerns about what these views may portend for future U.S.-EU relations. European Council President Donald Tusk conveyed the anxiety of many in the EU when he stated in January 2017 that "the new administration [is] seeming to put into question the last 70 years of American foreign policy" and remarked that potential changes in the U.S. posture toward Europe could pose further challenges to EU cohesion, stability, and security. On the economic front, the EU is deeply concerned about what it regards as protectionist U.S. trade policies—including the imposition of tariffs on imports of steel and aluminum from the EU—and President Trump's apparent view of EU trade practices as being detrimental to the United States. In mid-July 2018, President Trump reportedly asserted that the EU was a U.S. "foe" for "what they do to us in trade," although he also noted, "that doesn't mean they are bad … it means that they are competitive." Some European analysts speculate that contrary to past U.S. views, the Trump Administration might be indifferent to the collapse of the EU if this were to allow the United States to negotiate better bilateral trade deals with individual member states. President Trump has been vocal in his support for the UK's decision to leave the EU and for a future U.S.-UK free trade agreement following Brexit. Many in the EU greeted the July 25, 2018, accord between President Trump and European Commission President Juncker on renewing U.S.-EU economic cooperation as a positive first step toward de-escalating tensions on trade and tariff issues. EU officials hope that U.S.-EU discussions will lead to an end to U.S. tariffs on steel and aluminum products and prevent potential new U.S. tariffs on autos and auto parts. Administration officials and supporters credit President Trump's approach with compelling the EU to address U.S. trade concerns. Nevertheless, some EU policymakers and experts remain skeptical about the prospects for resolving trade differences with President Trump. U.S.-EU differences have surfaced about the extent and scope of the proposed new trade talks, especially related to whether agricultural products should be part of upcoming trade discussions. Meanwhile, U.S. officials have expressed frustration with what they perceive to be slow progress on the EU side. U.S.-EU divisions have emerged on a growing number of other issues, as well. Many EU officials are uneasy with elements of the Trump Administration's "America First" foreign policy and with U.S. positions on a range of international challenges—including relations with Russia and China, the nuclear deal with Iran, the Middle East peace process, migration, and climate change. Some in the EU have bristled at concerns voiced by several Administration officials that EU defense efforts must not distract European countries from their NATO commitments. EU policymakers also express concerns about what they regard as the Trump Administration's ambivalence toward multilateral organizations such as the United Nations and the World Trade Organization. Many in the EU are anxious about the degree to which the United States will continue to play a leading role in supporting the multilateral trading system. Various EU officials and European analysts increasingly question whether the United States will remain a credible and reliable partner in the years ahead. The aforementioned European Parliament resolution, for example, expresses concern that "the current one-sided 'America first' policy harms the interests of both the EU and the US, undermines mutual trust and may also have wider implications for global stability and prosperity." Some Europeans worry that there is a risk of U.S. global disengagement and argue that the EU must be better prepared to address both regional and international challenges on its own. Many observers view EU efforts over the last few years to conclude trade agreements with other countries and regions (including Canada, Japan, and Latin America) and to enhance defense cooperation and as aimed, in part, at reducing European dependence on the United States. Some analysts suggest that recent calls by French President Macron for a "European army" seek to underscore the need to boost European military capabilities in the face of growing uncertainty about the future U.S. role in the world. German Chancellor Merkel subsequently supported Macron's position on developing a European army, although she noted that it should seek to complement not compete with NATO. Others maintain that despite U.S.-EU tensions on certain policy issues, the EU will seek to work with the Trump Administration on common interests—such as countering terrorism and promoting cybersecurity—and will aim to preserve political, security, and economic relations with the United States for the long term. Some observers point to European Commission President Juncker's efforts to reduce trade tensions with President Trump as a clear indication that the EU remains committed to ensuring close U.S.-EU relations for the foreseeable future. EU foreign policy chief Federica Mogherini has asserted, "I have no doubt that the European Union and the United States are and will remain natural partners, natural friends, in spite of disagreements we may have with the U.S. Administration." Many U.S. officials and analysts also contend that EU fears of a demise in relations are largely overblown, especially in light of recent statements of support for the EU from President Trump and other Administration officials. Following his July 2018 meeting with European Commission President Juncker, President Trump tweeted that the United States and the EU "love each other," and he appeared to give a more upbeat assessment of U.S.-EU economic relations. In September 2018, new U.S. Ambassador to the EU Gordon Sondland observed that there have always been disagreements between the United States and the EU and that "one of the key strengths of the U.S.-EU relationship is our ability to talk candidly and freely about our differences. That is not an advantage we enjoy with all our partners, and we should not lose sight of its importance." Sondland further noted that on a multitude of strategic and economic concerns, the United States and the EU "work best when we work in tandem," and he pledged continued support for close U.S.-EU cooperation. Appendix. Map of the EU and Candidate Countries

The European Union (EU) is a unique partnership in which member states have pooled sovereignty in certain policy areas and harmonized laws on a wide range of economic and political issues. The EU is the latest stage in a process of European integration begun after World War II, initially by six Western European countries, to promote peace, security, and economic development. The EU currently consists of 28 member states, including most of the formerly communist countries of Central and Eastern Europe. The EU is largely viewed as a cornerstone of European stability and prosperity. For much of the last decade, however, many EU countries have faced considerable economic difficulties. Despite an improved economic situation in the EU since 2017, economic pressures and societal changes have contributed to the rise of populist and antiestablishment political parties, at least some of which harbor anti-EU or "euroskeptic" sentiments. Such trends have complicated the EU's ability to deal with multiple internal and external challenges. Among the most prominent challenges are the pending departure of the United Kingdom (UK) from the EU ("Brexit"); democracy and rule-of-law concerns in Poland, Hungary, and other EU members; migration and related societal integration concerns; a resurgent Russia; and a heightened terrorism threat. Amid these difficult issues, some are questioning the future shape and character of the EU. Supporters of the EU worry that certain aspects of EU integration could be stopped or reversed. Others contend that the multiple crises could produce some beneficial reforms and ultimately transform the EU into a more effective, cohesive entity. Recently, considerable attention has focused on developing a "multispeed EU," in which some EU members could pursue greater integration in specified areas while others could opt out. Successive U.S. Administrations and many Members of Congress have supported the European integration project since its inception, viewing it as crucial to European peace and security and as a way to foster strong U.S. allies and trading partners. Despite some tensions over the years, the United States and the EU share a dynamic political partnership on various foreign policy issues and an extensive trade and investment relationship. How the EU evolves in the years ahead may have strategic and economic repercussions for the United States. At the same time, some EU leaders are concerned about President Trump's apparent skepticism of the EU and his reported assessment of the bloc as an economic competitor. Those of this view also worry that elements of the Trump Administration's "America First" foreign policy—such as the U.S. decision to withdraw from the 2015 multilateral nuclear deal with Iran—pit the United States against the EU. A number of European officials and analysts question whether traditional U.S. support for close U.S.-EU relations may be shifting and whether the United States will remain a reliable international partner. Some observers suggest that managing relations with the United States under the Trump Administration has emerged as another, somewhat unexpected, challenge for the EU. At the same time, many in the EU hope to preserve close U.S.-EU ties and EU policymakers continue to seek to cooperate with the Trump Administration where possible on issues of common interest and concern. This report provides a brief history of the EU and the major challenges confronting the bloc. It also discusses the potential implications for the EU and for U.S.-EU relations. Also see CRS Report RS21372, The European Union: Questions and Answers, by Kristin Archick.

Practices Adopted During the American Revolution Congress from the outset was "imbued with the conviction that only the very highest achievements [were] entitled to such a distinction, and that the value of a reward is enhanced by its rarity!" Instituting such a tradition was considered "both a legitimate function and powerful instrument of nationality." "Few inventions," Colonel David Humphrey wrote in 1787, "could be more happily calculated to diffuse the knowledge and preserve the memory of illustrious characters and splendid events than medals—whether we take into consideration the imperishable nature of the substance whence they are formed, the facility of multiplying copies, or the practice of depositing them in the cabinets of the curious." With these words, Humphrey, who had the responsibility for having the first gold medals struck in Paris, captured the essence of the feelings which inspired the Continental Congress to choose medals as its highest distinction and expression of national appreciation. Following a long-standing historical practice, Congress commissioned gold medals as tributes for what were considered to be the most distinguished achievements. Silver and bronze medals, and ceremonial swords, were awarded for less eminent, but still notable, accomplishments. Of these, only the gold medal has been continuously awarded to the present day. The Continental Congress had not yet proclaimed its independence from Great Britain when, on March 25, 1776, George Washington, commander of the Continental Army, was tendered the first Congressional Gold Medal for his "wise and spirited conduct" in bringing about British evacuation of Boston. During the next 12 years, the Continental Congress authorized an additional six gold medals for Revolutionary military and naval leaders. In 1777, Major General Horatio Gates was recognized for his "brave and successful efforts" in bringing about the surrender of the British Army at Saratoga. Two years later, a similar honor was bestowed upon Major General Anthony Wayne in 1779 for his courageous assault on the British at Stony Point, NY. A gold medal was also given to Major Henry Lee in commemoration of the skill and bravery he exhibited against the British at Paulus Hook, NJ. Brigadier General [author name scrubbed] and Major General Nathaniel Greene were praised for their gallant efforts in South Carolina during 1781. Six years later, John Paul Jones was similarly honored for his "valor and brilliant services" in capturing the Serapis. First Medals Were Struck in Paris While the Continental Congress was prompt in approving each of these medals, those responsible for carrying out the wishes of Congress were far less expeditious. Because of its close ties with France, Congress turned to Paris for advice and assistance in having the medals struck. Unfortunately, Congress's preoccupation with the American Revolution, together with the lengthy and complicated procedures which had to be followed in Paris, produced long delays. Thomas Jefferson was not able to present Washington his gold medal until March 21, 1790, some 14 years after it had been approved. At the same time, Washington received a mahogany box containing a number of other gold medals ordered by Congress. Soon thereafter, these medals were transmitted by the former President to the various recipients. The gold medal conferred upon Major Henry "Light Horse Harry" Lee for his "remarkable prudence" and "bravery" during the surprise raid of Paulus Hook, NJ, was the first to be struck in this country. Recipients in the Nineteenth Century Following the ratification of the Constitution, the first gold medal authorized by the Congress of the United States was given to Captain Thomas Truxtun in 1800 for his gallant effort during the action between the United States frigate Constellation and the French ship La Vengeance . In 1805, Commodore Edward Preble received a gold medal for gallantry and good conduct during the War with Tripoli. War of 1812 Subsequently, Congress commissioned 27 gold medals for notable victories and achievements in the War of 1812. This was more than four times as many as it had given during the American Revolution. "Scarcely a victory of any consequence was overlooked." The gold medal Congress approved on February 22, 1816, honoring Captain James Biddle's "gallantry" in capturing the British sloop-of-war Penguin , was the final naval award of this character awarded by Congress until World War II. Mexican War Gold medals would continue to be awarded for military achievements until the Civil War, but with far less frequency. In part this is explained by the fact that in the War with Mexico naval operations were negligible and military operations were principally confined to two expeditions led, respectively, by Major General Zachary Taylor and Major General Winfield Scott. Taylor's heroics against the Mexicans earned him gold medals on three different occasions. Scott, for his efforts, was accorded a gold medal in 1848. Gold medals were also given to 10 officers and seamen belonging or attached to the French, British, and Spanish ships-of-war, who on December 10, 1846, gallantly rescued 37 of the officers and crew from the wreck of the United States brig Somers in Vera Cruz harbor. Heroic action of a very different type in 1854 prompted Congress to praise Commander Duncan N. Ingraham of the USS St. Louis for his efforts in rescuing Martin Koszta from illegal seizure and imprisonment aboard the Austrian war-brig Hussar . Congress Broadens the Scope of Its Gold Medal Soon after the Hussar episode, Congress broke with its tradition of only honoring heroism associated with the actions of American military or naval personnel. In 1858, Dr. Frederick A. Rose, an assistant-surgeon in the British Navy, was recognized for his kindness and humanity to sick American seamen aboard the U.S. steamer Susquehannah whose crew had been stricken with yellow fever. At the behest of President Abraham Lincoln, Congress applauded Cornelius Vanderbilt in 1864 for his patriotic gift to the imperiled nation of a steamship which bore the donor's name. Three years later, Cyrus W. Field was praised for his work in the laying of the transatlantic cable. Tribute was similarly paid to Private George F. Robinson for his "heroic conduct" in saving Secretary of State William H. Seward from an assassin's knife on April 14, 1865. At the same time, Congress established the first permanent American military decoration with creation of the Medal of Honor. This award, which was conceived in the early 1860s, marked the beginning of a formalized policy by the United States of awarding military decorations. Although this medal was also to be presented in the name of the Congress of the United States and today is often referred to as the Congressional Medal of Honor, the regulations for awarding the Medal of Honor have from the beginning been the responsibility of the armed services. There is a clear distinction between the Medal of Honor, which is a military award, and Congressional Gold Medals, which are authorized by Congress to honor particular individuals and events. During the Civil War, more than 1,500 Americans were awarded the Medal of Honor, but only one individual—Ulysses S. Grant—received a Congressional Gold Medal. Thirty-five years were to pass before Congress would bestow the award on another American military leader. On five occasions, in the interim, Congress expressed its gratitude for lifesaving contributions. In 1866 three merchant sea captains were recognized with gold medals for rescuing some 500 men from the wreck of the steamship San Francisco more than a decade earlier. In 1873, Congress expressed its admiration for the 10 men from Westerly, RI, who saved the lives of 32 persons from the wrecked steamer Metis , in the waters of Long Island Sound. The following year, the heroics of John Horn, Jr., who during an 11-year period had rescued 110 men, women, and children from drowning in the Detroit River, captured the attention of Congress. Joseph Francis was thanked in 1888 for his "life-long service to humanity" in the construction and perfection of lifesaving appliances, which had been instrumental in saving several hundreds of lives. In 1890, George Wallace Melville, chief engineer aboard the Arctic exploring steamer Jeannette , and seven of his shipmates were praised for their persistent efforts to find and assist their commanding officer after they became shipwrecked. Nineteenth-century contributions of a far different nature prompted expressions of gratitude to philanthropists George Peabody of Massachusetts and John F. Slater of Connecticut for their substantial financial support for education of the underprivileged in the South and Southwest. Recipients in the 20th and 21st Centuries In the 20 th and 21 st centuries, Congress continued to broaden the scope of such honors to include recognition of excellence in such varied fields as the arts, athletics, aviation, diplomacy, entertainment, exploration, medicine, politics, religion, and science. Actors, Artists, Authors, Entertainers, and Musicians Nineteen Americans from the arts and the world of entertainment have received Congressional Gold Medals to date. Composer George M. Cohan was the first to be so acclaimed, in 1936, for his patriotic songs "Over There" and "A Grand Old Flag." Some 18 years later, in recognition of Irving Berlin's brilliance in composing "God Bless America" and other patriotic songs, Congress bestowed its second gold medal on an American song writer. During the 1960s, poet Robert Frost was praised for enriching the culture of the world, comedian Bob Hope was honored for outstanding "service to his country and the cause of peace," and filmmaker Walt Disney was singled out for his "outstanding contributions to the United States and the world." Opera singer and humanitarian Marian Anderson and actor John Wayne were similarly decorated for their distinguished careers and contributions to the nation and world in the late 1970s. Since 1980, author Louis L'Amour, choral music conductor Fred Waring; entertainer and humanitarian Danny Thomas; and author Elie Wiesel, one of the foremost spokesmen of the victims of the Holocaust, were so honored. Singer Harry Chapin was recognized for his efforts to address issues of hunger around the world. In addition, Congress has memorialized the contributions of George and Ira Gershwin to American music, theater, and culture; Aaron Copland to American music composition; Andrew Wyeth to American art; Frank Sinatra to the entertainment industry through his endeavors as a producer, director, actor, and vocalist; and Charles M. Schulz to comic illustration. In 2008, Constantino Brumidi was recognized for his contributions to the nation as a designer and decorator of the U.S. Capitol. Aeronautical and Space Pioneers Gold medals for outstanding contributions in air and space exploration have covered a broad spectrum of accomplishments. In a public ceremony at Dayton, Ohio, on June 18, 1909, Wilbur and Orville Wright were presented Congressional Gold Medals for their achievements in demonstrating to the world the potential of aerial navigation. Congress recognized Charles A. Lindbergh for his aeronautical achievements in 1928. A year later, the seven officers and men who conceived, organized, and commanded the first trans-Atlantic flight in the United States naval flying boat NC-4 were honored. Howard Hughes was praised in 1939 for "advancing the science of aviation." At the close of World War II, Congress authorized a gold medal for American military aviation pioneer Brigadier General William (Billy) Mitchell. In September 1959, Dr. Robert H. Goddard's "historic pioneering research on space rockets, missiles, and jet propulsion" was acclaimed by Congress. Since that time, gold medals have been given to Lieutenant General Ira C. Eaker for his "distinguished career as an aviation pioneer and Air Force leader"; and to the first transatlantic balloonists: Ben Abruzzo, Maxie Anderson, and Larry Newman. Four decades later, in conjunction with the 40 th anniversary of mankind's historic and first lunar landing in 1969, Congress honored Neil A. Armstrong, the first human to walk on the Moon; Edwin E. "Buzz" Aldrin, Jr., the pilot of the lunar module and second person to walk on the Moon; Michael Collins, the pilot of their Apollo 11 mission's command module; and John Herschel Glenn, Jr., who, in 1962, became the first American to orbit the Earth. Antarctic Explorers Congressional tributes have also been extended to several explorers of Antarctica. American explorer Lincoln Ellsworth received a gold medal for his polar flight of 1925 and transpolar flight of 1926. Also participating in the latter flight, and similarly honored, were Norwegian explorer Roald Amundsen and Italian explorer Umberto Nobile. The undaunted services rendered by Rear Admiral Richard E. Byrd and the other members of the Byrd Expedition were praised with equal exuberance in 1930. Six years later, Lincoln Ellsworth received a second gold medal for his claims on behalf of the United States of approximately 350,000 square miles in Antarctica and for his 2,500-mile aerial survey of the heart of Antarctica. Acclaimed Lifesavers Despite the fact that several different lifesaving medals have been provided for over the years by law, Congress has still periodically expressed its own admiration for acts of heroism. In 1865, Congress praised George F. Robinson for his heroic conduct in fighting off an assassin attempting to kill Secretary of State William H. Seward. Two American sea captains, Captain Edwin J. Low, of the bark Kilby of Boston, and Captain George C. Stouffer, of the ship Antarctic of New York, were recognized in 1866 for aiding in the rescue of some 500 men from the wreck of the steamship San Francisco . Six years later, Congress lauded Captain Jared S. Crandall and nine other men of Westerly, RI, for manning a life-boat and a fishing boat to save the lives of 32 persons from the wreck of the steamer Metis on the waters of Long Island Sound. A Gold Medal was awarded to John Horn, Jr., in 1874 for his heroic exploits in rescuing 110 men, women, and children from drowning in Detroit River. Congress in 1888 acknowledged the work of Joseph Francis in the construction and perfection of life-saving appliances by which many thousands of lives have been saved. In 1902, three members of the Revenue Cutter Service were praised for a nearly 2,000-mile overland relief expedition to the American whaling fleet in the arctic region. At a March 1, 1913, White House ceremony, Captain Arthur Henry Rostron, commander of the steamship Carpathia , received a gold medal from President William Howard Taft for his prompt and heroic response in rescuing 704 survivors from the wreck of the Titanic . The following March, Captain Paul H. Kreibohm of the American steamer Kroonland , and four members of his crew, were awarded gold medals for rescuing 89 people from the burning steamer Volturno in the North Atlantic. Rev. Francis X. Quinn, pastor of the Church of the Guardian Angel in New York City, was honored in 1939 for risking his life in persuading an armed gunman holding an elderly couple hostage to surrender to police. The following January, a medal was authorized for William Sinnott, who had been wounded while guarding Franklin D. Roosevelt in Miami just prior to his first inauguration. A year later, 11-year-old Roland Boucher of Burlington, VT, saved the lives of four children who had broken through the ice on Lake Champlain near Juniper Island. Congress saluted Boucher's bravery and heroism in 1943. Distinguished Military Personnel In 1900, Congress once again returned to the practice of recognizing distinguished military service when it praised First Lieutenant Frank H. Newcomb, commander of the revenue cutter Hudson for rescuing the United States naval torpedo boat Winslow under a "most galling fire from the enemy's guns." At the conclusion of World War II, the valor, bravery, and heroism of Fleet Admiral Ernest J. King and General of the Army George C. Marshall, two of America's most able military leaders during the war, were recognized. Also in 1946, General John J. Pershing was honored for his "heroic achievements" as Commander in Chief of the American Expeditionary Forces in Europe in World War I and for his "unselfish devotion to the service of his country" during World War II. The four known surviving veterans of the Civil War received Congressional Gold Medals a decade later. Rear Admiral Hyman George Rickover was applauded in 1958 for his achievements in "directing the development and construction of the world's first nuclear-powered ships and the first large-scale nuclear power reactor devoted exclusively to the production of electricity." A quarter of a century later, Rickover was accorded a second gold medal for his contributions to the "development of safe nuclear energy and the defense of the United States." Meanwhile, in 1962, Congress authorized a Congressional Gold Medal for General Douglas MacArthur in recognition of his "gallant service" to the United States. Three other military leaders were so acclaimed in the 1990s. General Matthew B. Ridgeway's more than 40 years of distinguished service as a military commander earned recognition at the beginning of the decade. Following Operation Desert Storm, which culminated with the successful liberation of the nation of Kuwait, General H. Norman Schwarzkopf and General Colin L. Powell were honored. Schwarzkopf was cited for his "exemplary performance as a military leader in coordinating the planning, strategy, and execution of the United States" and coalition forces in liberating Kuwait. Powell was recognized for his "exemplary performance as a military leader and advisor to the President in planning and coordinating the military response to the Iraqi invasion of Kuwait." In 2000, Congress recognized the contribution of the original 29 Navajo Marine Corps Radio Operators, known as the "Navajo Code Talkers," who developed a code using their native language to communicate military messages during World War II. The code developed by these Native Americans proved to be unbreakable and was used extensively throughout the Pacific theater. Military commanders credited use of the Navajo Code with "saving lives of countless American soldiers and the success of the engagements of Guadalcanal, Tarawa, Saipan, Iwo Jima, and Okinawa." With the Code Talkers Recognition Act of 2008, Congress recognized the dedication and valor of Native American code talkers from other tribes for their contributions to United States victories in World War I and World War II. General Henry H. Shelton, Chairman of the Joint Chiefs of Staff (October 1997-September 2001), was honored in 2001 for his leadership in coordinating the United States and NATO successful combat action throughout Operation Allied Force in the Balkans. In a unique action early in 2006, Congress honored the Tuskegee Airmen collectively with a single Congressional Gold Medal in recognition of their unique military record, which inspired revolutionary reform in the Armed Forces. The presentation ceremony was held in the Capitol Rotunda on Thursday, March 29, 2007. Following presentation by the President, the medal was given to the Smithsonian Institution, where it was to be displayed. Congress used a similar approach in 2009, awarding the Women Airforce Service Pilots of World War II collectively for their "pioneering military service and exemplary record." The "WASP," as they were known, were the first women in history to fly American military aircraft. This medal, like the Tuskegee Gold Medal, is to be given to the Smithsonian Institution for display as appropriate. In 2010, another collective medal was awarded, to the 100 th Infantry Battalion, the 442 nd Regimental Combat Team, and the Military Intelligence Service United States Army, in recognition of their "bravery, valor, and dedication to country … while fighting a 2-fronted battle of discrimination at home and fascism abroad." Two other collective medals were awarded in 2011. The first was awarded to the Montford Point Marines, in recognition of "their personal sacrifice and service to their country" as the first African-American Marines. The second was awarded to all fallen heroes of 9/11, in "honor of the men and women who perished as a result of the terrorist attacks on the United States on September 11, 2001." In 2013, Congress awarded a collective medal to the First Special Service Force, in recognition of "its superior service during World War II." In 2014, Congress awarded collective medals to five groups associated with World War II: the American Fighter Aces, the Doolittle Raiders, The World War II Civil Air Patrol, the Monuments Men, and the 65 th Infantry Regiment, known as the Borinqueneers. In 2016 Congress awarded collective medals to two groups: the Filipino Veterans of World War II, and the Office of Strategic Services. Notables in Agriculture, Science, and Medicine Historic achievements in agriculture, science, and medicine also have been watched closely by Congress. For discovering the cause and means of transmission of yellow fever, Major Walter Reed and his 21 associates were recognized in 1928. Gold medals were subsequently authorized for Mrs. Richard Aldrich and Anna Bouligny some four decades after their outstanding, unselfish, and wholly voluntary service in establishing and operating "hospitals for the care and treatment of military patients in Puerto Rico" during the War with Spain. Thomas A. Edison was honored for the development and application of "inventions that have revolutionized civilization." Similar congressional tributes were subsequently extended to Dr. Jonas E. Salk, for discovering a serum for the prevention of polio, to Dr. Thomas Anthony Dooley III for his unselfish medical care among the underprivileged peoples of the world, particularly in southeast Asia, and to Mary Lasker, whom some considered the first lady of medicine and science in this country, for her "humanitarian contributions in the area of medical research and education, urban beautification and the fine arts." Congress recognized Nobel Laureate Dr. Norman E. Borlaug, "whose accomplishments in terms of bringing radical change to world agriculture and uplifting humanity are without parallel." Internationally recognized physician and surgeon Dr. Michael Ellis DeBakey was lauded for his pioneering work in the field of cardiovascular surgery, as well as for his innovative research into this and other fields of medicine. Awards for Public Service, Athletic Prowess, Civil Rights Activism, and Humanitarian Contributions The first politician to be honored with a gold medal was Vice President Alben W. Barkley in 1949. Since that time, Congress has saluted the distinguished and dedicated public service of Sam Rayburn, Robert F. Kennedy, Hubert Humphrey, Harry S. Truman, former President Gerald R. Ford and his wife Betty, and former President Ronald Reagan and his wife Nancy. Tribute was also paid to Representative Leo J. Ryan, following his "untimely" assassination while performing his responsibilities as a Member of the House of Representatives in Guyana. Most recently, former Senator Edward William Brooke III, of Massachusetts, the first African American elected by popular vote to the U.S. Senate, was recognized for his unprecedented and enduring service to our nation. Athletes so recognized have been baseball hall of famers Roberto Clemente and Jackie Robinson, heavyweight boxing champion Joe Louis, track and field star Jesse Owens, and golfers Byron Nelson and Arnold Palmer. Clemente was also praised for his "civil, charitable, and humanitarian contributions," Robinson for "many contributions to the nation," Louis for bolstering the "spirit of American people during one of the most critical times in American history," Owens for his "humanitarian contributions to public service, civil rights, and international goodwill," Nelson "for his significant contributions ... as a teacher and a commentator," and Palmer for "his service to the Nation in promoting excellence and good sportsmanship in golf." A lifelong commitment to the principles of freedom, equality, justice, and peace earned civil rights worker Roy Wilkins acclaim on Capitol Hill. The Little Rock Nine—Jean Brown Trickey, Carlotta Walls LaNier, Melba Patillo Beals, Terrence Roberts, Gloria Ray Karlmark, Thelma Mothershed Wair, Ernest Green, Elizabeth Eckford, and Jefferson Thomas—were recognized for the selfless heroism they exhibited "in the cause of civil rights by integrating Central High School in Little Rock Arkansas." Rosa Parks, the "First Lady of Civil Rights," was honored for her "quiet dignity," which "ignited the most significant social movement in the history of the United States." Praise was bestowed on Dr. Dorothy Height for her contribution "as one of the preeminent social and civil rights activists of her time, particularly in the struggle for equality, social justice, and human rights for all people." Reverend Joseph A. DeLaine, Harry and Eliza Briggs, and Levi Pearson were saluted "for their contributions to the Nation as pioneers in the effort to desegregate public schools that led directly to the landmark desegregation case of Brown et al. v. the Board of Education of Topeka et al." Reverend Doctor Martin Luther King, Jr., and his wife Coretta Scott King, were lauded for their contribution "to the Nation on behalf of the civil rights movement." Sustained efforts to preserve the beauty of our nation prompted praise for Lady Bird Johnson and Laurence Spelman Rockefeller. Lady Bird was applauded for her "outstanding contributions to the improvement and beautification of America," and Rockefeller for his "leadership on behalf of natural resource conservation and historic preservation. Marking humanitarian efforts, 12 of the 53 gold medals awarded by the 103 rd -106 th Congresses were given to individuals who have dedicated their lives to the service of others. Rabbi Menachem Mendel Schneerson, the leader of the Lubavitch movement for more than four decades, was recognized for his "outstanding and enduring contributions toward world education, morality, and acts of charity." Billy Graham, "America's most respected and admired evangelical leader for the past half century," and his wife Ruth, were honored for "their outstanding and enduring contributions toward faith, morality, and charity." Former President Gerald Ford and his wife Betty were honored "their dedicated public service and outstanding humanitarian contributions to the people of the United States." Mother Teresa of Calcutta was acclaimed for her nearly 70 years of "selfless dedication to humanity and charitable works." Ecumenical Patrick Bartholomew, the spiritual leader of 300 million Orthodox Christians around the world, was lauded for "outstanding and enduring contributions to religious understanding and peace." Nelson Rolihlahla Mandela was cited for his "lifelong dedication to the abolition of apartheid and promotion of reconciliation among the people of the Republic of South Africa." Congress honored Father Theodore M. Hesburgh, President of the University of Notre Dame from 1952 until 1987, for his "outstanding and enduring contributions to civil rights, higher education, the Catholic Church, the Nation, and the global community." John Cardinal O'Connor, Archbishop of New York, was recognized for "his accomplishments as a priest, a Navy chaplain, and a humanitarian." Tribute was paid to Pope Paul II for "his many and enduring contributions to peace and religious understanding." Enduring and outstanding contributions to peace, non-violence, human rights, and religion won acclaim for Tenzin Gyatso, the Fourteenth Dalai Lama. Recognition was bestowed on Daw Aung San Suu Kyi for "her courageous and unwavering commitment to peace, nonviolence, human rights, and democracy in Burma." Dr. Muhammad Yunus was recognized for his "contributions to the fight against global poverty." These recent awards are not without precedent, since the first and only Gold Medal given to an organization honored the American Red Cross in 1979 for "unselfish and humanitarian service to the people of the United States." In 2013, Congress awarded a gold medal to Addie Mae Collins, Denise McNair, Carole Robertson, and Cynthia Wesley, to "commemorate the lives they lost … in the bombing of the Sixteenth Street Baptist Church." In 2014, Jack Nicklaus was a awarded a gold medal in "recognition of his service to the Nation in promoting excellence, good sportsmanship, and philanthropy." In 2015, the Foot Soldiers of the Voting Rights Movement were awarded a gold medal in recognition of their "extraordinary bravery and sacrifice [that] brought national attention to the struggle for equal voting rights, and served as the catalyst for Congress to pass the Voting Rights Act of 1965." Foreign Recipients Thirty-one of the Congressional Gold Medals authorized to date have gone to non-Americans. In 1847, 10 officers and men belonging to or attached to French, British, and Spanish ships-of-war in the harbor of Vera Cruz captured congressional attention for aiding in the rescue of officers and crew of the United States brig Somers . Eight years after Congress paid tribute to Dr. Frederick A. Rose of the British Navy in 1858, Captain Robert Creighton, of the British ship Three Bells, won acclaim for aiding in the rescue of survivors from the steamship San Francisco . Gold medals were also given to Señor Domicio da Gama, Señor Rómulo S. Naón, and Señor Eduardo Suárez, the diplomatic representatives of Argentina, Brazil, and Chile who acted as mediators between the United States and Mexico in 1914; and to Norwegian explorer Roald Amundsen and Italian explorer Umberto Nobile for their participation in American explorer Lincoln Ellsworth's polar flight of 1925 and his 1926 transpolar flight. In 1969, President Nixon was authorized to present a gold medal in the name of the United States and in the name of Congress to the widow of the late British Prime Minister Winston Churchill. Canadian Ambassador to Iran Kenneth Taylor was honored in March 1980 for his efforts in securing the safe return of six American Embassy officials in their escape from Tehran. Congress recognized Simon Wiesenthal of Austria in 1980 for his dedicated action in bringing to justice Nazi war criminals who had gone into hiding at the end of World War II. Early in 1982, Her Majesty Queen Beatrix of the Netherlands was awarded a gold medal in recognition of the bicentennial anniversary of diplomatic and commercial relations between her country and the United States. Natan (Anatoly) and Avital Shcharansky of the former Soviet Union were applauded in 1986 for their "supreme dedication and total commitment to the cause of individual human rights and freedoms." During the 105 th Congress, the President was authorized to award gold medals to three additional foreign recipients—Mother Teresa of Calcutta, Ecumenical Patriarch Bartholomew, a Turkish citizen, and Nelson Rolihlahla Mandela of the Republic of South Africa. In the 106 th Congress, Pope John Paul II was cited. British Prime Minister Tony Blair in 2003 became the first Briton since Winston Churchill to be awarded the Congressional Gold Medal. Three years later, Tenzin Gyatso, Tenzin, the Fourteenth Dalai Lama, earned recognition. Daw Aung San Suu Kyi of Burma won acclaim in 2008, as did Dr. Muhammad Yunus in 2010. In 2012, a Congressional Gold Medal was awarded to Raoul Wallenberg in recognition of his achievements and heroic actions during the Holocaust. In 2014, a gold medal was awarded to Shimon Peres. Design and Casting of Gold Medals After a Congressional Gold Medal bill has been approved by both houses of Congress and signed into law by the President, officials of the United States Mint meet with the sponsors of the legislation and members of the honoree's family to discuss possible designs for the medal. Photographs of the honoree are also examined during this meeting. Mint engravers then prepare a series of sketches of possible designs for consideration and comment by the Commission of Fine Arts and subsequently the Secretary of the Treasury, who makes the final decision on the medal's design. Once the Secretary of the Treasury, in consultation with the honoree's family, has made a selection, the design is sculptured, a die is made, and the medal is struck at the Philadelphia Mint. The Mint then notifies the White House and arrangements are made for a formal presentation by the President. The cost of issuing a Congressional Gold Medal, generally about $30,000, is charged against the United States Mint Public Enterprise Fund. Congress established this revolving fund "in the Treasury of the United States ... to be available to the Secretary for numismatic operations and programs of the United States Mint without fiscal year limitations." The authorizing legislation in each case typically includes a provision stating that the "Secretary may strike and sell duplicates in bronze of the gold medal struck ... at a price sufficient to cover the costs of the medals (including labor, materials, dies, use of machinery, and overhead expenses) and the cost of the gold medal." Monies received from the sales of the bronze duplicates are deposited in the United States Mint Public Enterprise Fund. Legislative Procedures Procedures in the 115th Congress In the House, there are no chamber or committee rules regarding the procedures for gold medal bills. Rule 28(a)(7) of the House Republican Conference, however, prohibits the Republican leader from scheduling any bill or resolution for consideration under suspension of the Rules which directs the Secretary of the Treasury to strike a Congressional Gold Medal unless the recipient is a natural person; the recipient has performed an achievement that has an impact on American history and culture that is likely to be recognized as a major achievement in the recipient's field long after the achievement; the recipient has not received a medal previously for the same or substantially the same achievement; the recipient is living or, if deceased, has not been deceased for less than 5 years or more than 25 years; and the achievements were performed in the recipient's field of endeavor, and represent either a lifetime of continuous superior achievements or a single achievement so significant that the recipient is recognized and acclaimed by others in the same field, as evidenced by the recipient having received the highest honors in the field. The rules of the House Republican Conference also place an indirect restriction on the number of gold medals that may be awarded annually. Rule 28(a)(7)(F) prohibits the Republican leader from scheduling, or requesting to have scheduled, any bill for consideration under suspension of the rules which "directs the Secretary of the Treasury to strike a Congressional Gold Medal ...[that causes] the total number of measures authorizing the striking of such medals in that Congress to substantially exceed the average number of such measures enacted in prior Congresses." A waiver on the restriction can be granted by the majority of the elected leadership of the conference. In addition, because the restriction only applies to bills considered under suspension of the rules, it appears that an otherwise-prohibited bill could be brought to the floor under an alternative procedure, such as a special rule. In the Senate, the Banking, Housing, and Urban Affairs Committee in the 115 th Congress requires that at least 67 Senators must cosponsor any Congressional Gold Medal bill before being considered by the committee. Statutory Limitations on Eligibility Although Congress has approved legislation stipulating requirements for numerous other awards and decorations, there are no permanent statutory provisions specifically relating to the creation of Congressional Gold Medals. When a Congressional Gold Medal has been deemed appropriate, Congress has, by legislative action, provided for the creation of a medal on an ad hoc basis. Statutory Limitations on Awarding or Striking Gold Medals CRS research did not identify any statutory restrictions on the number of gold medals that may be awarded by Congress or struck by the U.S. Mint. Furthermore, since each award made by Congress is itself statutory law, it is unlikely that any statutory limitation on the annual number of Congressional Gold Medals that could be struck would prevent the enactment of legislation authorizing additional medals. Bills to Change Procedures or Criteria As of this writing, there have been no proposals in the 115 th Congress to change the procedures or criteria for awarding congressional gold medals. During the 109 th Congress, however, on January 26, 2005, the House, by a vote of 231 to 173, approved H.R. 54 , the Congressional Gold Medal Enhancement Act of 2005, sponsored by Representative Michael N. Castle. The bill would have amended Section 5111 of Title 31 of the United States Code by adding the following new subsection: (e) Congressional Gold Medal Standards— (1) MAXIMUM NUMBER—Beginning on the date of the enactment of the Congressional Gold Medal Enhancement Act of 2005, the Secretary of the Treasury may strike not more than 2 congressional gold medals for presentation pursuant to an Act of the Congress in any calendar year. (2) PROGRAM REQUIREMENTS—The Secretary may strike congressional gold medals only in accordance with the following requirements: (A) RECIPIENTS—Only an individual may be a recipient of a congressional gold medal. (B) TIMING—No gold medal may be presented posthumously on behalf of any individual except during the 20-year period beginning 5 years after the death of the individual (unless the Act of Congress authorizing the striking of such medal was enacted before the death of such individual). During House debate on H.R. 54 , Representative Castle emphasized that his measure sought "to maintain the prestige of the medal by limiting the number that may be awarded each year," and to "clarify that recipients are individuals and not groups." Passage of the measure, he argued, "will ensure the future integrity and true honor of the award. It is my goal that every recipient, [P]resident, civil rights leader, military hero, inventor, or noted healer, who receives the Congressional Gold Medal will remain part of a unique honor bestowed by the United States Congress." House Financial Services Committee Chairman Michael G. Oxley characterized the proposed legislation as a "commonsense effort to maintain the prestige of this award." By limiting the number of medals that can be struck each year, and by "limiting the recipients to individuals rather than groups, maintains the prestige and honor of receiving a Congressional Gold Medal. Combined with the requirement of a minimum co-sponsorship level of two-thirds of the House is the best way to preserve the integrity of the gold medal." Representative Joseph Crowley in opposing the legislation told his House colleagues, "We are rushing to act on an issue that does not represent a problem." "Who that received this medal in the past," he asked, "was not worthy of it?" He also expressed dismay "that the Committee on Rules refused to allow consideration of a key amendment that would strike a section of bill that only permits the granting of Congressional Gold Medals to individuals." Although Crowley tended "to agree with the notion that distributing what is an exceptional honor to too many individuals could devalue the symbolic worth of a gold medal, there are occasions when more than one person is justified to receive the medal for their honorable actions in tandem with others." He continued by emphasizing that had this bill already been law, "Congress would not have been able to issue" a Congressional Gold Medal "to the Little Rock Nine," to "President and Mrs. Reagan," or to "Martin Luther King and Coretta Scott King." The House adopted by voice vote an amendment to H.R. 54 offered by Representative Oxley that would make the legislation effective immediately upon passage, instead of the original effective date of January 1, 2006. Two amendments offered by Representative Crowley, both of which were defeated, would have (1) raised the number of Gold Medals that could be approved from two per calendar year to six per Congress, or an overall increase of two medals per Congress; and (2) required that there be an equitable distribution of Gold Medals approved between those sponsored by the majority and minority parties. Later the same day, H.R. 54 was received in the Senate, read twice, and referred to the Senate Committee on Banking, Housing, and Urban Affairs. There was no further action on the bill. Appendix. Recipients of Congressional Gold Medals, 1776-2016: A Chronological List George Washington . In recognition of the "wise and spirited conduct" of George Washington, and the officers and soldiers under his command, in the siege and acquisition of Boston. Approved March 25, 1776 (U.S. Continental Congress, Journal of the Continental Congress 1774-1789, 34 vols. (Washington: GPO, 1906, vol. 4, p. 234). Major General Horatio Gates . In recognition of the "brave and successful efforts" of Major General Horatio Gates, commander in chief in the northern department, and Major General Benjamin Lincoln and Major General Benedict Arnold, and the other officers and troops under his command, "in support of the independence of their country at Saratoga." Approved November 4, 1777 ( Journal of the Continental Congress 1774-1789 , vol. 9, pp. 861-862). Major General Anthony Wayne . In recognition of the "good conduct, coolness, discipline, and firm intrepidity" of Major General Anthony Wayne, and the officers and soldiers under his command, in the assault of the enemy's works at Stony Point. Approved July 26, 1779 ( Journal of the Continental Congress 1774-1789 , vol. 14, p. 890). Major Henry Lee . In recognition of the "remarkable prudence, address and bravery" exhibited by Major Henry Lee, and the non-commissioned officers and soldiers under his command, for their surprise raid of Pawles (Paulus) Hook, NJ, in August 1779. Approved September 24, 1779 ( Journal of the Continental Congress 1774-1789 , vol. 15, pp. 1099-1102). Brigadier General [author name scrubbed] . In recognition of the "fortitude and good conduct" displayed by Brigadier General [author name scrubbed], and the officers and men under his command, in the action at Cowpens, in the state of South Carolina on January 17, 1781. Approved March 9, 1781 ( Journal of the Continental Congress 1774-1789 , vol. 19, pp. 246-247). Major General Nathaniel Greene . In recognition of Major General Nathaniel Greene's "wise, decisive and magnanimous conduct in the action" of September 8, 1781, "near Eutaw Springs, in South Carolina; in which, with a force inferior in number to that of the enemy, he obtained a most signal victory." Approved October 29, 1781 ( Journal of the Continental Congress , 1774-1789, vol. 21, pp. 1083-1084). John Paul Jones . In recognition of the "valor and brilliant services" of John Paul Jones in commanding a "squadron of French and American ships under the flag and commission of the United States off the coast of Great Britain." Approved October 16, 1787 ( Journal of the Continental Congress 1774-1789 , vol. 33, p. 687). Captain Thomas Truxtun . In recognition of the "gallantry and good conduct" of Captain Thomas Truxtun in the action between the United States frigate Constellation and the French ship of war La Vengeance . Approved March 29, 1800 (2 Stat. 87). Commodore Edward Preble . In recognition of the "gallantry and good conduct" displayed by Captain Edward Preble, and the officers, petty officers, seamen and marines attached to the squadron under his command, in the several attacks on the town, batteries, and naval force of Tripoli in 1804. Approved March 3, 1805 (2 Stat. 346-347). Captain Isaac Hull, Captain Stephen Decatur, and Captain Jacob Jones . In recognition of the "gallantry, good conduct, and services" of Captain Isaac Hull of the frigate Constitution , Captain Stephen Decatur of the frigate United States , and Captain Jacob Jones of the sloop-of-war Wasp , in their respective conflicts with the British frigates the Guerriere and the Macedonian , and sloop-of-war Frolic . Approved January 29, 1813 (2 Stat. 830). Captain William Bainbridge . In recognition of the "gallantry, good conduct and services of Captain William Bainbridge," and the officers and crew of the frigate Constitution , in the capture of the British frigate Java , after a "brave and skillful combat." Approved March 3, 1813 (2 Stat. 831). Captain Oliver Hazard Perry and Captain Jesse D. Elliott . In recognition of the "decisive and glorious victory gained on Lake Erie" by Captain Oliver Hazard Perry and Captain Jesse D. Elliott, on September 10, 1813. Approved January 6, 1814 (3 Stat. 141). Lieutenant William Burrows and Lieutenant Edward R. M'Call . In recognition of the "gallantry and good conduct" of Lieutenant William Burrows and Lieutenant Edward R. M'Call of the brig Enterprise , in the conflict with the British sloop Boxer on September 4, 1813. Approved January 6, 1814 (3 Stat. 141-142). Captain James Lawrence . In recognition of the "gallantry and good conduct" of Captain James Lawrence, and the officers and crew of the sloop-of-war Hornet , in the capture of the British vessel of war, the Peacock . Approved January 11, 1814 (3 Stat. 142). Captain Thomas MacDonough, Captain Robert Henly, and Lieutenant Stephen Cassin . In recognition of the "decisive and splendid victory" of Captain Thomas MacDonough and Lieutenant Stephen Cassin, gained on Lake Champlain on September 11, 1814. Approved October 20, 1814 (3 Stat. 245-246). Captain Lewis Warrington . In recognition of the "gallantry and good conduct" of Captain Lewis Warrington, and the officers and crew of the sloop-of-war Peacock in the action with the British brig Epervier on April 29, 1814. Approved October 21, 1814 (3 Stat. 246). Captain Johnston Blakely . In recognition of the "gallantry and good conduct" of Captain Johnston Blakely, and the officers and crew of the sloop Wasp in the action with the British sloop-of-war Reindeer on June 28, 1814. Approved November 3, 1814 (3 Stat. 246-247). Major General Jacob Brown . In recognition of the "gallantry and good conduct" of Major General Jacob Brown, and the "officers and men, of the regular army, and of the militia under his command ... in the successive battles of Chippewa, Niagara, and Erie, in Upper Canada, in which British veteran soldiers were beaten and repulsed by equal and inferior numbers." Approved November 3, 1814 (3 Stat. 247). Major General Winfield Scott . In recognition of the "uniform gallantry and good conduct" of Major General Winfield Scott "in the successive conflicts of Chippewa and Niagara." Approved November 3, 1814 (3 Stat. 247). Brigadier General Eleazar W. Ripley, Brigadier General James Miller, and Major General Peter B. Porter . In recognition of the "gallantry and good conduct" of Brigadier General Eleazar W. Ripley, Brigadier General James Miller, and Major General Peter B. Porter "in the several conflicts of Chippewa, Niagara, and Erie." Approved November 3, 1814 (3 Stat. 247). Major General Edmund P. Gaines . In recognition of the "gallantry and good conduct" of General Edmund P. Gaines, and the officers and men under his command, in defeating the British Army at Erie on August 15, 1814. Approved November 3, 1814 (3 Stat. 247). Major General Alexander Macomb . In recognition of the "gallantry and good conduct" of Major General Alexander Macomb, and the officers and men under his command, in defeating a veteran British Army at Plattsburg on September 11, 1814. Approved November 3, 1814 (3 Stat. 247). Major General Andrew Jackson . In recognition of the "valor, skill and good conduct" of Major General Andrew Jackson, and the officers and soldiers of the regular army, of the militia, and of the volunteers under his command, which was conspicuously displayed against the British Army at New Orleans on January 8, 1815. Approved February 27, 1815 (3 Stat. 249). Captain Charles Stewart . In recognition of the "gallantry, good conduct and services" of Captain Charles Stewart, and the officers and crew, of the frigate Constitution , in capturing the British vessels of war, the Cyane and the Levant, after a brave and skillful combat. Approved February 22, 1816 (3 Stat. 341). Captain James Biddle . In recognition of the "gallantry, good conduct and services" of Captain James Biddle, and the officers and crew, of the sloop-of-war Hornet , in capturing the British sloop-of-war Penguin , after a brave and skillful combat. Approved February 22, 1816 (3 Stat. 341). Major General William Henry Harrison and Governor Isaac Shelby . In recognition of the "gallantry and good behavior" of Major General William Henry Harrison and Governor Isaac Shelby, and the officers and men under their command, "in defeating the combined British and Indian forces under Major General Proctor, on the Thames, in Upper Canada, on October 5, 1813, and in capturing the British Army with their baggage, camp equipage and artillery." Approved April 4, 1818 (3 Stat. 476). Colonel George Croghan . In recognition of the "gallantry and good conduct" of Colonel George Croghan in the defense of Fort Stephenson in 1813. Approved February 13, 1835 (4 Stat. 792). Major General Zachary Taylor . In recognition of the "fortitude, skill, enterprise, and courage" of Major General Zachary Taylor, and his officers and men, which distinguished the brilliant operations on the Rio Grande. Approved July 16, 1846 (9 Stat. 111). Major General Zachary Taylor . In recognition of the "fortitude, skill, enterprise, and courage" of Major General Zachary Taylor, and his officers and men, which distinguished the brilliant military operations at Monterey. Approved March 2, 1847 (9 Stat. 206). Rescuers of the Officers and Crew of the U. S. Brig Somers . In recognition of the "officers and men belonging or attached to the French, British, and Spanish ships-of-war in the harbor of Vera Cruz, who so gallantly, and at the imminent peril of their lives, aided rescuing from a watery grave many of the officers and crew of the United States brig Somers ." The records of the United States Mint indicate that 10 gold medals were struck in commemoration of the gallant effort of the Somers . Approved March 3, 1847 (9 Stat. 208). Major General Winfield Scott . In recognition of the "uniform gallantry and good conduct" of Major General Winfield Scott, and the officers and men of the regular and volunteer corps under him, "conspicuously displayed at the siege and capture of the city of Vera Cruz and castle of San Juan de Ulloa," on March 29, 1847; in the successive battles of Cerro Gordo on April 18, San Antonio and Churubusco on August 19 and 20; in the "victories achieved in front of the city of Mexico" on September 8 and 11-13; and for the capture of the metropolis on September 14, "in which the Mexican troops, greatly superior in numbers, and with every advantage of position, were in every conflict signally defeated by the American arms." Approved March 9, 1848 (9 Stat. 333). Major General Zachary Taylor . In recognition of the "valor, skill, and good conduct" of Major General Zachary Taylor, and the officers and soldiers of the regular army and of the volunteers under his command, "conspicuously displayed" on February 22 and 23, 1848, in the battle of Buena Vista, in "defeating a Mexican army under the command of General Santa Anna of more than four times their number." Approved May 9, 1848 (9 Stat. 334-335). Commander Duncan N. Ingraham . In recognition of the "gallant and judicious conduct" of Commander Duncan N. Ingraham "in extending protection to Martin Koszta, by rescuing him from illegal seizure and imprisonment on board the Austrian war-brig Hussar ." Approved August 4, 1854 (10 Stat. 594-595). Frederick A. Rose . In recognition of "Assistant-Surgeon Frederick A. Rose, of the British navy, who volunteered, with the permission of his commanding officer, to join the Susquehannah ," at a time when many of its crew had yellow fever, "at imminent personal risk, devoted himself, on the voyage from Jamaica to New York, to care for the sick remaining on board." Approved May 11, 1858 (11 Stat. 369). Major General Ulysses S. Grant . In recognition of "gallantry and good conduct" of Ulysses S. Grant, and the officers and men who fought under his command during the Civil War, in the battles in which they engaged. Approved December 17, 1863 (13 Stat. 399). Cornelius Vanderbilt . In recognition of Cornelius Vanderbilt's "gift to his imperiled country" of the steamship Vanderbilt , which was "actively employed in the service of the Republic against the rebel devastations of her commerce." Approved January 28, 1864 (13 Stat. 401). Captains Robert Creighton, Edwin J. Low, and George C. Stouffer . In recognition of the "gallant conduct" of Captain Robert Creighton, of the ship Three Bells , of Glasgow; Captain Edwin J. Low, of the bark Kilby , of Boston; and Captain George C. Stouffer, of the ship Antarctic, in rescuing about 500 men from the wreck of the steamer San Francisco . Approved July 26, 1866 (14 Stat. 365-366). Cyrus W. Field . In recognition of the "foresight, courage, and determination" of Cyrus W. Field "in establishing telegraphic communications by means of the Atlantic cable traversing mid-ocean and connecting the Old World with the New." Approved March 2, 1867 (14 Stat. 574). George Peabody . In recognition of George Peabody's "great and peculiar beneficence" in giving $2 million "for the promotion of education in the most destitute portions of the southern and southwestern States." Approved March 16, 1867 (15 Stat. 20). George F. Robinson . In recognition of the "heroic conduct" of George F. Robinson in saving the life of Secretary of State William H. Seward on April 14, 1865. Approved March 1, 1871 (16 Stat. 704). Captain Jared S. Crandall, and Others . In recognition of the services of Captain Jared S. Crandall, Albert Crandall, Daniel F. Larkin, Frank Larkin, Bryon Green, John D. Harvey, Courtland Gavitt, Eugene Nash, Edwin Nash, and William Nash of Westerly, RI, who "so gallantly volunteered to man a life-boat and a fishing-boat, and saved the lives of thirty-two persons from the wreck of the steamer Metis on the waters of the Long Island sound," on August 31, 1872. Approved February 24, 1873 (17 Stat. 638). John Horn, Jr . In recognition and commemoration of the "heroic and humane exploits" of John Horn, Jr., in rescuing 110 men, women, and children from drowning in the Detroit River. Approved June 20, 1874 (18 Stat. 573). On April 28, 1904, Congress authorized and directed the Secretary of the Treasury to strike off and present to John Horn, Jr., a duplicate of the medal voted by Congress to him in 1874, which was stolen from him in October 1901. Approved April 28, 1904 (33 Stat. 1684-1685). John F. Slater . In recognition of John F. Slater's contribution of $1 million for the purpose of "uplifting the lately emancipated population of the Southern States and their prosperity, by conferring on them the blessings of Christian education." Approved February 5, 1883 (22 Stat. 636). Joseph Francis . In recognition of Joseph Francis' "life-long services to humanity and to his country ... in the construction and perfection of life-saving appliances by which thousands of lives have been saved." Approved August 27, 1888 (25 Stat. 1249). Chief Engineer George Wallace Melville and Others . In recognition of the "meritorious service" of Chief Engineer George Wallace Melville, United States Navy, "in successfully directing the party under his command after the wreck of the Arctic exploring steamer Jeannette , and of his persistent efforts through dangers and hardships to find and assist his commanding officer and other members of the expedition before he himself was out of peril." This act does not specifically indicate what type of medal was to be presented to Chief Engineer Melville and the officers and men of the Jeannette "as an expression of the high esteem Congress [held] their services." The records of the United States Mint, however, indicate that eight gold medals were struck in commemoration of the perils encountered by the Jeannette expedition. Approved September 30, 1890 (26 Stat. 552-553). First Lieutenant Frank H. Newcomb . In recognition of the "intrepid and heroic gallantry" of First Lieutenant Frank H. Newcomb, commander of the revenue cutter Hudson , and the officers and men under his command, "in action at Cardenas, Cuba," on May 18, 1898, "when the Hudson rescued the United States naval torpedo boat Winslow in the face of a most galling fire from the enemy's guns, the Winslow being disabled, her captain wounded, her only other officer and half her crew killed." Approved May 3, 1900 (31 Stat. 717). First Lieutenant David H. Jarvis, Second Lieutenant Ellsworth P. Bertholf, and Dr. Samuel J. Call . In recognition of the "heroic service" rendered by First Lieutenant David H. Jarvis, Second Lieutenant Ellsworth P. Bertholf, and Dr. Samuel J. Call, all of the Revenue-Cutter Service and members of the overland expedition of 1897-1898, in providing relief to the whaling fleet in arctic regions. Approved June 28, 1902 (32 Stat. 492). Wright Brothers . In recognition and appreciation of the "great service" Orville and Wilbur Wright of Ohio, "rendered the science of aerial navigation in the invention of the Wright aeroplane, and for their ability, courage, and success in navigating the air." Approved March 4, 1909 (35 Stat. 1627). Captain Arthur Henry Rostron . In recognition of Captain Henry Rostron, and the officers and crew of the steamship Carpathia , "for promptly going to the relief of the steamship Titanic and heroically saving the lives of seven hundred and four people who had been shipwrecked in the North Atlantic Ocean." Approved July 6, 1912 (37 Stat. 639). Captain Paul H. Kreibohm and Others . In recognition of the heroic rescue of 89 people by Captain Paul H. Kreibohm and the officers and crew of the American steamer Kroonland from the burning steamer Volturno in the North Atlantic. The records of the United States Mint indicate that four gold medals were struck in commemoration of the actions of the Kroonland . Approved March 19, 1914 (38 Stat. 769). Señor Domicio da Gama, Señor Rómulo S. Naón, and Señor Eduardo Suárez . In recognition of the "generous services" of Señor Domicio da Gama, Señor Rómulo S. Naón, and Señor Eduardo Suárez, "as mediators in the controversy between the Government of the United States and the leaders of the warring parties in the Republic of Mexico." Approved March 4, 1915 (38 Stat. 1228). Charles A. Lindbergh . In recognition of the "achievements" of Charles A. Lindbergh. Approved May 4, 1928 (45 Stat. 490). Lincoln Ellsworth, Roald Amundsen, and Umberto Nobile . In recognition of the "conspicuous courage, sagacity, and perseverance" Lincoln Ellsworth exhibited during his famous polar flight of 1925 and his transpolar flight of 1926; and the contributions of Roald Amundsen, the distinguished Norwegian explorer, and Umberto Nobile, the distinguished Italian explorer, who participated with Ellsworth in the transpolar flight of 1926. Approved May 29, 1928 (45 Stat. 2026-2027). Thomas A. Edison . In recognition of the "achievements" of Thomas A. Edison. Approved May 29, 1928 (45 Stat. 1012). First Successful Trans-Atlantic Flight . In recognition of Commander John H. Tower's "extraordinary achievement" in conceiving, organizing, and commanding the first trans-Atlantic flight; and Lieutenant Commander Albert C. Read, United States Navy, commanding officer; Lieutenant Elmer F. Stone, United States Coast Guard, pilot; Lieutenant Walter Hinton, United States Navy, pilot; Lieutenant H. C. Rodd, United States Navy, radio operator; Lieutenant J. L. Breese, United States Naval Reserve Force, engineer; and Machinist's Mate Eugene Rhodes, United States Navy, engineer, "in making the first successful trans-Atlantic flight, in the United States naval flying boat NC-4, in May 1919." Approved February 9, 1929 (45 Stat. 1158). Major Walter Reed and Associates for Yellow Fever Experimentations in Cuba . In recognition of the "high public service rendered and disabilities contracted" by Major Walter Reed, James Carroll, Jesse W. Lazear, Aristides Agramonte, James A. Andrus, John R. Bullard, A. W. Covington, William H. Dean, Wallace W. Forbes, Levi E. Folk, Paul Hamann, James F. Hanberry, Warren G. Jernegan, John R. Kissinger, John J. Moran, William Olsen, Charles G. Sonntag, Clyde L. West, Dr. R. P. Cooke, Thomas M. England, James Hildebrand, and Edward Weatherwalks "in the interest of humanity and science as voluntary subjects for the experimentation during the yellow-fever investigations in Cuba." Approved February 28, 1929 (45 Stat. 1409-1410). This act was subsequently amended on July 2, 1956, and September 2, 1958, to include the names of Gustaf E. Lambert and Roger P. Ames (70 Stat. 484; and 72 Stat. 1702). Officers and Men of the Byrd Antarctic Expedition . In recognition of the "high admiration in which Congress and the American people hold [the] heroic and undaunted services [connected] with the scientific investigations and extraordinary aerial expeditions of the Antarctic Continent, under the personal direction of Rear Admiral Richard E. Byrd." The records of the United States Mint indicate that 67 gold medals were struck in commemoration of the Byrd Antarctic Expedition. Approved May 23, 1930 (46 Stat. 379). Lincoln Ellsworth . In recognition of Lincoln Ellsworth "claiming on behalf of the United States approximately three-hundred-fifty-thousand square miles of land in the Antarctic between the eightieth and one hundred and twentieth meridians west of Greenwich, representing the last unclaimed territory in the world, and for his exceptionally meritorious services to science and aeronautics in making a two-thousand-five-hundred mile aerial survey of the heart of Antarctica, thus paving the way for more detailed studies of geological, meteorological, and geographical questions of world-wide importance and benefit." Approved June 16, 1936 (49 Stat. 2324). George M. Cohan . In recognition of the public service of George M. Cohan during the World War in composing the patriotic songs "Over There" and "A Grand Old Flag." Approved June 29, 1936 (49 Stat. 2371). Mrs. Richard Aldrich and Anna Bouligny . In recognition of Mrs. Richard Aldrich and Anna Bouligny "who, during the War with Spain, voluntarily went to Puerto Rico and there rendered service of inestimable value to the Army of the United States in the establishment and operation of hospitals for the care and treatment of military patients in Puerto Rico." Approved June 20, 1938 (52 Stat. 1365). Howard Hughes . In recognition of the "achievements" of Howard Hughes in "advancing the science of aviation and thus bringing great credit to his country throughout the world." Approved August 7, 1939 (53 Stat. 1525). Reverend Francis X. Quinn . In recognition of the "valor of Reverend Francis X. Quinn, pastor of the Church of the Guardian Angel, New York City, who risked his life by entering the room when an armed desperado held two elderly persons as hostages, and who by successfully disarming this criminal and saving the lives of two innocent persons distinguished himself conspicuously by gallantry and intrepidity at the risk of his life above and beyond the call of his duty." Approved August 10, 1939 (53 Stat. 1533). William Sinnott . In recognition of action of "William Sinnott, a detective, who in guarding Franklin D. Roosevelt, then President-elect of the United States, at Miami, Florida, on February 15, 1933, was shot and wounded by Giuseppe Zangara, who attempted to assassinate" Mr. Roosevelt. Approved June 15, 1940 (54 Stat. 1283). Roland Boucher . In recognition of the "valor, bravery, and heroism of Roland Boucher, of Burlington, Vermont, age 11, who on February 12, 1941, risked his life in rescuing five children who had broken through the ice on Lake Champlain near Juniper Island, saving the lives of four, and who in so doing displayed unusual bravery and the presence of mind extraordinary in one of his age." Approved January 20, 1942 (56 Stat. 1099-1100). General of the Army George Catlett Marshall and Fleet Admiral Ernest Joseph King . In recognition of General of the Army George C. Marshall's "distinguished leadership, as Chief of Staff of the Army and as a member of the Combined Chiefs of Staff of the United Nations, in planning the expansion, equipment, training and deployment of the great Army of the United States and in formulating and executing the global strategy that led to victory in World War II," and the "members of the Army of the United States who served under his direction with such heroic devotion, and personal sacrifice." In recognition also of Admiral Ernest J. King's "distinguished leadership as Commander in Chief of the United States Fleet and Chief of Naval Operations and as a member of the Combined Chiefs of Staff of the United Nations, in planning the expansion, equipment, training, and operation of the United States Navy and in formulating and executing the global strategy that led to victory in World War II," and the "members of the United States Navy, the United States Marine Corps and the United States Coast Guard," and the "members of the Reserve Forces who served under his direction with such heroic devotion and personal sacrifice." Approved March 22, 1946 (60 Stat. 1134-1135). General of the Armies of the United States John J. Pershing . In recognition of General John J. Pershing's "peerless leadership, heroic achievements, and great military victories, as Commander in Chief of the American Expeditionary Forces in Europe in World War I, and for his gallant and unselfish devotion to the service of his country in preparation for, and the prosecution of World War II." Approved August 7, 1946 (60 Stat. 1297-1298). Brigadier General William Mitchell . In recognition of the "outstanding pioneer service and foresight of General William Mitchell in the field of American military aviation." Approved August 8, 1946 (60 Stat. 1319). Vice President Alben W. Barkley . In recognition of Vice President Alben W. Barkley's "distinguished public service and outstanding contribution to the general welfare." Approved August 12, 1949 (P.L. 81-221, 63 Stat. 599). Irving Berlin . In recognition of Irvin Berlin's "services in composing many patriotic songs, including God Bless America, which became popular during World War II." Approved July 16, 1954 (P.L. 83-536, 68 Stat. A120). Doctor Jonas E. Salk . "In recognition of the great achievement of Doctor Jonas E. Salk in the field of medicine by his discovery of a serum for the prevention of poliomyelitis." Approved August 9, 1955 (P.L. 84-297, 69 Stat. 589). Surviving Veterans of the War Between the States . "In honor of the last [four] surviving veterans of the War Between the States who served in the Union or the Confederate forces." Approved July 18, 1956 (P.L. 84-730, 70 Stat. 577). Rear Admiral Hyman George Rickover . "In recognition of the achievements of Rear Admiral Hyman George Rickover, United States Navy, in successfully directing the development and construction of the world's first nuclear-powered ships and the first large-scale nuclear power reactor devoted exclusively to the production of electricity." Approved August 28, 1958 (P.L. 85-826, 72 Stat. 985). Doctor Robert H. Goddard . In recognition of the "great, creative achievements of Doctor Robert H. Goddard, and his historic pioneering research on space rockets, missiles, and jet propulsion." Approved September 16, 1959 (P.L. 86-277, 73 Stat. 562-563). Robert Frost . In recognition of Robert Frost's "poetry, which has enriched the culture of the United States and the philosophy of the world." Approved September 13, 1960 (P.L. 86-747, 74 Stat. 883). Doctor Thomas Anthony Dooley III . "In recognition of the gallant and unselfish public service rendered by Doctor Thomas Anthony Dooley III in serving the medical needs of the people of Laos living in the remote areas of the Laotian jungles, and the peoples in other newly developing countries." Approved May 27, 1961 (P.L. 87-42, 75 Stat. 87). Bob Hope . In recognition of Bob Hope's outstanding "service to his country and the cause of peace." Approved June 8, 1962 (P.L. 87-478, 76 Stat. 93). Sam Rayburn, Speaker of the House of Representatives . In recognition of Sam Rayburn's "distinguished public service and outstanding contribution to the general welfare." Approved September 26, 1962 (P.L. 87-702, 76 Stat. 605). General of the Army Douglas MacArthur . "In recognition of the gallant service rendered by General of the Army Douglas MacArthur to his country." Approved October 9, 1962 (P.L. 87-760, 76 Stat. 760). Walt Disney . In recognition of Walt Disney's "distinguished public service and outstanding contributions to the United States and the world." Approved May 24, 1968 (P.L. 90-316, 82 Stat. 130-131). Winston Churchill . In recognition of Winston Churchill, on the occasion of the dedication of the Winston Churchill Memorial and Library at Westminster College in Fulton, MO, in May 1969. Approved May 7, 1969 (P.L. 91-12, 83 Stat. 8-9). Roberto Walker Clemente . In recognition of Roberto Clemente's "outstanding athletic, civil, charitable, and humanitarian contributions." Approved May 14, 1973 ( P.L. 93-33 , 87 Stat. 71). Marian Anderson . "In recognition of the highly distinguished and impressive career of Miss Marian Anderson for a period of more than a half a century during which she has been the recipient of the highest awards from a score of foreign countries, for her untiring and unselfish devotion to the promotion of the arts in this country and throughout the world including the establishment of scholarships for young people, for her strong and imaginative support to humanitarian causes at home, for her contributions to the cause of world peace through her work as United States delegate to the United Nations and her performances and recordings which have reached an estimated seven million people throughout the world, and her unstinting efforts on behalf of the brotherhood of man, and the many treasured moments she has brought to us with enormous demand on her time, talent, and energy." Approved March 8, 1977 ( P.L. 95-9 , 91 Stat. 19). Lieutenant General Ira C. Eaker . In recognition of Lieutenant General Ira C. Eaker's "distinguished career as an aviation pioneer and Air Force leader." Approved October 10, 1978 ( P.L. 95-438 , 92 Stat. 1060). Robert F. Kennedy . In recognition of the "distinguished and dedicated service" Robert Kennedy "gave to the Government and to the people of the United States." Approved November 1, 1978 ( P.L. 95-560 , 92 Stat. 2142). John Wayne . In recognition of John Wayne's "distinguished career as an actor and his service to the Nation." Approved May 26, 1979 ( P.L. 96-15 , 93 Stat. 32). Ben Abruzzo, Maxie Anderson, and Larry Newman . In recognition of the "distinguished feat" of transatlantic balloonists Ben Abruzzo, Maxie Anderson, and Larry Newman "as aviation pioneers." Approved June 13, 1979 ( P.L. 96-20 , 93 Stat. 45). Hubert H. Humphrey . In recognition of Hubert H. Humphrey's "distinguished and dedicated service" to the Government and to the people of the United States. Approved June 13, 1979 ( P.L. 96-21 , 93 Stat. 46). American Red Cross . In recognition of the "unselfish and humanitarian service" of the American Red Cross to the people of the United States. Approved December 12, 1979 ( P.L. 96-138 , 93 Stat. 1063). Ambassador Kenneth Taylor . In recognition of Canadian Ambassador to Iran Kenneth Taylor's "valiant efforts to secure the safe return of six American Embassy officials in Tehran." Approved March 6, 1980 ( P.L. 96-201 , 94 Stat. 79). Simon Wiesenthal . In recognition of Simon Wiesenthal's "contribution to international justice through the documentation and location of war criminals from World War II." Approved March 17, 1980 ( P.L. 96-211 , 94 Stat. 101). Queen Beatrix of the Netherlands . In recognition of the "two hundredth anniversary, in 1982, of the establishment of diplomatic and commercial relations between the Governments of the United States and the Netherlands." Approved March 22, 1982 ( P.L. 97-158 , 96 Stat. 18-19). Admiral Hyman George Rickover . In recognition of Admiral Hyman George Rickover's "distinguished service and for his unique world-renowned contributions to the development of safe nuclear energy and to the defense of the United States." Approved June 23, 1982 ( P.L. 97-201 , 96 Stat. 126-127). Fred Waring . In recognition of Fred Waring's "contribution to enriching American life." Approved August 26, 1982 ( P.L. 97-246 , 96 Stat. 315-316). Joe Louis . In recognition of Joe Louis's "accomplishments which did so much to bolster the spirit of the American people during one of the most crucial times in American history and which have endured throughout the years as a symbol of strength for the Nation." Approved August 26, 1982 ( P.L. 97-246 , 96 Stat. 315-316). Louis L'Amour . In recognition of Louis L'Amour's "distinguished career as an author and his contributions to the Nation through his historically based works." Approved August 26, 1982 ( P.L. 97-246 , 96 Stat. 315-316). Leo J. Ryan . In recognition of Leo J. Ryan's "distinguished service as a Member of Congress and the fact of his untimely death by assassination while performing his responsibilities as a Member of the United States House of Representatives." Approved November 18, 1983 ( P.L. 98-159 , 97 Stat. 992). Danny Thomas . In recognition of Danny Thomas' "humanitarian efforts and his outstanding work as an American." Approved November 29, 1983 ( P.L. 98-172 , 97 Stat. 1119-1120). Harry S. Truman. In recognition of the "life-time of outstanding public service which ... Harry S. Truman, gave to the United States, and in commemoration of his one hundredth birthday which was celebrated on May 8, 1984." Approved May 8, 1984 ( P.L. 98-278 , 98 Stat. 173-175). Lady Bird Johnson . In recognition of Lady Bird Johnson's "humanitarian efforts and outstanding contributions to the improvement and beautification of America." Approved May 8, 1984 ( P.L. 98-278 , 98 Stat. 173-175). Elie Wiesel . In recognition of Elie Wiesel's "humanitarian efforts and outstanding contributions to world literature and human rights." Approved May 8, 1984 ( P.L. 98-278 , 98 Stat. 173-175). Roy Wilkins . In recognition of the "incomparable contribution of Roy Wilkins to the struggle for civil rights and equality for all Americans." Approved May 17, 1984 ( P.L. 98-285 , 98 Stat. 186). George and Ira Gershwin . In recognition of "George and Ira Gershwin's outstanding and invaluable contributions to American music, theatre and culture." Approved August 9, 1985 ( P.L. 99-86 , 99 Stat. 288-289). Natan (Anatoly) and Avital Shcharansky . In recognition of the "supreme dedication and total commitment" of Natan (Anatoly) and Avital Shcharansky "to the cause of individual human rights and freedoms." Approved May 13, 1986 ( P.L. 99-298 , 100 Stat. 432-433). Harry Chapin . In recognition of "Harry Chapin's efforts to address issues of hunger around the world." Approved May 20, 1986 ( P.L. 99-311 , 100 Stat. 464). Aaron Copland . In recognition of Aaron Copland's "contribution to American musical composition." Approved September 23, 1986 ( P.L. 99-418 , 100 Stat. 952-953). Mary Lasker . In recognition of Mary Lasker's "humanitarian contributions in the areas of medical research and education, urban beautification and the fine arts." Approved December 24, 1987 ( P.L. 100-210 , 101 Stat. 1441). Jesse Owens . In recognition of "Jesse Owens' athletic achievements and humanitarian contributions to public service, civil rights and international goodwill." Approved September 20, 1988 ( P.L. 100-437 , 102 Stat. 1717). Andrew Wyeth . In recognition of Andrew Wyeth's "outstanding and invaluable contributions to American art and culture." Approved November 9, 1988 ( P.L. 100-639 , 102 Stat. 3331-3332). Laurence Spelman Rockefeller . In recognition of Laurence Spelman Rockefeller's "leadership on behalf of natural resource conservation and historic preservation." Approved May 17, 1990 ( P.L. 101-296 , 104 Stat. 197-199). General Matthew B. Ridgeway. In recognition of General Matthew B. Ridgeway's "distinguished service to the Nation" during World War II and the Korean War. Approved November 5, 1990 ( P.L. 101-510 ; 104 Stat. 1720-1721). General H. Norman Schwarzkopf. In recognition of General H. Norman Schwarzkopf's "exemplary performance as a military leader in coordinating the planning, strategy, and execution of the U.S. combat action and his invaluable contributions to the United States and to the liberation of Kuwait as Commander-in-Chief, United States Central Command." Approved April 23, 1991 ( P.L. 102-32 ; 105 Stat. 175-176). General Colin Powell. In recognition of General Colin Powell's "exemplary performance as a military leader and advisor to the President in planning and coordinating the military response of the United States to the Iraqi invasion of Kuwait and the ultimate retreat of Iraqi forces and Iraqi acceptance of all United Nations Resolutions relating to Kuwait." Approved April 23, 1991 ( P.L. 102-33 ; 105 Stat. 177-178). Rabbi Menachem Mendel Schneerson. In recognition of Rabbi Menachem Mendel Schneerson's "outstanding and enduring contributions toward world education, morality, and acts of charity." Approved November 2, 1994 ( P.L. 103-457 ; 108 Stat. 4799-4800). Ruth and Billy Graham. In recognition of Ruth and Billy Graham's "outstanding and lasting contributions to morality, racial equality, family, philanthropy, and religion." Approved February 13, 1996 ( P.L. 104-111 ; 110 Stat. 772-773). Francis Albert "Frank" Sinatra. In recognition of Frank Sinatra's "outstanding and enduring contributions through his entertainment career and humanitarian activities." Approved May 14, 1997 ( P.L. 105-14 , 111 Stat. 32-33). Mother Teresa of Calcutta. In recognition of Mother Teresa of Calcutta's "outstanding and enduring contributions through humanitarian and charitable activities." Approved June 2, 1997 ( P.L. 105-16 , 111 Stat. 35-36). Ecumenical Patriarch Bartholomew. In recognition of Ecumenical Patriarch Bartholomew's "outstanding and enduring contributions toward religious understanding and peace." Approved October 6, 1997 ( P.L. 105-51 , 111 Stat. 1170-1171). Nelson Rolihlahla Mandela. In recognition of Nelson Rolihlahla's "life-long dedication to the abolition of apartheid and the promotion of reconciliation among the people of the Republic of South Africa." Approved July 29, 1998 ( P.L. 105-215 , 112 Stat. 895-896). Little Rock Nine. In recognition of the "selfless heroism" Jean Brown Trickey, Carlotta Walls LaNier, Melba Patillo Beals, Terrence Roberts, Gloria Ray Karlmark, Thelma Mothershed Wair, Ernest Green, Elizabeth Eckford, and Jefferson Thomas "exhibited and the pain they suffered in the cause of civil rights by integrating Central High School in Little Rock, Arkansas." Approved October 21, 1998 ( P.L. 105-277 , 112 Stat. 2681-597). Gerald R. and Betty Ford. In recognition of Gerald R. and Betty Ford's "dedicated public service and outstanding humanitarian contributions to the people of the United States." Approved October 21, 1998 ( P.L. 105-277 , 112 Stat. 2681-598). Rosa Parks. In recognition of Rosa Parks' "contributions to the Nation" as the "first lady of civil rights" and "mother of the freedom movement," and whose "quiet dignity ignited the most significant social movement in the history of the United States." Approved May 4, 1999 ( P.L. 106-26 ; 113 Stat. 50-51). Theodore M. Hesburgh. In recognition of Theodore M. Hesburgh's "outstanding and enduring contributions to civil rights, higher education, the Catholic Church, the Nation, and the global community." Approved December 9, 1999 ( P.L. 106-153 ; 113 Stat. 1733-1734). John Cardinal O'Connor, Archbishop of New York. In recognition of John Cardinal O'Connor's "accomplishments as a priest, a chaplain, and a humanitarian." Approved March 3, 2000 ( P.L. 106-175 ; 114 Stat. 20-21). Charles M. Schulz. In recognition of Charles M. Schulz's "lasting artistic contributions to the Nation and the world." Approved June 20, 2000 ( P.L. 106-225 ; 114 Stat. 457-458). Pope John Paul II. In recognition of Pope John Paul II's "many and enduring contributions to peace and religious understanding." Approved July 27, 2000 ( P.L. 106-250 ; 114 Stat. 622-623). Ronald and Nancy Reagan. In recognition of Ronald and Nancy Reagan's "service to the Nation." Approved July 27, 2000 ( P.L. 106-251 ; 114 Stat. 624-625). Navajo Code Talkers. In recognition of the contribution of the original 29 Navajo Marine Corps Radio Operators, known as the Navajo Code Talkers, "who distinguished themselves in performing a unique, highly successful communications operation that greatly assisted in saving countless lives and hastening the end of World War II in the Pacific." (Silver medals were awarded to each person who qualified as a Navajo Code Talker (MOS 642).) Approved December 21, 2000 ( P.L. 106-554 ; 114 Stat. 2763A-311—2763A-312). General Henry H. Shelton. In recognition of the performance of General Henry H. Shelton "as a military leader in coordinating the planning, strategy, and execution of the United States and NATO combat action and his invaluable contributions to the United States and to the successful return to peace in the Balkans as Chairman of the Joint Chiefs of Staff." Approved January 16, 2002 ( P.L. 107-127 ; 115 Stat. 2405-2406). Prime Minister Tony Blair. In recognition of the "outstanding and enduring contributions" of Prime Minister Tony Blair of the United Kingdom "to maintaining the security of all freedom-loving nations." Approved July 17, 2003 ( P.L. 108-60 ; 117 Stat. 862). Jackie Robinson. In recognition of Jackie Robinson's "legacy and personal achievements," and "many contributions to the nation." Approved October 29, 2003 ( P.L. 108-101 ; 117 Stat. 1195-1197). Dr. Dorothy Height. In recognition of Dr. Dorothy Height's contribution "as one of the preeminent social and civil rights activists of her time, particularly in the struggle for equality, social justice, and human rights for all people." Approved December 6, 2003 ( P.L. 108-162 ; 117 Stat. 2017-2019). Reverend Joseph DeLaine, Harry and Eliza Briggs, and Levi Pearson . In recognition of the contributions of Reverend Joseph A. DeLaine, Harry and Eliza Briggs, and Levi Pearson "to the Nation as pioneers in the effort to desegregate public schools that led directly to the landmark desegregation case of Brown et al. v. the Board of Education of Topeka et al." Approved December 15, 2003 ( P.L. 108-180 ; 117 Stat. 2645-2647). Reverend Doctor Martin Luther King, Jr. and Coretta Scott King. In recognition of the contributions of Reverend Doctor Martin Luther King, Jr. and Coretta Scott King "to the Nation on behalf of the civil rights movement." Approved October 25, 2004 ( P.L. 108-368 ; 118 Stat. 1746-1748). Tuskegee Airmen. In recognition of the "unique military record" of the Tuskegee Airman, "which inspired revolutionary reform in the Armed Forces." Approved April 11, 2006 ( P.L. 109-213 ; 120 Stat. 322-325). Gyatso, Tenzin, the Fourteenth Dalai Lama. In recognition of the "many enduring and outstanding contributions of Tenzin Gyatso, the Fourteenth Dalai Lama, "to peace, non-violence, human rights, and religious understanding." Approved September 27, 2006 ( P.L. 109-287 ; 120 Stat. 1231-1232). Byron Nelson. In recognition of Byron Nelson's "significant contributions to the game of golf as a player, a teacher, and a commentator." Approved October 16, 2006 ( P.L. 109-357 ; 120 Stat. 2044-2046). Dr. Norman E. Borlaug. In recognition of Dr. Norman E. Borlaug's "enduring contribution to the United States and the World." Approved December 14, 2006 ( P.L. 109-395 ; 120 Stat. 2708-2710). Dr. Michael Ellis DeBakey. In recognition of Dr. Michael Ellis DeBakey's "many outstanding contributions to the Nation." Approved October 16, 2007 ( P.L. 110-95 ; 121 Stat. 1008-1010). Daw Aung San Suu Kyi. In recognition of Daw Aung San Suu Kyi's "courageous and unwavering commitment to peace, nonviolence, human rights and democracy in Burma." Approved May 6, 2008 ( P.L. 110-209 ; 122 Stat. 721-722). Constantino Brumidi. In recognition of his contributions to the nation as a designer and decorator of the U.S. Capitol. Approved July 1, 2008 ( P.L. 110-259 ; 122 Stat. 2430-2432). Edward William Brooke, III. In "recognition of his unprecedented and enduring service to our Nation." Approved July 1, 2008 ( P.L. 110-260 ; 122 Stat. 2433-2435). Code Talkers Recognition Act of 2008. In recognition of the service of all Native American code talkers during World War I and World War II. Approved October 15, 2008 ( P.L. 110-420 ; 122 Stat. 4774-4777). Women Airforce Service Pilots ("WASP") . In recognition of the "pioneering military service and exemplary record" of the Women Airforce Service Pilots ("WASP"), "which forged revolutionary reform in the Armed Forces of the United States of America." Approved July 2, 2009 ( P.L. 111-40 ; 123 Stat. 1958-1961). Neil A. Armstrong, Edwin E. "Buzz" Aldrin, Jr., Michael Collins, and John Herschel Glenn, Jr. In recognition of the "significant contributions to society" of Neil A. Armstrong, the first human to walk on the Moon; Edwin E. "Buzz" Aldrin, Jr., the pilot of the lunar module and second person to walk on the Moon; Michael Collins, the pilot of their Apollo 11 mission's command module; and John Herschel Glenn, Jr., the first American to orbit the Earth. Approved August 7, 2009 ( P.L. 111-44 ; 123 Stat. 1966-1967). Arnold Palmer. In recognition of Arnold Palmer's "service to the Nation in promoting excellence and good sportsmanship in golf." Approved September 30, 2009 ( P.L. 111-65 ; 123 Stat. 2003-2005). Dr. Muhammad Yunus . In recognition of Dr. Yunus's "contributions to the fight against global poverty." Approved October 5, 2010 ( P.L. 111-253 ; 124 Stat. 2635). 10 0 th Infantry Battalion and the 442 nd Regimental Combat Team, and the Military Intelligence Service, United States Army . In recognition of their "bravery, valor, and dedication to country … while fighting a 2-fronted battle of discrimination at home and fascism abroad." Approved October 5, 2010 ( P.L. 111-254 ; 124 Stat. 2637). The Montford Point Marines . In recognition of "their personal sacrifice and service to their country" as the first African-American Marines. Approved November 23, 2011 ( P.L. 112-59 ; 125 Stat. 749). Fallen Heroes of 9/11 . In "honor of the men and women who perished as a result of the terrorist attacks on the United States on September 11, 2001. Approved December 23, 2011 ( P.L. 112-76 ; 125 Stat. 1275). Raoul Wallenberg . In "recognition of his achievements and heroic actions during the Holocaust." Approved July 26, 2012 ( P.L. 112-148 ; 126 Stat. 1140). Addie Mae Collins, Denise McNair, Carole Robertson, and Cynthia Wesley . To "commemorate the lives they lost … in the bombing of the Sixteenth Street Baptist Church." Approved May 24, 2013 ( P.L. 113-11 ; 127 Stat. 446). First Special Service Force . In "recognition of its superior service during World War II." Approved July 12, 2013 ( P.L. 113-16 ; 127 Stat. 477). American Fighter Aces . In "recognition of their heroic military service and defense of the nation's freedom." Approved May 19,2014 ( P.L. 113-105 ; 128 Stat. 1157). Doolittle Tokyo Raiders . In "recognition of their military service during World War II." Approved May 23, 2014 ( P.L. 113-106 ; 128 Stat. 1160). World War II Civil Air Patrol . In "recognition of their military service and exemplary record during World War II." Approved May 30, 2014 ( P.L. 113-108 ; 128 Stat. 1164). Shimon Peres . In recognition of his lifetime achievements. Approved June 9, 2014 ( P.L. 113-114 ; 128 Stat. 1175). Monuments Men . In "recognition of their heroic role in the preservation, protection, and restitution of monuments, works of art, and artifacts of cultural importance during and following" World War II. Approved July 12, 20013 ( P.L. 113-116 ; 128 Stat. 1179). 65 th Infantry Regiment, the Borinqueneers . In "recognition of its pioneering military service, devotion to duty, and may acts of valor in the face of adversity." Approved June 10, 2014 ( P.L. 113-120 ; 128 Stat. 1187). Jack Nicklaus . In "recognition of his service to the Nation in promoting excellence, good sportsmanship, and philanthropy." Approved December 16, 2014 ( P.L. 113-210 ). Foot Soldiers of the Voting Rights Movement . In recognition of their "extraordinary bravery and sacrifice [that] brought national attention to the struggle for equal voting rights, and served as the catalyst for Congress to pass the Voting Rights Act of 1965." Approved March 7, 2015. ( P.L. 114-5 ). Filipino Veterans of World War II . In "recognition of the dedicated service of the veterans during World War II." Approved December 12, 2016 ( P.L. 114-265 ). Office of Strategic Services . In recognition of their "superior service and major contributions during World War II." Approved December 14, 2016. ( P.L. 114-269 ).

Senators and Representatives are frequently asked to support or sponsor proposals recognizing historic events and outstanding achievements by individuals or institutions. Among the various forms of recognition that Congress bestows, the Congressional Gold Medal is often considered the most distinguished. Through this venerable tradition, the occasional commissioning of individually struck gold medals in its name, Congress has expressed public gratitude on behalf of the nation for distinguished contributions for more than two centuries. Since 1776, this award, which initially was bestowed on military leaders, has also been given to such diverse individuals as Sir Winston Churchill and Bob Hope, George Washington and Robert Frost, Joe Louis and Mother Teresa of Calcutta. Members of Congress and their staff frequently ask questions concerning the nature, history, and contemporary application of the process for awarding Gold Medals. This report responds to congressional inquiries concerning this process, and includes a historical examination and chronological list of these awards. It is intended to assist Members of Congress and staff in their consideration of future Gold Medal proposals, and will be updated as Gold Medals are approved.

Background Activities which are generally described as efforts to stimulate "grassroots" lobbying (depending on the context of the term and/or the particular bill in question) are communications which are directed at members of the general public, or at more selected persons on mailing lists of organizations or other entities, which take specific positions on legislative matters pending before or public policy issues to be considered by the legislature, and which contain a so-called "call to action," that is, for example, urging the recipients of the communications to contact members of the legislature to favor or oppose legislative action on the issue. Currently, under federal law (the Lobbying Disclosure Act of 1995 [LDA], as amended), registrations and disclosures by professional lobbyists are triggered and related only to so-called "direct" lobbying contacts with covered Government officials, and those activities which support those direct contacts. The current law's registration and reporting requirements are not separately triggered by "grassroots" lobbying activities. That is, an organization which engages only in "grassroots" lobbying, regardless of the extent of such "grassroots" lobbying activities, is not required to register its members, officers or employees who engage in those activities, and a lobbying firm or other outside lobbyist which conducts only "grassroots" lobbying campaigns on behalf of a client, regardless of the amount of compensation from the client or the amount of grassroots activities engaged in, does not need to register and report such activities or relationships under the LDA. Certain legislative proposals under consideration in the 110 th Congress had originally proposed to include disclosures of efforts to stimulate "grassroots" lobbying generally in two different ways. In the first instance, only those professional "lobbyists" who were already required to register under the LDA provisions (by virtue of their "direct" lobbying contacts) would have been additionally made to report certain efforts to stimulate "grassroots" lobbying for clients or employers over a certain amount. Secondly, certain entities which were compensated over a threshold amount ($25,000 or $50,000 in a calendar quarter, depending on the proposal) to engage in activities to stimulate "grassroots" lobbying on behalf of an outside client would have separately "triggered" registration and disclosure of such activities under the proposed amendments to LDA. Under either method of coverage, however, an organization which had engaged only in efforts to stimulate "grassroots" lobbying on behalf of itself, through its own employees, members, or volunteers, would have not been required to register and file disclosure reports. Neither the Senate bill, S. 1 , 110 th Congress, as introduced, nor the similar House version from the 109 th Congress, H.R. 4682 , 109 th Congress, would have changed the definition of a "lobbyist" who must register under LDA (that is, a "lobbyist" to be covered must have still made more than one direct "lobbying contact," which expressly excludes solicitations to stimulate grassroots lobbying ). The only additional registrants under these types of provisions would have been for "grassroots lobbying firms" which, as noted, would have covered only those entities compensated over a particular threshold amount by clients to stimulate grassroots lobbying efforts on the client's behalf. Even these somewhat limited and targeted disclosure proposals with respect to "grassroots" lobbying were not enacted into law. The "grassroots" lobbying disclosure provisions for registered professional lobbyists, and for commercial direct mail or public relations firms on behalf of outside clients ("grass roots lobbying firms"), which had been originally included in S. 1 , 110 th Congress, were struck from the Senate bill by a floor amendment, and the lobby reform legislation, the "Honest Leadership and Open Government Act of 2007" ( P.L. 110-81 , 121 Stat. 735, September 14, 2007), was enacted without grassroots lobbying disclosure provisions. The question and issue of whether paid efforts to stimulate grassroots lobbying should, at some point, be required to be publicly disclosed as part of a transparency and "open government" scheme, where the paid influences and pressures upon Members of Congress may be analyzed and reviewed by the electorate, continues to be of some import to certain government reform groups and persons both inside and outside of Congress. The following discussion analyzes the constitutional issues with respect to a federal requirement to report or disclose monies expended or received by professional lobbyists or commercial organizations for efforts to stimulate grassroots lobbying by the public, or a certain segment of the public, regarding specific federal legislation or proposals before Congress. Constitutional Protection of Lobbying and Advocacy Activities The activities involved in "lobbying," that is, persons individually or in association with one another engaging in, initiating and/or directing advocacy communications to public officials on political, social and economic issues of interest to those individuals and groups, have been found to be intertwined with and implicate several fundamental rights protected by the First Amendment to the United States Constitution. In Eastern Railroads President Conference v. Noerr Motor Freight, Inc. , the Supreme Court ruled that because of First Amendment considerations the prohibitions of the Sherman Anti-Trust Act could not reach the activities of rival businesses to prohibit them acting in concert to lobby legislatures for favorable transportation legislation. The Court noted that lobbying activities involve the "right of petition [which] is one of the freedoms protected by the Bill of Rights," and could not be restricted by statute without serious First Amendment implications. The Court explained the importance of lobbying activities in our representative form of government: In a representative democracy such as this, these branches of government act on behalf of the people and, to a very large extent, the whole concept of representation depends upon the ability of the people to make their wishes known to their representatives. The activities involved in lobbying, public advocacy and political expression about public policy issues, government and legislation, have been found by the Supreme Court to be among the most important freedoms in preserving an open democracy. The Court has thus noted the "profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide open," and has in the past explained that "expression on public issues 'has always rested on the highest rung of the hierarchy of First Amendment values.'" The Supreme Court has therefore found that any regulations imposed by Congress on such lobbying and advocacy activities may not unduly burden the exercise of participants' First Amendment rights. Even when a federal regulation on public policy advocacy involved merely a disclosure and reporting requirement, and not a restriction which directly limits or prohibits advocacy activities, such a regulation underwent a rigorous constitutional scrutiny since, as characterized by the Supreme Court in Buckley v. Valeo , the Court has recognized the "deterrent effects on the exercise of First Amendment rights" which may arise "as an unintended but inevitable result of the government's conduct in requiring disclosure." The Supreme Court in NAACP v. Alabama overturned a State court contempt citation against the NAACP for that organization's failure to disclose its local membership list. Recognizing that "(e)ffective advocacy of both public and private points of view, particularly controversial ones, is undeniably enhanced by group association" and that, based upon the First Amendment rights of freedom of speech, petition and assembly, the Constitution guarantees the "freedom to engage in association for the advancement of beliefs and ideas," the Court noted the "chilling effect" that certain state actions, such as requiring the disclosure of membership lists, may have upon the exercise of those rights. There has additionally been recognized a constitutional protection for, as well as a longstanding tradition in our country of, anonymous political speech and pamphleteering. In McIntyre v. Ohio Elections Commission , the Supreme Court overturned a State statute requiring that the author of a pamphlet or political document place his or her name and home address on the document when the material was distributed in relation to an upcoming election/referendum on taxes. The Court found that the purpose of the identification law in Ohio was to prevent "fraud and libel" in campaign literature, and to provide information to the voter, but that requiring the author to put his or her name and address on the literature was inherently chilling, did not provide for most voters generally useful information, and did not sufficiently promote the governmental interests asserted as its justification. Governmental Interest in Lobbying Disclosures The Supreme Court has thus recognized the potential threat of the "chilling" of First Amendment rights in disclosure statutes which require identifications of those responsible for issue-oriented advocacy and persuasion concerning public policy and political issues. However, it has been noted as a general principle that although First Amendment rights "are fundamental, they are not in their nature absolute"; and the federal courts have increasingly upheld statutory regulation in the area of lobbying and campaign disclosures against facial challenges when, on balance, the governmental interest asserted in the regulation is significant, when possible limitations on First Amendment rights are only indirect (as in disclosure statutes), and where the statute in question is drawn with sufficient precision so as to promote and be relevant to the interests asserted as the statute's justification. The Government's asserted interests in preserving the integrity of fundamental governmental processes, such as the legislative process, and protecting such proceedings from corruption and undue influences from those who are paid specifically to influence them has been long recognized as a significant, important and compelling governmental interest. These interests of promoting and protecting the integrity of governmental processes from corruption and undue influences, of shedding light on the workings of Government, and in preserving the confidence of the public in the integrity and basic fairness of our democratic institutions are the interests that have informed the decisions permitting, in the field of lobbying regulation (as well as in some areas of campaign finance regulation), required disclosures, reporting, and identifications which, out of the context of professional "lobbying" or campaign finance, might otherwise be problematic from a First Amendment prospective. Thus, the Supreme Court has upheld the constitutionality of contribution limitations and disclosure requirements concerning contributors to and expenditures by political parties, political committees and candidates in Buckley v. Valeo , the disclosure requirements of the Federal Regulation of Lobbying Act of 1946 in United States v. Harriss , and a range of disclosures, reporting, as well as certain limitations and prohibitions in a broad range of campaign finance activities and issue advocacy in McConnell v. Federal Election Commission, 540 U.S. 93 (2003). In 1954 the Supreme Court upheld the reporting and registration requirements of the Federal Regulation of Lobbying Act of 1946. The Court in Harriss , construing narrowly the provisions of the Federal Regulation of Lobbying Act (2 U.S.C. §§261 et seq., 1994 Code ed.) upheld the constitutionality of that Act. As to the governmental interest involved in requiring the reports and disclosure from those who engage in "lobbying," as that term was defined by the Court, the Court stated: Present-day legislative complexities are such that individual members of Congress cannot be expected to explore the myriad pressures to which they are regularly subjected. Yet full realization of the American ideal of government by elected representatives depends to no small extent on their ability to properly evaluate such pressures. Otherwise the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favored treatment while masquerading as proponents of the public weal. This is the evil which the Lobbying Act was designed to help prevent. Toward that end, Congress has not sought to prohibit these pressures. It has merely provided for a modicum of information from those who for hire attempt to influence legislation or who collect or spend funds for that purpose. It wants only to know who is being hired, who is putting up the money, and how much. It acted in the same spirit and for a similar purpose in passing the Federal Corrupt Practices Act—to maintain the integrity of a basic governmental process. See Burroughs and Cannon v. United States , 290 U.S. 534, 545. Under these circumstances, we believe that Congress, at least within the bounds of the Act as we have construed it, is not constitutionally forbidden to require the disclosure of lobbying activities. To do so would be to deny Congress in large measure the power of self-protection. And here Congress has used that power in a manner restricted to its appropriate end. We conclude that [the registration and reporting sections of the Act], as applied to persons defined in §307 [those covered by the Act], do not offend the First Amendment. The Supreme Court in Buckley and in McConnell , looking at "campaign finance" regulations, recognized not only the significant governmental interest of assuring purity in elections, but also ultimately, the interest in mitigating the potential affect and undue influence of monied interests on the legislative process. The Court in Buckley , finding that disclosure requirements generally "appear to be the least restrictive means of curbing the evils" of unwarranted influence and corruption concerning basic governmental processes, noted that governmental interests such as these may "outweigh" the possible chilling effect of disclosure statutes on First Amendment rights: The strict test established by Alabama is necessary because compelled disclosure has the potential for substantially infringing the exercise of First Amendment rights. But we have acknowledged that there are governmental interests sufficiently important to outweigh the possibility of infringement, particularly when the "free functioning of our national institutions" is involved. The prevention of both actual undue influence, and the appearance of the undue influence of large, monied interests on the legislative process was sufficient for the Supreme Court in McConnell v. FEC to justify not only "disclosures," but also contribution limitations and prohibitions, as well as certain expenditure regulations in the context of campaigns to federal office and the relationship between a candidate/officeholder and those persons who are involved in the election process by spending or contributing large sums of money: Our cases have firmly established that Congress' legitimate interest extends beyond preventing simple cash-for-votes corruption to curbing "undue influence on an officeholder's judgment, and the appearances of such influences. With respect to contribution limitations, the Court reiterated its position: "Our cases have made clear that the prevention of corruption or its appearance constitutes a sufficiently important interest to justify political contribution limits." In addition to the general federal lobbying disclosure laws, there is currently a federal law in force that is commonly known as "FARA," the Foreign Agents Registration Act. Similar to the general federal lobbying law, this law, rather than prohibiting lobbying, or information or propaganda campaigns for or on behalf of foreign interests, instead requires registrations and disclosures by agents of foreign interests who engage in political or propaganda activities in the United States on behalf of such foreign interests, and also requires labeling of certain material distributed in the United States on behalf of those foreign principals. FARA has been upheld against constitutional challenges based on First Amendment freedoms because the courts found that the law does not prohibit speech or expression, but rather merely requires information from those engaging in such activities on behalf of foreign interests. In United States v. Peace Information Center , the federal district court noted specifically that the law "neither limits nor interferes with freedom of speech," nor does it "regulate expression of ideas" or "preclude the making of any utterances"; rather, the court found that the Act "merely requires persons carrying on certain activities to identify themselves by filing a registration statement." Similarly, the "labeling" and identifying of publicly distributed material under FARA was challenged on First Amendment grounds in a case concerning the distribution of films about acid rain produced by the Canadian Film Board and distributed in the United States. In Meese v. Keene , the labeling and public disclosure requirement was upheld by the Supreme Court against the constitutional challenges of distributors of the material in the United States. The Court noted that the act places "no burden on protected expression," and that the law was not intended to "prohibit, edit, or restrain the distribution of advocacy materials." Rather, the Court believed that the labeling requirement added to the information that the public receives, rather than suppressing any information or expression: To the contrary, Congress simply required the disseminators of such material to make additional disclosures that would better enable the public to evaluate the import of the propaganda. The statute does not prohibit appellee from advising his audience that the films have not been officially censured in any way.... By compelling some disclosure of information and permitting more, the Act's approach recognizes that the best remedy for misleading or inaccurate speech contained within material subject to the Act is fair, truthful, and accurate speech. Finally, as to governmental interests generally in required disclosures for activities in this subject area, it is informative to note that the governmental interest asserted in the 1995 political leafleting "labeling" case in Ohio ( McIntyre v. Ohio Elections Commission ), was to prevent "fraud and libel," and not the deterrence of corruption or the appearance of corruption or undue influence upon governmental processes. In McIntyre , while overturning Ohio's labeling provision on leaflets which were intended to prevent "fraud and libel," the Court distinguished the lobbying and campaign disclosure cases and expressly indicated that, contrary to the fraud and libel interest, the interests of deterring corruption or the appearance of corruption of governmental processes was a compelling enough interest to justify disclosure of, for example, lobbying activities. Disclosure of Direct vs. Indirect Lobbying It has been argued that in both the Harriss and the Buckley cases the Supreme Court made a specific distinction that, on the one hand, provided significant leeway to the government to require reporting and disclosures from those "directly" involved in or impacting the governmental processes being protected, as opposed to regulating those who are more on the periphery of the targeted activities and so do not directly impact, influence or communicate with candidates, lawmakers or public officials. In Harriss , the Supreme Court found that the lobbying statute, as the Court interpreted it, "sought the disclosure of ... direct pressures [upon Congress] ...," implying that the statute would not entail "a broader application to organizations seeking to propagandize the general public." Similarly, in Buckley v. Valeo , the Court had upheld disclosure provisions on independent expenditures by narrowing their application to groups that engage in express advocacy in relation to candidates, and who are thus more directly and intimately involved in the electoral process, rather than merely applying to independent "groups engaged purely in issue discussion," and who thus have only a tangential or peripheral impact or connection to the electoral process, candidates and public officials. In the lower court case in Buckley v. Valeo , the United States Court of Appeals overturned former 2 U.S.C. § 437a, a disclosure provision concerning independent expenditures, and that part of the decision was not appealed to Supreme Court. The Court of Appeals stated there: The Supreme Court has indicated quite plainly that groups seeking only to advance discussion of public issues or to influence public opinion cannot be equated to groups whose relation to political processes is direct and intimate. In United States v. Rumely , 345 U.S. 41 (1953), the Court upheld a resolution authorizing a House committee to inquire into lobbying activities after construing it narrowly to apply only to representations made directly to Congress, and not to indirect efforts to influence legislation by changing the climate of public opinion. In the context of lobbying disclosure provisions (as in the case of the campaign disclosure provisions reviewed in the Buckley case), the overbreadth doctrine may arguably counsel that the activities which are subject to disclosure requirements be carefully defined to exclude required disclosures relating to activities of individuals or groups that "do no more than discuss issues of public interest," or activities by "groups engaged purely in issue discussion." Disclosure and reporting requirements which sweep within their scope the activities by issue oriented or advocacy groups who do no more than publicly discuss, analyze or advocate positions on public issues, might arguably be too remote and not have a "substantial connection" to the governmental interest in lobbying regulation recognized in the Harriss case, that is, the revelation of "direct pressures" and influences upon Congress in order to "maintain the integrity of a basic governmental process." For example, in United States v. Rumely, supra , the Supreme Court, in upholding a resolution authorizing a House committee to investigate into "lobbying activities" which the Court narrowly defined, stated the following: Surely it cannot be denied that giving the scope to the resolution for which the Government contends, that is, deriving from it the power to inquire into all efforts of private individuals to influence public opinion through books and periodicals, however remote the radiations of influence which they may exert upon the ultimate legislative process, raises doubts of constitutionality in view of the prohibition of the First Amendment. It does not appear that these standards would, however, necessarily bar Congress from requiring the disclosure of information from groups or persons compensated to influence the legislative process, and who attempt to do so through either "direct" or indirect "grassroots" lobbying activities and communications. In the first instance, it should be emphasized that while the Supreme Court case of United States v. Harriss was ostensibly a decision that found permissible required disclosures of "direct" lobbying activities, the Supreme Court, in narrowly interpreting the provisions of the 1946 Lobbying Act, expressly explained that the lobbying statute "sought the disclosure of ... direct pressures [upon Congress] exerted by the lobbyists themselves or through their hirelings or through an artificially stimulated letter campaign ." The Supreme Court in Harriss stated: As in United States v. Rumely , 345 U.S. 41, 47, which involved the interpretation of similar language, we believe this language should be construed to refer only to "lobbying in its commonly accepted sense"—to direct communication with Members of Congress on pending or proposed federal legislation. The legislative history of the Act makes clear that, at the very least, Congress sought disclosure of such direct pressures, exerted by the lobbyists themselves or through their hirelings or through an artificially stimulated letter campaign . It is thus significant that the Supreme Court in Harriss included "artificially stimulated letter campaigns" as among the "direct" pressures on Congress that the lobbying law of 1946 could regulate by way of disclosures. The kinds of "grassroots" activities which the various proposed bills seek to include in disclosures would appear to be within this range of activity when they are sufficiently directed at conduct that involves such artificially stimulated letter campaigns (which are now often called "astroturf" lobbying), and as such, would arguably be activity which has already been considered by the Supreme Court to be of the type which may properly be subject to disclosure requirements. Grassroots activities by those compensated to influence legislation, when such activities involve a "call to action," as opposed to pure issue discussion or mere advocacy of a particular point of view, would generally be considered to be those communications that provide arguments and information in a manner and in a particular context intended and designed to stimulate a letter writing campaign and direct contacts and communications by members of the public with covered officials that may not have spontaneously occurred. Secondly, it should be noted that the distinction between what has been characterized as "express advocacy," as opposed to "issue advocacy," as far as the permissibility of requiring disclosures of such activities within a campaign context, while certainly valid in the past, has become less relevant in more recent case law. The Supreme Court in McConnell v. FEC , allowed certain limitations on, as well as disclosures about "issue advocacy" advertisements in what were defined as "electioneering communications" when such communications, regardless of any "express advocacy" (of the election or defeat of a clearly identified candidate), occur within a particular time frame near an election. The Court in McConnell expressly denied that, in the context of campaigns, a distinction between such communications is constitutionally based, but rather was mandated in the past only by statutory construction: "[A] plain reading of Buckley makes clear that the expenditure advocacy limitation, in both the expenditure and the disclosure contexts, was the product of statutory interpretation rather than a constitutional command." Furthermore, the Court found: "Nor are we persuaded, independent of our precedents, that the First Amendment erects a rigid barrier between express advocacy and so-called issue advocacy." The Court in McConnell thus upheld the disclosure requirement, even for so-called issue advocacy (as opposed to the "express advocacy" of the election or defeat of an identified candidate), when those issue ads ran in a certain time frame before an election for federal office, thus finding, in effect, that such groups do have enough of a "direct and intimate" relation to the political process to justify disclosing the required information regarding their activities. The Supreme Court in McConnell cited with approval the portion of the District Court's per curium decision dealing with the required disclosures under "BCRA," (the Bipartisan Campaign Reform Act) of "issues ads": ... Plaintiffs never satisfactorily answer the question of how 'uninhibited, robust, and wide-open' speech can occur when organizations hide themselves from scrutiny from the voting public. ... Plaintiff's argument for striking down BCRA's disclosure provisions does not reinforce the precious First Amendment values that Plaintiffs argue are trampled by BCRA, but ignores the competing First Amendment interest of individual citizens seeking to make informed choices in the political marketplace. The Supreme Court decisions thus far with respect to preserving the integrity of the electoral and legislative processes appear to attempt to balance competing interests in such a way as to promote a societal value of increasing the opportunity, effectiveness, and thus the encouragement for participation in the democratic process by ordinary citizens vis-à-vis the more wealthy or organized "special" interests. The decisions have thus, in effect, sought to reduce the perceived "monopoly" that wealthy individuals and monied interests might have in gaining the ear or access to public officials, thus leaving room for and encouraging ordinary citizens to participate and have an impact on public policy. In Harriss , for example, the Supreme Court expressly upheld the disclosure and sunlight provisions of the 1946 lobbying law because "the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favored treatment while masquerading as proponents of the public weal." The Supreme Court in McConnell , quoting specifically from its ruling in Shrink Missouri Government PAC , allowed certain restrictions and disclosure of particular advocacy activities so as not to discourage others' participation in government: "Take away Congress' authority to regulate the appearance of undue influence and the 'cynical assumption that large donors call the tune could jeopardize the willingness of voters to take part in the democratic process.'" In the Ohio case dealing with identification labeling on political leaflets and pamphlets, McIntyre v. Ohio Elections Commission , the Supreme Court invalidated a state law requiring the placing of the author's name and address on political pamphlets where it expressly noted that the plaintiff's activity was not "coordinated" with any public official, candidate or their "organized supporters" in an election, but rather was "independent activity pursued by Mrs. McIntyre," similar in nature and analogous to the activities of "volunteers" in a campaign which need not be disclosed or counted as campaign contributions under campaign finance law. These interests and values of citizen participation may arguably be consonant with the "grassroots" lobbying proposals under consideration, since such proposals would not encompass and thus not require disclosure of any activity by an individual for himself or herself, nor would it reach any activity by those who are merely volunteers of an organization and who are not compensated for their duties, as the grassroots provisions cover only "professional" lobbyists who are compensated above a certain amount to engage in a particular amount of indirect lobbying activities. As-Applied Analysis Although the Supreme Court has explained that disclosure provisions generally "appear to be the least restrictive means of curbing the evils" of unwarranted influence and corruption concerning governmental processes, the Court did note that the "balance" might be tipped in favor of non-disclosure where an organization may show that disclosure would result in harassment or threats of reprisal to contributors or members such that First Amendment rights of association and expression would seriously be infringed by the disclosures. The Court in Buckley stated: There could well be a case, similar to those before the Court in Alabama and Bates , where the threat to the exercise of First Amendment rights is so serious and the state interest furthered by disclosure so insubstantial that the Act's requirements cannot be constitutionally applied. But no appellant in this case has tendered record evidence of the sort proffered in Alabama. As to the evidence which may be necessary to be shown by a minor political party to exclude such a group from the disclosure requirements of the campaign Act, the Court in Buckley stated: The evidence offered need show only a reasonable probability that the compelled disclosure of a party's contributors' names will subject them to threats, harassment or reprisals from either government officials or private parties. The proof may include, for example, specific evidence of past or present harassment of members due to their associational ties, or of harassment directed against the organization itself. A pattern of threats or specific manifestations of public hostility may be sufficient. Thus although broad facial attacks on provisions of law dealing with such things as lobbying and political campaigns, where the law merely requires disclosures and reporting of activities and the amount of expenditures concerning such activities, would face a significant hurdle because of the recognized important and "vital" interest of the Government in assuring the integrity of these processes, such provisions may be examined under an "as-applied" challenge by particular groups, entities or individuals. The Supreme Court in McConnell , after quoting the standard to be used in an as-applied challenge, that is, if the parties can show a "reasonable probability"of "economic reprisals or physical threats" or other such similar "harassments," noted that "our rejection of plaintiffs' facial challenge to the requirement to disclose individual donors does not foreclose possible future challenges to particular applications of that requirement." Judicial Decisions and State Grassroots Lobbying Disclosure The clear trend in federal case law concerning constitutional challenges to lobbying statutes in the states has been to uphold against facial challenges provisions of state law which require the disclosure of "indirect" lobbying campaigns which involve "grassroots" lobbying of the nature generally covered in the legislative proposals discussed. While at least one state court has found disclosures of "indirect" grassroots lobbying to be beyond the permissible regulatory arm of the government (concerning disclosures required by the wording of a voter-adopted referendum), the indication from more recent state court cases is that the courts will uphold statutory requirements for "grassroots" lobbying activities, that is, those activities that urge or direct others to make direct communications or contacts with public officials, that are part of a general regulatory scheme to identify pressures and influences on the government and its officials, and to increase citizen confidence in the integrity of governmental institutions and processes. The Supreme Court of the State of Washington in 1974, for example, upheld very detailed lobbying disclosure provisions of State law concerning "grassroots" lobbying activities in Young Americans for Freedom, Inc. v. Gorton . Although the court there narrowly construed the Act so that an organization engaged in such a "lobbying" campaign need not disclose its member/contributor list, the court found that some disclosures regarding "grass root" lobbying campaigns, such as amounts expended, were necessary to fill possible loopholes in lobbying regulation: To strike down this portion of the initiative would leave a loophole for indirect lobbying without allowing or providing the public with information and knowledge re the sponsorship of the lobbying and its financial magnitude.... Thus, it seems abundantly clear, and we are convinced, that the right of the public to be informed is paramount to any inconvenience that reporting under section 20 [RCW §42.17.200] may cause respondent. The Supreme Court of Vermont in 1995, in Kimbell v. Hooper , upheld the provisions of a Vermont statute which required, among other items, reporting of "indirect contacts to influence legislators." The court there found that this scheme of disclosures and reporting was within the legislature's power to require as a measure to increase the information available about, the confidence in, and to assure the integrity of the basic legislative and governmental processes, and that the Supreme Court precedents had not ruled out required disclosures in lobbying laws of indirect pressures on public officials: Provisions that reach "indirect" lobbying activities beyond the parameters found in Rumely and Harriss are not, as plaintiffs would urge, necessarily unconstitutional; in fact, the Court intimated in these cases that Congress could require more stringent reporting. *** Properly evaluating the governmental process, and the influence lobbyists bring to bear upon it, implicates indirect as well as direct communications and activities needed to get the message across. A similar state statutory provision requiring indirect, grassroots disclosures was, in an advisory opinion by a Michigan court, found to be permissible as long as the reach of the law went to specific solicitations of others to make direct communications. This part of the advisory opinion was affirmed in a case in controversy in Michigan in 1983. As to federal court cases, a United States District Court in 1982 upheld against a constitutional challenge a New York statute which required registration and reporting from anyone who is employed by a person or entity and, in such employment, "attempts to influence the passage or defeat of legislation by either house of the legislature, approval or disapproval of any legislation by the Governor, or the adoption or rejection of any rule having the force or effect of law, or the outcome of any rate-making proceeding by a state agency." The plaintiffs' principal contention was that the statute was an over-broad intrusion into protected First Amendment conduct because it swept within its scope not only "direct contact with government officials in order to influence legislation," but also could be interpreted to cover "any action which could conceivably impact upon governmental action ..." such as " any discussion of the merits of any governmental action that may ultimately affect or influence such action," and as such chills "public discussions or communications in order to avoid the disclosure provisions of the lobby law." The court found, however, that the law may permissibly cover both "direct" lobbying and "indirect" grassroots lobbying activities, and construed the language of the law narrowly to that end so as to exclude coverage of a broader range of pure issue discussion or public advocacy activities: If the foregoing [plaintiff's argument of the law's coverage] constituted a realistic appraisal of the scope of the New York lobby law, this Court would agree with plaintiffs that it should be struck down as overbroad. However, since this court believes that the legislation, when put in its proper context, was never meant to, and in practice, never will reach such activities, the Court declines to invalidate the law for overbreadth in that regard. At the outset, the Court notes that Harriss did not hold that only direct contact with government officials could be regulated by a disclosure law. The Court held that indirect lobbying, in the forms of campaigns to exhort the public to send letters and telegrams to public officials, could be included within the definition of lobbying activities. United States v. Harriss, supra at 621 n.10. In 1985 the United States Court of Appeals for the 8 th Circuit, in Minnesota State Ethical Practices Board v. National Rifle Association , upheld against First Amendment challenges the provisions of a Minnesota ethics and lobbying law that required registration and reporting from certain "lobbyists" who are compensated and who expend a particular threshold amount of time and money "for the purpose of attempting to influence legislative or administrative action by communicating or urging others to communicate with public officials." The appellant National Rifle Association sent mailgrams and letters to all of its own members in Minnesota (approximately 54,000 persons) urging them to contact their legislators to support particular state legislation. The court found that the disclosure of the sources of pressures on legislators through such grassroots lobbying campaigns (an artificially stimulated letter campaign) to be, in a similar manner as the Supreme Court in Harriss , a "compelling interest," and that the potential and incidental burden on First Amendment rights in a statute that prohibits no activity but requires only disclosure is, similarly to the case in Buckley v. Valeo , subordinate to the public's "interest in disclosure." The fact that the original letters were only written to and between members within a voluntary association did not in the court's opinion change the outcome: When persons engage in an extensive letterwriting campaign for the purpose of influencing specific legislation, the State's interest is the same whether or not those persons are members of an association. The appellants have articulated no reason why their membership in the NRA should give then any greater constitutional protection with respect to lobbying activity than is enjoyed by other citizens. In Florida League of Professional Lobbyists v. Meggs , the United States Court of Appeals for the 11 th Circuit in 1996 similarly upheld against first amendment challenges a Florida lobbying disclosure statute which required reporting not only of direct face-to-face lobbying, but also included "indirect" lobbying activities, such as "media campaigns," within its scope. The court there, citing the interests of the government in providing information to the public and to officeholders about the various pressures and influences on the legislative performances of public officials recognized by the Supreme Court in both Harriss and Buckley v. Valeo , said: The League concedes, as it must, that the state has articulated legitimate interests.... And, these interests continue to apply when the pressures to be evaluated by voters and government officials are "indirect" rather than "direct." ... In fact, the government interest in providing the means to evaluate these pressures may in some ways be stronger when the pressures are indirect, because they are harder to identify without the aid of disclosure requirements. Harriss appears to have acknowledged as much when, even reading the statute narrowly to apply only to "direct communication," it nonetheless defined direct communication to include "artificially stimulated letter campaign[s]." In both state and federal courts, provisions which reach "indirect" or "grassroots" lobbying, that is, efforts to persuade, urge or convince members of the public, or members of one's organization, to make direct communications and contacts with public officials on a particular issue, have been upheld against facial constitutional challenges. The courts have noted that the Supreme Court in 1954 expressly upheld required lobbying disclosures relating to "direct" pressures on legislators by lobbying groups themselves, by their hirelings or through their "artificially stimulated letter campaigns." Additionally, the courts have seemed to recognize the growth of importance of such "grassroots" lobbying efforts in the legislative process, and the increased need for legislators and others to be able to identify and assess the pressures on legislators being stimulated (and financed) by interest groups by such methods. Under the analysis applied in these cases, it would appear that a federal statute which requires only disclosure and reporting, and does not prohibit any activity, and which reaches only those who are compensated to engage in a certain amount of the covered activity (leaving volunteer organizations, volunteers, and individuals who engage in such activities on their own accord out of the coverage and sweep of the provisions), would appear to fit within those types of provisions which have been upheld in judicial decisions when the statute is drafted in such a manner so as not to be susceptible to an overly broad sweep bringing in groups, organizations and other citizens who do no more than advocate, analyze and discuss public policy issues and/or legislation. Even with the probability of such a crafted disclosure statute withstanding a facial challenge, the law could still at some point be subject to an "as applied" challenge if a particular group or organization could show a reasonable probability that the disclosures required would result in harassment or reprisals against it or its member or contributors.

The disclosure by professional lobbyists and commercial lobbying firms of expenditures or payments for "grassroots" lobbying campaigns continues to be an issue of importance to reformers both inside and outside of Congress. Legislative proposals, such as S. 1, 110th Congress and H.R. 4682, 109th Congress, had originally sought to extend public reporting requirements for some paid activities intended to stimulate "grassroots" lobbying. The lobbying and ethics reform legislation eventually enacted into law in 2007, the "Honest Leadership and Open Government Act of 2007" (P.L. 110-81,121 Stat. 735 [S. 1, 110th Congress]) did not, however, include "grassroots" lobbying disclosure requirements. As to the constitutionality of requiring such disclosures, it should be noted that the activities involved in "lobbying," including the stimulation of "grassroots" lobbying, clearly implicate and involve freedoms protected by the First Amendment, including speech, associational rights, and the right to petition the government. The courts have long found, however, that some burden on these fundamental rights may be tolerated when a law promotes significant governmental interests, when the burdens on such activities are, at the most, indirect (such as in disclosure laws), and when the statute is drawn with enough precision so that a correlation exists between the information required to be disclosed and the achievement of the interests asserted as the law's justification. Under such standards, the courts have upheld against facial First Amendment challenges required disclosures in the areas of lobbying activities and campaign financing to promote the interests of preventing corruption and limiting the undue influences of monied and powerful interests, as well as preventing merely the "appearance" of such influence, in basic governmental and democratic processes. The apparent trend in more recent judicial decisions seems to allow the legislatures some leeway in determining which activities are relevant to the goals of preserving the integrity of, for example, their own legislative process, and so to include also in required disclosures some activities that are more on the periphery and not necessarily themselves directly involved in such process, but are intended to result in direct contacts and to significantly influence a legislator. In both state and federal courts, state provisions that reach "indirect" or "grassroots" lobbying have increasingly been upheld against facial constitutional challenges. Courts have recognized the growth of importance of these efforts in the legislative process, and the increased need for legislators and others to be able to identify and assess pressures on legislators. Under the analysis applied in these cases, it would appear that a federal statute that requires only disclosure and reporting, and does not prohibit activity, and that reaches only those who are compensated to engage in a certain amount of the covered activity, would appear to fit within those types of provisions upheld in past cases when the statute is narrowly drafted to exclude groups, organizations, and citizens who do no more than advocate, analyze, and discuss public policy. Even with the probability of such a crafted statute withstanding a "facial" challenge, the law might still be subject to an "as applied" challenge if a particular group could show a reasonable probability that the disclosures required would result in harassment or reprisals against members.

Expiring Provision Defined Some health care-related statutes in current law include provisions that (1) are time limited and (2) will expire absent further congressional action. Most expiring provisions provide temporary increases or decreases in funding or special protections that may result in greater funding. For example, one Medicare provision provided increased payments for certain Medicare mental health services provided during a certain time period; when the provision was not extended, the bonus payments ended. Examples of funding protections include those Medicare funding provisions that establish a floor (e.g., for a geographic adjustment index under the physician fee schedule) or a "hold harmless." Generally, the list covers provisions that have or will expire before the end of the first session of the 114 th Congress (i.e., by December 31, 2015). Exclusions That Do Not Meet the Definition While Medicare payments are reviewed for modification and updates each year, not every provision that changes Medicare payments is considered an expiring provision. Services for which payments are automatically updated each year are not considered expiring provisions and are not included in this report. For example, the physician fee schedule update is not considered an expiring provision because the statute prescribes the update process (the sustainable growth rate, or SGR, system) that applies each year, even though Congress has regularly chosen to supersede those updates in almost all recent years. Similarly, a recent change in Medicare payment policy included in the ACA requires the payment updates for many Medicare entities be adjusted by a productivity adjustment (similar to the payment adjustment for physicians). In general, the ACA provisions specify that the adjustment may result in a negative payment update allowing the payment rate for a year to be less than the rate for the preceding year. Just as the Medicare physician payment update is not considered an expiring provision, negative payment updates resulting from the productivity adjustment would not be considered expiring provisions because the updates are not time limited and do not expire absent congressional action, though, as with physician payments, Congress may choose to modify those updates. This report includes only those health care-related expiring provisions for which congressional action would be needed to extend the application of a provision once the expiration date is reached. Demonstration projects and pilot programs are not included. Provisions that expired or were repealed in 2013 are collected in the last section of the report. Report Organization and Legislative Acts The expiring provisions are summarized below, organized by SSA or PHSA title and section, as appropriate. The last part of the report includes provisions with expiration dates in 2013 that were not extended in any subsequent legislation. Because these programs and provisions are diverse, the provisions identified herein are not perfectly consistent, including with regard to the style of citations. The legislative actions that created, modified, or extended the expiring provisions covered in this report are the following: Social Security Act Expiring Provisions Title V: Maternal and Child Health Services Block Grant Family-to-Family Health Information Centers (SSA Section 501(c)) DRA Section 6064 established the Family-to-Family Health Information Centers program in SSA Section 501(c). The program, administered by the Health Resources and Services Administration (HRSA), provides grants to family-staffed organizations that provide health care information and resources to families of children with special health care needs. DRA (Section 6064) appropriated $3 million for FY2007; $4 million for FY2008; and $5 million for FY2009. ACA (Section 5507(b)) extended the $5 million appropriation through FY2012. ATRA ( Section 624 ) extended the $5 million appropriation through FY2013. PAMA (Section 207) provided $2.5 million for the remainder of FY2014 (from April 1, 2014, to September 30, 2014) and provided $2.5 million for the first half of FY2015 (October 1, 2014, through March 31, 2015). Current status: The funding designated for Family-to-Family Health Information Centers expires March 31, 2015. Abstinence Education Grants (SSA Section 510) PRWORA Section 912 authorized abstinence education formula grants in SSA Section 510. To receive these formula grants, states must request funding when applying for Maternal and Child Health Block Grant funds authorized in SSA Section 501. Funds provided must be used exclusively for teaching abstinence from sexual activity outside of marriage. PRWORA authorized and appropriated $250 million ($50 million for each of FY1998 through FY2002) for abstinence education. Subsequently, funding for this program was extended through June 30, 2009, by a series of legislation detailed below. ACA Section 2954 appropriated $50 million for each of FY2010 through FY2014 for this program. Most recently, PAMA extended funding for the program through FY2015. In addition, for FY2012 ( P.L. 112-74 ) and FY2013 ( P.L. 113-6 ), $5 million was added to this program to be used to award competitive grants. This program is administered by the Administration for Children and Families (ACF). PRWORA (Section 912) appropriated $50 million for each of FY1998 through FY2002. WREA 2003 (Section 6) extended the appropriation through FY2003. P.L. 108-89 (Section 101 ) extended the appropriation through March 31, 2004. WREA 2004 (Section 2) extended the appropriation through June 30, 2004. P.L. 108-262 (Section 2) extended the appropriation through September 30, 2004. P.L. 108-308 (Section 2) extended the appropriation through March 31, 2005. WREA 2005 (Section 2) extended the appropriation through June 30, 2005. P.L. 109-19 (Section 2) extended the appropriation through September 30, 2005. P.L. 109-91 (Section 102) extended the appropriation through December 31, 2005. TRHCA (Section 401) extended the appropriation through June 30, 2007. P.L. 110-48 (Section 1) extended the appropriation through September 30, 2007. P.L. 110-90 (Section 2) extended the appropriation through December 31, 2007. MMSEA (Section 202) extended the appropriation through June 30, 2008. MIPPA (Section 201) extended the appropriation through June 30, 2009. ACA (Section 2954) appropriated $50 million for each of FY2010 through FY2014. PAMA (Section 205) appropriated $50 million for FY2015. Current status: The funding designated for abstinence education grants expires September 30, 2015. Maternal, Infant, and Early Childhood Home Visiting Program (SSA Section 511) ACA Section 2951 established the Maternal, Infant, and Early Childhood Home Visiting Program in SSA Section 511. This program provides grants to states, territories, and tribes for the support of evidence-based early childhood home visiting programs. These programs support in-home visits by health or social service professionals with at-risk families. The ACA appropriated a total of $1.5 billion for FY2010 through FY2014 for the home visitation grant program. PAMA extended this funding through March 31, 2015. Of the amount appropriated for this program, 3% annually is reserved for research and evaluation and 3% annually is reserved to make grants to tribal entities for home visitation services to Indian families. This program is administered collaboratively by the Maternal and Child Health Bureau at HRSA and ACF. ACA (Section 2951) appropriated $100 million for FY2010; $250 million for FY2011; $350 million for FY2012; $400 million for FY2013; and $400 million for FY2014. PAMA (S ection 209) provided $400 million for the program for the first half of FY2015 (October 1, 2014, through March 31, 2015). It also reserved portions of this part-year funding for Indian tribal entities (3% of the appropriation) and research and evaluation (3% of the appropriation). Current status: The funding designated for Maternal, Infant, and Early Childhood Home Visiting Program expires March 31, 2015. Personal Responsibility Education Program (SSA Section 513) ACA Section 2953 established the Personal Responsibility Education Program (PREP) in Section 513 of the SSA. PREP is a state formula grant program to support evidence-based programs designed to educate adolescents about abstinence, contraception, and adulthood. The ACA also required the Secretary of Health and Human Services (the Secretary) to award grants to implement innovative youth pregnancy prevention strategies and to target services to high-risk populations. The ACA appropriated a total of $375 million, with $75 million appropriated for each of FY2010 through FY2014. The ACA required that $10 million each year be reserved for the youth pregnancy prevention grants. PAMA extended funding for the program through FY2015. The funds are available until expended. The program is administered by ACF. ACA (Section 2953) appropriated a total of $375 million from FY2010 through FY2014. PAMA (Section 206) appropriated $75 million for FY2015. Current status: The funding designated for PREP expires September 30, 2015. The funds are available until expended. Title XI: General Provisions, Peer Review, and Administrative Simplification Outreach and Assistance for Low-Income Programs (SSA Sections 1102 and 1871, PAMA Section 110) See SSA Section 1871. CHIPRA Children's Health Care Quality Measures (SSA Section 1139A(i)) CHIPRA (Section 104) required the Secretary to identify and publish an initial core set of pediatric quality measures by no later than January 1, 2010. The Secretary, not later than January 1, 2011, and every three years thereafter, also is required to submit a report to Congress on, for example, the quality of children's health care under Medicaid and CHIP. A Pediatric Quality Measures Program (PQMP) was required to be established by January 1, 2011; this program is required to identify pediatric measure gaps and development priorities, award grants and contracts to develop measures, and revise and strengthen the core measure set, among other things. States are required to submit reports to the Secretary annually to include, for example, information about state-specific child health quality measures applied by the state. The Secretary is required to collect, analyze, and make publicly available the information reported by states not later than September 30, 2010, and annually thereafter. The Secretary was required, between FY2009 and FY2013, to award no more than 10 grants to states for demonstration projects to evaluate ideas to improve the quality of children's health care; in addition, the Secretary, not later than January 1, 2010, was required to establish a program to encourage the development and dissemination of a model electronic health record for children. The Institute of Medicine (IOM) was required to develop a report on measurement of child health status and quality by no later than July 1, 2010. Funding for these activities was appropriated in the amount of $45 million for each of FY2009 through FY2013. PAMA (Section 210) extended funding for SSA Section 1139A(b) for FY2014 by requiring that $15 million of the $60 million appropriated under Section 1139B(e) be used to carry out Section 1139A(b). Current status: The appropriation in Section 1139A(i) for funding to carry out SSA Section 1139A expired in FY2013; the funding designated to carry out SSA Section 1139A(b) expired in FY2014. Adult Quality Measures (SSA Section 1139B(e)) ACA (Section 2701) required the Secretary to publish a core set of Medicaid adult health quality measures by January 1, 2012. Also, no later than January 1, 2013, the Secretary was required to develop a standardized format for reporting information based on this initial core measurement set. The Secretary is required to submit a report to Congress by January 1, 2014, and every three years thereafter, that describes the Secretary's efforts to improve, for example, the quality of care of different services for adults under Medicaid. Within one year after the release of the recommended core set of adult health quality measures, the Secretary is required to establish a Medicaid Quality Measurement Program (MQMP). To this end, the Secretary is required to award grants and contracts for developing, testing, and validating emerging and innovative evidence-based measures applicable to Medicaid adults. Not later than two years after the establishment of the MQMP, and annually thereafter, the Secretary is required to publish recommended changes to the initial core set of adult health quality measures based on the results of testing, validation, and the consensus process for development of these measures. States are required to submit reports to the Secretary annually to include, for example, information about state-specific adult health quality measures applied by the state. The Secretary is required to collect, analyze, and make publicly available the information reported by states before September 30, 2014, and annually thereafter. Funding for these activities was appropriated in the amount of $60 million for each of FY2010 through FY2014. PAMA (Section 210) required that, of the funds appropriated for FY2014, $15 million be used to carry out SSA Section 1139A(b). Current status: The appropriation in SSA Section 1139B(e) for funding to carry out SSA Section 1139B and SSA Section 1139A(b) expired in FY2014. Title XVIII: Medicare Therapy Services (SSA Section 1833(g)) BBA 97 (Section 4541) established, beginning in CY1999, a $1,500 limit on outpatient physical therapy services (including speech language pathology services) provided by nonhospital providers and a separate $1,500 limit on outpatient occupational therapy services provided by nonhospital providers. Provided that these limits would be updated by the Medicare Economic Index (MEI) beginning in CY2002. BBRA 99 (Section 221) suspended application of the limits for CY2000 and CY2001. BIPA 2000 (Section 421) suspended application of limits for CY2002. MMA (Section 624) suspended application of limits beginning December 8, 2003, through December 31, 2005. DRA (Section 5107) required the Secretary to implement an exceptions process for services meeting specified criteria for medically necessary services provided in 2006. TRHCA (Section 201) extended the exceptions process through CY2007. MMSEA (Section 105) extended the exceptions process through the first six months of 2008. MIPAA (Section 141) extended the exceptions process through CY2009. ACA (Section 3103) extended the exceptions process through CY2010. MMEA (Section 104) extended the exceptions process through CY2011. TPTCCA ( Section 304) extended the exceptions process through February 2012. MCTRJCA (Section 3005) extended the exceptions process through December 2012 and created several additional requirements. The provision also set the annual threshold at $3,700 to be applied separately (1) for physical therapy services and speech language pathology services and (2) for occupational therapy services. However, this increased amount applies to therapy service received both in physicians' offices as well as hospital outpatient departments. The increased cap amount expires coincident with the expiration of the exceptions process. ATRA (Section 603) extended the exceptions process through December 31, 2013, extended the application of the cap and threshold to therapy services furnished in a hospital outpatient department, and counted outpatient therapy services furnished in a Critical Access Hospital (CAH) toward the cap and threshold. This change did not affect the payment method for outpatient therapy services provided by CAHs. ATRA also extended the mandate that Medicare perform manual medical review of therapy services furnished January 1, 2013, through December 31, 2013, for which an exception is requested when the beneficiary has reached a dollar aggregate threshold amount of $3,700 for therapy services. PAMA (Section 103) extended the therapy cap exceptions process through March 31, 2015. Current Status: The Medicare therapy cap exceptions process and the associated mandated medical review expire March 31, 2015. Assistance for Rural Ambulance Providers in Low Population Density Areas (SSA Section 1834(l)(12)) MMA (Section 414(c)) provided an increase in base payments for ground ambulance services furnished in low population density rural areas beginning July 1, 2004, and ending December 31, 2009. The Centers for Medicare & Medicaid Services (CMS) established this increase as 22.6%. ACA (Section 3105) extended increased base payments in low population density areas through CY2010 (super rural ambulance payments). MMEA (Section 106) extended the super rural ambulance payments through CY2011. TPTCCA (Section 306) extended the super rural ambulance payments until March 1, 2012. MCTRJCA (Section 3007) extended the super rural ambulance payments until January 1, 2013. ATRA (Section 604) extended the super rural ambulance payments until January 1, 2014. P.L. 113-67 (Section 1104( b )) extended the MIPPA payment increases until March 31, 2014. PAMA (Section 104(b)) extended the super rural ambulance payments until March 31, 2015. Current Status: Increased Medicare ambulance payments in low population density areas apply through March 31, 2015. Temporary Increase For Ground Ambulance Services (SSA Section 1834(l)(13)) and Grandfathered Rural Areas for Air Ambulance Services MMA (Section 414(d)) provided that the rate otherwise established for the year would be increased an additional 2% for rural ambulance services and 1% for urban ambulance services beginning July 1, 2004, through December 31, 2006. MIPPA (Section 146) provided that the rate otherwise established for the year would be increased an additional 3% for rural ambulance services and 2% for other areas for the period July 1, 2008, through December 31, 2009. ACA (Section 3105) extended the MIPPA payment increases through CY2010. MMEA (Section 106) extended the MIPPA payment increases through CY2011. TPTCCA (Section 306) extended the MIPPA payment increases until March 1, 2012. MCTRJCA (Section 3007) extended the MIPPA payment increases until January 1, 2013. Required the Government Accountability Office (GAO) to update the report GAO-07-383, Ambulance Providers: Costs and Expected Medicare Margins Vary Greatly by October 1, 2012. (See GAO 13-6, published October 1, 2012). It also required the Medicare Payment Advisory Commission (MedPAC) to study the appropriateness of ambulance add-on payments and submit a report to the congressional committees with jurisdiction over Medicare by June 15, 2013. In its November 1, 2012, meeting, MedPAC commissioners voted to recommend that the ambulance add-on payments not be extended. This recommendation (and others concerning Medicare's ambulance payments) was included in MedPAC's June 2013 Report to Congress . ATRA (Section 604) extended the 2% urban add-on payment and the 3% rural add-on payment until January 1, 2014. The Department of Health and Human Services (HHS) is required to conduct studies of various aspects of ambulance costs and consult with the industry on the design of such cost-collection efforts, explore the use of cost surveys and cost reports, examine the development of a standard cost reporting tool, and examine the ability of different types of ambulance providers to furnish the cost data. Two reports, each with legislative and administrative recommendations, were due to Congress no later than October 1, 2012, and July 1, 2014. CMS has not yet issued those reports. P.L. 113-67 (Section 1104(a)) extended the MIPPA payment increases until March 31, 2014. PAMA (Section 104(a)) extended the MIPPA payment increases through March 31, 2015. Current Status: The MIPAA Medicare rural and urban add-on payments expire on March 31, 2015. Physician Quality Reporting Payments (Section 1848(a)(8)) TRHCA (Section 101) provided a 1.5% bonus payment for physicians voluntarily reporting certain quality measures for the period July 1, 2007-December 31, 2007. MMSEA (Section 101) extended and modified the Physician Quality Reporting Initiative (PQRI) for physicians and other health care professionals under Medicare for 2008 and 2009. MIPPA (Section 131) made permanent the PQRI and extended bonus payments equal to 1.5% for 2008 and 2.0% for 2009 and 2010. ACA (Section 3002 as modified by Section 10327) extended the Physician Quality Reporting System (PQRS) incentive payments through 2014. Eligible professionals who successfully reported in 2010 received a 1% bonus in 2011; those who successfully report in 2011, 2012, and 2013 received a 0.5% bonus in 2012, 2013, and 2014, respectively. The provisions also implemented an incentive (penalty) for providers who do not report quality measures beginning in 2015. Eligible professionals who fail to participate successfully in the program will face a 1.5% payment penalty in 2015 and a 2% payment penalty in 2016 and in subsequent years. There is no expiration for this penalty. In addition, the ACA added a 0.5% incentive payment available in years 2011 through 2014 for eligible professionals who also meet the requirements of a Maintenance of Certification Program (MOCP). ATRA (Section 601) required the Secretary to deem those eligible professionals who satisfactorily participate in a qualified clinical data registry as having met the quality reporting requirements for PQRS for 2014 and subsequent years. The provision also required the Secretary to establish requirements for a qualified clinical data registry and, in so doing, to consider, among other things, whether an entity has mechanisms in place to ensure transparency and to support quality improvement initiatives for participants. Current Status: The Medicare PQRS incentive payments expired on December 31, 2014, with a penalty imposed beginning in 2015 and in subsequent years for professionals who do not successfully report. There is no expiration for this penalty. Floor on Geographic Adjustment for Physician Fee Schedule (SSA Section 1848(e)(1)(E)) MMA (Section 412) provided for an increase in the work geographic index to 1.0 (floor) for any locality for which the work geographic index was less than 1.0 for services furnished from January 1, 2004, through December 31, 2006. TRHCA (Section 102) extended the floor through CY2007. MMSEA (Section 103) extended the floor through June 30, 2008. MIPPA (Section 134) extended the floor through December 2009. In addition, beginning January 1, 2009, and with no expiration, the work geographic index for Alaska was set to 1.5 if the index would otherwise be less than 1.5. ACA (Section 3102) extended the floor through December 2010. MMEA (Section 103) extended the floor through December 2011. TPTCCA (Section 303) extended the floor through February 2012. MCTRJCA (Section 3004) extended the floor through December 2012 and required a MedPAC to report on whether any work geographic adjustment to the physician fee schedule is appropriate, what that level of adjustment should be (if appropriate), and where the adjustment should be applied. The report also was required to assess the impact of such an adjustment, including how it affects access to care. ATRA (Section 602) extended the 1.0 floor for the physician work geographic index through December 31, 2013. PAMA (Section 102) extended the 1.00 floor for the physician work geographic index through March 31, 2015. Current Status: The 1.0 floor for the Medicare physician fee schedule work geographic index will expire on March 31, 2015. Electronic Health Record Incentive Payments for Physicians (SSA Section 1848(o)) ARRA ( Title IV, Subtitle A , Section 4101) authorized incentive payments through Medicare Part B for up to five years beginning as early as 2011 to physicians who are meaningful users of certified electronic health record (EHR) technology. Incentive payments were available for physicians who qualified as meaningful users in CY2011, CY2012, or CY2013. However, no payment incentives will be provided after December 31, 2016, regardless of what year the physician first receives an incentive payment. Current Status: No Medicare EHR payment incentives will be provided after December 31, 2016, regardless of what year the physician first receives an incentive payment. Restriction on Enrollment for Medicare Advantage Plans for Special Needs Individuals (SSA Subsection 1859) MMA (Section 231) created a new Medicare Advantage (MA) option—MA plans for special needs beneficiaries. Special Needs Plans (SNPs) are MA plans that can limit enrollment to the following subgroups of Medicare beneficiaries: (1) those dually eligible for Medicare and Medicaid; (2) those who are institutionalized; and (3) those with severe or disabling chronic conditions. SNPs are paid in the same way as other MA plans and are subject to the same regulations. Under MMA, authority for SNPs to limit enrollment to beneficiary subgroups expired December 31, 2008. MMSEA (Section 108) extended the time SNPs may restrict enrollment to one or more classes of special needs beneficiaries until January 1, 2010. MIPPA (Section 164) extended the time SNPs may restrict enrollment to one or more classes of special needs individuals until January 1, 2011. ACA (Section 3205) extended through December 31, 2013, the time SNPs may restrict enrollment to special needs individuals. ATRA (Section 607) extended through December 31, 2014, the time SNPs may restrict enrollment to special needs individuals. PSRA (Section 1107) extended through December 31, 2015, the time SNPs may restrict enrollment to special needs individuals. PAMA (Section 107) extended through December 31, 2016, the time SNPs may restrict enrollment to special needs individuals. Current Status: Enrollment in SNPs will no longer be limited to special needs individuals after December 31, 2016. Medicare Dependent Hospital (SSA Section 1886(d)(5)(G)) BBA 97 (Section 4204) reinstated the Medicare Dependent Hospital (MDH) classification, starting on October 1, 1997, through October 1, 2001, for small rural hospitals that treat a relatively high proportion of Medicare patients, allowing these hospitals to continue to receive special Medicare payments. BBRA 99 (Section 404) extended the MDH program to October 1, 2006. DRA (Section 5003) extended the MDH program through discharges occurring before October 1, 2011. Starting for discharges on October 1, 2006, an MDH may elect payments based on 50% of its FY2002 hospital-specific costs if doing so resulted in higher Medicare payments. MDHs' payments are based on 75% of their adjusted hospital-specific costs starting for discharges on October 1, 2006. MDHs that qualify for a disproportionate share hospital (DSH) adjustment do not have the adjustment capped at 12%. ACA (Section 3124) extended the MDH program until September 30, 2012. ATRA (Section 606) extended the MDH program until September 30, 2013. P.L. 113-67 (Section 1106) extended the MDH program until March 31, 2014. PAMA (Section 106) extended the MDH program until March 31, 2015. Current Status: MDH special payment status expires for discharges starting April 1, 2015. Low-Volume Adjustment (SSA 1866(d)(12)) ACA (Section. 3125 as modified by Section 10314) eased the distance and volume requirements for hospitals to qualify for the low-volume adjustment and receive increased Medicare Inpatient Prospective Payment System (IPPS) payments for FY2011 and FY2012. Under the enhanced adjustment, hospitals must have fewer than 1,600 Medicare discharges and be at least 15 miles from the nearest like hospital. ATRA (Section 605) extended the enhanced low-volume adjustment for FY2013. P.L. 113-67 (Section 110 5) extended the enhanced low-volume adjustment through March 31, 2014. PAMA (Section 1 05) extended the enhanced low-volume adjustment though March 31, 2015. Current status: The low-volume adjustment will revert to original standards starting for discharges on April 1, 2015. These standards are set in statute at more than 25 road miles and less than 800 discharges. As directed, CMS examined the empirical cost relationship and set the standards at fewer than 200 total discharges established at Title 42, Section 412.101, of the Code of Federal Regulations . Outreach and Assistance for Low-Income Programs (SSA Sections 1102 and 1871, PAMA Section 110) MIPPA (Section 119) provided $25 million for FY2008 and FY2009 for low-income Medicare beneficiary outreach and education through State Health Insurance Counseling and Assistance Programs (SHIPs), Area Agencies on Aging (AAAs), Aging and Disability Resource Centers (ADRCs), and the Administration on Aging (AoA). ACA (Section 3306) temporarily extended MIPPA Section 119 and provided an additional $45 million for outreach and education related to Medicare low income assistance programs. Funds were available for obligation through 2012. ATRA (Section 610) extended MIPPA Section 119 authority through FY2013 and appropriated the following amounts for low-income Medicare beneficiary outreach and assistance programs: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the Contract with the National Center for Benefits and Outreach Enrollment, $5 million. PSRA (Section 1110) extended MIPPA Section 119 authority through March 31, 2014, and appropriated the following amounts for low-income Medicare beneficiary outreach and assistance programs: SHIPs, $3.75 million; AAAs, $3.75 million; ADRCs, $2.5 million; and the Contract with the National Center for Benefits and Outreach Enrollment, $2.5 million. PAMA (Section 110) further extended MIPPA Section 119 authority through September 31, 2014, and appropriated the following amounts for low-income Medicare beneficiary outreach and assistance programs: SHIPs, $7.5 million; AAAs, $7.5 million; ADRCs, $5 million; and the Contract with the National Center for Benefits and Outreach Enrollment, $5 million. In addition, PAMA Section 110 extended MIPPA Section 119 authority through March 31, 2015, and appropriated the following amounts for low-income Medicare beneficiary outreach and assistance programs: SHIPs, $3.75 million; AAAs, $3.75 million; ADRCs, $2.5 million; and the Contract with the National Center for Benefits and Outreach Enrollment, $2.5 million. Current Status: Funding for low-income Medicare beneficiary outreach and education is available for obligation through March 31, 2015. Extension of Medicare Cost Contracts (SSA Section 1876(h)(5)(C)(ii)) BBA 97 (Section 4002) established transition from Medicare Risk Contract program to Medicare + Choice program. BBRA 99 (Section 503 ) extended Medicare cost contracts through CY2004. BIPA 2000 (Section 634 ) allowed service-area expansion for certain Medicare cost contracts. MMA (Section 234) transitioned from Medicare + Choice to MA program and allowed cost contracts to be extended or renewed indefinitely. Beginning in 2008, these contracts could not be extended or renewed for a service area that during the entire previous year had two or more MA regional plans or two or more MA local plans. MMSEA (Section 109) extended by one year—from January 1, 2008, to January 1, 2009—the length of time a cost plan contract could continue for a cost plan in an area served by two or more local or two or more regional plans. MIPPA (Section 167) extended by one year—from January 1, 2009, to January 1, 2010—the length of time a cost plan contract could continue for a cost plan in an area served by two or more local or two or more regional plans. To prohibit a cost plan from participating after January 1, 2010, the two or more plans in a service area were required to be offered by different organizations and had to meet minimum enrollment requirements. ACA (Section 3206) extended by three years—from January 1, 2010, to January 1, 2013—the length of time a cost plan contract could continue for a cost plan in an area served by two or more local or two or more regional plans that meet minimum enrollment requirements. ATRA (Section 608) extended by one year—from January 1, 2013, to January 1, 2014—the length of time a cost plan contract could continue for a cost plan in an area served by two or more local or two or more regional plans that meet minimum enrollment requirements. P.L. 113-67 (Section 1108) extended by one year—from January 1, 2014, to January 1, 2015—the length of time a cost plan contract could continue for a cost plan in an area served by two or more local or two or more regional plans that meet minimum enrollment requirements. PAMA (Section108) extended by one year—from January 1, 2015, to January 1, 2016—the length of time a cost plan contract could continue for a cost plan in an area served by two or more local or two or more regional plans that meet minimum enrollment requirements. Current Status: Medicare cost contracts can be extended or renewed indefinitely, except that beginning on or after January 1, 2016, these contracts may not be extended or renewed in areas that during the entire previous year had two or more MA regional plans or two or more MA local plans offered by different organizations, with a minimum enrollment. This means that such plans will not be renewed at the end of 2016, based on minimum enrollment data for the 2015 contract year, and will cease to operate at the end of 2016. Electronic Health Record Incentive Payments for Hospitals (SSA Section 1886(n)) ARRA (Title IV, Subtit le A, Section 4102) authorized incentive payments to eligible acute care hospitals and critical access hospitals that are meaningful users of certified EHR technology. Payments were authorized over a four-year period, from FY2011 to FY2014. Current Status: Incentive payments to hospitals for the meaningful use of EHRs were authorized from FY2011 through FY2014. Quality Measure Selection (SSA Section 1890A(a)-(d)) ACA (Section 3014(b) and (c)) required the Secretary to establish a pre-rulemaking process to include a series of six steps to select quality measures for use in the Medicare program. These steps included requirements that the consensus-based entity with a contract gather multi-stakeholder input and annually transmit that input to the Secretary. The provision also required the Secretary to make measures under consideration available to the public and to publish in the Federal Register the rationale for the use of any quality measure that has not been endorsed by the consensus-based entity, among other things. In addition, it required the Secretary to establish a process for disseminating those quality measures that are being used and to periodically review and determine whether to maintain or to phase out these quality measures. The ACA also provided for the transfer of a total of $20 million from the Medicare Part A and Part B Trust Funds for each of FY2010 through FY2014 to carry out the amendments made in ACA Section 3014(b) (and in ACA Section 3014(a), see below). PAMA (Section 109) required the transfer of $5 million for FY2014 and $15 million for the first six months of FY2015 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d); funds are required to remain available until expended. Current Status: Funding to carry out the quality measure selection activities under SSA Section 1890A(a)-(d) will expire on March 31, 2015. The funding will remain available until expended. Contract with a Consensus-Based Entity Regarding Performance Measurement (SSA Section 1890(d)) MIPPA (Section 183) required the Secretary to have a contract with a consensus-based entity (e.g., National Quality Forum, or NQF) to carry out specified duties related to performance improvement and measurement. These duties included, among others, priority setting; measure endorsement; measure maintenance; convening multi-stakeholder groups to provide input on the selection of quality measures and national priorities; and annual reporting to Congress. MIPPA also provided for the transfer, from the Medicare Part A and Part B Trust Funds, of a total of $10 million for each of FY2009 through FY2012. ACA (Section 3014(a)) added to the annual reporting requirements and also added a requirement that the consensus-based entity convene multi-stakeholder groups to provide input on the selection of quality measures for use in the Medicare program and on national priorities for improvement in population health and health care delivery. ATRA (Section 609(a)) extended funding through FY2013 and modified the duties of the consensus-based entity. PSRA (Section 1109) required that transferred funding remain available until expended. PAMA (Section 109) required the transfer of $5 million for FY2014 and $15 million for the first six months of FY2015 to carry out both SSA Section 1890 and SSA Section 1890A(a)-(d). Current Status: Funding for the contract with the consensus-based entity (NQF) will expire on March 31, 2015. Funds transferred will remain available until expended. Home Health Prospective Payment System Rural Add-On (SSA Section 1895) BIPA (Section 508) provided a 10% increase in Medicare's Home Health (HH) Prospective Payment System (PPS) for services provided to beneficiaries in rural areas beginning April 1, 2001, through March 31, 2003. MMA (Section 421) provided a 5% increase to Medicare's HH PPS for services provided to beneficiaries in rural areas beginning April 1, 2004, through March 31, 2005. DRA (Section 5201) reestablished the Medicare HH PPS rural add-on in MMA as a 5% increase beginning January 1, 2006, through December 31, 2006. ACA (Section 3131) reestablished the Medicare HH PPS rural add-on in MMA as a 3% increase beginning April 1, 2010, through December 31, 2015. Current Status: The Medicare HH PPS rural add-on will expire on December 31, 2015. Title XIX: Medicaid Qualifying Individual Program (SSA Section 1902(a)(10)(E)(iv) and Funding (SSA Section 1933(g)) MMEA (Section 110) authorized and appropriated $280 million in funding for the Medicaid Qualifying Individual (QI) program for the first quarter of FY2012. TPTCA (Section 310) reauthorized and funded the QI program from January 1, 2012, through February 29, 2012 (increasing FY2012 funding through February 29, 2012, to $430 million). MCTRJCA (Section 3101) reauthorized and funded the QI program through September 30, 2012, increasing total FY2012 funds available to $730 million, as well as authorizing and appropriating $280 million to extend the QI program through the first quarter of 2013 (October 1, 2012-December 31, 2012). ATRA (Section 621) reauthorized and funded the QI program through December 31, 2013. For the period between January 1, 2013, and September 30, 2013, the total allocation amount for the QI program was $485 million, and for the period between October 1, 2013, and December 31, 2013, the total allocation amount was $300 million. PSRA (Section 1201) reauthorized and funded the QI program through March 31, 2014. For the period between January 1, 2014, and March 31, 2014, $200 million was appropriated for the QI program. PAMA (Section 201) reauthorized and funded the QI program through March 31, 2015. The following amounts are appropriated for the QI program: for the period between April 1, 2014, and September 30, 2014, $485 million; for the period between October 1, 2014, and December 31, 2014, $300 million; and for the period between January 1, 2015, and March 31, 2015, $250 million. Current Status: The QI program authorization expires on March 31, 2015, and $1.035 billion has been appropriated through the second quarter of FY2015 (March 31, 2015). Medicaid Payments to Primary Care Providers (SSA Sections 1902(a)(13)(C), 1902(jj), 1905(dd)), and 1932(f)) Under Medicaid, for the most part, states establish their own payment rates for Medicaid providers. Federal statute requires that these rates be sufficient to enlist enough providers so that covered benefits will be available to Medicaid enrollees at least to the same extent they are available to the general population in the same geographic area. HCERA (Section 1202) added the required increase to the Medicaid primary care rates. Specifically, for CY2013 and CY2014, Medicaid payment rates for certain primary care services furnished by physicians with certain subspecialties (i.e., family medicine, general internal medicine, and pediatrics) are required to be the same as what Medicare pays for these services. The federal government is picking up the entire cost of that increase in primary care rates (i.e., the difference between states' Medicaid payment rates as of July 1, 2009, and Medicare payment rates) for those two years. Current Status: The requirement for states to provide Medicaid primary care payments at parity with Medicare and the full federal financing of the increased primary care rates expired December 31, 2014. Transitional Medical Assistance (SSA Sections 1902(e)(1)(B) and Section 1925(f)) Under federal law, states are required to continue Medicaid benefits for certain low-income families that would otherwise lose coverage because of changes in their income. This continuation, called transitional medical assistance (TMA), requires four months of TMA for families that lose Medicaid eligibility due to increased spousal support collections, as well as those who lose eligibility due to an increase in earned income or hours of employment. Section 303(a)(1) of the Family Support Act of 1988 ( P.L. 100-485 ) expanded work-related TMA and requires states to provide at least 6, and up to 12, months of coverage. Since 1996, these work-related TMA requirements have been funded by short-term extensions. PRWORA (Section 114(c)) extended TMA from September 30, 1998, to September 30, 2001. BIPA 2000 (Section 707(a)) extended TMA through September 30, 2002. WREA (Section 5) extended TMA through September 30, 2003. ARRA (Section 5004(a)(1)) extended TMA through December 31, 2010. MMSEA (Section 202 ) extended TMA through December 31, 2011. TPTCCA (Section 311) extended TMA through February 29, 2012. MCTRJCA (Section 3102) extended TMA through December 31, 2012. ATRA (Section 622) extended TMA through December 31, 2013. P.L. 113-67 (Section 1202) extended TMA through March 31, 2014. PAMA (Section 202) extended TMA through March 31, 2015. Current status: Medicaid work-related TMA will expire after March 31, 2015. Medicaid and CHIP Express Lane Option (SSA Sections 1902(e)(13)(A)(i) and 1902(e)(13)(I)) CHIPRA created a state plan option for "Express Lane" eligibility, through September 30, 2013, whereby states are permitted to rely on a finding from specified "Express Lane" agencies (e.g., those that administer programs such as Temporary Assistance for Needy Families, Medicaid, CHIP, and Food Stamps) for (1) determinations of whether a child has met one or more of the eligibility requirements necessary to determine his or her initial eligibility, (2) eligibility redeterminations, or (3) renewal of eligibility for medical assistance under Medicaid or CHIP. ATRA (Section 623 ) permitted states to rely on "Express Lane" eligibility determinations through September 30, 2014. P.L. 113-93 (Section 203) permitted states to rely on "Express Lane" eligibility determinations through September 30, 2015. Current status: Authority for "Express Lane" eligibility determinations will expire after September 30, 2015. Improving Access to Clinical Trials (SSA Section 1902(e)(14) and Section (3)(e) of the IACTA) IACTA (Section s 3(c)(1) and 3(e)) permitted individuals (who have attained 19 years of age) to exclude the first $2,000 received as compensation for participation in a clinical trial for the testing of treatments for a rare disease or condition when determining Medicaid income eligibility for such individual. Section 3(e) repeals the amendments made by this act five years after the date of enactment (or October 5, 2015). Current Status: Authority for individuals to exclude certain earnings from participation in a clinical trial for rare diseases or conditions when determining Medicaid income eligibility will expire five years after the date of enactment (i.e., October 5, 2015). Additional FMAP Increase for Certain "Expansion States" (SSA Section 1905(z)(1)) Medicaid is jointly financed by the federal government and the states. The federal government's share of a state's expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP), which varies by state and is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). Exceptions to the regular FMAP rate have been made for certain states, situations, populations, providers, and services. ACA (Section s 2001 and 10201 ) and HCERA ( Section 1201) added the additional FMAP increase for certain "expansion states," which provides an FMAP rate increase of 2.2 percentage points during 2014 and 2015 to expansion states (i.e., states that had provided health benefits coverage meeting certain criteria statewide to parents with dependent children and adults without dependent children up to at least 100% of the federal poverty level [FPL] as of March 23, 2010) that (1) the Secretary of HHS determines would not receive any FMAP rate increase for "newly eligible" individuals under the ACA Medicaid expansion and (2) had not been approved to use Medicaid disproportionate share hospital (DSH) funds to pay for the cost of health coverage under a waiver in effect as of July 2009. The 2.2 percentage point increase is applied to the state's regular FMAP rate and used for Medicaid expenditures for enrollees who are not newly eligible individuals. Vermont is the only state that has been confirmed as meeting the criteria for the additional FMAP increase for certain expansion states. Current Status: The additional Medicaid FMAP increase for certain expansion states expires on December 31, 2015. Balancing Incentive Payments Program (ACA Section 10202) The Balancing Incentive Payments (BIP) Program authorizes CMS to provide incentive payment grants to qualifying state Medicaid programs for increasing their share of long-term services and supports (LTSS) spending on home and community-based services while reducing their share of spending on institutional long-term care. To be eligible to receive incentive payments, states must have spent less than 50% of total Medicaid medical assistance spending on non-institutionally based LTSS for FY2009, among other requirements. Participating states will receive an FMAP rate increase for eligible medical assistance payments. ACA (Section 10202) authorized CMS to provide incentive payments to states, which are not to exceed $3 billion from October 1, 2011, to September 30, 2015. Current status: Authority for Medicaid BIP Program payments to states will expire after September 30, 2015. Title XX: Block Grants to States for Social Services and Elder Justice Health Professions Opportunity Grants for Low-Income Individuals (SSA Section 2008) ACA Section 5507(a) required the Secretary to establish a demonstration project in SSA Section 2008 that awarded funds to states, Indian tribes, institutions of higher education, and local workforce investment boards for health profession opportunity grants (HPOG). These grants were used to help low-income individuals—including individuals receiving assistance from the State Temporary Assistance for Needy Families (TANF) program—to obtain education and training in health care jobs that pay well and are in high demand. Funds also were used to provide financial aid and other supportive services. The section appropriated $85 million for each of FY2010 through FY2014 ($425 million total) but reserved a total of $15 million for a demonstration project for personal and home care aides from FY2010 through FY2012. PAMA extended funding for the HPOG program through FY2015. This program is administered jointly by HRSA and ACF. ACA (Section 5507(a) ) appropriated a total of $425 million from FY2010 to FY2014. PAMA (Section 208) appropriated $85 million for FY2015. Current status: Health Professions Opportunity Grants are funded through September 30, 2015. Title XXI: Children's Health Insurance Program CHIP Appropriations (SSA Section 2104(a) and CHIPRA Section 108 as amended by the ACA) Federal funding for CHIP is provided through FY2015 with appropriation amounts in statute that are the overall annual ceiling on federal CHIP spending to the states, the District of Columbia, and the territories. CHIP was established as part of the Balanced Budget Act of 1997 ( P.L. 105-33 ). Since that time, other federal laws have provided additional years of appropriation amounts. BBA97 (Section 4901) provided appropriations amounts for FY1998 through FY2007. Continuing Resolutions ( P.L. 110-92 , Section 106 ; P.L. 110-116 , Section 101 ; P.L. 110-137 ; and P.L. 110-149 ) provided an FY2008 CHIP appropriation amount of $5.04 billion, the same amount used in FY2007, through specified termination dates (respectively, November 16, December 14, December 21, and December 31, 2007). MMSEA (Section 201) made the appropriation amount for FY2008 available through March 31, 2009. It also appropriated $5.04 billion for FY2009 allotments, available through March 31, 2009. CHIPRA (Section s 101 and 108) provided appropriations for FY2009 through FY2013. ACA (Section 2101 as modified by Section 10203(d)) provided annual national appropriation amounts for an additional two years. For FY2014 and FY2015, the annual appropriation amounts are $19.1 billion and $21.1 billion, respectively. The FY2015 appropriation is the combination of semiannual appropriations of $2.85 billion from Section 2104(a) of SSA plus a one-time appropriation in the amount of $15.36 billion from Section 108 of CHIPRA. Current Status: FY2015 is the last year for which a CHIP appropriation amount is provided. CHIP Allotments (SSA Section 2104(m)) State allotments are the federal funds allocated to each state for the federal share of their CHIP expenditures. State CHIP allotment funds are provided annually, and the funds are available to states for two years. There are two formulas for determining state allotments: an even year formula and an odd year formula. In even years, such as FY2014, state CHIP allotments are each state's previous year allotment plus any Child Enrollment Contingency Fund (described below) payments from the previous year adjusted for health care inflation and child population growth in the state. For even years, the allotment amount can be adjusted to reflect CHIP eligibility or benefit expansions. In odd years, state CHIP allotments are each state's previous year spending (including federal CHIP payments from the state CHIP allotment, Child Enrollment Contingency Funds, and redistribution funds) adjusted using the same growth factor as the even year formula (i.e., health care inflation and child population growth in the state). Since the odd year formula is based on states' actual use of CHIP funds, it is called the "re-basing year" because a state's CHIP allotment can either increase or decrease depending on each state's CHIP expenditures in the previous year. BBA97 (Section 4901) authorized allotments for FY1998 through FY2007. DRA (Section 6101) provided additional allotments to eliminate FY2006 funding shortfalls. U.S. Troop Readiness, Veterans ' Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007 (Section 7001) allotted funds to eliminate the remainder of CHIP funding shortfalls. Continuing Resolutions ( P.L. 110-92 , Section 106 ; P.L. 110-116 , Section 101 ; P.L. 110-137 ; and P.L. 110-149 ) authorized FY2008 CHIP allotments through the specified termination dates (respectively, November 16, December 14, December 21, and December 31, 2007). MMSEA (Section 201) made the FY2008 allotments available through March 31, 2009, and it also authorized FY2009 allotments through March 31, 2009. CHIPRA (Section 102) authorized CHIP allotments for FY2009 through FY2013. ACA (Section 2101 as modified by Section 10203(d)) extended the authorization for CHIP allotments through FY2015. Current Status: CHIP allotments are authorized through FY2015. CHIP Child Enrollment Contingency Funds (SSA Section 2104(n)) If a state's CHIP allotment for the current year, in addition to any allotment funds carried over from the prior year, is insufficient to cover the projected CHIP expenditures for the current year, a few different shortfall funding sources are potentially available. These include Child Enrollment Contingency Fund payments, redistribution funds, and Medicaid funds. For FY2009 through FY2015, Child Enrollment Contingency Fund payments have been available to states with both a funding shortfall (i.e., current year CHIP allotment plus any unused CHIP allotment funds from the previous year are insufficient to cover the federal share of the state's CHIP program) and CHIP enrollment for children exceeding a target level. As a result, not all states with funding shortfalls are eligible for Child Enrollment Contingency Fund payments. The contingency fund payments are based on a state's growth in CHIP enrollment and per capita spending. This means that a state may receive a payment from the fund that does not equal its actual shortfall in CHIP funding. CHIPRA (Section 103) established the Child Enrollment Contingency Fund. ACA (Section 2101 as modified by Section 10203(d)) extended the authority for the Child Enrollment Contingency Fund through FY2015. Current Status: CHIP Child Enrollment Contingency Fund payments are authorized through September 30, 2015. CHIP Qualifying State Option (SSA Section 2105 (g)(4)) In a few situations, federal CHIP funding is used to finance Medicaid expenditures. For instance, certain states significantly expanded Medicaid eligibility for children prior to the enactment of CHIP in 1997. These states are allowed to use their CHIP allotment funds to fund the difference between the Medicaid and CHIP matching rates (i.e., federal medical assistance percentage [FMAP] and enhanced federal medical assistance percentage [E-FMAP] rates, respectively) to finance the cost for children in Medicaid above 133% FPL. The following 11 states meet the definition: Connecticut, Hawaii, Maryland, Minnesota, New Hampshire, New Mexico, Rhode Island, Tennessee, Vermont, Washington, and Wisconsin. This is referred to as the "qualifying state" option, and FY2015 is the last year the qualifying state option is authorized. State Children 's Health Insurance Program Allotments Extension Act (Section 1(b)) added the authority for qualifying states to use certain funds for Medicaid expenditures. Technical Corrections with Respect to the Definition of Qualifying State changed the income standard and applicable dates for the "qualifying state" option. DRA (Section 6103) continued authority for qualifying states to use available FY2001, FY2004, and FY2005 CHIP funds for certain Medicaid expenditures. National Institutes of Health Reform Act of 2006 (Section 201(b)) continued authority for qualifying states to use any available FY2006 and FY2007 CHIP funds for certain Medicaid expenditures. Continuing Resolutions ( P.L. 110-92 , Section 106 ; P.L. 110-116 , Section 101 ; P.L. 110-137 ; and P.L. 110-149 ) permitted the use of FY2008 allotments for expenditures allowed for qualifying states under Section 2105(g), through the specified termination dates. MMSEA (Section 201) made permanent to use qualifying states' FY2008 allotments for expenditures under Section 2105(g), as initially permitted under the continuing resolutions. Qualifying states' ability to use FY2009 allotments under Section 2105(g) was permitted through March 31, 2009. CHIPRA (Section 107) allowed qualifying states to use CHIP allotments for FY2009 through FY2013 for certain Medicaid expenditures. ACA (Section 2101 as modified by Section 10203(d)) extended the authorization for the qualifying state option through FY2015. Current Status: The qualifying state option is authorized through September 30, 2015. CHIP Outreach and Enrollment Grants (SSA Sections 2113(a)(1) and 2113(g)) CHIPRA authorized $100 million in outreach and enrollment grants in addition to the regular CHIP allotments for fiscal years 2009 through 2013. Ten percent of the allocation is directed to a national enrollment campaign, and 10% is targeted to outreach for Native American children. The remaining 80% is distributed among state and local governments and to community-based organizations for purposes of conducting outreach campaigns with a particular focus on rural areas and underserved populations. Grant funds are also targeted to proposals that address cultural and linguistic barriers to enrollment. ACA (§10203(d)(2)(E)) appropriated $140 million for the period of FY2009 through FY2015 for CHIP outreach and enrollment grants. Current status: Authority for CHIP outreach and enrollment grants will expire after September 30, 2015. CHIPRA Children's Health Care Quality Measures (SSA Section 1139A(i)) See " Adult Quality Measures (SSA Section 1139B(e)) " and " CHIPRA Children's Health Care Quality Measures (SSA Section 1139A(i)) ," above. Public Health Service Act Expiring Provisions Community Health Center Fund (PHSA Section 330) The ACA created the Community Health Center Fund (CHCF) that provided mandatory funding for federal health centers authorized in PHSA Section 330. These centers are located in medically underserved areas and provide primary care, dental care, and other health and supportive services to individuals regardless of their ability to pay. ACA (Section 10503 as amended by HCERA 2303) appropriated a total of $9.5 billion from FY2011 through FY2015 annually as follows: $1 billion for FY2011; $1.2 billion for FY2012; $1.5 billion for FY2013; $2.2 billion for FY2014; and $3.6 billion for FY2015. Funds are to remain available until expended. ACA also appropriates $1.5 billion for health center construction and renovation for the period FY2011 through FY2015, to remain available until expended. Current Status: Funding for the Community Health Center Fund is appropriated through FY2015. Funds transferred will remain available until expended. Special Diabetes Programs (PHSA Sections 330B and 330C) The BBA97 authorized two diabetes-related programs within the PHSA. The first, authorized in Section 330B, provides funding for the National Institutes of Health to award grants for research into the prevention and cure of Type I diabetes. The second, authorized in Section 330C, provided funding for the Indian Health Service (IHS) to award grants for services related to the prevention and treatment of diabetes for American Indians and Alaska Natives who receive services at IHS-funded facilities. BBA97 ( Sections 4921 and 4922 ) transferred $30 million from CHIP funds to each of these programs from FY1998 through FY2002. BIPPA ( Section 931 ) increased each program's annual appropriation to $70 million for FY2001 through FY2002 and appropriated $100 million for FY2003. P.L. 107-360 (Section 1 ) increased each program's annual appropriation to $150 million and appropriated funds from FY2004 through FY2008. MMSEA ( Section 302 ) extended each program's annual appropriation of $150 million through FY2009. MIPPA (Section 302) extended each program's annual appropriation of $150 million through FY2011. MMEA ( Section 112 ) extended each program's annual appropriation of $150 million through FY2013. ATRA ( Section 625 ) extended each program's annual appropriation of $150 million through FY2014. PAMA (Section 204) extended each program's annual appropriation of $150 million through FY2015. Current Status: Funding for the two PHSA diabetes-related programs will expire on September 30, 2015. National Health Service Corps Appropriations (PHSA Section 338H) The ACA created the Community Health Center Fund that provided mandatory funding for the National Health Service Corps (NHSC), authorized in Title III of the PHSA, which provides scholarships and loan repayments to certain health professionals in exchange for providing care in a health professional shortage area for a period of time that varies based on the length of the scholarship or the number of years of loan repayment received. ACA (Section 10503 as amended by HCERA 2303) appropriated $1.50 billion to support the National Health Service Corps from FY2011 through FY2015 annually as follows: $290 million for FY2011; $295 million for FY2012; $300 million for FY2013; $305 million for FY2014; and $310 million for FY2015. Funds are to remain available until expended. Current Status: Funding for the National Health Service Corp is appropriated through FY2015. Funds transferred will remain available until expended. Teaching Health Centers (PHSA Section 340H) The ACA Section 5508(c) created PHSA Section 340H, which required the Secretary to make direct and indirect Graduate Medical Education payments to qualified teaching health centers. ACA (Section 550 8(a)) appropriated $230 million in direct and indirect Graduate Medical Education payments for the period of FY2011 through FY2015. Current Status: Funding for direct and indirect Graduate Medical Education payments to teaching health centers has been provided through September 30, 2015. Private Health Insurance Expiring Provisions Federal Grants for Health Insurance Exchanges (ACA Section 1311(a)) The ACA authorizes grants to states for the planning and establishment of health insurance exchanges. Exchanges are marketplaces where individuals and small businesses can "shop" for health insurance sold by private insurance companies. The ACA provides an indefinite appropriation for the exchange grants. For each fiscal year, the HHS Secretary is to determine the total amount that will be made available to each state for exchange grants. Current status: Authority for the exchange grants terminated after December 31, 2014. However, states may continue to use the grant funding they previously received for exchange design and implementation in 2015 and beyond. Expired Provisions The following provisions have expiration dates on or before December 31, 2013, and were not addressed in any subsequent legislation. Maintenance of Effort for Adults (SSA Section 1902(gg)(1)) The ACA included maintenance of effort (MOE) provisions under which states were required to maintain their Medicaid programs for adults with no more restrictive eligibility standards, methodologies, and procedures until the exchanges were operational (i.e., through December 31, 2013), and for Medicaid-eligible children up to the age of 19 until September 30, 2019. Failure to comply with the ACA MOE requirements means a state loses all of its federal Medicaid matching funds. Current Status: The ACA adult MOE requirement expired December 31, 2013. Medicaid Disproportionate Share Hospital Allotment for Tennessee (SSA Section 1923(f)(6)(A)(v)(II)) The Medicaid statute requires that states make disproportionate share hospital (DSH) payments to hospitals treating large numbers of low-income patients. While most federal Medicaid funding is provided on an open-ended basis, federal DSH funding is capped. Each state receives an annual DSH allotment, which is the maximum amount of federal matching funds a state is permitted to claim for Medicaid DSH payments. States' Medicaid DSH allotments are based on each state's prior year DSH allotment, but Hawaii and Tennessee have special statutory arrangements for the determination of their respective DSH allotments provided through multiple laws. Most recently, the ACA provided Hawaii a Medicaid DSH allotment for FY2012 and subsequent years, and the Tennessee provision provided an allotment for FY2012 and FY2013. TRHCA (Section 404) established a Medicaid DSH allotment for FY2007 for Tennessee. MMSEA (Section 204) extended the Medicaid DSH allotment for Tennessee through June 30, 2008. MIPPA (Section 202) extended the Medicaid DSH allotment for Tennessee through the end of FY2008, FY2009, and for the first calendar quarter of FY2010. CHIPRA (Section 616) extended the Medicaid DSH allotment for Tennessee through the end of FY2010, FY2011, and for the first calendar quarter of FY2012. ACA (Section 2551 as modified by Section 10201(e) and Section 1203 of HCERA) extended the Medicaid DSH allotment for Tennessee set Tennessee's Medicaid DSH allotment through the end of FY2012 and FY2013. Current Status: For FY2014 and subsequent years, Tennessee is the only state without a Medicaid DSH allotment. CHIPRA Performance Bonus Payments (SSA Section 2105(a)(3)) CHIPRA established performance bonus payments for states that increase their Medicaid (not CHIP) enrollment among low-income children above a defined baseline. From FY2009 through FY2013, performance bonus payments were available to states. To qualify for bonus payments, states had to have (1) implemented five out of eight specified enrollment and retention provisions and (2) achieved state-specific targets for increasing Medicaid enrollment among children. There were two tiers of bonus payments depending on how much the state's enrollment exceeded the baseline. From FY2009 through FY2013, 27 states received CHIPRA performance bonus payments totaling $1.1 billion over the five years. Some states received payments in more than one year. CHIPRA (Section 104) established performance bonus payments for FY2009 through FY2013. Current Status: CHIPRA performance bonus payments were authorized through FY2013. CHIP Federal Matching Funds for Parent Coverage Waivers (SSA Section 2111(b)(2)(A)) In the early years of the CHIP program, states were permitted and encouraged to extend CHIP coverage to uninsured pregnant women, parents, and childless adults aged 19 and older generally through the use of the Section 1115 waiver authority. However, Congress acted to largely limit this practice through a series of laws. The DRA prohibited the use of CHIP funds from coverage of non-pregnant childless adults in any new waivers approved after February 8, 2006. CHIPRA terminated CHIP coverage of non-pregnant childless adults by the end of calendar year 2009, prohibited new states from obtaining waivers to extend CHIP coverage to uninsured parents, and phased out coverage of parents altogether by FY2014. Current Status: The authority for states to use CHIP federal matching funds for parent coverage waivers expired September 30, 2013. School-Based Health Center Funding (ACA 4101(a)) ACA directly appropriated funding to support construction and renovation of school-based health centers. The ACA appropriated $50 million for each of FY2010 through FY2013 for a total of $200 million. Current status: No funding was appropriated in FY2014 or in F2015 as of the publication date of this report.

This report provides a list of selected health-related programs and activities under specified titles of the Social Security Act (SSA), including the Maternal and Child Health Services Block Grant (Title V), General Provisions, Peer Review, and Administrative Simplification (Title XI), Medicare (Title XVIII), Medicaid (Title XIX), and the State Children's Health Insurance Program (CHIP; Title XXI); the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended); as well as selected provisions from the Public Health Service Act (PHSA) that are scheduled to terminate during the first session of the 114th Congress (i.e., by December 31, 2015). This report includes only those health care-related expiring provisions for which congressional action would be needed to extend the application of a provision once the expiration date is reached, and it does not include demonstration projects or pilot programs. Although the Congressional Research Service (CRS) has attempted to be comprehensive, CRS cannot guarantee that every relevant provision is included here. The report defines what constitutes an expiring provision, clarifies which issues do not meet the definition of an expiring provision, lists the legislative history of each of the programs and policies that are due to expire before the end of the first session of the 114th Congress, and includes future deadlines, when applicable, for those programs and policies. The historical legislative actions that created, modified, or extended the expiring provisions covered in this report are also summarized. Expiring provisions are organized by SSA section, ACA section, or PHSA title and section, as appropriate. The last part of the report includes provisions with expiration dates in 2013 that were not extended in any subsequent legislation. The main body of the text also includes a number of provisions that expired in 2014.

Background The BSA is "the primary U.S. anti-money laundering (AML) law" regulating financial institutions. Among other things, the Act and related regulations impose certain reporting and recordkeeping requirements and require certain institutions to establish AML programs that meet specified minimum standards. The BSA and related regulations provide for civil and criminal penalties for violations of their provisions, as well as the forfeiture of assets involved in a violation. The level of BSA penalties varies based on the type of entity charged with a violation, the type of violation, and the defendant's level of intent. The Financial Crimes Enforcement Network (FinCEN), a bureau within the Department of the Treasury primarily charged with administering the BSA, has enforcement authority to bring administrative actions for failure to meet BSA requirements. The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation, the Federal Reserve, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the National Credit Union Administration also have authority to enforce the BSA's requirements against the institutions they regulate. Moreover, the Department of Justice (DOJ) regularly brings criminal charges for BSA violations. BSA Enforcement Trends Increases in Penalty Frequency and Size Commentators have noted an increase in the frequency with which BSA enforcement actions have involved an assessment by federal regulators of monetary penalties, and an increase in the size of those penalties. According to a June 2016 study conducted by National Economic Research Associates, Inc. (NERA), nearly 90% of BSA/AML enforcement actions from 2012 through 2015 involved an assessment of money penalties, compared to less than half of such enforcement actions from 2002 through 2011. NERA also observed that BSA/AML penalties "have grown substantially in both absolute terms and as a proportion of firm capital." Specifically, NERA found that more than 80% of the total money penalties imposed for BSA/AML violations since 2002 have been levied after 2012. Moreover, according to that same report, since October 2009, nearly one-third of BSA/AML penalties have exceeded 10% of a defendant institution's capital. By contrast, no penalty imposed before 2007 exceeded 9% of a defendant institution's capital. Two recent BSA/AML enforcement actions stand out for their size. In 2012, HSBC Holdings plc and HSBC Bank USA N.A. (together, HSBC) were assessed a $665 million civil money penalty, forfeited roughly $1.2 billion, and entered into a deferred prosecution agreement (DPA) based on, among other things, their failure to maintain an effective AML program and conduct appropriate due diligence on foreign correspondent account holders. The HSBC enforcement action was pursued concurrently by the DOJ, the OCC, the Federal Reserve, and the Department of the Treasury. Pursuant to the DPA, HSBC admitted responsibility for violating the BSA and associated regulations from 2006 to 2010. Specifically, HSBC admitted that during the relevant time period, it "ignored the money laundering risks associated with doing business with certain Mexican customers and failed to implement a BSA/AML program that was adequate to monitor suspicious transactions from Mexico." According to the DPA, as a result of HSBC's failures, at least $881 million in drug trafficking proceeds were laundered through HSBC Bank USA without being detected. In a series of other BSA enforcement actions, a number of federal regulators assessed large penalties against JPMorgan Chase Bank, N.A. (JPMorgan) in January 2014 for its role in the Bernard L. Madoff Ponzi scheme. JPMorgan entered into a DPA with the U.S. Attorney's Office for the Southern District of New York concerning Madoff-related BSA violations. Pursuant to the DPA, JPMorgan admitted that it violated the BSA by failing to maintain an effective AML compliance program and failing to file suspicious activity reports (SARs) concerning transactions related to the Madoff scheme. JPMorgan further agreed to forfeit $1.7 billion to compensate victims of the Madoff fraud—the largest-ever penalty for a BSA violation. Separately, the OCC and FinCEN assessed civil money penalties of $350 million and $461 million, respectively, against JPMorgan for its Madoff-related BSA violations. Emphasis on Acceptance of Responsibility A second recent trend in BSA/AML enforcement is an increased emphasis by regulators on the acceptance of responsibility by institutions charged with BSA violations. In 2013, FinCEN Director Jennifer Shasky Calvery indicated that FinCEN had changed its approach of generally allowing financial institutions charged with BSA violations to enter into settlements "without admitting or denying" the facts alleged in a penalty assessment. Shasky Calvery noted that in FinCEN's most recent enforcement actions, defendant institutions had been required to stipulate to a statement of facts, reflecting the agency's new position that "[a]cceptance of responsibility and acknowledgment of the facts is a critical component of corporate responsibility." Two years later, FinCEN's Director of Enforcement confirmed the agency's changed approach when she indicated that FinCEN operates under a "presumption" that "a settlement of an enforcement action will include an admission to the facts, as well as the violation of law." Along these lines, NERA's 2016 study found that four of the six largest BSA/AML violations charged between 2010 and 2015 "required the [defendant] financial institution to admit the accuracy of government claims and accept responsibility for the actions of its officers, agents, and employees who violated BSA/AML regulations." Increased Risk of Individual Liability Finally, commentators have noted an increased risk of individual liability for BSA violations. In December 2014, FinCEN assessed a $1 million civil money penalty against Thomas Haider, the former Chief Compliance Officer of MoneyGram International for willful violations of the BSA's program requirements and failure to timely file SARs concerning fraudulent telemarketing operations and other schemes. FinCEN's enforcement action led to litigation over the application of the BSA to individuals. In January 2016, a federal district court held in U.S. Department of Treasury v. Haider that individuals can be liable for violations of the BSA's AML program requirements. In that case, Haider argued that individuals cannot be liable for violations of the BSA's program requirements because the relevant BSA provision provides that "financial institution[s] shall establish anti-money laundering programs," in contrast to the BSA's provision requiring the filing of SARs, which provides that "any financial institution, and any director, officer, employee, or agent of any financial institution , [may be required] to report suspicious transactions relevant to a possible violation of law or regulation." The court rejected this argument, reasoning that because the BSA's general civil penalty provision authorizes the imposition of money penalties against, among other individuals, "officer[s]" of financial institutions, Haider could be held liable for violations of the BSA's AML program requirements. Regulators have recently pursued a number of other BSA enforcement actions against individual compliance officers. This increased emphasis on individual prosecutions is broadly consistent with the approach outlined by the DOJ in the September 2015 "Yates Memo," which emphasized the importance of individual accountability for corporate wrongdoing. Current Deputy Attorney General Rod Rosenstein has indicated that while he "generally agree[s] with the critique that motivated" the Yates Memo, the memo is currently under review. Accordingly, it remains to be seen whether the DOJ under President Trump will maintain the previous Administration's emphasis on individual responsibility in white-collar enforcement actions and prosecutions.

This report provides an overview of recent trends in the enforcement of the Bank Secrecy Act (BSA), the principal U.S. anti-money laundering law regulating financial institutions. The report begins by providing general background information on BSA penalties and enforcement. The report concludes by discussing three recent trends that commentators have observed in BSA enforcement: (1) an increase in the frequency with which BSA enforcement actions involve an assessment of money penalties, and an increase in the size of those penalties, (2) an increased emphasis by regulators on the acceptance of responsibility by institutions entering into settlement agreements for BSA violations, and (3) an increased risk of individual liability for BSA violations.

Introduction In an effort to protect the purchasing power of Social Security recipients, Congress in the early 1970s indexed benefit increases to the only consumer price index available at the time. The index to which Social Security benefits are linked became known as the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) after the U.S. Bureau of Labor Statistics (BLS) began publishing the Consumer Price Index for All Urban Consumers (CPI-U) in 1978. Concern has periodically been expressed that the CPI-W may not accurately reflect the inflation experience of the elderly, who make up the majority of Social Security beneficiaries. It has been argued that because annual cost-of-living adjustments (COLAs) in Social Security benefits have not kept pace with increases in the prices of goods and services more often purchased by the elderly (e.g., health care), some index other than the CPI-W might be more appropriate (e.g., an index for the elderly that Congress directed BLS to develop in 1987). This is not the context within which reconsidering the index upon which Social Security benefits are based has most recently been raised, however. Suggestions to change the index for inflation-adjusting Social Security among other programs and provisions in federal law most recently have arisen in connection with deficit reduction. Several plans to curb the growth in the U.S. budget deficit, which were put forth in 2010 and 2011, recommend that inflation-indexing be based on the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) rather than on the CPI-W or CPI-U. Because the C-CPI-U has typically risen more slowly than the two indexes, this proposal raised concern at that time among those Social Security recipients who believe they already are being insufficiently compensated for increases in their cost of living. A bipartisan amendment in the nature of a substitute to the FY2013 budget resolution in the House, which was introduced but not approved in March 2012, suggests that interest remains in slowing the growth in the deficit by changing the price index on which Social Security COLAs are based. This report opens with an explanation of whom and what the CPI-W represents before examining how the spending pattern of the average elderly household differs from that of all households. It then focuses on BLS' experimental consumer price index (CPI-E) for the elderly and analyzes rates of change over time in the CPI-E, CPI-W, and C-CPI-U. The report closes with a brief discussion of policy considerations. Expenditure Patterns of the Elderly The CPI-W is designed to measure changes in the price of a market basket of goods and services purchased by those who earn at least half of their income by having worked in clerical, blue-collar, or service occupations for at least 37 weeks in the previous year. In other words, the CPI-W only tracks the buying habits of the employed. This particular group of employed persons has accounted for a dwindling share of the U.S. population over time. Today, it reflects changes in the cost of living of about 32% of the population. Price changes may affect the average retiree's cost of living differently from that of the average CPI-W household to the extent that their purchasing patterns differ from one another. BLS collects data through the Consumer Expenditure Survey (CES) on how households spend their money in order to assign weights to each of the goods and services in the market basket. The weight reflects an item's relative importance in the market basket and determines how much a change in an item's price will affect the overall CPI. As shown in Table 1 , elderly households allocate their spending differently from the rest of the population across the major categories of goods and services in the CPI. The largest difference in spending patterns between the elderly and the general population is found in the shares of expenditures accounted for by health care. In 2010, the latest year for which data are available, those aged 65 and older spent twice as large a share of their total outlays on health care compared with the overall population. With respect to the population aged 75 and older, the share of their spending devoted to health care was two-and-one-third times the share of the total population. Health care costs have consistently risen more rapidly than the average price level. Because the elderly consume a greater than average share of a good whose price has generally risen faster than overall prices, the CPI-W may understate the inflation experience of the average elderly household. As noted above, the argument is often made that the CPI does not represent the average inflation experience of the elderly population. But, just as the inflation experience of the elderly population may differ from that of the population at large, so too are there differences within the elderly population itself. No summary inflation measure for a large population group will exactly account for the experience of each member of that group. Differences in spending patterns, in combination with different rates of price change for all of the various goods and services included in the CPI, mean that individual inflation rate experiences may range considerably above or below the measured average. If there is a great deal of variation in both the general population and within subgroups such as the elderly, a small difference in average inflation rates between groups may not be significant. Suppose the average inflation rate of the elderly population is slightly higher than the rate for the overall population, but that the distribution of individual inflation rates among the elderly is widely dispersed. In this case all of the elderly would be better off if their benefits were indexed to an inflation measure based on the average elderly household. Within the elderly population, however, there would be several different consequences. First, there would be some elderly whose inflation rates would be understated by the overall rate, but exaggerated by the elderly inflation measure. Second, there would be those elderly whose inflation rates were higher than either the overall measure or one based on elderly consumption patterns. Finally, there would be a number of elderly whose actual inflation rates would be lower than either the overall measure or one based on the elderly. One study of the distribution of inflation rates across the population found that differences in inflation rates among demographic groups were small in comparison with the variation within those groups. Further, it was found that differences among groups tended not to be stable over time. This study argued that no one group suffered disproportionately from inflation. If the variation in consumption patterns is great among the elderly and if the average inflation rate of the elderly is not dramatically different from the average rate of the overall population, then arguments for a separate index for the elderly population may be less compelling. The Experimental CPI for the Elderly In 1987, Congress amended the Older Americans Act of 1965 to direct BLS to develop an experimental price index to track inflation in the population aged 62 and older. BLS has calculated estimates of such an index, commonly called the CPI-E, dating back to December 1982. In all but 5 of the 29 years between December 1982 and December 2011, the experimental index rose as or more rapidly than the CPI-W and CPI-U. (See Table 2 .) In only three years was the increase in the CPI-E closer to that of the CPI-W than the CPI-U. The increase in the CPI-E has usually been closer to that of the CPI-U partly because a larger weight is given to health care outlays in the market basket of the CPI-U than the CPI-W. (Recall that unlike the CPI-W, the CPI-U covers persons not in the labor force including retirees.) The difference in the annual rates of change of the CPI-E compared with both the CPI-W and CPI-U has generally decreased since 1993, largely because the gap between health care inflation and overall inflation has narrowed as has the gap between shelter inflation and overall inflation. The 0.5-0.7 percentage point gap in the annual rates of change between the CPI-E compared with the CPI-W and CPI-U that often was the case from 1982 to 1993, shrank to 0.3 percentage points or less in most years thereafter. (See Table 2 .) Although the differences in the three indexes usually have been in the expected direction, the relationships between the three might not be the same if BLS developed an official rather than experimental index for the elderly. Optimally, when constructing a CPI for older Americans, a sample of geographic areas would be drawn for that specific population. In addition, surveys would be designed to collect expenditure weights for that specific population, a point-of-purchase survey designed for that population would be used to construct the outlet frame, and the distribution of items sampled would be representative of older Americans. Such an index would be costly to construct, however, and Congress has not appropriated the necessary funds to do so. For example, the number of households in the CES on which market baskets are based is much smaller for the CPI-E than for the CPI-W and CPI-U. The CPI-E therefore is subject to greater sampling error than the official indexes because of BLS' limited resources. The CPI-E also uses the CPI-U's sample of retail outlets to gather prices, but the outlets may not accurately reflect those at which the elderly shop and the prices may not be representative of those paid by the elderly. These methodological limitations may have contributed to the differences in the experimental compared with official measures of inflation and are the reasons for it being "classified as an experimental index." Policy Considerations If the primary purpose of developing a separate index for the elderly is to inflation-adjust Social Security benefits, it should be kept in mind that not all Social Security recipients are elderly. Some receive benefits under the program because they have disabilities; others, because they are the spouse or young child of a deceased worker covered by the program. Thus, some would argue that the market basket of the elderly population is not the most appropriate one on which to base adjustments to Social Security benefits. Having a separate price index for the elderly may introduce complications in other areas. For example, the income thresholds that define tax brackets currently are adjusted annually by the CPI-U. If it is appropriate to base Social Security benefit adjustments on a price index for the elderly, should it also be used to adjust income tax brackets of elderly taxpayers? Finally, as stated at the outset, recent interest in the indexes used to inflation-adjust federal programs and individual income tax provisions has been prompted by the desire among policymakers to curb the growth rate of the budget deficit. Switching from the CPI-W or CPI-U to the Chained CPI-U may reduce government outlays and raise revenue in future years because the Chained CPI-U has risen more slowly than the two official indexes—and therefore, more slowly than the CPI-E. Leaving aside whether the Chained CPI-U is a more accurate measure of inflation than the CPI-W and CPI-U, it would not appear to achieve the purpose of those who have proposed changing to the Chained CPI-U to instead switch to the CPI-E for calculation of Social Security benefits as some have suggested. Were BLS to replace the experimental index with a newly developed index more representative of the elderly population, there also is no guarantee it would bear the same relationship to the CPI-W and Chained CPI-U as that of the CPI-E.

The federal government, in an effort to protect the purchasing power of Social Security beneficiaries, indexes benefits to increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Concern has periodically been expressed that the CPI-W may understate the impact of inflation on the elderly population and that it therefore may not be the most appropriate measure of inflation's impact on the elderly. At the behest of Congress, the U.S. Bureau of Labor Statistics (BLS) developed an experimental price index to track changes in the cost of living for the population aged 62 and older. In most years since 1982, the start of the experimental consumer price index (CPI-E) for the elderly, the annual rate of change in the CPI-E has exceeded that of the CPI-W and CPI-U. But, methodological limitations in the experimental index may have contributed to this pattern. Were BLS to construct an index that is more representative of the elderly population than the CPI-E, there is no guarantee that the relationship between the new index and the CPI-W would be the same. Interest in the CPI-E most recently emerged in response to deficit-reduction plans issued in 2010 and 2011 that recommend inflation-indexed provisions in federal law be based on the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). Because the C-CPI-U has typically risen more slowly than the CPI-W, this proposal raised concern at the time among those Social Security recipients who already believe they have not been fully compensated for increases in their cost of living. Bills were then introduced to switch for purposes of Social Security indexation from the CPI-W to a CPI for those aged 62 and older (H.R. 456, H.R. 539, H.R. 776, H.R. 798, and S. 1876). As suggested by an amendment in the nature of a substitute to the FY2013 budget resolution in the House, interest has lingered into 2012 among some Members to switch to the C-CPI-U as a means of curbing the rate of growth in the budget deficit.

Introduction Since its establishment in 1977, the Department of Energy (DOE) has been frequently criticized for its lax approach to counterintelligence, particularly at its nuclear weapons laboratories. Years of increasingly critical counterintelligence (CI) reviews by the Government Accountability Office, the Intelligence Community and DOE's own security experts, among others, culminated in 1998 with the discovery of intelligence evidence suggesting that China had stolen nuclear weapons secrets from DOE's weapons laboratories, and Wen Ho Lee, a Taiwan-born U.S. citizen employed by the Los Alamos National Laboratory, was identified as a suspect. In February 1998, DOE was directed to fundamentally restructure its counterintelligence program when President Clinton issued Presidential Decision Directive No. 61 (PDD-61). To enhance counterintelligence capabilities, DOE was directed to develop and implement specific security measures, including the possible use of the polygraph to screen employees with access to certain highly sensitive and classified information. In March 1999 DOE initiated its first-ever polygraph screening program, testing approximately 800 DOE federal and contractor employees employed in certain high-risk programs. These employees were given a "Counterintelligence-scope" polygraph test which was limited to questions concerning the individual's involvement in espionage, sabotage, terrorism, unauthorized disclosure of classified information, unauthorized "foreign contacts," and deliberate damage to or malicious misuse of a U.S. Government information or defense system. In August 1999, DOE proposed expanding its polygraph testing program to include DOE contractors who had access to its "most sensitive and classified information and materials," thus increasing the number of employees subject to such testing from 800 to 3,000. In the fall of 1999, Congress approved two additional changes to DOE's polygraph program. It directed that the program be expanded to cover 13,000 DOE employees, including those falling under DOE's "Special Access" and "Personnel Security and Assurance" Programs, and it mandated by statute that DOE implement a polygraph program. Previously, the Energy Secretary had the discretion whether to require polygraph testing. Despite the new legal requirement for an expanded testing program, DOE Secretary Bill Richardson in December 1999 announced that the Department's counterintelligence (CI) interests could be satisfied by testing a substantially smaller number – 800 individuals – and indicated that he would seek legislation that would bring DOE's testing needs into line with congressional intent. Notwithstanding Secretary Richardson's claims that fewer, rather than more, polygraph tests would be adequate, Congress the next year passed legislation, that the President signed, which expanded the program a second time by designating those DOE employees with access to "Sensitive Compartmented Intelligence" for such testing. As Congress increased the number of those to be tested, some DOE nuclear weapons laboratory employees, a group that is generally viewed as including some of the world's top scientists, continued to criticize the scientific validity of polygraph testing, and DOE's polygraph screening program in particular. In 2001, Congress appeared to partially reverse course, directing DOE to revamp its polygraph screening program, and in so doing to take into account any forthcoming recommendations by the National Academy of Sciences (NAS), which, then under contract with DOE, was reviewing the scientific evidence with regard to the validity and reliability of polygraph testing, particularly when used for personnel security screening [hereafter, referred to as the NAS Report or NAS Study]. The NAS Report, published in 2003, concluded that the accuracy of polygraph tests is questionable, and that polygraph screening tests are particularly problematic because generic questions are generally posed during such a polygraph (e.g., "Did you ever reveal classified information to an unauthorized person?") and thus "examinee and examiner may have difficulty knowing whether an answer to such a question is truthful unless there are clear and consistent criteria that specify what activities justify a 'yes' answer." Such testing, according to NAS, is made even more complicated by the fact that it involves inferences about future behavior on the basis of information about past behaviors that may be quite different (e.g., whether past use of illegal drugs, or lying about such use on a polygraph test, predicts future spying). NAS thus concluded: Polygraph testing yields an unacceptable choice for DOE employee security screening between too many loyal employees falsely judged deceptive and too many major security threats left undetected. Its accuracy in distinguishing actual or potential security violators from innocent test takers is insufficient to justify reliance on its use in employee security screening in federal agencies. NAS also recommended that if polygraph screening is to be used at all, it should be used only as a trigger for detailed follow-up investigation, rather than as a basis for personnel action. While questioning the polygraph's scientific validity, NAS recognized the polygraph screening had "utility" as a screening tool and could be useful "for achieving such objectives as deterring security violations, increasing the frequency of admissions of such violations, deterring employment applications from potentially poor security risks, and increasing public confidence in national security organizations." After some Members of Congress criticized DOE's initial efforts to revamp its polygraph program to reflect NAS's findings, including its criticism of screening polygraphs, the Department in October 2006 eliminated the use of polygraph testing for screening applicants for employment and employees without specific cause, a policy that remains in effect as of the date of this report. Specifically, the new DOE policy established in 2006 requires mandatory polygraph screening only if one of the following five causes is triggered: (1) a counterintelligence evaluation of an applicant or employee reveals that the individual may be engaged in certain activities, including clandestine or unreported relationships with foreign powers, organizations, or persons; (2) an employee is to be assigned to certain activities within DOE which involve another agency, and that agency requires a polygraph examination; (3) an agency to which a DOE employee will be assigned requests that DOE administer a polygraph examination as a condition of the assignment; (4) an employee is selected for a random counterintelligence evaluation, including a polygraph test; or (5) an employee is required to take a specific-incident polygraph examination. As noted above, the policy also includes provisions for a random counterintelligence evaluation program, including polygraph testing, and specific incident polygraph examinations. According to the policy guidelines, no adverse decision on access to certain information or programs will be made based solely on the results of a polygraph test. At roughly the same time DOE was reviewing its polygraph program, Congress signaled its interest in exploring alternatives to the polygraph. It provided $500,000 to fund a joint National Science Foundation (NSF) and White Office of Science and Technology Office (OSTP) research study "relating to the development of new techniques in the behavioral, psychological, or physiological assessment of individuals to be used in security evaluations." [emphasis added] Among the study's conclusions: There is little development of theoretical models for explaining links between human reactions .... and deception; There is clear need for the creation of standardized protocols for assessing deception so that various techniques can be appropriately compared and evaluated; It is imperative to investigate the role of variables such as culture, gender, language, geography, and individual variation in security evaluation; Polygraphy has preventative value as a deterrent; and, Given that scientific approach to security evaluations requires high quality data, access to additional data on actual security compromises would be exceptionally useful in the design and testing of new approaches. Although NSF and OSTP were directed to identify the federal agencies best suited to support research on behavioral, psychological, and physiological assessments of individuals, and to develop recommendations for coordinating future federally-funded research for the development, improvement, or enhancement of security evaluations, the joint report contained no such recommendations. More recently, the out-going administration of President George W. Bush issued a legal opinion stating that a forty-year-old memorandum issued By President Lyndon B. Johnson limiting use of polygraph tests is not binding on executive branch agencies today. Some polygraph critics have said that it is unclear why the opinion was issued and what its impact may be. Background The polygraph machine, first constructed in the early 1900s, does not detect lies. Rather, it is an instrument that charts changes in an individual's respiration, heart rate, blood pressure, and sweat gland activity in response to a series of yes-or-no questions. Polygraph examiners determine whether a person's physiological reaction is stronger in responding to certain questions when contrasted with recorded reactions to a series of comparison or "control" questions. It is believed that stronger reactions indicate deception on the part of the individual being tested. It is these physiological responses which are at the heart of the ongoing debate over the validity of polygraph testing. The polygraph examination attempts to serve two purposes: to detect deception and to reveal truth. The test itself represents an attempt to capture accurate psychophysiological indicators of deception. The "polygraph examination," however, includes both the test and the interrogation surrounding it, and is intended to be a tool for revealing truth. The polygraph is used in three circumstances: event specific or exculpatory, e.g., when a crime has been committed; preemployment screening; and current employee screening. The Intelligence Community uses the polygraph both as an investigative tool and as a screening device. The Department of Defense (DOD) uses the device almost exclusively as an investigative tool, although DOD also uses it to screen certain employees, but only in cases involving a requirement for exceptional clearances for highly sensitive programs. DOE Adopts First Use of Polygraph For Screening Although DOE has had a long-standing policy of using the polygraph as a tool to investigate specific events such as a particular crime, until 1999 it had never utilized the polygraph to screen prospective and current employees. As discussed above, the Department began to employ polygraph screening after intelligence information surfaced indicating that China may have stolen secrets from DOE's weapons labs and following President's Clinton PDD-61 directive to strengthen its counterintelligence program. Specifically, DOE was directed to adopt several organizational changes as well to consider several improvements to its counterintelligence program, including the possible development and implementation of a polygraph screening program to screen employees with access to highly sensitive information. DOE subsequently pursued such a program. DOE's CI evaluation program historically had consisted of several counterintelligence practices, including employee background checks, periodic re-investigations, monitoring of financial records, restrictions on publishing materials, and, for some employees, mandatory drug testing and medical assessments, as well incident-specific polygraph examinations. DOE cited three reasons for developing and implementing its polygraph screening program in 1999. First, this program would serve as a means to deter unauthorized disclosures of classified information as well as provide early warning of such disclosures, allowing DOE to react faster to possible damage to national security. Second, polygraph testing could continue to be used to provide interim personnel security clearances on an expedited basis. And, third, the polygraph would provide employees confronting unresolved CI issues an option that could lead to a quick resolution of such issues. DOE was prohibited by statute from taking adverse personnel action solely on the basis of a polygraph test result indicating deception unless "reasonable" efforts were made to independently verify through alternative means the veracity of the individual's response. Scientific Evidence Indicating Polygraph Screening Accuracy Is Limited Supporters and critics agree that scientific evidence supporting the validity of polygraph screening is extremely limited. The NAS Report identified only one flawed field study containing evidence relevant to the accuracy of preemployment polygraph screening. The American Polygraph Association (APA), the largest association of polygraphers in the United States, acknowledges that such evidence is scant, but blames limited research funding. NAS also questioned the "striking" lack of a serious research effort in view of the decades-long debate over the polygraph's accuracy and the federal government's heavy reliance on polygraph testing, especially for screening for espionage and sabotage. What Available Research Shows While acknowledging that there is little available research pertaining to the accuracy of screening polygraphs, NAS said its examination of evidence derived from studies of specific-incident polygraph testing lead it to conclude that polygraph screening accuracy is insufficient to justify using polygraph screening in federal agencies. In examining 57 specific incident polygraph studies, NAS found that such polygraph tests can discriminate lying from truth telling at rates well above chance, though well below perfection. Because polygraph screening tests involve considerably more ambiguity in determining truth than arises in specific-incident polygraphs, NAS said polygraph screening accuracy is almost certainly lower than that of specific-incident polygraph testing. As a result, NAS concluded that when polygraphs are used to screen employees, they yield an unacceptable choice between too many loyal employees falsely judged deceptive and too many major security threats left undetected. Research Indicates Countermeasures Pose Potential Threat to Accuracy NAS also found that basic science and polygraph research point to "countermeasures" as posing a potential threat to the polygraph's accuracy. According to NAS, it is entirely possible that an individual undergoing a polygraph test can consciously alter responses through cognitive or physical means since the physiological indicators measured by the polygraph can be altered by such activity. NAS also concluded that it is possible for individuals to learn certain countermeasures. Screening Polygraphs For DOE Use NAS found that polygraph screening is particularly ill-suited for use at an agency like DOE, where the proportion of spies, terrorists, and other major national security threats among the employees subject to polygraph testing presumably is very low. In such cases, according to NAS, polygraph screening should not be counted on, for detection in populations in which a very small proportion of individuals could be expected to pose major security risks, since doing so would require high accuracy. "Screening in populations with very low rates of the target transgressions (e.g., less than 1 in 1,000) requires diagnostics of extremely high accuracy, well beyond what can be expected from polygraph testing," NAS stated in its report. NAS Results Track Earlier Findings Questioning Polygraph Validity NAS's findings essentially tracked the results of a similar research review conducted by the congressional Office of Technology Assessment (OTA) in 1983. In its study, OTA concluded that the available evidence was insufficient to conclusively establish the scientific validity of polygraph screening. OTA cited two reasons why it would be impossible to establish the polygraph's overall validity. First, the polygraph examination encompasses a process that is far more complex than the instrument itself. The types of individuals tested, the examiner's training, the purpose of the test, and the types of questions asked, among other factors, can differ substantially, one test from the next, according to the OTA study. Second, the research on polygraph validity varies widely in terms of results and the quality of the research design and methodology. "... [C]onclusions about scientific validity can be made only in the context of specific applications and even then must be tempered by the limitations of available research evidence," OTA concluded. Polygraph Supporters Say Polygraph 80-90 Percent Accurate Supporters of polygraph testing, such as the APA, point to 80 research projects conducted since 1980 that it says show polygraph accuracy ranging from 80 to 98 percent. While conceding that most of the these research projects have studied event-specific polygraph testing rather than pre-employment or employment screening, APA contends that "real world conditions are difficult if not impossible to replicate in a mock crime or laboratory environment for the purpose of assessing effectiveness." The APA further asserts that the same physiological measures are recorded, and the same basic psychological principles may apply in both event-specific, pre-employment, and employment screening polygraph examinations. As a result, says APA, there is no reason to believe that there is a substantial decrease in the validity rate when the polygraph is used for screening purposes. Proponents also argue that accuracy rates have improved as hand-scoring by examiners has been replaced by computerized algorithms that proponents say filter out human errors and biases. Examiners reportedly also have employed certain techniques to counter subjects who try to undermine testing by, for example, squeezing muscles in the buttocks, using what they describe as "butt pads" to detect muscle squeezing. U.S. Intelligence Agencies Have Defended Screening Polygraphs U.S. intelligence agencies have defended polygraph screening, according to the findings in the OTA study. The Central Intelligence Agency (CIA), for example, cited classified research to support its use of polygraph testing, but OTA did not review this research. OTA concluded that some intelligence agencies, including the National Security Agency (NSA) and perhaps CIA, appeared to employ polygraph testing for its utility in encouraging admissions, rather than as a method to determine deception or truthfulness, per se. In its study, OTA said that NSA security adjudicators were more interested in whatever admissions individuals made during the course of a polygraph test than in the test results. Some Who Question Polygraph's Validity Accept Its Utility Though skeptical of the polygraph's validity, NAS acknowledged that polygraph testing may have some utility for achieving such objectives as deterring security violations, increasing the frequency of admissions of such violations, deterring employment applications from potentially poor security risks, and increasing public confidence in national security organizations. But NAS concluded that such utility derives from beliefs about the validity of the procedure, and are distinct from "actual validity or accuracy." In 2000, the "Redmond Panel," a panel of experts convened by the House Permanent Select Committee on Intelligence to review DOE CI capabilities at its nuclear weapons laboratories agreed that the polygraph has utility. According to the Panel's report, "...polygraphs, while not definitive in their results, are of significant utility in a broader comprehensive CI program. The polygraph is an essential element of the CI program..." But Panel members reported they encountered many DOE scientists who questioned the polygraph's utility as well as its validity. They found that many DOE laboratory personnel have a "very negative" attitude towards the polygraph, with attitudes running the gamut from cautiously and rationally negative, to emotionally and irrationally negative. Scientists, Panel members concluded, represent a particular problem with regard to the administration of polygraphs. "They are most comfortable when dealing with techniques that are scientifically precise and reliable," the Panel's report stated. "The polygraph, useful as it is as one of several tools in a CI regimen, does not meet this standard. Accordingly, many scientists who have had no experience with it are skeptical of its utility." Congress Directs DOE To Develop New Polygraph Program After directing DOE in 1999, and again in 2000, to expand its polygraph screening program, Congress by 2001 appeared prepared to reexamine some of the program's underpinnings, particularly with regard to the use of the polygraph as a screening tool. Members introduced a provision in the FY2002 National Defense Authorization Act requiring that DOE develop a new counterintelligence polygraph program – one that would take into account the final recommendations of the NAS Study, which was underway. At the same time, Congress statutorily directed that the purpose of any such new program should be to minimize the potential for release or disclosure of classified data, materials, or information. To satisfy Congress's directive, DOE on April 14, 2003, published a notice of proposed rule-making "to begin a proceeding to consider whether to retain or modify [DOE's] current Polygraph Examination Regulations." While acknowledging NAS's recommendation that the polygraph not be used to screen employees because of its inaccuracy, and Congress's directive that DOE take into account NAS's views on the subject, Energy Secretary Spencer Abraham said the DOE would retain polygraph screening as one of several CI tools. He asserted that DOE's polygraph program was "consistent with the statutory purpose of minimizing the risk of disclosure of classified data," and stated that DOE used the polygraph only in conjunction with other information and only as a trigger for a detailed follow-up investigation, not as a basis for personnel action. This application, according to Abraham, was compatible with NAS's findings. Nevertheless, critics had doubts about Secretary Abraham's decision. Alluding to NAS's findings, Senator Jeff Bingaman, then-Ranking Member of the Senate Energy and Natural Resources Committee, with jurisdiction over DOE, said relying on a technique as inaccurate as the polygraph could produce a false sense of confidence, which he said, "can be the real danger to national security." Senator Bingaman also argued applying polygraphs to employee screening could lead to either too many loyal employees who will be judged deceptive, or too many undetected major security threats. Senator Pete Domenici, the Committee's then-Chairman, expressed related concerns, saying, "I continue to believe that the system is too much an affront[,] especially since the polygraph program was so thoroughly criticized by the National Academy of Sciences. I hope the department will rethink this situation." DOE apparently did rethink its approach, issuing a Supplemental Notice of Proposed Rule-making in January 2005, in lieu of Secretary Abraham's April 2003 preliminary proposal. DOE Deputy Secretary McSlarrow foreshadowed the Department's revamped policy when he earlier testified to Congress on September 4, 2003, that he had recommended to Secretary Abraham that DOE sharply curtail polygraph screening. Mr. McSlarrow said DOE should retain mandatory polygraph screening only for employees having regular access to DOE's most sensitive information. Adopting such an approach, according to Mr. McSlarrow, would reduce "the number of individuals affected from well in excess of potentially 20,000 ... to approximately 4,500..." Although he recommended that DOE continue its polygraph screening program, albeit on a smaller scale, Mr. McSlarrow said the Department's polygraph testing conformed with NAS's recommendation that such testing, at most, should be used only to trigger further testing, investigation, and collection of other information about the individual. Mr. McSlarrow also said DOE wanted to include random polygraph testing as part of its overall counterintelligence evaluation program, citing the NAS finding that "'polygraph screening may be useful for achieving such objectives as deterring security violations, increasing the frequency of admissions of such violations, [and] deterring employment applications from potentially poor security risks,'" and that "'predictable polygraph testing (i.e., fixed-interval testing of people in specific job classifications) probably has less deterrent value than random testing.'" Senator Domenici commended Mr. McSlarrow for DOE's apparent willingness to revise its polygraph testing policy. "I have been appalled by DOE's continued massive use of polygraph tests in the wake of a national study condemning the reliability of these tests ... I commend DOE for announcing plans to substantially reduce the number of people subject to polygraphs and to ensure that no negative actions are taken based on a single polygraph result," he said." Senator Bingaman said DOE's proposed new polygraph policy was a step in the right direction, but warned that he continued to harbor serious reservations about the polygraph's accuracy as a screening tool. DOE's January 7, 2005 Proposed Rule DOE subsequently sought public comment on a supplemental rule it proposed on January 7, 2005. The proposed rule contained provisions mirroring Mr. McSlarrow's earlier recommendations and retained mandatory polygraph screening already in place for DOE employees occupying: all counterintelligence positions; all positions in the Office of Intelligence at DOE Headquarters and at the Field Intelligence Elements located at the national laboratories; and, ●all positions in the DOE Special Access Programs (and in non-DOE Special Access Programs if the program sponsor requires a polygraph examination). The proposed rule would limit polygraph screening to those employees – probably less than 1,000, according to DOE – having regular and routine access to all DOE-originated "Top Secret" information, including Top Secret "Restricted Data" and Top Secret "National Security Information." Under this rule, certain managers were authorized to identify additional individuals for polygraph testing, provided they sought input from DOE's Office of Counterintelligence and the approval of either the Energy Secretary or the Administrator of the National Nuclear Security Administration. The supplemental proposed rule also would implement a random CI evaluation, including polygraph screening, for those employees not qualifying for mandatory screening but whose access to certain sensitive and classified information would warrant additional deterrence against damaging disclosures. As a result of the proposed random CI evaluation, an estimated 6,000 employees would be eligible for random polygraph testing, but only a small percentage of that number would be tested annually. Employees subject to random polygraph testing would include those: employed in the Offices of Security, Emergency Operations, and Independent Oversight and Performance Assurance who do not qualify for a mandatory polygraph examination; ●with routine access to "Sigma 14" and "Sigma 15" weapons data ("Sigma 14" and "Sigma 15" refer respectively to categories of sensitive information pertaining to the vulnerability of nuclear weapons to a deliberate, unauthorized detonation; and, to information pertaining to the design and function of nuclear weapons use control systems, features, and components); and those in charge of classified cyber systems. The proposed rule also permitted "specific-incident" polygraph examinations when there are indications that the employee may have clandestine or unreported relationships with foreign powers, organizations, or persons. DOE's 2006 Final Rule After receiving public comments on its 2005 supplemental rule, DOE issued a "final rule" establishing CI evaluation regulations, on October 31, 2006. The new regulation was similar to the January 7, 2005 supplemental proposed rule, with one principal exception: DOE would no longer administer polygraph screening tests without cause—other than through a reduced number of random polygraph screening test and counterintelligence evaluations. Focusing on "a specific-cause" criteria, according to DOE, would bring its practices more into line with those of the Intelligence Community and with NAS's recommendations. DOE also said a "specific-cause" standard also would "significantly reduce" the number of employees DOE would test. As a result, DOE estimated it will polygraph-test between 2,000 and 2,500 employees in 2006-2007, far less than the estimated more than 20,000 employees who would have been subject to such testing under Secretary Abraham's original plan. DOE's "final rule" also included a provision requiring that recordings—both video and audio—be made of each polygraph examination. Although the rule does not require that DOE release polygraph test reports or videotapes, it does stipulate that individuals may attempt to obtain such material through Freedom of Information Act requests. Aside from these modifications, the rule includes most of the provisions contained in the January 7, 2005 proposed rule, including the requirement for: random counterintelligence evaluations and polygraph screening tests in certain circumstances; specific incident polygraph examinations; and, the requirement that an employee's access to sensitive or classified information can be denied based the results of a polygraph examination. Issues for Congress Adequacy of the Current Polygraph Program Beyond monitoring DOE's implementation of its revamped polygraph screening program, Congress may also examine whether the Department's polygraph testing is sufficiently focused on a small enough number of individuals occupying only the most sensitive positions. DOE has tightened program's focus by establishing a generally applicable for-cause examination policy. A remaining question is whether there is a rationale for DOE to further focus its program, or whether the current structure of the program is the most effective, and thus reduce the number of individuals subject to polygraph examinations. Alternatively, Congress could explore the issue of whether the current structure of the program is too constrained, thus incurring the risk of failing to minimize the potential for release or disclosure of classified data, material, or information, as required by statute. Additional Research Polygraph critics and supporters alike agree that further research into the scientific basis for psycho-physiological detection of deception by any technique is warranted. The NAS Report suggested that if the federal government continues to rely heavily on the polygraph, research should be conducted that might result in the development of a firmer scientific foundation for the polygraph. The NAS Study cautioned, however, that the inherent ambiguity of the polygraph's physiological measurements suggests that investments in improving polygraph technique and interpretation will bring only modest improvements in accuracy. The NAS Report recommended that the government broaden its research into alternatives to the polygraph. While NAS reported that alternative techniques, such as measurements from brain activity and other physiological indicators, facial expressions, voice quality, and other aspects of demeanor show some promise, it cautioned that "none [of these techniques] has yet been shown to outperform the polygraph. None shows any promise of supplanting the polygraph for screening purposes in the near term." NAS also recommended that any research program should largely be administered by "an organization or organizations with no operational responsibility for detecting deception and no institutional commitment to using or training practitioners of a particular technique." While claiming that the polygraph provides satisfactory detection and deterrence, polygraph supporters still favor additional research on the grounds that such efforts could lead to improvements in the polygraph's validity and reliability. They caution, however, that the principal obstacle to assessing the polygraph's validity and reliability remains the difficulty in replicating real world conditions in a mock crime or laboratory environment. Supporters also argue that the lack of resources has hindered any such research efforts. Congress addressed the issue of additional research in 2003 when it funded such research in the FY2004 Intelligence Authorization Act. The act directed that the National Science Foundation (NSF) and the White House's Office of Science and Technology Policy (OSTP) identify the research most likely to advance the understanding of the use of certain assessments of individuals in security evaluations. Although directed by Congress to identify the federal agencies best suited to support such research and develop recommendations for coordinating future federally-funded research for the development, improvement, or enhancement of security evaluations, the NSF/OSTP study contained no recommendations in this regard. In 2007, an Intelligence Science Board study concluded that no significant scientific research about the effectiveness of many of the interrogation techniques used by the U.S. military and Intelligence Community has been conducted in more than four decades. "There is little systematic knowledge available to tell us 'what works' in interrogation," said one of the contributors to the report issued by the commission, which advises the Director of National Intelligence and recommended studying the matter. Issue of Discarding the Polygraph Program as a Screening Tool Another issue for Congress could be whether to discontinue polygraph screening altogether. Critics characterize polygraph screening as misguided and suggest that it be replaced by a more thorough examination of financial and travel records and more frequent reinvestigation by more traditional means. They further argue that the results of polygraph screening can produce a dangerously false sense of confidence with regard to identifying spies. Such misplaced confidence could lead authorities to relax efforts to obtain CI information through other channels, such as periodic security re-investigations and a close monitoring of security violations in certain government facilities. Finally, critics caution that, the accuracy of polygraphs notwithstanding, such tests can be defeated through certain countermeasures. Supporters counter that the polygraph is still the best tool available to detect deception, and that it remains an important counterintelligence tool. Some supporters distinguish between the polygraph's utility and its scientific validity. While its accuracy may be questionable, these supporters argue that the polygraph has significant utility when deployed as part of a comprehensive counterintelligence evaluation program. Finally, CIA has claimed that certain classified research suggests that the polygraph is sufficiently accurate.

Four years after Congress directed the Department of Energy (DOE) to revamp its polygraph program, taking into account a 2003 National Academy of Sciences (NAS) report that questioned the scientific basis for the accuracy of polygraph testing, particularly when used to "screen" employees, DOE promulgated a regulation on October 30, 2006, that eliminated polygraph screening tests without specific cause. DOE said its counterintelligence evaluation policies were now consistent with existing Intelligence Community practices and the NAS 2003 report's recommendations, particularly for cases when polygraph tests were used for screening purposes rather than for investigating specific events. Under its 2006 regulation, DOE requires that an applicant or employee be polygraph tested only if one of the following five causes is triggered: (1) a counterintelligence evaluation of an applicant or employee reveals that the individual may be engaged in certain activities, including clandestine or unreported relationships with foreign powers, organizations, or persons; (2) an employee is to be assigned to certain activities within DOE which involve another agency, and that agency requires a polygraph examination; (3) an agency to which a DOE employee will be assigned requests that DOE administer a polygraph examination as a condition of the assignment; (4) an employee is selected for a random counterintelligence evaluation, including a polygraph test; or (5) an employee is required to take a specific-incident polygraph examination. DOE said that by adopting a "specific-cause" polygraph testing standard, it significantly reduced the number of "covered employees" subject to polygraph examinations, from an earlier estimate of more than 20,000 employees to between 2,000 to 2,500 employees in 2006-2007. The value of polygraph testing, with its associated uncertainties, has been a part of Congress's continuing oversight interest concerning DOE. This report examines how DOE's polygraph testing program has evolved and reviews certain scientific findings with regard to the polygraph's scientific validity. Several issues include whether: DOE's new screening program is focused on an appropriate number of individuals occupying only the most sensitive positions; the program should be expanded in order to adequately safeguard certain classified information; further research into the polygraph's scientific validity is needed; there are possible alternatives to the polygraph; and whether DOE should continue polygraph screening. Possible options include a more focused polygraph screening program, an expanded polygraph program, additional research into the polygraph's scientific validity, and eliminating the use of the polygraph to screen applicants and employees. This report will be updated as warranted.

Examine the Foreign Born? This report offers context for consideration of immigration policy options by presenting data on key geographic, demographic, social, and economic characteristics of the foreign-born population residing in the United States. Data on the native-born population are often shown for comparison. The report relies heavily on the 2010 American Community Survey (ACS) Public Use Micro Sample (PUMS), the largest most representative and recent dataset available on the U.S. population. In some instances, other data sources, such as Decennial Census and Current Population Survey data are introduced. At times, the report discusses possible reasons for patterns observed in the data. The term "foreign-born" used in this report refers to people born outside the United States who do not automatically acquire citizenship at birth. The foreign born have a variety of immigration statuses and include immigrants, refugees, nonimmigrants, and persons illegally residing in the United States. This report often distinguishes between two groups of foreign-born individuals: noncitizens (a broad category that includes unauthorized aliens as well as legal permanent residents) and naturalized U.S. citizens. Interest in the U.S. foreign born stems, in part, from the changing demographic profile of the U.S. population, the rapidity of such change, and how both trends correspond to the objectives of U.S. immigration policy. Although relatively small in absolute terms, the foreign born are growing faster than the native-born population generally and specifically among young people and the civilian labor force. Moreover, much policy attention is devoted to dealing with the estimated 11.2 million foreign born (as of 2010) residing illegally in the United States. In 1970, the foreign born numbered 9.7 million people, or 4.8% of the total U.S. population, their lowest proportion since 1850. By 2010, the foreign-born population had increased to 39.9 million people representing 12.9% of the total U.S. population (see Figure 1 ). Although the absolute number of foreign born is higher than at any point in the nation's history, the foreign-born proportion of the total U.S. population was still lower in 2010 than peaks reached at the beginning of the 20 th Century. This report presents information on the foreign-born population that is relevant to several prominent immigration policy issues, including the unauthorized alien population; proposed revisions to current immigration policies; the skill and educational composition of new immigrants; and the impact of foreign-born workers on the U.S. economy. Using the 2010 ACS PUMS, the report describe characteristics of the foreign-born that relate directly to these immigration policy issues. The report begins by placing the current foreign-born population in historical context. It then describes from what regions of the world the foreign born originate, where they settle in the United States, and how these foreign origins and U.S. destinations have changed over the past five decades. Because legal status is central to immigration policy, the report discusses the unauthorized population and naturalization trends and often breaks out descriptive statistics by citizenship status throughout the text. The report describes several critical determinants of labor market outcomes, including age, educational attainment, and English language ability, and then compares the industrial sector and occupational distribution of the foreign born with the native born. Finally, the report presents several measures of economic well-being, including median income and poverty. Foreign-Born Population Growth in Historical Context In 2010, the nation's 39.9 million foreign-born persons represented 12.9% of the total U.S. population ( Figure 1 ). While this proportion remains lower than those reached during the turn of the last century, Figure 1 illustrates that the proportion of the foreign-born population has increased steadily since 1970. Moreover, the foreign-born population's contribution to total population growth in recent years—31.6% between 2000 and 2010—has been disproportionate for its size. The relatively high foreign-born proportion between the late 19 th century and 1920 resulted from several factors, including the U.S. industrial revolution, which generated substantial labor demand; political and economic turmoil throughout Europe during the latter 19 th Century; and the expansion of affordable transatlantic travel. In response to these historically high immigration flows, Congress passed the Immigration Act of 1924, which limited, by country, the number of new immigrants to a proportion of those already living in the United States and reduced immigration levels overall. The Great Depression reduced the foreign-born population by curtailing U.S. labor demand and worldwide migration flows. Foreign Origins and U.S. Destinations The Immigration and Nationality Act (INA) of 1952 collected and codified existing immigration law provisions into one organized structure. Amended many times, it remains the foundation of U.S. immigration law. The 1952 Act introduced a system of preferences based on family reunification and skills that upheld and reinforced the national origins quota system established in 1924. In 1965, Congress amended the INA, removing widely perceived discriminatory provisions of previous immigration laws and loosening numerical restrictions on immigration. The 1965 revisions to the INA also had the effect of gradually shifting the ethnic composition of the immigrant flow away from Europe and toward Latin America and Asia. Subsequent legislation—such as the Refugee Act of 1980 ; the Immigration Reform and Control Act of 1986 , which legalized the status of 2.7 million previously unauthorized residents; and the Immigration and Nationality Act Amendments of 1990 —have all increased the number of the foreign born directly by expanding legal immigration to the United States. These laws have also increased the numbers of foreign born indirectly because naturalized immigrants and legal permanent residents can sponsor for citizenship their relatives living abroad. Legislation aside, the U.S. foreign born also expanded from the aftermath of the Vietnam War, Central American political turmoil, greater numbers of U.S.-based foreign-born students and business people, and greater U.S. citizen contact with foreign nationals from international travel, study, and work assignments. Region of Birth Origin countries of the foreign born have changed since 1960 in ways that have increased U.S. population diversity. The absolute number of foreign born by region of birth ( Table 1 ) and the percent distribution of the total foreign-born population by region ( Figure 2 ) illustrate these trends. The proportion of all foreign-born persons originating from Europe declined from 74% in 1960 to 12% by 2010. Over the same period, fivefold increases occurred in the proportion from Latin America (9% to 53%) and Asia (5% to 28%). Proportions from other areas, including Canada, increased and then dropped over this period, although absolute numbers from these areas have increased steadily. Country of Birth The shift in the origins of the foreign born becomes more vivid when examining specific countries. In 1960, European nations represented eight of the top 10 origin countries for the foreign born ( Table 2 ). By 1990, that figure had dropped to three countries, and by 2010, no European country ranked among the top 10 origin countries. In contrast, in 1960 only one country from either Latin America or Asia ranked among the top 10 origin countries (Mexico), but by 2010 all of the top 10 origin countries were from these two regions. Trends on the top 10 origin countries for the foreign-born population reflect not only foreign-born composition but also immigrant diversity, a central principle governing legal immigration policy and the rationale for the Diversity Visa Lottery, which admits 55,000 persons annually from countries sending relatively few immigrants. Geographic Distribution in the United States The geography of foreign-born population settlement in the United States can be divided between the "stock" of the existing population and the "flow" of the recently arrived foreign born. The latter become especially visible during the past two decades in U.S. regions, cities, and rural areas that had not experienced recent foreign-born population growth, prompting some states and localities to pass or consider ordinances addressing immigration-related policy issues. As in previous decades, the foreign born continue to be concentrated in the nation's most populous states ( Table A-3 ). Six states—California, New York, Florida, Texas, New Jersey, and Illinois—accounted for 73%, 68%, and 65% of the entire foreign-born population in 1990, 2000, and 2010, respectively. Nationally, a much smaller proportion of the foreign born (8.5%) are concentrated in rural areas compared to the native born (23.5%). The declining proportion of foreign born living in the most populous six states reflects greater population dispersion to what are referred to as "new immigrant destinations" in both urban and rural areas. The extent of this geographic shift can be seen in Figure 3 , which displays foreign-born population growth for all states between 1990 and 2010. Notably, 10 of the 12 states with the highest foreign-born population growth rates are located in the South and Mountain West, two areas that as recently as 1960 contained 12.5% of the total foreign-born population, a figure that had increased to 38.0% by 2010. States with the lowest foreign-born population growth during this period were concentrated in the Northeast, the northern Midwest, and California. Moreover, many of these same states experienced total population growth that exceeded the national average of 7.0% ( Table A-3 ). The correspondence between foreign-born and total population growth during this period often resulted from, among other factors, growing labor demand in the construction and low-skilled service sectors. Outside of the more established destination states of Texas and Florida, foreign-born population growth in the South and Mountain West represents a considerable demographic shift. Period of Arrival Period of arrival data ( Figure 4 ) reflect the large and recent increase in the foreign-born population. In 2010, almost 35% of all foreign-born persons in the United States had arrived since 2000, and almost 62% since 1990. Greater proportions of noncitizens than naturalized citizens arrived this past decade, mirroring to some extent the time required to attain citizenship. Legal Status of the Foreign Born Legal status of the foreign born has received increased attention with the growing estimated size of the unauthorized population, the geographic dispersion of the foreign born to new U.S. destinations, and increased border security concerns. Legal status of the foreign born encompasses three broad groups: unauthorized aliens, legal noncitizens (which includes legal permanent and legal temporary residents), and naturalized citizens that are described below. According to the most recent estimates of foreign-born legal status ( Figure 5 ), unauthorized aliens, legal residents (permanent and temporary) and naturalized citizens made up, respectively, 28%, 35% and 37% of the foreign-born population. Applied to the total estimated foreign-born population of 39.9 million persons in 2010 (computed from the ACS data), these percentages yield absolute population sizes of 11.2 million for unauthorized aliens, 14.0 million for legal residents, and 14.8 million for naturalized citizens. Unauthorized Foreign Born28 Unauthorized aliens are part of the noncitizen foreign-born population captured by the American Community Survey. However, surveys of the population such as the ACS, the CPS and other nationally representative datasets are only permitted to record if respondents are citizens, but not if they are unauthorized aliens. Therefore, policymakers typically rely on estimates produced by government agencies and private organizations to have a sense of how many unauthorized noncitizens live in the United States. In 2010, the unauthorized population was estimated at roughly 11 million persons ( Figure 6 ). Estimates of the unauthorized population in Figure 6 are shown from 1986, the year Congress passed the Immigration Reform and Control Act (IRCA), which legalized 2.7 million unauthorized aliens, through the most recent year for which reliable estimates are available (2010). Some attribute declining incoming flows and estimated unauthorized population sizes after 2007 to the economic downturn and increased enforcement efforts. Some have suggested that greater enforcement of immigration laws likely reduced the overall flow from what it would have been during this period without such action. Legal Residents Legal residents include immigrants and nonimmigrants. Immigrants are synonymous with legal permanent residents (LPRs) and refer to foreign nationals who come to live lawfully and permanently in the United States. Nonimmigrants are admitted for a designated period of time and a specific purpose, and include foreign students, diplomats, temporary agricultural workers, persons on work assignments, and exchange visitors, among others. Conditions for immigrant admission to the United States are more stringent than those for nonimmigrants, yet once admitted, immigrants are subject to few restrictions regarding changes in employment and may apply for U.S. citizenship through the naturalization process, generally after five years. Naturalized Citizens The process of converting legal permanent resident status to U.S. citizenship is referred to as naturalization. In most cases, persons wishing to naturalize must first be permanent residents. Naturalization requires applicants to possess certain eligibility criteria, including a minimum age of 18; permanent residency status for five years (three years in some circumstances); good moral character; basic knowledge of U.S. government; continuous presence in the United States (generally fewer than 6 months abroad during the entire permanent residency status period requirement); and the ability to read, write, and speak basic English. These and other requirements explain the greater rate of naturalization among persons who have lived for more years in the United States ( Table A-2 ). Because citizenship confers the right to vote, naturalization trends may sometimes have political impacts. Over the longer term, however, naturalization trends have demographic implications because citizens are accorded higher preferences than legal permanent residents under U.S. immigration law to sponsor immediate and extended family members to live in the United States . As Figure 7 illustrates, in the past four decades, the total foreign-born and naturalized foreign-born populations have increased consistently while the proportion of foreign born who are naturalized has declined consistently from 63.6% in 1970 to 37.0% in 2010. Demographic Characteristics Age Composition Figure 8 shows that prime working ages dominate the foreign born, with six of every 10 persons between the ages 25 to 54. By contrast, just four of every 10 native-born persons falls within this age group. Above age 55, the foreign born largely resemble the native born, while among youth, the two populations differ considerably: children under 18 comprise 26% of the native-born population but just 7% of the foreign-born population. Moreover, among the foreign born, the age distribution differs substantially between the generally older naturalized citizen population and younger noncitizen population. The foreign born, 12.9% of the U.S. population, contribute disproportionately to the U.S. population across all age groups ( Table 3 ). Between 2000 and 2010, the foreign born contributed 8.8 million, or almost a third of the entire U.S. population increase of 27.9 million persons. Especially noteworthy was the foreign-born contribution of 5.4 million persons in the 25-54 prime working-age adult group. Some of this change occurred because the native born aged into older age cohorts. The foreign-born contribution to the child-age population was negative during this period, but this negative figure does not reflect a decline in child-bearing among foreign-born adults. Rather it reflects more native-born children born to foreign-born parents (see following discussion and Table 4 ). Among those ages 65 and older, the foreign born contributed just over a quarter (1.5 million persons) of the total U.S. increase (5.5 million persons). Most children of foreign-born parents are born in the United States ( Table 4 ). Of the 16.9 million children with at least one foreign-born parent in 2010, 14.5 million, or 86%, were born in the United States. Children with foreign-born parentage comprised almost one-fourth (24%) of the 70.6 million U.S. children under age 18. Native-born children with foreign-born parents confound the computation of foreign-born median age. Traditionally among the foreign born, noncitizens with less U.S. experience are often young adults with the most to gain economically over their working careers by migrating to a new country. Most foreign born are in fact relatively young, but because their U.S.-born children are included in native-born population figures, the foreign born have a higher median age (40) than the native born (35). However, when median ages are recomputed by reclassifying native-born minor children of foreign-born parents among the 38 million foreign born, the foreign-born median age (32) becomes less than the native-born median age (37). Household and Family Structure and Size Across several family and household measures, such as marital status (e.g., married, divorced, never married) and household structure (e.g., two-parent households, one-parent households), differences between the native born and foreign born are relatively modest ( Figure 9 ). Figure 10 presents household size—a commonly used measure of household structure—by nativity and citizenship status. Higher proportions of the native-born live in one- or two-person households compared to either foreign born group. Foreign-born noncitizens, by contrast, are found in equal proportions across all five categories shown. Differences in household size by nativity and citizenship status reflect several characteristics. Native-born persons and naturalized citizens, who have higher incomes than noncitizens (see Table 10 ), are more able to afford living alone or in nuclear families, if so preferred, compared to noncitizens who have lower median incomes. Age structure plays a role, particularly among the native born, with young adults and the elderly more likely to live alone. Cultural preferences can also influence living arrangements, with multi-generational households more common among the foreign born. Education and Skills Educational Attainment Educational attainment correlates positively with several public policy objectives, including labor market participation, higher incomes, improved health, improved child welfare, reduced public service utilization, and greater civic participation. Average educational attainment is lower for the foreign born than it is for the native born because many of the foreign born lack a high school diploma ( Figure 11 ). However, at the other end of the education distribution, the proportion of the foreign born with at least a bachelor's degree matches that of the native born. Foreign-born naturalized citizens have higher education levels than foreign-born noncitizens. Average education levels have been rising consistently throughout the world, and consequently, more recent immigrants, on average, arrive to the United States with more years of schooling than immigrants who arrived in earlier decades, as illustrated in the period of arrival data in Figure 11 . The proportion of the foreign born with a bachelor's degree has increased by roughly 50% since 1950, and from 22% in that decade to 31% for those arriving this past decade. Figure 11 shows that the educational attainment categories of the foreign born that have declined over the period examined include those who completed high school or some college. However, the figure also shows that the proportion of the foreign born without a high school diploma remained unchanged over this time. While the proportions of foreign born in each of the four broad education categories presented in Figure 11 suggest only modest changes in educational composition over time, they conceal significant increases in average schooling levels occurring in many countries. The foreign born from Mexico, Central America, and the Caribbean have the lowest proportions of college graduates and the highest proportions of persons lacking a high school diploma, in sharp contrast with those from Africa, Eastern Europe, Asia, and the Middle East ( Figure 12 ). Mexico's disproportionately high percentage of persons with less than a high school diploma may be attributable to the large proportion of unauthorized aliens from that country, a group with lower average education levels than other foreign born. English Language Ability Like education, English language ability positively influences labor market outcomes and social and cultural integration in the United States. Characteristics associated with higher education levels are also associated with English language ability, as shown in Table 5 . Research has shown that English language ability tends to improve substantially over time, and second- and third-generation immigrants often lose entirely the native languages of their parents. Such findings are borne out in Table 5 . Youth, who are much more likely to be enrolled in U.S. schools and who acquire languages more easily than adults, have the highest English language facility of all age groups, with nine out of 10 minors reporting that they speak English "well" or "very well." Two-thirds of all foreign-born working-age adults ages 25 to 64 also report similar English language proficiency. As expected, naturalized citizens exhibit stronger English language skills than noncitizens, reflecting U.S. experience. Among origin regions, foreign-born persons from Mexico and Central America report the lowest average English proficiency, while those from Africa, Western Europe, Canada, and Oceania, where English is typically spoken, report the highest. Employment Labor Force Participation In 2010, the foreign-born population accounted for 25.5 million, or 16.3%, of the total U.S. civilian labor force of 156.0 million. This proportion represents a considerable increase since 2000, when 17.4 million foreign-born persons accounted for 12.4% of the labor force, and mirrors higher foreign-born population growth generally within this age range. Labor force participation rates for foreign-born and native-born workers differ significantly for men and women ( Table 6 ). Foreign-born male workers exhibit consistently higher labor force participation rates than native-born workers both in total and across all age and education categories. In contrast, foreign-born female workers exhibit lower rates than native-born women except at lower education levels. Among all groups, labor force participation increases with education and from ages 16 to 44. Other characteristics among the foreign born significantly affect their labor force participation. As shown in Table A-1 , male naturalized citizens have lower labor force participation rates than male noncitizens. The reverse is true for women, which may reflect greater employment opportunity for those with citizenship, higher education levels, and more U.S. experience. Labor force participation increases during the first 30 years of U.S. experience only slightly for men but substantially for women, before declining significantly as both groups approach retirement. By region, participation is higher for foreign-born men and women from Latin America and Africa and lower for those from Europe, Oceania, and Canada ( Table A-1 ) . Employment by Industrial Sector Differences between the employment distribution of the native born and foreign born are found among noncitizens. Figures in Table 7 show that naturalized citizens differ little in this respect when compared with the numerically dominant native-born workforce. The noncitizen workforce, however, is more concentrated in agriculture, construction, manufacturing, other services, and accommodation and food services, and less in retail trade, finance, insurance, and real estate, education, health care, and public administration. To some extent, this difference in concentration may mirror skill requirements, with noncitizens more concentrated in industries employing less-skilled workers. Yet in the highly skilled professional, scientific, and management sector, the noncitizen foreign born are slightly more concentrated than either naturalized citizens or the native born. Foreign-born educational attainment and job competition between foreign-born and native-born workers continue to be perennial concerns, particularly during economic recessions. Yet, U.S. dependence on foreign-born workers is widely acknowledged in highly skilled sectors such as science and engineering as well as less-skilled sectors such as labor-intensive agriculture. Occupational Distribution The distribution of workers within broad occupation categories displays patterns similar to those found among industrial sectors ( Table 8 ). In most occupational categories, the native born and foreign-born naturalized citizens resemble each other closely. Differences appear among foreign-born noncitizens who, on average, concentrate less in higher-skilled services and more in lower-skilled service and industrial occupations. In the one key exception, computer, science, and engineering occupations, noncitizen foreign born are comparable to naturalized citizens and the native born. These descriptive statistics confirm an earlier Census Bureau report which showed that citizens and those with extensive U.S. experience are more likely to resemble the native born in their occupational distribution. Broad occupation and industrial sector categories can mask the extent to which native-born or foreign-born nationals dominate some occupations. Table 9 presents, for a group of selected occupations, the proportions held by native and foreign-born men and women, by citizenship status. The table lists these selected occupations according to native-born male proportion, ranked lowest to highest. Native and foreign-born workers shown in Table 8 represent 84% and 16%, respectively, of the U.S. labor force. Differences between this national average and figures shown in Table 9 indicate cases of occupational imbalance by gender, nativity, or citizenship. In some heavily unionized occupations such as locomotive engineers and construction inspectors, native-born workers dominate. In other, less-skilled occupations with low barriers to entry, such as sewing machine operators, agricultural workers, and meat processing workers, the foreign-born noncitizen population is represented in numbers that far exceed their total averages. Yet the foreign born also exceed their national average proportion in certain specialty occupations that require substantial education, such as physical scientists, physicians and surgeons, and computer scientists reflecting the bifurcated education profile discussed earlier and presented in Figure 11 . Economic Well-Being Median Income Policymakers frequently rely on median income as an indicator of economic assimilation and productive output. On average, median incomes of native-born workers are higher than foreign-born workers. These differences vary substantially by citizenship and sex ( Table 10 ) but at higher education levels, they become minimal. In fact, no nativity gap in median income appears for female workers with at least a bachelor's degree. Among the foreign born, naturalized U.S. citizen incomes exceed noncitizen incomes by an average of 62%, reflecting higher educational attainment, and greater U.S. experience (see Table 10 ). Poverty The poverty threshold, another measure of economic well-being, is an income figure set annually by the Census Bureau, above or below which an individual or family is officially classified as poor. Poverty for the foreign born varies by citizenship status, with relatively smaller proportions of naturalized citizens and greater proportions of noncitizens falling below the poverty threshold ( Figure 13 ). The difference in poverty level between the native born and foreign-born noncitizens is 10%. If those below poverty and those earning 100-200% of the poverty threshold are combined (the "poor" plus the "near-poor"), then the difference between the native born (35%) and foreign-born noncitizens (56%) expands to 21%. Poverty rates among the foreign born relative to the native born ( Table 11 ) follow patterns borne out by much previous research. Relatively higher poverty rates are reported by women, persons in the early working age groups, and the less educated. The proportion of children falling below the poverty line is considerably higher than that of working-age adults for all groups. Among the foreign born, poverty rates are relatively higher for persons who arrived in the United State more recently. Persons from the Middle East, the Caribbean, and Mexico exhibit relatively high rates while those from Oceania, Canada, and Western Europe exhibit the lowest. Concluding Observations The 39.9 million foreign born (in 2010) make up roughly one-eighth of the U.S. population, but between 2000 and 2010, they accounted for nearly one-third of all U.S. population growth. They include not only an estimated 14.8 million naturalized citizens (37% of all foreign born) but also 11.2 million unauthorized aliens. Of the 16.9 million children with at least one foreign-born parent in 2010, 14.5 million, or 86%, were born in the United States. Recent estimates indicate that unauthorized aliens, legal residents (permanent and temporary) and naturalized citizens made up 28%, 35% and 37%, respectively, of the foreign-born population. Years of U.S. experience and educational attainment are positively associated with citizenship status. Origins of the foreign born have shifted from Europe (74% in 1960) to Latin America and Asia (81% in 2010). While many foreign-born persons have settled recently in new urban and rural destinations, two-thirds of the foreign-born population lives in California, New York, Florida, Texas, Illinois, and New Jersey. Almost two thirds of all foreign born arrived to the United States after 1990. Between 2000 and 2010, foreign-born workers accounted for almost all the growth in the U.S. workforce between ages 25-54. As this CRS analysis illustrates, their labor force contributions to the U.S. economy range from low-skilled occupations in the agriculture, manufacturing, and service sectors to highly skilled occupations in science, engineering, medicine, nursing, defense, and other critical industrial sectors. The foreign born have lower average educational attainment and a higher proportion of persons without a high school diploma than the native born. However, the foreign-born and native-born populations possess the same proportion with at least a bachelor's degree. Lower education levels and differences in industrial sector and occupational distributions partly explain income and poverty differences between foreign-born and native-born workers; for those with at least a four-year college degree, earnings differences by nativity are minimal. Among the foreign born, median incomes of naturalized citizens are roughly 60% higher than those of noncitizens, reflecting higher education levels, older ages, and greater U.S. labor market experience. Poverty status is linked to the lack of citizenship, a difference that is magnified after including the "near-poor," who earn between 100% and 200% of the poverty threshold. Changes in the age composition of the American population can have a considerable impact on the U.S. labor force, on public sector expenditures, and consequently on U.S. public policy. Political debates over immigration policy may sometimes originate because of different priorities for public spending, as younger foreign-born persons and their children tend to demand different public services (e.g., public education and affordable housing) than older native-born residents (e.g., affordable health care). Appendix. Data Sources and Limitations Unless indicated otherwise, data for this report come primarily from the Public Use Micro Sample (PUMS) of the 2010 American Community Survey (ACS). This survey is sent to roughly 250,000 households every month (or 3 million households every year) and replaces the long form questionnaire of the decennial census. As with the decennial census long form, the ACS collects information on socio-demographic characteristics, disability, English and native language use, income, and housing characteristics. The ACS has the advantage of continuous measurement by producing new data every year rather than every 10 years for the decennial census. However, because it is sent to far fewer households (1 in 100) compared to the decennial census (1 in 6) ACS estimates of the population and population characteristics have a relatively greater margin of error, particularly for smaller geographic areas. This report avoids that obstacle because it presents computations at a sufficiently large geographic unit of analysis, often at the national level. For instance, the 2010 ACS PUMS contains about 2,714,000 observations representing the native born, and 348,000 observations representing the foreign born, before weighting. As such, descriptive statistics presented herein are based upon sufficiently large sample sizes that support statistical validity at the 95% probability level. The PUMS is a publically available dataset that contains no personal identifiers and permits analysis of micro-level data across characteristics of one's choosing. Key Definitions Nativity , which refers to whether someone is native born or foreign born, generally refers to place of birth, but not exclusively. The Census Bureau defines native-born persons as those who were U.S. citizens or U.S. nationals at birth. Hence, in addition to persons born in the United States, the term native-born also includes persons born in a U.S. Commonwealth or other territories (Puerto Rico, U.S. Virgin Islands, Guam, American Samoa, or the Northern Mariana Islands), or born abroad to a U.S. citizen parent or parents. Anyone not born a U.S. citizen or U.S. national is defined as foreign born, including those who have become U.S. citizens through naturalization. Naturalized citizens are defined by the Immigration and Naturalization Act (INA) as persons admitted as legal residents who have lived in the United States continuously for at least five years; demonstrated good moral character as well as English reading, writing, and speaking ability; and passed an examination on U.S. history and government. If these legal permanent residents have their petitions for naturalization approved, they become U.S. citizens.

This report offers context for consideration of immigration policy options by presenting data on key geographic, demographic, social, and economic characteristics of the foreign-born population residing in the United States. Interest in the U.S. foreign-born population stems in part from the changing demographic profile of the United States as well as the rapidity of such change, and how both of these trends correspond to U.S. immigration policy. Although the foreign born are relatively small in absolute terms—39.9 million people representing 12.9% of the total U.S. population of 309.3 million in 2010—they are growing far more rapidly than the native-born population. Between 2000 and 2010, the foreign born contributed 32% of the total U.S. population increase and almost all of the prime 25-54 working age group increase. Almost one-third of the foreign born arrived in the United States since 2000, and an estimated 28% were residing illegally in the United States in 2010. Geographic origins of the foreign born have shifted from Europe (74% in 1960) to Latin America and Asia (81% in 2010). In recent years, many foreign born have settled in new urban and rural destinations, often in response to employment opportunities in construction, manufacturing, and low-skilled services. Yet, as in previous decades, at least two-thirds of the foreign born remain concentrated in just six states: California, New York, Florida, Texas, Illinois, and New Jersey. Several measures of marital status and household structure show little difference between the native born and foreign born. The foreign born have lower average educational attainment, but the proportion with at least a bachelor's degree matches that of the native born. In 2010, the foreign born accounted for 16.3% of all workers, with higher labor force participation rates among men and lower rates among women compared to native-born workers. With exceptions, native and foreign-born workers generally resemble each other in their distribution across broad industrial and occupational sectors. Among specific occupations, however, glaring differences occur, with native-born workers dominating occupations such as construction inspectors and librarians, and foreign-born workers dominating occupations such as agricultural laborers and tailors. Lower education levels and differences in industrial sector and occupational distributions explain in part why foreign-born workers have lower median incomes and higher poverty rates than native-born workers. Earnings differences are minimal for those with a four-year college degree. Among the foreign born, median incomes of naturalized citizens are 62% higher than those of noncitizens, reflecting higher education levels, older ages, and greater U.S. labor market experience. Poverty status is linked to the lack of citizenship, a difference that is magnified after including the "near-poor," who earn between 100% and 200% of the poverty threshold. Although foreign-born population growth and transformation often occur because of factors beyond the control of Congress—including political turmoil and natural disasters in neighboring countries and social and economic processes of globalization—how Congress crafts immigration law does influence the size and character of resulting immigration flows to the United States.

Introduction In the past three decades, the U.S. government and international community have increasingly recognized violence against women (hereinafter VAW) as a human rights problem with far reaching consequences. Prior to the 1970s, many in the international community viewed VAW as a private matter to be dealt with among individuals and not a public matter that merited a national or international response. In the late 1970s and 1980s, however, the international community began to focus on VAW as a global health problem and violation of human rights. This shift was driven, in part, by an increasingly effective and well-organized grassroots movement of local, national, and international women's non-governmental organizations (NGOs) that brought international attention to the plight of VAW victims and created a more public forum for discussion of the issue. U.S. policymakers have generally addressed VAW as a component of other international development efforts rather than as a stand-alone issue. Congress has authorized and appropriated funds for international programs that address types of VAW, including trafficking in persons and female genital cutting (FGC). Members of Congress have also addressed VAW in the context of issues such as HIV/AIDS prevention and democracy promotion. Similarly, in the last decade past and current Administrations have supported initiatives to reduce specific types and circumstances of international VAW through programs addressing humanitarian assistance and healthcare. The lack of U.S. government-wide coordination or overarching framework for addressing international VAW, however, has led some to suggest that U.S. efforts to address VAW, while important, take a piecemeal approach to addressing the problem. Further, some argue that the United States should re-examine and possibly enhance current efforts to combat violence against women. This report identifies types of VAW and the direct and indirect consequences of these acts of violence. It provides examples of completed and ongoing U.S. government programs that—in whole or in part—work to reduce or eliminate international violence against women. It does not assess the scope of individual programs or a program's success in achieving its goal. The report also outlines possible policy considerations for the 112 th Congress, including the scope and effectiveness of current U.S. programs, further integrating VAW prevention and treatment into U.S. foreign assistance programs, coordinating among U.S. executive branch agencies and departments, and U.S. funding of international anti-VAW programs. Defining Violence Against Women In 1993, the U.N. General Assembly adopted the non-binding Declaration on the Elimination of Violence Against Women (DEVAW). The Declaration, which was supported by the U.S. government, describes VAW as "any act of gender-based violence that results in, or is likely to result in, physical, sexual, or psychological harm or suffering to women, including threats of such acts, coercion or arbitrary deprivation of liberty, whether occurring in public or private life." The DEVAW definition of VAW is broad, encompassing both physical and psychological harm. It is used in this report because it is one of the most inclusive and widely agreed to international definitions. In some contexts, VAW may be used synonymously with "gender-based violence" (GBV), which describes violence perpetrated against an individual, regardless of sex, because of his or her gender. Despite the international adoption of DEVAW, governments, organizations, and cultures continue to define VAW in number of ways, taking into account unique factors and circumstances. How VAW is defined has implications for policymakers because the definition affects the types of violence that are measured and addressed. Some law enforcement organizations and national criminal codes, for instance, do not consider psychological abuse to be a form a VAW because, while harmful, in many cases it is legal. Others, however, advocate for a broader definition of VAW, contending that physical and psychological harm cannot be separated, and that psychological abuse can be as devastating as physical abuse. Scope and Context VAW occurs in all geographic regions, countries, cultures, and economic classes. Many experts view VAW as a symptom of the historically unequal power relationship between men and women, and argue that over time this imbalance has led to pervasive cultural stereotypes and attitudes that perpetuate a cycle of violence. Though the specific causes of VAW vary on a case-by-case basis, some researchers have identified community and individual risk factors that may increase rates of violence against women. Community factors can include cultural norms that support male superiority, high crime levels, poor economic conditions, and a lack of political and legal protection from governments. Individual factors that may lead to a high risk of becoming a victim of VAW include living in poverty and a previous history of abuse. Social and Health Consequences A wide range of research highlights the serious social and civil consequences of violence against women. In many societies, women provide emotional and financial support for families and communities. Studies have shown that violence and the social stigma of violence negatively affect the ability of women and girls to participate fully in and contribute to their communities. Research has also found that women who experience violence are less likely to hold jobs and are more likely to live in poverty than those who do not experience violence. Violence and the fear of violence may cause some women to avoid public places such as schools and the workplace. Some research has also found that women may also be less likely to participate in political activities or development projects because of the threat of physical violence. Moreover, some studies have found that harassment and sexual abuse contributes to low female enrollment rates and high dropout rates from secondary schools. The health consequences of VAW are significant, with many victims suffering from severe physical and mental health consequences—both immediate and long-term. Numerous studies have found that women and girls who experience violence have an increased risk of poor physical and reproductive health. The physical health impacts of VAW can be divided into two categories—immediate and functional. Immediate consequences directly result from acts of violence, and may include fractures, gunshot wounds, bruises and lacerations, and death. Functional consequences, also referred to as "functional disorders," include long-term health consequences. Researchers have linked these functional impacts to long-term physical or sexual abuse. They include gastrointestinal disorders, chronic pain (including pelvic pain), chronic urinary tract infections, and irritable bowel syndrome. (For more information on the health consequences of VAW, see the " Global Health " section.) Prevalence and Circumstances World Health Organization (WHO) multi-country surveys estimate that between 10% and 69% of women have been physically hit or harmed by a male partner at some point in their lives. The WHO surveys found that levels of violence tend to vary by country, and that women in developing countries may experience higher rates of violence than those in developed countries. Some research indicates that approximately one in five women experiences rape or attempted rape during her lifetime. Surveys in some Asian and sub-Saharan African countries have found high female mortality rates due to female infanticide and nutritional neglect of young girls. Many incidences of violence are not reported because of the shame and fear associated with being a victim. Experts generally agree that current levels of violence reported through studies and national and local law enforcement records represent a minimum of actual VAW cases. Rates of sex trafficking, sexual violence in armed conflict situations, female infanticide, and violence in schools and the workplace, for example, are thought to be significantly under-documented, particularly in developing countries. Underreporting may occur because victims view violence as normal or expected behavior. Additionally, in certain circumstances it is difficult for researchers to collect data on VAW prevalence. In conflict situations, for example, potentially dangerous and fluid conditions may affect the ability of researchers to gain access or create conditions conducive to victims coming forward. In addition, some communities, particularly those in developing countries, lack adequate law enforcement infrastructure and reporting services, which may discourage women from reporting abuse. VAW can occur in the home as well as in public and private institutions, including the workplace, schools, universities, and state institutions. Custodial VAW, which includes violence in prisons, immigration detention centers, social welfare institutions, and jails, is reported in many areas of the world—though there is not enough to data to quantify its prevalence globally. Moreover, VAW in schools, which can be perpetrated by teachers, administrators, and students, is prevalent in developing countries, particularly those in Africa, the Middle East, South Asia, and Latin America. In Ecuador, for example, a World Bank study found that approximately 22% of women reported being sexually abused in school. A qualitative study in Ethiopia found that harassment and sexual abuse contributed to low female enrollment rates and high dropout rates from secondary school. Types of Violence Violence against women can include both random acts as well as sustained abuse over time, which can be physical, psychological, or sexual in nature (see Table 1 ). Some research has found that women are most likely to experience violence at the hands of someone they know, including authority figures, parents, sons, husbands, and male partners. Studies conclude that one of the most common forms of VAW is intimate partner violence, which can include forced sex, physical violence, and psychological abuse, such as isolation from family and friends. There are many different types of violence against women. Honor killings, for example, occur when women are stoned, burned, or beaten to death, often by their own family members, in order to preserve the family honor. The practice is most common in Middle Eastern and South Asian countries, though it has been reported in other parts of the world, such as Latin America and Africa. Dowry-related violence, where victims might be attacked or killed by in-laws for not bringing a large enough dowry to the marriage, is also prevalent in South Asian countries such as Pakistan, India, and Bangladesh. Female genital cutting (FGC), which has also been referred to as female genital mutilation (FGM) or female circumcision, is common in some African and Middle Eastern countries. The World Health Organization estimates that between 100 and 140 million women and girls have undergone a form of the procedure, and that about 3 million girls are at risk each year. Some consider child and adolescent marriage, which is particularly prevalent in parts of the Middle East and Africa, to be a form of violence against women. In such cases, girls as young as 10 and 12 years old may be married to older men, often with the approval of their parents. Some research indicates that these child brides may face a greater risk of violence. Harmful Traditional Practices Traditional practices are part of local cultures and are generally considered socially acceptable; in some cases, they are encouraged by family members and the community. Many experts maintain that some of these practices are damaging to women. They argue that these "harmful traditional practices," including FGC, intimate partner violence, and child marriage, perpetuate unbalanced sex stereotypes and a cycle of violence. What constitutes a harmful traditional practice, however, is a matter of perspective. In some cultures, for instance, both men and women may view violence as a legitimate punishment for female disobedience and as a traditional part of male-female relationships. Moreover, some women may not view forced marital sex as rape, or may endure frequent beatings from their husbands, fathers, sons or boyfriends because of cultural or familial legacies. In addition, some do not view child marriage as a harmful traditional practice—instead they see it as a cultural tradition that should be respected. In recent years, some international advocates have increasingly argued that harmful traditional practices should be addressed through anti-VAW programs. They maintain that anti-VAW efforts should focus not only on treatment and services for victims of violence, but also on eliminating harmful traditional practices. Because some of these practices are often a part of a community's culture, however, programs that introduce treatment and services may meet resistance. Some experts argue that harmful traditional practices cannot be significantly altered without sustained, long-term efforts on the local level with national and international support. Finding the most appropriate balance and means of intervention is a challenge that highlights a broader debate—with human rights and individual freedom on the one hand, and the right to preserve culture, group identity, and tradition on the other. Administration Actions Most U.S. agencies and departments do not track the cost or number of current anti-VAW programs; therefore, it is unclear how much money the U.S. government, or individual agencies, spends annually on anti-VAW programs. The U.S. Agency for International Development (USAID) and the Department of State (DOS) are the primary U.S. entities that implement U.S. international anti-VAW programs. Other agencies and departments that support some programs with anti-VAW components include the Departments of Defense (DOD), Health and Human Services (HHS), Justice (DOJ), and Labor (DOL). The Department of Homeland Security (DHS) and the Peace Corps also address aspects of violence against women. (See the Appendix for a list of selected U.S. offices and bureaus that have anti-VAW programs.) In March 2007, U.S. agencies and departments provided information to CRS on programs that address international VAW either in whole or in part. Approximately 350 U.S. government programs with VAW components across eight agencies have been identified. Capturing the overall U.S. government response to VAW is complicated by the number of programs, the degree to which they focus on VAW or are part of a larger initiative, and overlaps in program budget allocations. Thus, it is possible to generate only a snapshot of activities rather than an all-inclusive list. The information provided to CRS indicated that funding levels for individuals programs in FY2006 and FY2007 ranged from $10,000 to $15 million; in many cases, the anti-VAW component included only a small portion of total program funding. Of these reported programs, approximately 10% operated globally, 22% in Africa, 21% in Europe/Eurasia, 17% in the Western Hemisphere, 14% in South/Central Asia, 14% in East Asia/the Pacific, and 2% in the Near East. Obama Administration The Obama Administration has expressed its commitment to incorporating issues important to women—including violence against women—into all aspects of U.S. foreign policy. Secretary of State Hillary Clinton has sought to bring attention to VAW, particularly sexual violence in conflict, through speeches, meetings, events, and editorials. She has also focused on violence against women in U.N. fora, playing a lead role in the adoption of U.N. Security Council Resolution 1888 and 1889 on sexual violence in conflict and obstacles to women's involvement in peace processes, peacekeeping, and peacebuilding. In April 2010, she established the Secretary's International Fund for Women and Girls, a State Department-led grants program that provides funding for NGO activities that improve the well-being of women, including those that aim to combat VAW. The State Department has also engaged in public-private partnerships that aim to end violence against women. The Obama Administration has also sought to address violence against women in specific countries, particularly in Africa. In August 2009, for instance, Secretary of State Clinton traveled to Goma, Democratic Republic of the Congo (DRC), where she focused on activities to prevent and combat sexual violence and announced $17 million in "new funding" to be distributed to organizations across eastern parts of the country. For FY2012, the Administration requested approximately $117.2 million for programs addressing GBV worldwide, including $87.9 for Africa; $1 million for East Asia and the Pacific; $2 million for Europe and Eurasia; $2.5 million for the Near East; $5.2 million for South and Central Asia; and $8.6 million for the Western Hemisphere. On a global level, the Administration requested $1 million for GBV and economic growth, agriculture, and trade; $425 million for global health and GBV; $292 million for International Narcotics and Law Enforcement Affairs and GBV; and $8 million for population, refugees, and migration activities addressing GBV. Bush Administration The Bush Administration expressed its support for programs addressing international VAW. In 2007, then-Secretary of State Condoleezza Rice stated that combating VAW was a foreign policy priority. The Administration did not pursue an overall policy focused on VAW alone, although it initiated several government-wide programs with VAW prevention, treatment, and protection components. These components existed primarily in the context of a program's broader mission and often represented a small fraction of the budgets for these programs. This was particularly true for the President's Plan for HIV/AIDS Relief (PEPFAR) and Middle East Partnership Initiative. Other Bush Administration initiatives with VAW components included the Women's Justice and Empowerment Initiative and an initiative to respond to ongoing and widespread violence against women and girls in Darfur, Sudan. The Administration also strongly supported the adoption of U.N. Security Council Resolutions 1325 and 1820 on women, peace, and security. Interagency Activities U.S. agencies and departments participate in formal and informal intra- and interagency working groups that address aspects of international violence against women. The National Security Staff (NSS) for example, leads the International Violence Against Women Working Group, a coordinating and information-sharing mechanism for U.S. government agencies addressing VAW. Members include the State Department, USAID, the Department of Justice (DOJ), the Millennium Challenge Corporation (MCC), and others. The USAID Bureau of Global Health collaborates with a network of NGOs through the Interagency Gender Working Group (IGWG), which identifies GBV as a priority. In early 2011, USAID established a policy task team to develop agency policy on gender equality and women's empowerment through its Policy, Planning, and Learning Bureau. In addition, the PEPFAR interagency Gender Technical Working Group addresses the links between HIV/AIDS and gender. U.S. anti-trafficking efforts are coordinated at the cabinet level by the President's Interagency Task Force to Monitor and Combat Trafficking (PITF), which is chaired by the Secretary of State. The PITF meets annually to coordinate broad U.S. anti-trafficking in persons (TIP) policy. The interagency Senior Policy Operating Group (SPOG) meets quarterly to carry out PITF initiatives and to discuss TIP policy and programming issues. In March 2009, President Obama issued an executive order (EO) establishing the White House Council on Women and Girls (the Council). The Council serves as an advisory body to the President with the purpose of (1) establishing a coordinated federal response to issues that impact the lives of women and girls and (2) ensuring that federal programs and policies "address and take into account" their specific concerns. The EO identifies violence against women as a "global epidemic." Council members are comprised of Members of the Cabinet and other high-level executive branch officials. The Council is charged with, among other things, developing and submitting a federal interagency plan to ensure that interagency activities are consistent with the goals expressed in the executive order. Key Issues and Related U.S. Activities This section describes key VAW issues and discusses examples of related U.S. activities across agencies and departments. Some of the activities have been completed, while others are ongoing. Because the U.S. government does not track anti-VAW programs and funding, it is difficult to determine the extent to which a U.S. initiative, program, or project addresses violence against women. Therefore, the descriptions of U.S. anti-VAW activities in this section are largely anecdotal and, in many cases, implemented only in the context of broader development efforts. This section does not assess the scope of individual programs, or a program's success in achieving its goal. (For more information, see the " Policy Issues for Congress " section.) Global Health The physical and psychological health impacts of VAW are wide-ranging. VAW may lead to miscarriage or the transmission of sexually transmitted diseases, including HIV/AIDS. Women who become pregnant as a result of rape may be more likely to undergo abortions (sometimes outside of health setting and in unsafe environments), attempt suicide, or be beaten or killed by their partner. Women may also be killed by their spouses or other family members—though there is limited data on the frequency of this phenomenon. In some cultures, an unmarried woman's unintended pregnancy may trigger social isolation from family and friends. Moreover, when young girls are forced to marry and become sexually active and pregnant, often through coercion, they may experience complications during pregnancy that can result in death or long-term health problems such as obstetric fistula. VAW can cause psychological issues that may manifest physically. Women who are abused are more likely to use drugs and alcohol, attempt suicide, and suffer from nervous system disorders and post-traumatic stress syndrome. A 2007 study found that 59% of women who were abused in the previous year suffered from psychological problems, compared with 20% of women who did not experience any abuse. Moreover, victims of rape, intimate partner violence, and child sex abuse were found to experience a higher level of post-traumatic stress than victims of other types of violence. According to the U.N. Population Fund (UNFPA), rape victims were nine times more likely to attempt suicide than non-victims. Related U.S. Activities USAID and HHS support the majority of U.S. health-related VAW prevention and treatment programs abroad, though other agencies or departments, particularly the State Department, also support and provide health services. The President's Emergency Plan for AIDS Relief (PEPFAR), a five-year, $15 billion government-wide initiative to address HIV/AIDS globally, allocates some resources to mitigating the health consequences of violence against women. According to The President's Emergency Plan for AIDS Relief Report on Gender-Based Violence and HIV/AIDS , $104 million in PEPFAR funds supported 243 activities with a gender-based violence component in FY2006. The report did not explain what constituted a GBV component. The U.S. President's Emergency Plan for AIDS Relief 2009 Annual Report to Congress (Annual Report to Congress) does not address how much funding is specifically allocated to combating GBV. It states, however, that in FY2008 PEPFAR spent $1 billion on activities that included a gender focus. According to the report, 407 of these activities addressed violence and coercion. The 2011 version of the Annual Report to Congress states that in 2010 PEPFAR "intensified" its focus on GBV with a $30 million commitment that built on PEPFAR activities in all focus countries, particularly the DRC, Mozambique, and Tanzania. PEPFAR is also part of a public-private partnership, Together for Girls , which works to combat GBV by informing and implementing a coordinated approach to the issue at the country level. Many of USAID's health programs that address aspects of VAW prevention and response are supported by the Bureau of Global Health (GH) and implemented by regional and country missions. GH includes the Office of Population and Reproductive Health (PRH) and the Office of HIV/AIDS (OHA). PRH offers strategies to raise awareness about intimate partner violence and its impact on maternal and reproductive health. Several OHA activities educate audiences on how sexual violence and coercion can spread HIV/AIDS. According to USAID, OHA programs also advocate against sexual abuse, provide access to services for rape survivors, and teach women how to negotiate safe sex. Moreover, USAID addresses female genital cutting (FGC) prevention, awareness, and treatment at a variety of levels. USAID missions in Ethiopia, Egypt, Kenya, and Guinea, for example, support FGC prevention activities. In 2004, GH adopted a strategy to deter FGC that targets countries for continued and future support. USAID also focuses on strengthening prevention and treatment services for obstetric fistula. HHS has supported some international programs that facilitate the collection and analysis of data and demographic surveys that measure the impact of violence on health—particularly reproductive health. The Centers for Disease Control and Prevention's (CDC's) Monitoring and Evaluation to Assess and Use Results (MEASURE) program, for example, worked with USAID country and regional missions to develop, implement, and analyze national reproductive health surveys that provide population-based data on reproductive health indicators, including the prevalence of violence against women. CDC's National Center for Injury Prevention and Control (NCIPC) worked with partners, including the U.N. Children's Fund (UNICEF), to provide technical assistance on data collection, assess patterns of violence against women and children, and examine possible prevention strategies and policies to address violence. HHS also worked with WHO to build regional frameworks in three countries for VAW prevention. Furthermore, as a PEPFAR implementing partner, CDC's Global AIDS Program has supported prevention and response programs to address the relationship between VAW and HIV. The programs included HIV post-exposure prophylaxis (PEP) in clinical settings for survivors of sexual violence; strengthening linkages among health, community, and legal services that provide protection and care for victims; and HIV prevention programs that focused on VAW prevention. Humanitarian Crises and Protection of Displaced Populations During humanitarian crises and armed conflict (or occupation), populations become vulnerable to an array of threats, including VAW, and often lack protection from their governments, communities, and families. This underscores reports that levels of VAW increase during conflict and remain a large risk in the aftermath of upheaval in post-conflict areas or during the emergency phase following a natural disaster. Rape and other forms of sexual abuse reported during periods of armed conflict are common and in some cases may be systematic. Those who are displaced—including refugees, Internally Displaced Persons (IDPs), and those attempting to return home (returnees)—often lack protection and remain vulnerable, sometimes for years. The U.N. High Commissioner for Refugees (UNHCR) estimates that in the majority of refugee situations worldwide, close to 50% of the displaced are women and girls and that sexual violence is one of the most common crimes committed against refugees. During crises, other forms of VAW, such as sexual exploitation and "survival sex" (when a person engages in sex in exchange for money or material assistance as a means of survival), domestic violence, and traditional practices that prove harmful, occur with frequency. In addition, long periods of displacement and frustration can lead to VAW within families and communities. In such insecure environments, the high degree of fear, lawlessness, and lack of judicial procedure and enforcement means that many perpetrators are not prosecuted or punished. Often, survivors are left with little recourse and suffer related problems such as emotional and physical health risks, unwanted pregnancies, HIV infection, and rejection by family and community. In some cases, humanitarian and peacekeeping workers themselves are perpetrators of violence against women. VAW is a documented problem in conflict settings worldwide and particularly where there are large displaced populations, including the Darfur region of Sudan, DRC, Pakistan, and Colombia. Members of the international community—including governments, international organizations, NGOs, and others—work on collaborative and separate initiatives to develop prevention and response strategies to protect vulnerable populations, particularly women and girls. These projects are undertaken with an eye toward strengthening the protection of displaced women and promoting gender equality. Many experts view increasing the capacity of states and host communities as a priority for implementing sustained, effective measures. Related U.S. Activities U.S. activities addressing GBV in humanitarian and refugee/IDP settings are often incorporated into other programs and activities, including basic humanitarian services, treatment, and education. Because of this, it is a challenge to determine the total number and scope of U.S. activities that address GBV in crisis settings. As the issue has gained attention, GBV has in some instances become the main focus of specific projects. In the humanitarian sector, the U.S. government's response to GBV comes from the State Department's Bureau for Population, Refugees and Migration (PRM), and USAID's Bureau for Democracy, Conflict, and Humanitarian Assistance (DCHA) through its Office of Foreign Disaster Assistance (OFDA) and Office of Transition Initiatives (OTI). USAID missions may also be involved at the regional and country level. Implementing partners include U.N. agencies, such as UNHCR, and international organizations, such as the International Organization for Migration (IOM), and many NGOs, including the American Refugee Committee and the International Rescue Committee. PRM began addressing GBV through its refugee assistance programs in FY2000. Since then, it has provided over $60 million toward targeted GBV programming for refugee and IDP populations. PRM funds projects that specifically respond to GBV, support GBV activities integrated into larger multi-sectoral programs, and work with its international and NGO partners to develop policies that address the protection needs of women and children in any humanitarian response. PRM projects funded specifically to address GBV in recent years have covered a range of activities, such as building local capacity among Afghan refugee populations in Pakistan and returnees in Afghanistan; working to reduce the vulnerability of women and children from the Rohingya community currently living in unofficial camps in Bangladesh; and improving capacity and supporting prevention of GBV in Colombia and the surrounding region. Global programs have focused on increasing the accountability of humanitarian workers for protecting children and vulnerable people from exploitation and abuse by agency staff, as well as ensuring protection, support, and assistance for GBV survivors through local efforts. Other programs have provided technical assistance to practitioners in developing effective livelihood alternatives for women. USAID/DCHA supports response and prevention projects in humanitarian operations through its implementing partners. Since FY2007, USAID has supported a number of programs, including projects in Liberia to address and raise awareness about sexual exploitation and violence; technical evaluations of energy efficient stoves in Uganda and Darfur to help reduce women's exposure to sexual abuse while traveling long distances to find firewood; and support for health and livelihood recovery programs in the DRC, Sri Lanka, and Kenya. In addition, a $15 million initiative in Darfur, Sudan, focused on improving the physical safety of vulnerable populations, some of which benefited women. In FY2010, DCHA funded approximately $7.5 million in stand-alone protection programs that helped to address GBV, including 14 programs in eight countries that focused on preventing and responding to GBV in humanitarian situations. Programming included a three-year project to examine the relationship between natural disasters and incidences of GBV and support for post-conflict and political transition projects. Most projects were funded through small grants to local organizations and national entities, and through larger humanitarian assistance programs implemented by international NGOs. Foreign Military Training The issue of VAW awareness training and education for foreign military and peacekeeping troops was brought to the fore by events in the Democratic Republic of the Congo in 2004. Cases of sexual exploitation and abuse (SEA) by U.N. peacekeepers had been documented in the 1990s and early 2000s in Bosnia and Herzegovina, Kosovo, Cambodia, East Timor, and West Africa. After a special review of the situation, then-U.N. Secretary General Kofi Annan recommended that the U.N. Department of Peacekeeping Operations organize intensive training for peacekeepers. Related U.S. Activities The Department of Defense (DOD) has provided VAW training and education through a small number of programs. Most of the VAW content in DOD programs is incorporated into programs for peacekeepers and military forces participating in disaster and humanitarian relief operations. Funding for the VAW-related components of these programs is generally incorporated into the overall program budgets and not separately identifiable. VAW topics have been incorporated into curricula at some DOD educational and training institutions. The DOD-funded Center of Excellence in Disaster Management and Humanitarian Assistance (CoE-DMHA), for example, reports a broad and apparently growing number of training and education modules on VAW and SEA. These programs—sometimes funded through DOD accounts, sometimes by the Department of State—are offered throughout the world to foreign government personnel, including civilians, military, and police, as well as NGOs. DOD's Defense Institute of International Legal Studies (DIILS), which trains and educates military personnel and civilian government officials on international legal issues, offers a number of training modules related to GBV in resident courses at its home facility in Rhode Island and in mobile courses conducted abroad. DIILS peacekeeping program curriculum, taught in resident and mobile programs, incorporates instruction on violence against women, as does a DIILS mobile program on "Legal Aspects of Developing a Professional Military." DIILS seminars on the Law of Armed Conflict identify non-combatant women as protected persons who are not to be targeted during hostilities. It conducts programs to build military justice capacity in post-conflict countries that include basic human rights and the duties of a professional military toward protected persons as a fundamental part of the instruction. These programs are often employed in areas affected by VAW, such as the Democratic Republic of the Congo, Burundi, and south Sudan. DIILS has also addressed VAW in occasional special courses prepared, on request, for foreign militaries. Another military training program, the Global Peace Operations Initiative (GPOI), funded by the State Department and conducted under the oversight of the State Department Bureau of Political-Military Affairs and in cooperation with DOD, trains foreign peacekeepers and incorporates VAW content in its training exercises. According to a recent State Department report to Congress, GPOI requires that VAW/SE content "be included in its training programs, events, and activities, and provided to individual soldiers, trainers, and leaders, as appropriate." The report states that GPOI's largest component, the African Contingency Operations Training and Assistance (ACOTA) program, administered by the Africa Bureau, is successful in promoting "exemplary conduct among the African peacekeepers it trains." Noting that "no amount of training will guarantee good conduct" the report states that since ACOTA's inception in 1997, "the State Department does not know of any ACOTA-trained peacekeepers to have been implicated in any such [VAW/SEA] misconduct." In recent years, Congress has worked to incorporate VAW awareness into foreign military training. The Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006 ( P.L. 109-102 ), required that training on gender-based violence be included, where appropriate, as a component of programs funded through bilateral assistance and military assistance accounts. These accounts include funding for the education and training of foreign military and civilian defense personnel. Similar language was included in FY2008, FY2009, and FY2010 foreign operations appropriations. Moreover, in FY2009 the Committees on Appropriations requested that USAID and the Department of State report to the Committees "on programs addressing sexual violence and gender-based violence and how these issues are being integrated into foreign police, judicial, and military training programs." Trafficking in Women and Girls Trafficking in women and girls is a high-profile form of violence against women. Severe forms of trafficking in persons is defined by the Trafficking Victims Protection Act of 2000 (TVPA, P.L. 106-386 , as amended) as "(A) sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such an act has not attained 18 years of age; or (B) the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery." Examples of human trafficking that affect women and girls include forced labor, including forced child labor, child soldiering, and involuntary domestic servitude, and sex trafficking, including child sex trafficking. Force, fraud, or coercion can take many forms, including physical and psychological violence. Another form is debt bondage, which involves the exploitation of an initial debt to coerce trafficking victims to continue to work. Domestic violence is considered a risk factor particularly for sex trafficking and exploitation, and gender-based violence is believed to be a common experience of victims of human trafficking. Trafficking in women and girls gained attention in the United States and worldwide in the late 1990s, and is considered by many experts to be one of the leading criminal enterprises of the early 21 st Century. Studies have found that human trafficking occurs in every country and disproportionately affects women and girls. In 2009, a U.N. Office on Drugs and Crime (UNODC) study found that, on average, 65%-75% of human trafficking victims are women and 15%-25% are minors. The International Labor Organization (ILO) estimates that women and girls account for 56% of victims of forced economic exploitation, such as domestic service, agricultural work, and manufacturing—and 98% of victims of forced commercial sexual exploitation. The vulnerability of women and girls is due to a number of factors in source, transit, and destination countries. Among women victims, while there is no single victim stereotype, the majority of trafficked women are under the age of 25, with many in their mid- to late teens. Women trafficking victims also suffer higher rates of HIV/AIDS infection. In some cases, the fear of HIV infection among customers has driven traffickers to recruit younger women and girls, erroneously perceived by customers to be too young to have been infected. Many experts conclude that a country is more likely to become a source of human trafficking if it has recently experienced political upheaval, armed conflict, economic crisis, or natural disaster—phenomena that tend to have a disproportionate impact on women and children. Even in the absence of a major crisis, inadequate legal recognition and protection, discriminatory attitudes toward women, and a lack of educational and job opportunities for women and girls in many source countries place them at-risk for trafficking. Such circumstances often intersect with other racial, ethnic, and class disparities to make poor and minority women and girls especially vulnerable to trafficking. Families in some of the most impoverished countries have sold their daughters to brothels or traffickers for the immediate payoff and to avoid having to pay their dowries in the future. In transit and destination countries, female migrant workers are often at risk of becoming trafficked because of their precarious economic and political status. The combined victimization of women due to GBV and human trafficking poses a particular challenge to policymakers as the response may require a different course of treatment, addressing the crimes both separately and in relation to each other. Related U.S. Activities The U.S. government supports several types of anti-trafficking in persons (anti-TIP) initiatives overseas, some of which may address violence against women and girls. U.S. anti-TIP efforts are intended to combat a broad range of human trafficking forms and consequences—and there is no specific program or budget committed to combating trafficking of women and girls. While the U.S. government does not maintain a public strategy to combat trafficking in persons, U.S. anti-trafficking policy generally emphasizes prevention, protection, and prosecution, pursuant to the TVPA, as amended. Prevention programs combine public awareness campaigns with education and employment opportunities for those at-risk of trafficking, particularly women and girls. Protection programs directly support shelters, as well as train local service providers, public officials, and religious groups to identify and protect trafficking victims. Some programs also improve the prosecution rates of traffickers and help countries draft or amend existing anti-TIP laws and train law enforcement and judiciaries to enforce those laws. In addition, the U.S. Department of State releases an annual Trafficking in Persons (TIP) report that ranks foreign countries in "tiers" based on their level of commitment to combating human trafficking. For countries listed on the lowest tier ranking, Tier 3, the President has the option of withholding certain types of U.S. bilateral foreign assistance from such states. The 2011 TIP report identified 23 countries in Tier 3, up from 13 in 2010. All of these countries are described in the report as either a source or destination for the exploitation of women and girls. Many U.S. anti-TIP programs operate under the authority of the Victims of Trafficking and Violence Protection Act of 2000 or TVPA, as amended. In FY2010, the U.S. government obligated an estimated $85.3 million in international anti-trafficking assistance to foreign governments. U.S. agencies and departments supported global and regional anti-trafficking programs in more than 80 countries. This is up from $84 million in FY2009. The Trafficking Victims Protection Reauthorization Act of 2005 (TVPRA), P.L. 109-164 , authorized appropriations for anti-TIP programs in FY2006 and FY2007. The William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008, P.L. 110-457 , authorizes appropriations for FY2008 through FY2011. This most recent act, among other provisions, increased the technical assistance and other support to help foreign governments inspect locations where forced labor occurs, register vulnerable populations, and provide more protection to foreign migrant workers. Many U.S. anti-trafficking programs abroad are administered by the State Department, USAID, and the Department of Labor (DOL). In addition, the State Department PRM office funds programs focused on victim's assistance, return, and reintegration. The State Department's Office to Monitor and Combat Trafficking in Persons (G-TIP) and Bureau of Europe and Eurasian Affairs support prevention and public awareness campaigns, victim's assistance programs, and anti-TIP law enforcement programs. G-TIP and the Bureau of Education and Cultural Exchanges also sponsor TIP-related research and exchange programs. USAID has supported prevention programs that include education and income generation for potential victims, protection programs, including training and support for local victim services providers, and anti-TIP training for police, prosecutors, and judges. In addition, DOL's Bureau of International Labor Affairs works to provide assistance to child victims of trafficking, support public awareness campaigns, and build capacity for governments and service providers that combat TIP. Moreover, the Department of Justice's International Criminal Training Assistance Program (ICITAP) and Office of Overseas Prosecutorial Development, Assistance, and Training (OPDAT) provide some anti-TIP training for law enforcement and judicial officials overseas. Legal and Political Rights Some experts maintain that to successfully address VAW on a global level, national governments and communities must strengthen the capacity of their political, legal, and law enforcement institutions. In some countries, for example, legal and political institutions may hinder rather than help women seeking information, assistance, and protection from violence. Many experts maintain that addressing possible weaknesses in these institutions is especially crucial in some developing countries where national government infrastructures may be weakened by poverty, corruption, or other factors. Some have increasingly advocated the value of providing women with education and training to prevent and address violence and gender discrimination in both public and private life. Related U.S. Activities The U.S. government has supported programs that aim to strengthen the legal and political capacity of women in developing countries. Because of the cross-cutting nature of U.S. programs that address VAW, however, the number and cost of programs addressing its political, legal, and legislative aspects are difficult to quantify. In 2005, President Bush announced the creation of the Women's Justice and Empowerment Initiative (WJEI), a three-year, $55 million program to improve legal rights for women in Benin, Kenya, South Africa, and Zambia. Some observers, however, were concerned that the Administration delayed or did not meet its funding obligations for WJEI. The Middle East Partnership Initiative (MEPI), which is implemented by the Department of State and has been continued by the Obama Administration, has also focused some of its resources on VAW and women's empowerment. Specifically, it supported programs that provided training for judges and legal professionals on types of VAW, including honor killings and intimate partner violence. In April 2011, USAID announced the establishment of a new $14 million global grant program to increase women's involvement in peace processes as part of U.S. implementation on U.N. Security Council Resolution 1325 on women, peace and security. The State Department, USAID, and DOJ have supported other programs and activities that aim to strengthen the legal and political capacity of national governments. The State Department's Bureau of Democracy, Human Rights, and Labor (DRL), for example, funded initiatives in sub-Saharan Africa to support work on the rule of law, empowerment of women and youth, and democracy initiatives. The USAID Office of Women in Development (WID) supported the Women's Legal Rights Initiative (WLRI), which aimed to strengthen the capacity of women to work for greater economic and legal rights in Albania, Guatemala, Benin, South Africa, and Rwanda. A USAID WID program in Ethiopia also worked with community leaders to advocate the enforcement of laws that address harmful traditional practices such as bride abduction. Other reported U.S. activities include training specialists and advocates on how to effectively influence foreign governments to address VAW, and working with governments and NGOs in developing countries to draft legislation on women's rights. Moreover, the USAID Safe Schools program worked with partners at national, institutional, community, and individual levels to combat school-related gender-based violence. Selected International Activities International organizations, particularly the United Nations and its specialized agencies, support myriad mechanisms and programs that address VAW in all parts of the world. U.N. System Efforts103 In February 2011, an updated inventory of U.N. system anti-VAW activities identified 36 U.N. entities working to combat VAW on a global, national, or local level. Their activities range from large-scale interagency efforts to smaller grants and programs implemented by NGOs, national governments, or individual U.N. agencies. Agencies that work to combat VAW include the U.N. Development Program (UNDP), the U.N. Children's Fund (UNICEF), the newly established U.N. Entity for Gender Equality and the Empowerment of Women (UN Women), WHO, ILO, the Joint U.N. Program on HIV/AIDS (UNAIDS), the U.N. Office of Drugs and Crime (UNODC), the U.N. Population Fund (UNFPA), and the U.N. High Commissioner for Refugees (UNHCR). The U.N. Secretariat's Department of Peacekeeping Operations (DPKO) has also made efforts to address the problem of violence against women by U.N. peacekeepers. U.N. funds and programs are also engaged in interagency activities that address specific types and circumstances of VAW directly. U.N. Action, for example, draws 13 U.N. entities together to improve and better coordinate the U.N. system response to sexual violence before and after conflict. It operates through existing coordination mechanisms, including the Inter-Agency Standing Committee, and focuses on building capacity and training advisers in anti-VAW programming at the country level. It aims to strengthen medical and legal services to survivors and, in the long term, address gender imbalances. It also works to raise public awareness of sexual violence and urges governments to address the issues. Many U.N. member states are parties to international conventions and agreements that address VAW and women's rights, including the U.N. Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the U.N. Convention on the Rights of the Child (CRC), and the Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children (Trafficking Protocol). U.N. member states have also demonstrated concern for VAW through World Conferences on Women and resolutions adopted by the U.N. Security Council. Between 1974 and 1995, for example, U.N. member states—including the United States—participated in four World Conferences on Women. The Fourth Conference, which was held in 1995 in Beijing, China, identified VAW as a human rights concern and an obstacle to the achievement of women's equality. In addition, U.N. Security Council Resolutions 1325, 1820, 1888, and 1889 on Women, Peace and Security highlight the need to protect women and girls from human rights abuses and improve their participation in peace processes. Other International Efforts U.N. system anti-VAW activities are part of a much larger international effort composed of many international actors. NGOs, international financial institutions, and intergovernmental and regional organizations such as the International Organization for Migration (IOM), World Bank, and European Union (EU) develop, fund, and implement anti-VAW initiatives and programs at all levels of society. The World Bank, for example, supports pilot projects in Bolivia, Honduras, and Nicaragua to improve awareness of VAW in their health systems. The EU's Daphne II and Daphne III Programs, which complement existing EU member state efforts to combat VAW, support organizations that work to prevent or combat violence against children, young people, and women. In addition, regional organizations such as the Organization of American States (OAS) have adopted agreements that address violence against women. The OAS Inter-American Convention on the Prevention, Punishment and Eradication of Violence Against Women, for example, entered into force on March 5, 1994, and declares that "every woman has the right to be free from violence in both the public and private spheres." Parties to the Convention agree to condemn all forms of VAW and to pursue policies to prevent, punish and eradicate violence. The United States has not signed or ratified the Convention. Policy Issues for Congress For more than a decade, Congress has demonstrated an ongoing interest in addressing international violence against women. It has passed legislation addressing specific types of VAW, such as human trafficking and FGC, and has adopted legislation addressing VAW in different regions and countries, particularly in Africa and Asia. In some cases, Congress has incorporated VAW components into legislation and programs addressing international HIV/AIDS prevention and foreign military and law enforcement training. Congress has also committed resources to the U.N. Trust Fund in Support of Actions to Eliminate Violence Against Women, an international mechanism that addresses violence against women. In both the 110 th and 111 th Congresses, Members introduced, but did not pass, House and Senate versions of the International Violence Against Women Act, which sought to coordinate and provide additional funding for U.S. efforts to address violence against women overseas. When considering U.S. and international efforts to address violence against women, the 112 th Congress may wish to take a number of issues into account. Scope, Effectiveness, and Funding of U.S. Programs Some experts argue that U.S. government programs and initiatives do not sufficiently address international violence against women. They maintain that current anti-VAW funding levels do not reflect the scope of the problem, and, further, that many of the programs in place are not adequately funded. Others argue that many U.S. anti-VAW programs are short in duration and often not renewed—making it a challenge for programs to have a substantive long-term impact. Some also suggest that when highlighting U.S. efforts to combat VAW, the U.S. government places too much emphasis on programs with VAW components, as opposed to programs solely addressing the issue. This may create the appearance that the U.S. government commits significant resources to addressing international VAW—when, according to some, the United States does not do enough. A 2006 USAID report on gender-based violence and HIV/AIDS, for example, identified 243 PEPFAR programs that incorporate gender-based violence components in FY2006. Many are concerned that these components did not constitute a substantial anti-VAW effort. Some also contend that U.S. anti-VAW initiatives that were promised, such as the Bush Administration's proposed Women's Justice Empowerment Initiative (WJEI), were not fully funded or implemented. Integration into Foreign Assistance Programs and Additional Funding Some experts and policymakers question whether U.S. programs addressing VAW should be further integrated into U.S. foreign assistance programs. Supporters of increased integration maintain that, in addition to receiving attention as a stand-alone global health and human rights issue, VAW should be a component of broader U.S. foreign assistance efforts—including health services, development, human rights, foreign military training and law enforcement training, humanitarian assistance, and legal and political reform. They argue that additional funding is needed to adequately coordinate government-wide efforts and fund current and future U.S. programs and activities. Coordination Among U.S. Agencies and Departments Some have expressed concern that the U.S. government does not adequately coordinate its anti-VAW efforts. Many argue that in order to effectively combat the issue, the U.S. government should actively track its anti-VAW programs and establish mechanisms that will identify potential gaps and weaknesses in U.S. approaches. Some observers have reportedly found it difficult to assess the adequacy of U.S. efforts in this area because of the lack of anti-VAW program data collection, coordination, and analysis. Some have proposed that the government establish a discrete office or coordinating body to address U.S. efforts to address violence against women. Such actions, they argue, may be a valuable tool for policymakers who wish to prevent the possible duplication of U.S. anti-VAW activities and more effectively disseminate best practices among and within U.S. government agencies. Collaboration with International Organizations Some experts contend that providing financial and technical support to international organizations that address VAW is a particularly effective use of U.S. resources. They maintain that such cooperation benefits the United States because it allows the U.S. government to share anti-VAW-related costs and resources with other governments and organizations. Opponents argue that the U.S. government should focus on its own anti-VAW initiatives, and emphasize that U.N. activities addressing VAW, for example, may not always align with U.S. priorities. Were Congress to opt to use U.N. mechanisms to combat VAW, there are a number of programs and options that might be considered. The United Nations and its specialized agencies support a range of programs to eliminate violence against women. UN Women, for example, administers the U.N. Trust Fund in Support of Actions to Eliminate Discrimination Against Women, an interagency mechanism to fund and promote U.N. actions on violence against women. In recent years, some policymakers have recognized the Trust Fund as a possible tool for combating international violence against women. For a discussion of U.N. system programs and mechanisms that address VAW, see CRS Report RL34518, United Nations System Efforts to Address Violence Against Women , by [author name scrubbed]. Possible Program Implementation Challenges Finding ways to address VAW is a significant and ongoing challenge for the U.S. government and the international community. There may be a number of oversight issues of interest to the 112 th Congress. Infrastructure and Priorities Some governments, particularly those of developing countries, lack the political, legislative, and financial infrastructures to establish and maintain policies and programs to eliminate violence against women. A 2006 U.N. study on VAW found that 102 of the 192 U.N. member states lack domestic legal provisions addressing intimate partner violence. In recent years, efforts to address domestic violence have appeared to increase. A 2011 UN Women report, for example, found that 125 countries have adopted legislation on domestic violence, including almost all countries in Latin America and the Caribbean. Despite such improvements, significant obstacles remain. Many countries lacking domestic violence laws often face challenges such as poverty, health epidemics, and political unrest, may not view combating VAW as a policy priority—either because they do not view it as a significant problem or lack the resources to address it. Moreover, in some cases, national governments may pass laws that support anti-VAW policies, but ineffective legal, political, or law enforcement infrastructures may hinder their ability to implement and enforce laws and provide the necessary support services to be effective. Most Effective Approaches? Some experts disagree on the most effective methods to address violence against women. This lack of consensus may pose a challenge for policymakers who determine funding levels for and implementation of anti-VAW programs. There is debate, for example, over where to draw the line between the need to protect women's rights and to preserve their freedom of choice. Moreover, in the past, some experts have disagreed on how to most effectively allocate scarce resources for anti-VAW programs. Some maintained that anti-VAW programs should focus on providing treatment services for VAW victims, while others contended that programs should focus on prevention and the root causes of violence. Many experts have concluded, however, that the most effective anti-VAW approaches address both prevention and treatment. Program Evaluation Local, national, and international governments and NGOs implement thousands of anti-VAW programs annually, but few of these programs are evaluated for their effectiveness. Many anti-VAW programs tend to be short in duration (one to two years) and have small budgets, which some observers fear may leave little time and financial resources for evaluations. Consequently, some argue, experts and policymakers may have difficulty gauging a program's effectiveness. Some believe that this may lead to scarce resources being allocated to programs with limited impact. In recent years, some analysts have increasingly recognized the importance of program evaluation, and are taking steps to improve data collection instruments, share existing best practices, and improve coordination among funding and implementing organizations. Some experts have advocated for program donors and members of the policy community to provide additional funding for program evaluations when funding anti-VAW projects and programs or providing technical assistance. Lack of Comparable Data Existing VAW research offers little in the way of comparative data. Many researchers use different sampling techniques, methodologies, and criteria for defining VAW and conducting surveys—which may lead to inconsistent and varied findings. The lack of comparable data may present a challenge to policymakers attempting to identify the scope of the problem and implement programs to address the issue. Some researchers and policymakers have recognized this and are actively working to streamline survey processes and reporting procedures. Some have also called for the creation of comprehensive international indicators for violence against women. Current and Emerging Issues In the past three decades, the level and quality of research addressing VAW have increased as awareness of the problem has grown. This section highlights some current and emerging areas in VAW research, prevention, and treatment. Links to Security In recent years, a number of governments, international organizations, and NGOs have increasingly argued that the problem of international violence against women—particularly sexual violence in conflict situations—may be linked to national and international security. For example, U.N. Security Council Resolution 1820, unanimously adopted in 2008, affirmed that "effective steps to prevent and respond to ... sexual violence can significantly contribute to the maintenance of international peace and security." In August 2009, Secretary of State Hillary Clinton stated, "no nation can succeed in ... increasing security if it leaves out or leaves behind more than half of the population." Supporters of this position argue that the deliberate use of sexual abuse during armed conflict, which is designed to split families and communities apart, threatens public order. They further contend that sexual violence prolongs armed conflict and may undermine possibilities for long-term peace and security. Many emphasize that women may not fully participate in civil society because they are intimated by violence or the threat of violence. Some also argue that because sexual violence often destabilizes communities, it could create conditions that breed terrorism. The Role of Men and Boys Research on VAW has evolved to include not only treatment and prevalence but also root causes. As a result, many experts and policymakers have increasingly focused on the role of men and boys in preventing violence against women. Some NGOs and governments have developed school curricula, services, and public awareness campaigns to educate boys and men on the negative consequences of violence against women. These efforts range from rehabilitating perpetrators through counseling to establishing curricula for young boys that challenge traditional notions of masculinity. Violence and HIV/AIDS During the last decade, researchers and policymakers have increasingly explored the relationship between HIV/AIDS and violence against women. Studies have found that women in developing countries are disproportionately affected by HIV, with the United Nations estimating that two-thirds of new infections among people from 15 to 24 years old are among women. Global statistics indicate that women who are victims of violence are more likely to contract HIV than those who are not, leading some experts to conclude that there may be a correlation between rates of HIV in women and violence. Reportedly, women who experience or fear violence appear to be less likely to request or insist on using condoms during sexual encounters, increasing their risk of HIV and other sexually transmitted diseases. Women who are raped are also more susceptible to contracting HIV due to vaginal and anal tearing. Discrimination and Violence Some experts have linked VAW to discrimination. Many in the international community view violence as a form of discrimination against women and maintain that discrimination also causes violence. To successfully combat VAW, they contend, equal attention should be paid to the causes and impacts of female discrimination. Women who are discriminated against because of their sex may not receive a formal education or have access to healthcare. In many societies, women may not own property or have inheritance rights. Some analysts argue that these factors may contribute to an unequal power relationship between men and women—which in turn may lead to a cycle of violence. Possible Economic Impacts Some developed countries have undertaken studies to determine the economic costs of violence against women. Though the results vary because of differing methodologies, the studies generally found that the cost to society may be significant. Canadian researchers, for example, estimated that the cost of damage incurred by VAW in Canada is over $4 billion Canadian dollars. Most studies analyze both long-term and short-term cost variables such as treatment and services for women victims of violence (including healthcare and legal costs), and reduced employment and productivity levels because of violence against female employees. Some studies also address the economic impact of pain and suffering inflicted on women by violence, though estimating the costs of such intangibles can present a challenge to researchers. Moreover, many experts generally agree that because of VAW's complex and wide-ranging impact on society, it is likely that existing research underestimates the economic consequences of violence. Appendix. Selected U.S. Agencies and Offices/Bureaus that Address Global Violence Against Women

In recent years, the international community has increasingly recognized international violence against women (VAW) as a significant human rights and global health issue. VAW, which can include both random acts of violence as well as sustained abuse over time, can be physical, psychological, or sexual in nature. Studies have found that VAW occurs in all geographic regions, countries, cultures, and economic classes, with some research showing that women in developing countries experience higher rates of violence than those in developed countries. Many experts view VAW as a symptom of the historically unequal power relationship between men and women, and argue that over time this imbalance has led to pervasive cultural stereotypes and attitudes that perpetuate a cycle of violence. U.S. policymakers have generally focused on specific types or circumstances of VAW rather than view it as a stand-alone issue. Congress has authorized and appropriated funds for international programs that address VAW, including human trafficking and female genital cutting. In addition, past and current Administrations have supported efforts to reduce international levels of VAW—though many of these activities are implemented as components of broader foreign aid initiatives. There is no U.S. government-wide coordination of anti-VAW efforts. Most agencies and departments do not track the cost or number of programs with VAW components. Therefore, it is unclear how much money the U.S. government, or individual agencies, spend annually on VAW-related programs. Some experts have suggested that the U.S. government should re-examine, and perhaps enhance, current U.S. anti-VAW activities. They argue that VAW should not only be treated as a stand-alone human rights issue, but also be integrated into U.S. assistance and foreign policy mechanisms. Other observers are concerned with a perceived lack of coordination among U.S. government agencies and departments that address international violence against women. This report addresses causes, prevalence, and consequences of violence against women. It provides examples of completed and ongoing U.S. activities that address VAW directly or include anti-VAW components, and it outlines possible policy issues for the 112th Congress, including the scope and effectiveness of U.S. programs in addressing international VAW; further integrating anti-VAW programs into U.S. assistance and foreign policy mechanisms; U.S. funding for anti-VAW activities worldwide, particularly in light of the global financial crisis, economic recession, and subsequent calls to reduce the U.S. budget deficit; and strengthening U.S. government coordination of anti-VAW activities. Information on United Nations (U.N.) anti-VAW activities that previously appeared in this report is now published in CRS Report RL34518, United Nations System Efforts to Address Violence Against Women, by [author name scrubbed]. This report will be updated as events warrant.

Introduction Immigration has been a contentious issue since the nation's inception. During periods of substantial immigration, it has not been unusual for the native-born population to raise objections on many grounds—cultural, religious, ethnic, and economic. The focus of the latest national debate over high levels of immigration is largely on its economic effects, that is, whether immigration provides net economic benefits to society. The current debate has been concerned with the impact of immigration on the public budget and the private economy. In terms of budgetary effects, the question is whether immigrants receive more in public services than they pay in taxes. Immigrants also affect the private economy in their capacity as workers: if the admission of foreign-born workers lowers wages, which, in turn, results in more goods being produced at lower prices, then U.S. consumers would benefit; however, if immigration results in lower wages, U.S. workers would be harmed. The debate over immigration policy has been devoted more to the well-being of U.S. workers than to consumer welfare. The report opens with a discussion of how to analyze the impact of immigrants on the pay and job opportunities of native-born workers. It then uses this framework to examine and interpret the empirical literature on the subject. The report concludes with a discussion of policy implications. Immigration and the Labor Market Before the entrance of foreign-born workers to the U.S. labor market, the amount of labor that workers are willing to supply to employers is represented by the curve labeled S 1 in Figure 1 . The supply curve is upward sloping because workers are willing to offer more labor (e.g., work more hours) in response to higher real wages. Employers' demand for labor is represented by the curve labeled D, which slopes downward because each worker that is hired contributes less to the firm's revenues than the prior worker. A firm stops hiring workers when the last employee added to the payroll contributes as much to revenues as the wage the employee is willing to accept. This is represented by point A, with total pre-immigration employment equal to E 1 and natives' real wage equal to W 1 . The increase in the supply of labor due to the addition of foreign-born workers is represented by S 2 . At any given wage rate, more workers now are willing to offer their services to employers. Because the contribution of the last worker hired (E 1 ) to the firm's revenues is greater than his asking wage (W * , which is lower than the pre-immigration wage, W 1 ), the firm is willing to expand employment beyond E 1 . The firm once again continues to add workers to the payroll until the contribution of the last employee hired is just equal to the wage the employee is willing to accept. This is represented by point B, with total post-immigration employment equal to E 2 and the wage rate of native- and foreign-born workers equal to W 2 . In summary, supply-and-demand theory predicts that the real wage rate for all workers will fall from W 1 to W 2 after the entrance of immigrants to the U.S. labor market. In the process, total U.S. employment expands from E 1 to E 2 , native-born employment contracts from E 1 to E 3 , and foreign-born employment increases from zero to E 2 minus E 3 . Distributional Issues In this manner, immigration is expected to redistribute national employment. Because the lower post-immigration wage (W 2 ) makes work less rewarding, some native-born workers will find other activities more attractive. As a consequence, they leave the labor force and employment among the native-born population, as noted above, declines (from E 1 to E 3 ). The initial employment of foreign-born workers (E 2 minus E 1 ) expands as they assume a portion of the jobs formerly held by native-born workers (E 1 minus E 3 ). The latter has been referred to as the "displacement effect." The actual size of the displacement as well as the wage effect will depend upon how sensitive labor demand and domestic labor supply are to a change in the wage rate. In addition to reallocating national employment, immigration also is expected to redistribute national income by reducing the amount that accrues to native-born workers and increasing the amount that accrues to owners of capital and foreign-born workers. The difference between the pre- and post-immigration wages of native-born workers is not lost to the economy but is instead reallocated: part of the wages that previously went to native-born workers (W 1 ACW 2 ) now goes to capital holders and part (E 3 FCE 1 ) to foreign-born workers. In addition to its distributional effects, immigration is expected to expand national output and income. The increase in total employment (from E 1 to E 2 ), which results from the entrance of immigrants to the U.S. labor market, adds to national income (by E 1 ABE 2 ). Part of the increase (E 1 CBE 2 ) goes to foreign-born workers in the form of wages. The remainder of the increase in national income (the "immigration surplus," ABC) goes to nonlabor factors of production, such as owners of capital. The total benefits that capital owners derive from increased immigration is equal to the immigration surplus (ABC) and part of the wages transferred from native-born workers (W 1 ACW 2 ). The Model's Assumptions The simple neoclassical model just presented makes a variety of assumptions, including that labor is homogenous and that immigrants are perfectly interchangeable with (i.e., substitutes for) all native-born workers. Depending upon the socioeconomic characteristics of foreign-born workers, however, their effect on different groups of native-born workers could vary. If immigrants are close substitutes for a subset of native-born workers—the less skilled, for example—then only this group's wages or employment prospects might be depressed in the manner shown in Figure 1 . Alternatively, the demand for and returns to those production factors that complement immigrants' skills might rise as a result of the increase in immigrant employment (e.g., capital and skilled native-born labor). Thus, the skill composition of foreign-born vis-a-vis native-born workers is expected to influence which native-born workers' labor market outcomes might benefit from or be harmed by immigrant inflows. The model also assumes that, in the short run, immigration affects labor supply but not labor demand. However, by doing such things as investing financial capital they might have brought with them, using their human capital (e.g., entrepreneurial or innovative abilities), or purchasing U.S.-produced goods and services, immigrants may well expand aggregate output and increase labor demand beyond their own employment. If immigration were to raise the demand for labor in the U.S. economy, which would be represented by a rightward shift of the demand curve in Figure 1 , it would mitigate its potentially adverse consequences for native-born workers. In addition, the model does not take into account long-run adjustments that native-born workers might make in response to immigration. It assumes that the quantity and quality of native-born workers do not change after an inflow of immigrants. If some native-born workers perceive that their labor market prospects have changed for the worse, however, they might invest in their own human capital (i.e., undertake education and training). This could raise their productivity in their current jobs or it could cause them to change occupations. The wage prospects of native-born workers who increased their human capital investment would thus tend to rise—thereby offsetting any initial adverse effects of immigration—and to equalize the net gain for all native-born labor force participants. Native-born workers also can make long-run adjustments to immigration by moving across local economies. Factors of production—both labor and capital—are geographically mobile and they, like goods, can flow between areas thereby linking seemingly unconnected local markets. If, for example, some native-born workers who are close substitutes for immigrants saw their wage or job prospects being eroded, they might migrate to areas with fewer competitors and better opportunities. Native-born substitutes who are residing elsewhere might avoid high-immigrant communities, as well. Similarly, firms that rely heavily on less-skilled workers might have an incentive to open plants in high-immigrant communities if their labor costs would be lower and their profits higher than expanding in their current locations, thereby suppressing job opportunities in the communities where the existing plants are located. Over some period, then, these movements of labor, capital, and goods could spread immigration's labor market impacts from high-immigrant areas to the rest of the country. What Does the Empirical Literature Have to Say? Does the theory sketched in Figure 1 translate into fact? The model suggests that some native-born workers may be made worse off through lower wages or diminished job prospects because immigration increases the supply of labor available to the nation's employers. But, theory also suggests that immigration would make consumers (including the above-mentioned native-born workers) better off because it holds down wages and thereby holds down prices of goods and services. The empirical issue is how best to measure the existence and magnitude of the potential wage and employment effects of immigration that the model describes. Overview of the Literature Despite the greatly increased presence of foreign-born workers since the 1970s, the foreign-born make up less than one-fifth of U.S. labor force participants. Therefore, immigration is unlikely to have substantially affected the wage or job prospects of the average native-born worker. But, if immigrants are concentrated in particular geographic areas, then native-born workers who live in those communities and possess characteristics similar to those of foreign-born workers might be affected. Such an impact might be detected by comparing the wage and employment opportunities of selected groups of native-born workers in areas with high versus low concentrations of immigrants. Consequently, the first group of analyses reviewed below utilize data for a sample of cities or states disaggregated by immigrant share to estimate the relationship between an increase in their immigrant population and the labor market outcomes of U.S. workers thought to compete with foreign-born workers. Most of the inter-area studies have found little if any statistically significant and economically meaningful difference between the wage and employment experiences of native-born workers—overall, or disaggregated by race, gender, or skill level—in areas with high versus low concentrations of immigrants. A few spatially based studies have estimated a slight negative impact on a small share of the U.S. labor force—low-skilled natives , defined as persons who did not graduate from high school. It has been suggested that inter-area research does not provide a complete picture of immigration's effects, however: The spatially based studies correctly tell us that immigrants have no measurable effect on particular labor markets , but they are not informative about the economy-wide effects of immigrants." (Emphasis added.) As noted in the section of this report concerning the model's assumptions, mobility of production factors and goods could disperse the local effects of immigration across the nation. Differences between areas in the supply of labor by skill category would be minimized if, for example, many low-skilled U.S. workers in high-immigrant cities whose wages had been depressed quickly overcame the monetary, psychological, and information costs of moving, and relocated to cities with better opportunities (i.e., low-immigrant communities). The mobility of labor, capital, and goods between areas thus could make it difficult for cross-city studies to detect the labor market consequences of immigration. This alleged deficiency of the inter-area approach has prompted research into immigration's effect on the aggregate (i.e., national) labor market. The second group of studies discussed below utilize national data to assess the impact of immigration on native-born workers by skill level. Various explanations have been offered for the increase since the 1970s in wage inequality (i.e., workers increased concentration at the lower end of the wage distribution). Although skill-biased technological change is considered the leading contributor, others include international trade, the level of the federal minimum wage, changes in wage-setting institutions, and immigration. Na tional analyses typically have estimated that, by immigration ' s changing the nation ' s skill composition toward relatively more inexperienced workers who lack a high school degree than otherwise would have been the case , immigrants have harmed the labor market prospects of low-skilled native-born workers . However, the extent of the adverse wage effect appears sensitive to the definition of low-skilled workers according to other national and cross-city studies . The economy-wide studies that have examined the relationship between immigration and changes in the relative proportions of labor by skill category are not without their own drawbacks. Early studies that utilized the "factor-proportions" methodology were faulted because they did not directly estimate the responsiveness of natives' wages to the immigration-induced increase in the relative supply of low-skilled workers, and for this reason, might overstate immigrants' wage effect on U.S. workers. The more recent work of researchers who take a national approach has responded to this, among other, criticisms. Economy-wide analyses also might overstate the impact of immigration in the long run if, for example, they do not take into account natives adjustment to the increased presence of immigrants by completing more years of schooling or choosing different fields of study which takes them out of competition with immigrants for jobs in which foreign-born workers have made substantial inroads. The assumption by proponents of the national approach—that native-born "substitutes" for and "complements" of foreign-born workers quickly diffuse the effect of immigration across the country—is suspect, as well, because other economic shocks typically have been followed by longer adjustment periods. In addition, the precise relationship between immigration and internal labor migration remains unresolved: studies find a negative, a positive, or no connection between the in- or out-migration of native-born workers and an area's immigrant concentration; and they do not establish causality (i.e., that the observed migration patterns of natives are due to immigration's impact on the labor market). Based on its review of the inconsistent results provided by inter-area and national studies through the mid-1990s, the National Research Council concluded that [I]mmigration has only a small adverse impact on the wage and employment opportunities of competing native-born groups. This effect appears not to be concentrated in the local areas where immigrants live; much of it is probably dispersed across the United States as competing native workers migrate out of the areas to which immigrants move. The migration of native labor and native capital across cities (to take advantage of whatever differential economic opportunities initially arise from immigration), as well as the beneficial effect that immigrant groups have on other native groups, suggest the unlikelihood of detecting any sizable negative effect on native workers. The Findings of Studies Using a Spatial Approach Bean, Lowell and Taylor estimated the effect of authorized and unauthorized Mexican workers on the earnings of native-born workers in metropolitan labor markets in the southwestern United States in 1980. Regardless of the native-born group in question (e.g., black males, non-Hispanic white males, native Mexican males, and women), the numerical impact of Mexican male immigrants on natives' annual earnings was small. Using an alternative estimation procedure, the researchers found that legal Mexican immigrants slightly lowered the earnings of native-born women and native-born non-Hispanic white men while not affecting the earnings of native-born minorities. In contrast, they estimated that unauthorized Mexican immigrants slightly raised the earnings of all groups studied except Mexican-origin men. The authors explained these results by suggesting that unauthorized Mexican immigrants do not compete with native-born workers as legal immigrants appear to—unauthorized Mexican immigrants may take "secondary" jobs, which are low-paying and unattractive to native-born workers, while legal Mexican immigrants may possess characteristics needed to compete with native-born workers for "primary" jobs. Nonetheless, regardless of the estimation procedure used, the impact of authorized and unauthorized Mexican workers on the annual earnings of native-born workers was small. LaLonde and Topel found no evidence that immigrants reduce the annual earnings of young native-born black and Hispanic males (i.e., the relationship is statistically insignificant). Because the results were about the same with either weekly or annual earnings as the outcome variable, they surmised that immigrants also have an inconsequential impact on the amount of time worked (i.e., number of weeks worked) by the two native-born groups. A study by Altonji and Card focused on the implications of increased immigration for less-skilled native-born workers (i.e., those with 12 or less years of schooling). When the researchers accounted for the location decisions of immigrants and compared differences over time in inter-area wage growth, they found that immigration significantly reduced the earnings of the less-skilled group. Altonji and Card analyzed immigration's impact on the employment outcomes of less-skilled natives as well. They concluded that, on balance, inflows of foreign-born labor had neither a large nor systematically positive or negative impact on the job opportunities of less-skilled native-born workers. They did find some evidence of displacement among native-born workers in high-immigrant cities in those industries that employed relatively large and increasing numbers of immigrants between 1970 and 1980, including low-wage manufacturing industries (e.g., apparel), service industries (e.g., private households), and agriculture. Because the employment outcomes of less-skilled natives across all industries were unaffected, however, the authors suspected that the job losers were able to get new positions in other industries or in other metropolitan areas. Utilizing data from the 1990 census, Card subsequently analyzed the employment effects of recent immigrants on native-born workers and on earlier immigrants employed in the same occupation-based skill groups. He estimated that immigrants admitted to the United States between 1985 and 1990 who were employed in laborer and low-skilled service occupations slightly reduced the employment rates of natives and older immigrants in this lowest paid, least educated group. Only in the few cities in which the inflow of foreign-born low-skilled competitors during the 1985-1990 period "expanded their unskilled labor forces by as much or more than the Mariel boatlift affected the Miami labor market" did immigration substantially lower the employment rates of young, less-educated natives. Card similarly found that, based upon data from the 2000 census, an increase in the relative supply of male immigrants who failed to complete high school had only a small adverse effect on the relative employment of male native-born dropouts. In contrast, he estimated no relationship between a city's increased supply of low-skilled male immigrants and the wages of their native-born competitors. Card's research led him to suggest that those industries in high-immigrant areas which rely heavily on low-skilled labor (e.g., agriculture; textiles, apparel, and footwear; and low-skilled service industries) have been able to absorb the increase in immigrant supply without harming similar native-born workers. Schoeni addressed some of the shortcomings of the spatial approach by examining a period of time (the 1970s and 1980s) rather than one year, as is true of most of the other cross-sectional studies discussed above. He also adjusted for cost-of-living differences between cities with varying immigrant concentrations and for the influence of immigrants' location decisions, both of which could bias the results. Schoeni found evidence that immigration has the largest adverse effect on the earnings and employment outcomes of natives with less than a high school degree. To a lesser degree, the labor market experiences of high school graduates appear depressed as well. For example, increased immigration during the 1970s might have caused a 2.2% decline over the decade in the real (inflation-adjusted) wage of low-skilled white men, and increased immigration during the 1980s might have led to a 1.18 percentage point rise in unemployment over that period among low-skilled black men. Similarly, heightened immigration during the 1970s might have prompted a 7.5% decrease in the real weekly wage of low-skilled black women, and heightened immigration during the 1980s might have produced a 0.55 percentage point increase in unemployment among low-skilled white women. Thus, the form of the labor market effect may have changed over time: in the 1970s, the wage of native-born workers bore the brunt of immigration's impact; in the 1980s, the impact shifted to native-born workers' employment according to Schoeni's analysis. While his results support the notion that immigration imposes considerable costs on native-born workers with 12 or less years of schooling, Schoeni concluded that its economy-wide effects are small, because in 1990 unaffected workers (i.e., those with more than a high school diploma) made up more than half of all workers. Johannsson and Weiler similarly covered a span of time (1998-2002) and took the location decisions of low-skilled immigrants into account. They estimated that metropolitan areas experiencing an increase in their low-skilled immigrant population have a significantly lower rate of labor force participation among similar native-born workers. The withdrawal of natives from the local labor force may partly explain the markedly reduced unemployment rate among low-skilled natives in areas with increased immigration. The researchers suggest that "lower-skilled older natives with considerable mobility costs may opt to reduce their participation rather than out-migrate in response to adverse local labor market shocks" such as an immigration-induced increase in the supply of labor. The Findings of Studies Using a Nationwide Approach Topel analyzed the local supply and demand factors that might have affected the wage of low-skilled compared to high-skilled men during the 1980s. Not only did he find that the wage gap between the two groups widened in every region but that this happened at different rates in different regions. In particular, the West recorded the largest decline in low-skilled men's relative wage. Topel estimated that if it were not for the increased presence of immigrants in the West's labor force, the supply of low-skilled compared to high-skilled men would have fallen by more than it actually did, and the relative wage of low-skilled men consequently would not have fallen by as much as it did. He concluded "... that immigration has played ... [a significant] role in affecting the supply and welfare of low-skilled men," especially in the West where it might have reduced their relative wage by some 10%. Enchautegui examined how much of the decline during the 1980s in the level of real (inflation-adjusted) wages among workers without a high school diploma was due to the influx of low-skilled foreign-born labor. She estimated that, at the national level, the increased presence in the U.S. labor force of low-skilled foreign-born workers explained just 4% of the 13% decline in real annual earnings of workers with less than 12 years of schooling. From a national perspective, then, the increase in the supply of foreign-born workers without a high school degree had little impact on the erosion in low-skilled workers' earnings during the 1980s. But, the explanatory power of the heightened presence of low-skilled foreign-born workers appears to increase with an area's immigrant density: In areas of low immigration, only 2 percent of the wage change can be attributed to increased immigrant representation in the work force. In areas of medium immigration, 14 percent of the wage drop is due to the larger immigrant share among the low skilled, while in areas of high immigration, the influx of immigrants accounts for 43 percent of the 7-percent decline in wages experienced in these areas.... In Los Angeles [an example of a high-immigrant area], the change in the proportion of natives and immigrants accounted for more than half of the 9-percent decline in real wages of low-skilled workers. Another study directly examined immigration's labor market impact by relating occupational differences in immigrants' share of employment to the wages of natives. Although it could not address whether foreign-born labor contributed to the decline over time in the wage level of low-skilled workers because the research covered just one period, the cross-occupation analysis was conducted on a nationwide basis so it is not susceptible to the previously discussed drawback of the inter-area approach. Camarota estimated that as the share of foreign-born employment in an occupation rose, the earnings of native-born workers fell significantly. Specifically, for every 1% increase in immigrant composition in an occupation, the weekly wage of the average native-born worker in that occupation declined by 0.5%. The data suggest that the largest negative effects were felt by low-skilled labor: among all natives with 12 or less years of schooling, a 1% increase in the employment share of foreign-born workers reduced weekly wages by 0.66%; among all natives in low-skilled occupations (i.e., jobs typically performed by workers with no more than a high school degree), a 1% increase in immigrant composition lowered weekly wages by 0.8%. Borjas, Freeman, and Katz found that immigration played a statistically significant part in the declining relative wage of low-skilled workers. But they also concluded that it had little effect on either the growth in wage inequality or in the wage gap between college and high school graduates. The economists estimated that, between 1980 and 1995, immigration expanded the relative supply of workers with less than a high school degree by some 15%. If immigration had not been skewed in this manner, the relative wage of the scarcer low-skilled natives would have increased (assuming unchanged employer demand). By becoming a major supplier of low-skilled workers and thereby changing the nation's skill endowment from what it otherwise would have been, immigration may have accounted for some 44% of the decrease over the 15-year period in the relative wage of workers with less than 12 years of schooling. The economists further estimated that immigration lowered the wage of low-skilled workers by about 5% between 1980 and 1995. Borjas, in more recent analyses, made refinements to the national approach that address some of the previously mentioned criticisms. He found that an increase in the supply of immigrant labor by skill group (defined by educational attainment and years of work experience) over the 1960-2000 period had a significantly adverse impact on the wages of native-born men with whom they competed: a 10% increase in the number of workers in a given skill group reduced the absolute weekly wage of similar native-born males by some 4%, and their employment (i.e., weeks worked), by some 3%. Even after allowing for the positive earnings impact that low-skilled (high-skilled) immigrants can have on native-born workers in high-skilled (low-skilled) groups, Borjas estimated that immigration over the 1980-2000 period reduced the wage of native-born workers in each skill group. Young (i.e., less experienced) native-born males without a high school degree appear to have experienced the greatest negative wage effect, which seemingly was due to the entrance into the United States between 1980 and 2000 of predominantly low-skilled authorized and unauthorized Mexican workers. The author found that the overall wage impact of increased immigration was more modest over the long run as the capital stock adjusted to the greater labor supply. Ottaviano and Peri similarly studied the effect of immigration between 1990 and 2006 on native-born workers by taking into account both education and experience, but reached very different conclusions. This is in part because they found workers with at most a high school degree were close substitutes for those without one, which diminishes the competitive effect of immigrants on the least skilled native-born workers. The two researchers estimated that, in the long run, the average real wage of U.S. workers increased slightly (by 0.6%) as a result of immigration over the 1990-2006 period. The short-run wage impact on native-born workers (as of 2007, before capital had fully adjusted to the increase in immigrants) was negative but small (0.4%). Ottaviano and Peri further found a smaller real wage loss (0.7% in the short run) among the least educated U.S. workers than had previously been derived, and a positive but very slight effect (0.3%) in the long run for this group. Ottaviano and Peri further estimated that recent immigrants had the largest negative effect (6%) on previous immigrants. In January 2009, Card presented a lecture to the American Economic Association in which he found common ground between cross-city studies and Ottanviano and Peri's national study. Based on city-specific labor market measures in 1980, 1990, 2000, and 2005/2006 derived from the 1980-2000 decennial censuses and the 2005 and 2006 American Community Surveys, Card estimated that workers with less than a high school education are perfect substitutes for workers with a high school education and that "high school equivalent" workers are imperfect substitutes for "college equivalent" workers. The findings from these cross-city analyses argue in favor of using two education classes, as was done by Ottaviano and Peri, when estimating the impact of immigration on wages rather than four education classes, as was done by Borjas (who treated dropouts separately from high school graduates). In addition, Card estimated that immigrants and native-born workers in the same education groups are imperfect substitutes, which Ottaviano and Peri assumed in contrast to Borjas assuming they are competitors. Card's results suggest that the inflow of immigrants since 1980 has had a small impact on the relative wages of native-born workers in different skill groups. "The main explanation for this somewhat surprising conclusion is that under a two-education-group model, what matters for the structure of wages is the relative fractions of immigrants and natives who are high school-equivalent and college-equivalent workers. U.S. immigrants are only slightly under-represented in the college-equivalent group relative to natives (36% versus 41%). Compared to the distribution among natives alone immigrant arrivals have hardly distorted the relative fraction of college-equivalent workers in the economy, and have therefore had little impact on the college-high school wage gap." Borjas, Grogger, and Hanson examined the relationship between immigration and black men's wages, employment opportunities, and incarceration rates. They estimated from 1960-2000 census data that when immigration led to disproportionate increases in the supply of labor to particular skill groups, the earnings of black and white men in the skill group declined by about the same percentage. But, the employment rate of black men fell and the incarceration rate of black men rose to a greater extent than the changes experienced by white men. The researchers emphasized that although immigration contributed to the large changes in employment and incarceration rates among black men since 1960, there would have been a substantial decrease in black employment and increase in black incarceration rates in the past four decades in the absence of immigration. Policy Implications Some policymakers have proposed further strengthening the U.S. border with Mexico to curtail the entrance of unauthorized aliens and improving enforcement of more stringent sanctions against employers who hire these predominantly low-skilled workers, based in part upon the belief that immigration does, in fact, have substantial adverse consequences for low-skilled native-born workers. It also has been suggested that Congress address the distributional issue some empirical studies have raised by changing the composition of legal immigration. If, for example, individuals permanently admitted to the United States under the employment-based category are largely high-skilled, while those admitted under one or more of the other categories (i.e., family preference, immediate relatives, diversity, or refugees and asylees) are largely low-skilled, then the current numerical limits on the latter might be lowered to mitigate immigration's presumed adverse consequences for less-skilled natives. Indeed, if the skill levels of immigrants do differ by admission category, then an across-the-board cutback in the number of foreign-born persons allowed into the United States would not be an effective remedy for the poor labor market performance of low-skilled natives in recent decades. Only if foreign-born workers who enter under each of the categories has roughly the same skill distribution would an untargeted reduction in the overall level of immigration assist less-skilled U.S. workers. Yet, changing the composition of immigration may not be the most effective way to improve the plight of low-skilled native-born workers. As noted earlier in this report, several explanations have been offered for the increase in U.S. wage inequality. If other factors (e.g., skill-biased technological change) have played a greater role than the inflow of low-skilled foreign-born workers, then curtailing the immigration of this group may not much affect the wage and employment outcomes of low-skilled U.S. workers. Moreover, a policy that shifts the composition of foreign-born persons who legally enter the United States—through permanent admissions or temporary worker programs—toward the more skilled might have unintended consequences. An increase in the supply of foreign-born workers to high-skilled occupations might adversely affect the wage and job opportunities of native-born workers in those fields and dissuade students from majoring in them. Despite the considerable debate that preceded amendments to the professional specialty (H-1B visa) guest worker program made by Congress to increase the arguably inadequate supply of native-born workers qualified to fill information technology jobs, little research has been undertaken to assess the effects of the policy changes on native-born workers. Perhaps not surprisingly, in light of the conflicting results of the previously discussed literature, there is no consensus among the few studies that have looked specifically at the impact on high-skilled native-born workers of an increase in the supply of comparable foreign-born workers. One researcher tentatively concluded that while allowing into the country H-1B workers with information technology (IT) skills may not depress the wages of U.S. workers in computer-related occupations, the program might adversely affect the group's unemployment rate. Another analysis similarly estimated that an increase in temporary and permanent immigrants does not negatively affect the wages of U.S. workers in professional occupations. Although a third study determined that H-1B workers in computer programming occupations typically are paid much less than U.S. workers similarly employed in the same state, perhaps the number of H-1B programmers in a given state is not sufficiently large to lower the wages of native-born programmers in a given state. In contrast, yet another empirical study found that an increase in the supply of labor to a particular doctoral field caused by an influx of foreign students reduced the earnings of competing science and engineering Ph.D. students who graduated at about the same time. The economist attributed "roughly half of the adverse wage impact of immigration on high-skill labor markets ... to the increased use of low-pay postdoctoral appointments [in science and engineering] as a way of adjusting to the increase in [labor] supply." If the composition of foreign-born workers were shifted toward the high-skilled, it could make it more difficult to utilize one means commonly suggested to mitigate any adverse distributional effects of immigration. Students and low-skilled native-born workers often have been encouraged to become complements of rather than substitutes for foreign-born workers. Expressed differently, they have been urged to obtain a bachelor's degree or undertake retraining at community colleges, for example, to acquire higher order skills expected to remove them from competition with low-skilled immigrants. But with the admission of more high-skilled foreign-born workers, just obtaining higher skill levels may not be sufficient to avoid potential wage suppression and displacement, based upon the results of at least some of the above-described empirical literature.

The large influx of immigrants in recent decades has led to an equally long debate over their effect on the labor market outcomes of native-born workers. Economic theory posits that an increase in the supply of labor, such as from immigration, will reduce the wage employers are willing to pay all workers (native-born and foreign-born) in a given labor market. As a result, some of the workers who had been earning a higher wage before the increase in labor supply will be unwilling to accept a lower wage and they will leave that labor market. The economic model assumes, however, that labor is homogenous. But, workers enter the United States possessing different skill levels and they therefore will compete with (i.e., put downward wage pressure on) native-born workers possessing very similar skill levels. Economists have conducted empirical studies to measure the labor market effects of immigration that take into account the skill composition of foreign-born vis-à-vis native-born workers. They have employed two different approaches to do so. The concentration of foreign-born workers in certain cities and skill groups led some economists to posit that immigration's greatest impact would be felt by similarly skilled native-born workers living in those areas. Studies thus have compared differences in labor market outcomes between native-born workers who live in high- versus low-immigrant areas and who most often compete for jobs with foreign-born workers; given the composition of the recent immigrant flow, these would be low-skilled U.S. workers. Most inter-area analyses have found scant evidence that foreign-born labor adversely affects the labor market prospects of U.S. workers in general. A few cross-city studies have estimated a slight negative impact on low-skilled natives. Other economists have argued that the cross-city approach underestimates immigration's consequences because it assumes that labor, capital, and goods do not rapidly adjust to the immigration-induced increase in the supply of labor. If, for example, native-born competitors quickly leave labor markets in high-immigrant areas, their movements would spread any wage effects due to immigration across the nation, and thereby make it difficult for spatially based research to detect any impact. Some analysts, therefore, have concluded that immigration's labor market effects can best be identified by examining data at the national level. For many years, national studies estimated that immigration in the short-run substantially reduced the wages of native-born workers in each skill (education-experience) group. Native-born workers who lacked a high school diploma were determined to be the most severely affected. More recent national studies have estimated the adverse wage effect of immigration in the short-run to be much smaller, even among the least skilled. The different results in part stem from the finding that workers with at most a high school degree are close substitutes for workers without a degree, which dampens the competitive effect of immigration on the least skilled workers. A 2009 study that utilized cross-city data similarly estimated that the two groups do not compete with one another; as a result, any adverse effect of low-skilled immigrants is not concentrated on the relatively few native-born workers who are high school dropouts.

Introduction Members of Congress and the Obama Administration are engaged in debate over short- and long-term efforts to sustain recovery and further stimulate the economy, reduce the federal budget deficit, and stabilize the national debt. Within that debate, policymakers hold different points of view on the optimal size and composition of federal spending and revenues. Adding to the issue's complexity, this year's budget discussions are occurring against the backdrop of the Budget Control Act of 2011 (BCA, P.L. 112-25 ), which put in place budget enforcement mechanisms and procedures intended to achieve a specified amount of deficit reduction over a 10-year period. President Obama submitted a detailed FY2013 budget proposal to Congress on February 13, 2012. The House Budget Committee subsequently reported a concurrent resolution on the FY2013 budget ( H.Con.Res. 112 ), based on a proposal by Committee Chairman Paul Ryan, which the full House passed on March 29. Several Members of the Senate have offered budget proposals, including a resolution by Budget Committee Chairman Kent Conrad that is based on recommendations of the National Commission on Fiscal Responsibility and Reform (also known as the Simpson-Bowles Commission). The Conrad/Fiscal Commission resolution was discussed at a markup session on April 18, but no vote was taken and the measure has not been formally introduced. On May 16, the Senate voted on motions to proceed to consideration of several alternative budget resolutions; however, none was agreed to. Although the House and Senate have not agreed on a concurrent resolution on the FY2013 budget, the FY2013 appropriations process is underway in both chambers. Moreover, on May 15, the House passed the Sequester Replacement Reconciliation Act ( H.R. 5652 ), which is intended to repeal and replace the automatic spending reduction (or "sequestration") scheduled for January 2, 2013 (discussed later in this report) with specific mandatory spending reductions over the period FY2012-FY2022. Purpose and Organization of Report This CRS report highlights and compares projected spending trends and policy initiatives in three distinct proposals— the President's FY2013 budget, the House budget resolution, and the Conrad/Fiscal Commission resolution —which represent different viewpoints about spending and revenues. The report focuses specifically on proposals affecting programs in the six functional budget categories that comprise the human resources "superfunction." Collectively, these six functions accounted for a majority (67%) of federal outlays in FY2011 (see Figure 1 , later in the report). The six human resources functions (and their function codes) are Education, training, employment, and social services (Function 500); Health (primarily Medicaid) (Function 550); Medicare (Function 570); Income security (Function 600); Social Security (Function 650); and Veterans benefits and services (Function 700). The purpose of this report is to give a broad overview of proposed spending trends and policy recommendations for human resources programs. The report does not discuss the broad outlines of the three proposals, such as their projected levels of total spending, revenues, or deficits. The report is not comprehensive in its coverage of all provisions in the proposals, nor does it attempt to quantify the costs or savings associated with specific proposals, or track their legislative status. This report begins by briefly explaining the concepts of budget "functions" and "superfunctions" and then provides a short discussion of the Budget Control Act of 2011 ( P.L. 112-25 ). The BCA placed limits on discretionary spending for FY2012-FY2021 and established an automatic spending reduction procedure. It is necessary to understand how the Congressional Budget Office (CBO) treated these BCA provisions in developing its current law baseline projections and, subsequently, how CRS adjusted this baseline to prepare and present the analysis in this report. The report then compares projected federal spending under current law for the human resources superfunction as a whole—and for each of the six functions within—with the President's budget proposal, the House budget resolution, and the Conrad/Fiscal Commission resolution. Each section compares the CBO current law baseline for FY2012 through FY2022 with the President's FY2013 budget proposal (as re-estimated by CBO) and the House and Conrad/Fiscal Commission budget resolutions, in constant FY2012 dollars. Key policy initiatives proposed by the Administration and assumed in each of the budget resolutions are identified. An Appendix to the report includes supporting tables. What Are Budget Functions and Superfunctions? The federal budget is divided into 20 functional categories (e.g., national defense, health, energy, transportation), which are further divided into subfunctions. These functional categories provide a broad statement of budget priorities and facilitate the analysis of trends in related programs; they are used for informational purposes in the congressional budget process. Some budget functions are grouped together into budget "superfunctions" (e.g., national defense, human resources, physical resources). Congress begins formal consideration of the annual budget resolution after the President submits his detailed budget request for the coming fiscal year. The congressional budget resolution is not signed by the President and does not become public law. Rather, it is an internal blueprint for Congress to use in its consideration of appropriations acts and other legislation for the coming fiscal year. The resolution establishes enforceable levels for projected spending (budget authority and outlays) and revenues, along with an estimate of the deficit (or surplus) and the national debt. The resolution includes amounts for the coming fiscal year and projections for subsequent years. Unlike the President's budget request submitted each February, the congressional budget resolution does not specify spending levels by program but instead establishes aggregate spending amounts for each of the functional categories referred to above. These aggregate amounts are based on certain "assumptions" about spending for specific programs. However, these assumptions are not typically specified in the resolution, nor are they binding on the appropriations committees or committees with jurisdiction over mandatory spending or tax provisions. Key assumptions are sometimes identified in the Budget Committee report that accompanies the concurrent resolution. The congressional budget process includes tools for enforcing the annual budget resolution. Members of Congress may raise points of order to bar consideration of legislation that would violate the spending ceilings or revenue floors in the resolution, among other provisions. Congress also has used the "reconciliation" process to implement budget policy. For example, the House-passed budget resolution for FY2013 ( H.Con.Res. 112 ) contains reconciliation instructions to six authorizing committees to find a specific amount of deficit reduction over 10 years. The committee report accompanying the budget resolution identified "illustrative" policy options by which to achieve these savings, but the committees are free to report whatever changes they want within their jurisdictions in response to a reconciliation directive. In response to the reconciliation instructions in H.Con.Res. 112 , the six committees reported their recommendations to the House Budget Committee, which assembled them into a single reconciliation bill ( H.R. 5652 ) that was passed by the House on May 15, 2012. The Budget Control Act and the CBO Baseline The BCA, enacted in August 2011, provided for increases in the debt limit and established procedures designed to reduce the federal budget deficit. Two components of the BCA are relevant to understanding the CBO "current law" baseline for human resources programs, as it is presented in this report. First, Title I of the BCA established enforceable limits on discretionary spending for FY2012 through FY2021. For FY2012 and FY2013, the law provided separate amounts for discretionary spending in the "security" and "nonsecurity" categories. "Security" was defined broadly to include the Departments of Veterans Affairs (VA), Homeland Security (DHS), and State, in addition to the Department of Defense and certain other activities; and "nonsecurity" was defined as everything else. For FY2014 and subsequent years, no distinction was made between security and nonsecurity; that is, Title I of the law established a single discretionary spending limit for each of those years. Second, the BCA established a Joint Select Committee on Deficit Reduction, tasked with developing legislation by November 23, 2011, to achieve $1.5 trillion in deficit reduction over the FY2013-FY2021 period. If Congress failed to pass such legislation by January 15, 2012, reducing the deficit by at least $1.2 trillion, a series of automatic spending reductions would be triggered, specified in Section 302 of the act. In fact, the Joint Committee did not meet its deadline and the necessary legislation was not enacted. Thus, under current law, the first automatic spending reductions are scheduled to take effect on January 2, 2013. These automatic procedures include sequestration of mandatory spending for each of FY2013-FY2021, a one-year sequestration of discretionary spending for FY2013, and lower discretionary spending limits for FY2014-FY2021. In addition to being lowered, the original discretionary spending limits (discussed above) are redefined so that security now consists only of budget Function 050 (which is primarily the Department of Defense). Spending reductions are to be equally divided between security and nonsecurity, which means that half the reductions triggered by failure of the Joint Committee process will come primarily from the Department of Defense, and the other half will come from the remainder of the federal budget. It should be noted that a significant amount of nonsecurity spending is either exempt from the sequestration process or otherwise subject to a special rule that limits the size of the reduction. In its overall current law baseline estimates and projections, CBO incorporated the discretionary spending limits imposed by Title I of the BCA (referred to in this report as the "original BCA spending limits") and the additional spending reductions triggered by failure of the Joint Committee process (referred to as the "additional BCA spending reductions"). However, with limited exceptions, insufficient information was available for CBO to estimate the impact of these BCA provisions at the budget function level. Thus, CBO allocated all budgetary effects of the BCA—other than those related to defense and Medicare—to budget Function 920 (allowances), which is used, among other purposes, as a placeholder category for budgetary effects not yet assigned elsewhere. This means that CBO's baseline for the human resources superfunction, and for each of the individual functions within, does not reflect the original discretionary spending limits or the additional spending reductions of the BCA. The sole exception in the human resources area is Function 570 (Medicare), where CBO was able to estimate the amount likely to be sequestered under the BCA provisions, which limit sequestration of most Medicare spending to 2%. Adjustment and Limitations of the CBO Current Law Baseline To present a consistent picture of CBO's current law baseline for purposes of this report, CRS has adjusted the baseline for Medicare (Function 570) and the human resources superfunction total, to eliminate the projected effects of Medicare sequestration. (CBO's unadjusted baseline for Medicare is presented in the Appendix .) This means that the CBO current law baseline for each of the six human resources budget functions , as presented in this report, does not reflect any of the spending reductions that are scheduled to occur under the BCA for the period FY2013 through FY2021. It is important to note that most spending in the human resources superfunction is mandatory, and most of this mandatory spending is exempt from sequestration (see footnote 14 ). Thus, for the individual human resources budget functions that are primarily or exclusively composed of mandatory spending, the CBO baseline would likely not change significantly if effects of the BCA were shown. CBO's baseline for budget functions dominated by discretionary spending, however, would change—and be somewhat lower—if BCA provisions were shown. (As noted above, these BCA provisions include both the original discretionary spending limits and the additional reductions; i.e., sequestration of discretionary spending in FY2013 and a lowering and redefining of the original limits for FY2014-FY2021.) The function that could be most affected is Function 500, because it includes primarily discretionary spending for education, training, employment, and social services. Most of this spending is not exempt from sequestration in FY2013, and could also be affected by the lower discretionary spending limits that would govern FY2014 and subsequent years. Function 700 also includes primarily discretionary spending, for veterans benefits and services. All programs administered by the VA are exempt from sequestration; however, they could be affected by the lower discretionary spending limits in FY2014 and subsequent years. In addition to the limitations described above, readers should note that CBO's current law baseline has not yet been updated to reflect the Supreme Court's June 28 decision on the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 ). CBO is currently reviewing that decision to assess its impact on federal spending and revenues. The Human Resources Superfunction Historical Trends As noted earlier and shown in Figure 1 , the human resources superfunction accounts for a majority of federal spending, representing 67% of all federal outlays in FY2011. Figure 2 shows the historical trend in outlays for the human resources superfunction, as a share of the national economy in comparison with other major categories of the federal budget, from FY1962 through FY2011. The figure illustrates the growing importance of the human resources component of the budget over time. Specifically, the figure shows that human resources spending accounted for 5.6% of the Gross Domestic Product (GDP) in FY1962 and rose to a peak of 16.6% in FY2010. As a share of GDP, human resources spending dropped slightly in FY2011, to 16.1%. National defense, by contrast, represented 9.2% of GDP in FY1962, peaked in FY1968 at 9.4%, and accounted for 4.7% of the national economy in FY2011. Current Law Projections Figure 3 shows the trend in federal outlays for each of the six human resources budget functions, as a share of the economy, from FY1962 through FY2011, and CBO's projections of spending under current law from FY2012 through FY2022. As illustrated, CBO estimates that total human resources spending, as a share of GDP, will have dropped to 15.5% in FY2012 and fluctuate around that level (dipping slightly in FY2017 and FY2018) until climbing back to 16.1% (same as the FY2011 level) in FY2022. Human resources spending is projected to remain significantly higher throughout the decade than its pre-recession level of 12.7% of GDP in FY2007. (Readers should remember, however, that CBO's "current law" baseline does not reflect the BCA.) Fueling growth over the long term are several factors, including the continuing effects of the baby boom generation's retirement and increased enrollment in Medicare and Social Security, certain program design features such as wage indexing in Social Security (which allows initial monthly benefits to replace a constant proportion of pre-retirement earnings and keep pace with rising living standards), medical cost inflation in excess of general inflation, and new spending attributable to implementation of the ACA of 2010. On the other hand, cost-mitigating factors in the first part of the decade include the assumed economic recovery, lower spending for programs that respond automatically to economic conditions such as Unemployment Insurance and the Supplemental Nutrition Assistance Program, and the expiration of all stimulus funding provided under the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ). The figure illustrates that spending in the human resources superfunction has been dominated by four categories: health (Function 550, which primarily consists of Medicaid), Medicare (Function 570), income security (Function 600), and Social Security (Function 650). With no change in current law, CBO projects that spending for income security as a share of GDP will contract over the next decade, as will spending for the two smallest functions—education, training, employment, and social services (Function 500); and veterans benefits and services (Function 700). On the other hand, CBO projects that spending for three functions—health (mostly Medicaid), Medicare, and Social Security—will consume increasingly more of the economy as the population ages and the cost of health care continues to rise. Analysis of projected spending in real terms (outlays in constant dollars) also shows the growing dominance of three functions within the human resources superfunction. CBO estimates that real spending for Medicaid equaled 15% of human resources spending in FY2012 and projects this will increase to 22% of human resources spending in FY2022. Medicare accounted for 20% of superfunction spending in FY2012, and is projected to rise to 23% in FY2022. Social Security is, and will remain, the largest component of the human resources superfunction, and will increase from 32% in FY2012 to 34% in FY2022. In contrast, CBO projects that income security programs under Function 600 will shrink from 23% of human resources spending in FY2012 to 14% in FY2022. And, the two smallest functions also will each contract as a share of the superfunction, from 4% in FY2012 to 3% in FY2022 for Function 500 and from 5% in FY2012 to 4% in FY2022 for veterans programs under Function 700. (See data in Table A-4 .) Most federal low-income assistance programs are included in one of the six human resources budget functions, primarily Function 500 (education, training, employment, and social services) and Function 600 (income security), in addition to Function 550, which includes Medicaid and the State Children's Health Insurance Program (CHIP). A review of low-income assistance programs shows the same general trend applicable to the human resources superfunction overall; that is, health care is growing as a share of the economy while spending for other purposes (other than Social Security) contracts. A CRS analysis of federal outlays for major federal low-income assistance programs shows all projected growth in these programs over the next decade will be for health programs, specifically Medicaid, CHIP, and the refundable portion of a health insurance tax credit created under the ACA of 2010, which is scheduled to begin in 2014. With no change in current law, spending for non-health low-income programs is expected to increasingly diminish as a share of the economy over the coming decade. Three Proposals Figure 4 compares total estimated outlays for the human resources superfunction, as a share of GDP, under the CBO current law baseline, President Obama's proposed budget (as re-estimated by CBO), the House budget resolution, and the Conrad/Fiscal Commission resolution, from FY2012 through FY2022. As noted above, CBO projects that human resources spending will be relatively flat as a share of the national economy for most of the 10-year period, dip slightly in FY2017 and FY2018, and then very gradually rise. Both the President's budget and the Conrad/Fiscal Commission resolution follow the CBO baseline fairly closely, although the Administration proposes somewhat increased spending in the early years. The House budget resolution assumes gradually decreasing spending for human resources as a share of GDP, although it also would rise slightly at the end of the decade. As stated earlier, CBO projects that human resources spending will equal 16.1% of GDP in FY2022 with no change in current law (not accounting for the effects of the BCA). This compares with 16.1% under the Administration's budget, 16% under the Conrad/Fiscal Commission resolution, and 14% under the House resolution. With regard to discretionary spending, both the Administration and the Conrad/Fiscal Commission resolution assume that the original spending limits established in Title I of the Budget Control Act will remain in place. The House resolution, however, assumes somewhat lower limits on total discretionary spending than required by the BCA (e.g., $1.028 billion versus $1.047 billion in FY2013). All three of the pending proposals assume that the additional BCA spending reductions, which are scheduled to begin in January 2013, will not take effect. Instead, they assume that these automatic reductions will be replaced by other deficit reduction initiatives that are reflected throughout the proposals. With regard to mandatory spending within the human resources superfunction over the next 10 years, the House resolution differs from the President and the Conrad/Fiscal Commission most significantly in budget Functions 550 (Medicaid) and 600 (income security). The House Budget Committee report also cites significantly different long-term policy assumptions for Medicare; however, these are not reflected in the 10-year window, as the legislative changes would not occur until after FY2022. Function 500: Education, Training, Employment, and Social Services (ETESS) Function Overview Function 500 includes funding for the Department of Education (ED), social services programs within the Department of Health and Human Services (HHS), and employment and training programs within the Department of Labor (DOL). It also contains funding for the Library of Congress and independent research and art agencies such as the Corporation for Public Broadcasting, the Smithsonian Institution, the National Gallery of Art, the John F. Kennedy Center for the Performing Arts, the National Endowment for the Arts, and the National Endowment for the Humanities. Most spending under Function 500 is discretionary. Mandatory spending in this function includes student financial assistance, some training and employment services, and Social Services Block Grants. Spending under this function is divided among the following six subfunctions: Elementary, secondary, and vocational education; Higher education; Research and general education aids; Training and employment; Other labor services; and Social services. Implications of the Budget Control Act Function 500 is dominated by discretionary spending, most of which is not specified as exempt from sequestration under the BCA. This means that most spending included in this function is subject to the automatic budget enforcement mechanism of the BCA, in addition to the discretionary spending limits. Pell Grants, which are primarily discretionary, are exempt from sequestration. In addition, among the few mandatory spending programs in Function 500, Social Services Block Grants are exempt from sequestration and federal student loans are governed by a special rule. As discussed earlier, the budgetary effects of the BCA are not reflected in the CBO current law baseline at the function level; thus the baseline shown in Figure 5 , below, is somewhat higher than it would be if these effects were shown. Projected Spending Trends Figure 5 shows estimated outlays for Function 500 programs, from FY2012 through FY2022 in constant FY2012 dollars, under the CBO baseline, the Administration's budget, the House resolution, and the Conrad/Fiscal Commission resolution. As illustrated, CBO projects that under current law (not accounting for the BCA), spending for this function will initially decline, then increase from FY2015 through FY2019, when it will generally level off for the balance of the period. The baseline shows real spending for Function 500 slightly higher at the end of the decade than at the beginning. On the other hand, the Administration's budget proposes an immediate spike in spending followed by decline through FY2017. Spending would then rise slightly and flatten out, but remain below the CBO baseline from FY2016 through the end of the budget window. The Conrad/Fiscal Commission resolution would generally track, at slightly lower levels, the CBO baseline. Finally, as shown in the figure, the House budget resolution assumes a sharp drop in spending through FY2014, followed by a gradual rise. Spending for Function 500 would end the decade lower in real terms than at the start under the House resolution. As a share of GDP (not shown in the figure), CBO projects that Function 500 will consume 0.55% of the national economy in FY2013 and drop to 0.47% by FY2022. This compares to 0.77% in FY2013 and 0.43% in FY2022 under the President's budget; 0.54% in FY2013 and 0.45% in FY2022 under the Conrad/Fiscal Commission resolution; and 0.49% in FY2013 and 0.37% in FY2022 under the House resolution (see Table A-3 ). Proposed Policy Initiatives Function 500 includes several policy areas identified by the White House as critical for investment. While staying within the original BCA discretionary spending limits for the 10-year budget window, the Administration proposes short-term funding increases for activities designed to create jobs and boost economic recovery. These include grants to state and local governments for school modernization, teacher hiring and retention, summer and year-round jobs for low-income youth, and employment opportunities for long-term unemployed and low-income adults. Many of these initiatives were included in the Administration's proposed American Jobs Act of 2011. The President calls for a variety of program consolidations, with increased spending for certain programs offset by termination of others. The Administration would maintain and expand competitive initiatives such as Race to the Top (first funded through ARRA), as well as certain school reform initiatives included in a proposed reauthorization of the Elementary and Secondary Education Act (ESEA). As part of efforts to maintain college access and affordability, the President proposes to sustain a maximum Pell Grant award of $5,635; double the number of college work-study jobs; provide incentives for states and colleges to keep tuition costs down; and shift campus-based aid toward colleges that restrain tuition increases. The Administration would consolidate and eliminate certain job training programs, coupled with some program expansions and new competitive initiatives intended to improve access to workforce development services. In its report accompanying the House budget resolution, the House Budget Committee identified a number of policy options within Function 500 as "worthy of consideration" by lawmakers. These include a reorganization and streamlining of elementary and secondary education programs as part of reauthorizing ESEA, termination and reduction of programs that are not considered effective in improving student achievement, and provisions to address perceived duplication in teacher quality programs. Suggested changes in the Pell Grant program would roll back recent expansions of the need analysis system for determining assistance levels, eliminate administrative fees for participating institutions, consider a maximum income cap, eliminate less-than-half-time students from eligibility, and adopt a maximum award level of $5,550. The House Budget Committee identifies possible changes in higher education programs such as removal of regulatory provisions that are perceived as restricting flexibility and innovative teaching methods, such as on-line coursework. The committee assumes consolidation of multiple job training programs into targeted career scholarship programs, elimination of funding for cultural agencies and for the Corporation for National and Community Service, and other program terminations. In the mandatory portion of Function 500, the House Budget Committee assumes repeal of certain student loan provisions enacted in 2010 (SAFRA Act, P.L. 111-152 ), and termination of the Social Services Block Grant. A key component of the Conrad/Fiscal Commission resolution is reduced discretionary spending. As shown in Figure 5 , Function 500 spending under this resolution would track CBO's baseline at somewhat lower levels; however, Senate documents do not identify specific discretionary spending cuts that are assumed in Function 500 programs. On the mandatory side, the Conrad/Fiscal Commission resolution assumes elimination of in-school interest subsidies for undergraduate federal student loan programs, a proposal also assumed in the House budget resolution. Function 550: Health Function Overview Function 550 includes most direct health care services programs, most notably Medicaid. Other health programs in this function fund anti-bioterrorism activities, national biomedical research, activities to protect the health of the general population and workers in their places of employment, health services for under-served populations, and training for the health care workforce. Some of the HHS agencies in this function include the National Institutes of Health, Centers for Disease Control and Prevention, Health Resources and Services Administration, and the Food and Drug Administration. The major mandatory programs in this function are Medicaid, the State Children's Health Insurance Program (CHIP), federal and retirees' health benefits, and health care for Medicare-eligible military retirees. Spending under this function is divided among the following three subfunctions: Health care services, Health research and training, and Consumer and occupational health and safety. Implications of the Budget Control Act The vast majority of spending in Function 550 is mandatory and exempt from sequestration under the BCA. However, Function 550 also includes some discretionary spending, which is subject to the automatic budget enforcement mechanism of the BCA, as well as the discretionary spending limits. Certain discretionary health programs, specifically health centers and Indian health services, are subject to a special rule that limits sequestration of these programs to no more than 2%. As explained earlier, the budgetary effects of the BCA are not reflected in CBO's baseline at the function level. However, given the size of Function 550 and the preponderance of exempted programs and activities, the current law baseline shown in Figure 6 , below, would likely change very little if BCA effects were shown. Implications of the Supreme Court Decision on the ACA On June 28, 2012, the Supreme Court issued its decision in National Federation of Independent Business v. Sebelius . In that decision, the Court held that the federal government cannot terminate current Medicaid program federal matching funds if a state refuses to expand its Medicaid program to include non-elderly, non-pregnant adults with income under 133% of the federal poverty level, as required by the ACA. If a state accepts the new ACA Medicaid expansion funds, it must abide by the new expansion coverage rules, but, based on the Court's opinion, it appears that a state can refuse to participate in the expansion without losing any of its current federal Medicaid matching funds. The CBO current law baseline was prepared before the Court's decision, and could change once the implications of this decision are fully considered. CBO is currently assessing the effects of the decision. Projected Spending Trends Figure 6 shows estimated outlays for Function 550 programs, from FY2012 through FY2022 in constant FY2012 dollars, under the CBO baseline, the Administration's budget request, the House budget resolution, and the Conrad/Fiscal Commission resolution. The House resolution shows a starkly different trend line than the other three budgets, which track very closely with each other. Under CBO's current law baseline, the President's proposed budget, and the Conrad/Fiscal Commission resolution, Medicaid spending will climb sharply over the 10-year period, primarily due to the expansion of Medicaid eligibility under the ACA (which, as noted above, could be affected by the Supreme Court's June 28 decision). The House resolution, meanwhile, would hold real spending relatively flat, with just a slight and gradual increase in the later years. As a share of GDP (not shown in the figure), CBO estimates Function 550 will consume 2.35% of the national economy in FY2013 and rise to 3.52% by FY2022. This compares to 2.36% in FY2013 and 3.45% in FY2022 under the President's budget; 2.32% in FY2013 and 3.46% in FY2022 under the Conrad/Fiscal Commission resolution; and 2.30% in FY2013 and 1.90% in FY2022 under the House resolution (see Table A-3 ). Proposed Policy Initiatives The Administration proposes a number of legislative initiatives intended to reduce spending growth in the health function, including a replacement of the current assortment of federal-state matching rates used under Medicaid and CHIP with a single federal matching rate, beginning in FY2017. Starting in FY2015, the Administration would phase down the Medicaid "provider tax threshold," which affects the extent to which states can use revenues from health-related fees, assessments, or other mandatory payments to finance the state share of Medicaid expenditures. The Administration would "rebase" Medicaid disproportionate share hospital allotments in FY2021, set a limit on Medicaid reimbursement for durable medical equipment (equal to what Medicare would have paid), and achieve savings through program integrity initiatives. The House Budget Committee, in its accompanying report, notes that the House budget resolution assumes a fundamental reform of Medicaid. "Illustrative policy options" include many of the same initiatives included in the House budget resolution for FY2012 ( H.Con.Res. 34 ), including conversion of the federal share of Medicaid spending into an allotment (a block grant), which would be indexed for inflation and population growth. The committee advocates repealing the Medicaid expansions enacted in ACA, as well as the ACA provisions authorizing subsidies to help low-income individuals purchase health insurance through exchanges. The resolution also assumes elimination of the individual mandate to purchase insurance, established under ACA. The House budget resolution further assumes savings would be achieved by repealing any remaining unspent funds provided under ARRA and other associated provisions in ACA. Senate Budget Committee documents do not specify Medicaid proposals assumed in the Conrad/Fiscal Commission resolution. The documents include a "health care savings policy statement" that says Congress should adopt program changes recommended by the Simpson-Bowles Commission, including such policies as eliminating states' ability to use provider taxes as their state share of Medicaid expenditures, requiring states to cover dual-eligibles under Medicaid managed care, reducing funding for Medicaid administrative costs, and allowing expedited application for Medicaid waivers in well-qualified states. Function 570: Medicare Function Overview Function 570 consists of the Medicare program, which provides health insurance to individuals age 65 or older and certain persons with disabilities. Nearly 99% of spending in this function is mandatory, and almost all of the mandatory spending consists of payments for Medicare benefits. Congress provides an annual appropriation for the costs of administering and monitoring the Medicare program. Implications of the Budget Control Act Medicare is generally subject to sequestration under the BCA's automatic budget reduction procedure; however, a special rule limits sequestration of most Medicare mandatory spending to no more than 2%. In addition, the low-income prescription drug subsidy under Medicare Part D and certain other programs and activities are exempt from sequestration altogether. CBO estimates that almost 90% of mandatory Medicare spending is subject to the 2% limit on sequestration, and another 10% is completely exempt. The discretionary portion of Function 570 (i.e., Medicare administrative expenses) is not exempt from sequestration or subject to a special rule. As discussed earlier, the CBO baseline shown in Figure 7 does not reflect the impact of sequestration, because CRS has adjusted CBO's Medicare baseline to make it consistent with the rest of the individual human resources functions. The CBO baseline for this function would be somewhat lower if the effects of sequestration were shown (see Table A-1 ). Projected Spending Trends Figure 7 shows estimated outlays for Medicare, from FY2012 through FY2022 in constant FY2012 dollars, under the adjusted CBO baseline (not accounting for the BCA), the Administration's budget request, the House budget resolution, and the Conrad/Fiscal Commission resolution. The figure shows relatively little difference between the budgets, with the House resolution slightly lower than the others, particularly in the later years. As a share of GDP (not shown in the figure), CBO estimates that Medicare will consume 3.23% of the national economy in FY2013 and rise to 3.65% by FY2022. This compares to 3.30% in FY2013 and 3.59% in FY2022 under the President's budget; 3.20% in FY2013 and 3.58% in FY2022 under the Conrad/Fiscal Commission resolution; and 3.21% in FY2013 and 3.51% in FY2022 under the House resolution (see Table A-3 ). Proposed Policy Initiatives The Administration's budget assumes Congress will enact a freeze on physician payment rates under Medicare at current levels (the so-called "doc fix"), which will otherwise decline under the sustainable growth rate (SGR) formula in current law. While this action would increase the baseline for Medicare spending, the Administration also proposes reduced Medicare spending through program integrity initiatives as well as a series of legislative changes. These include proposals affecting Part A (e.g., adjusting payment updates to certain post-acute care providers, reducing bad debt coverage, reducing payments to teaching hospitals for costs of graduate medical education); and Part B (e.g., introducing a premium surcharge for new beneficiaries buying Medigap policies with very low cost-sharing). The Administration would increase income-related premiums under both Part B and the prescription drug program under Part D, and would align Medicare Part D drug payments with the corresponding Medicaid rates for brand name and generic drugs provided to low-income subsidy beneficiaries. With regard to the budget overall, White House budget documents cite health care as "the primary driver of future deficit growth" and point to the health care reform law of 2010 (the ACA) as central to controlling the rising cost of health care. Many of the legislative proposals included in the Administration's current budget build upon initiatives included in the ACA. For example, ACA created the Independent Payment Advisory Board (IPAB) to develop and submit detailed recommendations to reduce Medicare spending to achieve certain target growth rates. The White House proposes to lower the target growth rate starting in 2020 and to give the IPAB additional tools to reduce spending. One of the most widely reported recommendations of the House Budget Committee for FY2012 is continued, with modifications, in the committee's report on the House budget resolution for FY2013. However, the budgetary impact of this policy recommendation would not be seen until after FY2022, which is beyond the current budget's 10-year window. The committee recommends enactment of legislation to convert Medicare into a "premium support" program, in which individuals would choose among private health insurance plans through a newly created Medicare "exchange" and be eligible for a subsidy to offset the cost of the premium. This change would not affect individuals currently age 55 or older and would not take effect until FY2023, so its budgetary effects are not reflected in Figure 7 . Unlike last year's recommendation, however, the current proposal would allow eligible individuals to choose to remain in traditional Medicare. The age of eligibility for Medicare would be gradually increased to align with Social Security, starting in 2023. Additional assumptions in the House resolution include a budget-neutral replacement for the current SGR formula; repeal of the IPAB; medical liability insurance reform, with limits on noneconomic and punitive damages; and additional means-testing of Medicare Part B and Part D premiums for high-income seniors, which is similar to a proposal of the Administration. The Conrad/Fiscal Commission resolution states that ACA "laid the foundation for long-term health care savings" but that more needs to be done. Like the Administration and the House resolution, the Conrad/Fiscal Commission resolution assumes reform of the SGR formula and that the associated costs will be offset by other savings in the plan. As noted earlier under Function 570, Senate Budget Committee documents include a "health care savings policy statement" that endorses recommendations of the Simpson-Bowles Commission, including many of the same initiatives identified in the Administration's budget. The Conrad/Fiscal Commission proposal also would expand the reach of IPAB and allow it to make recommendations affecting hospitals and other providers that are currently exempt. Function 600: Income Security Function Overview Function 600 includes a range of income security programs that provide cash or near-cash assistance (e.g., housing, nutrition, and energy assistance) to low-income persons, and benefits to certain retirees, persons with disabilities, and the unemployed. Major federal entitlement programs in Function 600 include Unemployment Insurance (UI), Trade Adjustment Assistance income support, the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Temporary Assistance for Needy Families (TANF), foster care and adoption assistance, and Supplemental Security Income (SSI). The refundable portion of the Earned Income Tax Credit (EITC) and the refundable Additional Child Tax Credit (ACTC) are also included in this function. Federal and other retirement and disability programs comprise approximately one-third of funds in Function 600. Housing assistance programs account for the largest share of discretionary spending in this function. Spending under this function is divided among the following six subfunctions: General retirement and disability insurance (excluding Social Security), Federal employee retirement and disability, Unemployment insurance, Housing assistance, Food and nutrition assistance, and Other income security. Implications of the Budget Control Act The majority of spending in Function 600 is mandatory and many of these mandatory programs and activities are exempt from sequestration under the BCA. However, discretionary programs—primarily consisting of housing assistance—are not exempt and would be affected by the act's automatic enforcement mechanism, as well as the discretionary spending limits. As discussed earlier, the budgetary effects of the BCA are not reflected in the CBO current law baseline at the function level; thus, the CBO baseline in Figure 8 , below, would be slightly lower if these impacts were shown. Projected Spending Trends Figure 8 shows estimated outlays for Function 600 programs, from FY2012 through FY2022 in constant FY2012 dollars, under the CBO baseline (not accounting for the BCA), the Administration's budget request, the House budget resolution, and the Conrad/Fiscal Commission resolution. The figure shows a decline in real spending through FY2018 under all four of the trend lines, with a slight rise in the final four years. The Administration envisions the most gradual decline and significantly higher spending than the CBO baseline for most of the period. The Conrad/Fiscal Commission hovers below the Administration's proposal, but would also exceed the CBO baseline. The House budget resolution assumes the steepest decline in spending for this function, which would remain substantially below the CBO baseline for the entire period. As a share of GDP (not shown in the figure), CBO estimates Function 600 will consume 3.37% of the national economy in FY2013 and fall to 2.30% by FY2022. This compares to 3.41% in FY2013 and 2.46% in FY2022 under the President's budget; 3.36% in FY2013 and 2.38% in FY2022 under the Conrad/Fiscal Commission resolution; and 3.25% in FY2013 and 2.09% in FY2022 under the House resolution (see Table A-3 ). Proposed Policy Initiatives Like the CBO baseline, the Administration's budget assumes reduced recession-related spending for UI and SNAP (food stamps) as the economy gradually recovers. However, as noted earlier under Function 500, the Administration's budget also includes proposals originally offered through the American Jobs Act of 2011, which include a series of UI reforms intended, among other things, to provide reemployment services to beneficiaries. The Administration proposes to permanently extend certain tax provisions, including expansions of the EITC and ACTC that were initially authorized under tax cut legislation in the 2000s and then further expanded in ARRA, and are currently set to expire at the end of calendar 2012. The Administration's budget also includes provisions intended to address shortfalls in the UI system and in the Pension Benefit Guaranty Corporation (PBGC). In its report on the budget resolution, the House Budget Committee cites conversion of SNAP into a block grant as an "illustrative policy option" for this function. The conversion would not take place until after FY2016, allowing time for the economy to recover first. Block grant allotments would be tailored for each state's low-income population, indexed for inflation and eligibility. States would be required to enroll a certain portion of recipients in work activities, which could include education and training, similar to current law provisions in the TANF program. The House resolution also assumes elimination of the current "categorical eligibility" provisions that enable TANF recipients to automatically qualify for SNAP. Additional assumptions in the House budget resolution include increases in civilian federal employee contributions to their retirement benefits; reduction in certain Railroad Retirement benefits; unspecified reforms of the Pension Benefit Guaranty Corporation; elimination of the Home Affordable Modification Program (HAMP); and creation of a sliding income scale to determine eligibility of children for SSI. The committee report also identifies reform of means-tested entitlements built upon the welfare reforms of 1996 that created TANF. However, beyond the discussion of SNAP, the report does not name specific programs that could be affected by this proposal. Senate Budget Committee documents indicate that the Conrad/Fiscal Commission resolution assumes adoption of non-health mandatory savings recommended by the Simpson-Bowles Commission. The committee also says the resolution "seeks to adhere to the Fiscal Commission's goals of: 'protecting the disadvantaged; ending wasteful spending; and looking to the private sector.'" Specific recommendations affecting Function 600 include creation of a task force to develop cost-saving changes to the civilian federal retirement program, and allowing the PBGC to increase premiums and thereby restore solvency. The committee refers to an "illustrative" tax reform option that would, among other things, preserve the Child Tax Credit and the EITC. The committee also mentions legislation to improve the current trigger mechanisms for the Extended Benefit (EB) program, which provides UI benefits to the long-term unemployed, so that these countercyclical benefits would trigger on and off more effectively. Function 650: Social Security Function Overview Function 650 consists of the payroll tax-financed programs that are collectively known as Social Security: Old-Age and Survivors Insurance and Disability Insurance (OASDI). This function includes both Social Security benefit payments (mandatory) and funds to administer the program (discretionary). Implications of the Budget Control Act Social Security benefit payments are exempt from sequestration under the BCA. Discretionary administrative funds are not exempt and would be subject to the automatic budget enforcement mechanism of the BCA, in addition to the discretionary spending limits. As noted previously, the budgetary effects of the BCA are not reflected in the CBO current law baseline at the function level. Given the magnitude of exempt funding in Function 650, however, the CBO baseline shown in Figure 9 would be essentially unchanged if effects of the BCA were shown. Projected Spending Trends Figure 9 shows estimated outlays for Function 650, from FY2012 through FY2022 in constant FY2012 dollars, under the CBO baseline, the Administration's budget request, the House budget resolution, and the Conrad/Fiscal Commission resolution. The figure shows virtually no difference between any of the four lines, as neither the Administration, the House, nor the Conrad/Fiscal Commission resolution assume significant policy changes in Social Security within the 10-year budget window. Note that Figure 9 shows outlays for both the on-budget and off-budget portions of Social Security. As a share of GDP (not shown in the figure), the CBO baseline and all three proposals generally estimate that Social Security will equal 5.15% of the national economy in FY2013 and rise to 5.46% by FY2022 (see Table A-3 ). Proposed Policy Initiatives The Administration's budget makes only general statements in support of Social Security reform and does not recommend specific program changes. The Administration's budget, however, explicitly states opposition to Social Security privatization. In the FY2013 budget, the Administration also requests funds to be used to reduce the disability claims backlog, proposes to reauthorize demonstration authority for the Disability Insurance program, and includes a series of program integrity measures. In its report on the FY2013 budget resolution, the House Budget Committee cited the Simpson-Bowles Commission as having made "positive steps forward on bipartisan solutions to strengthen Social Security." The House resolution would require the Social Security Board of Trustees to recommend statutory reforms to the President in any year when they find the 75-year actuarial balance and the annual balance in the 75 th year are in deficit. The President would be required to submit legislation to implement these recommendations by a certain deadline and congressional committees would be required to consider the legislation under expedited procedures. The Conrad/Fiscal Commission resolution fully endorses the Social Security reform recommendations of the Simpson-Bowles Commission, which Senate Budget Committee documents say would restore the program's 75-year solvency and put it on a sustainable path beyond 75 years. The Senate documents include a "Social Security policy statement" that directs Congress to work on a bipartisan basis to reform Social Security "for its own sake" and not for the sake of deficit reduction. Specific recommendations of the Simpson-Bowles Commission, identified and endorsed in the Conrad/Fiscal Commission resolution, include moving toward a more progressive benefit formula, providing an enhanced minimum benefit for low-wage workers, increasing benefits for older beneficiaries, increasing early and full retirement ages based on increases in life expectancy and creating a hardship exemption for individuals who cannot work beyond age 62, allowing retirees to claim a portion of their benefit at age 62 and the remaining portion at a later age, gradually increasing the taxable maximum so that 90% of aggregate covered wages would be taxable by 2050, adopting the Chained Consumer Price Index to compute cost-of-living adjustments, covering new state and local government workers after 2020, directing the Social Security Administration to improve information provided to future beneficiaries about their retirement options, and "beginning a broad dialog on the importance of personal retirement savings." Function 700: Veterans Benefits and Services Function Overview Function 700 covers the programs of the Department of Veterans Affairs (VA), including veterans' medical care, compensation and pensions, education and rehabilitation benefits, and housing programs. It also includes the Department of Labor's Veterans' Employment and Training Service, the United States Court of Appeals for Veterans Claims, and the American Battle Monuments Commission. This function includes both mandatory and discretionary spending accounts. Mandatory funding supports disability compensation, pension benefits, education, vocational rehabilitation, life insurance, and burial benefits, among other benefits and services. Discretionary funding supports a broad array of benefits and services; however, almost 90% of discretionary funding in Function 700 goes to veterans' health care. Spending under this function is divided among five subfunctions: Income security for veterans; Veterans education, training, and rehabilitation; Hospital and medical care for veterans; Veterans housing; and Other veterans benefits and services. Implications of the Budget Control Act All programs administered by the VA, whether discretionary or mandatory, are exempt from sequestration under the BCA, although it is possible that federal administrative expenses could be reduced. Discretionary programs also could be affected by the lower spending limits for FY2014-FY2021 resulting from failure of the Joint Committee process. As discussed earlier, the budgetary effects of the BCA are not reflected in the CBO baseline at the function level. Projected Spending Trends Figure 10 shows estimated outlays for Function 700 programs, from FY2012 through FY2022 in constant FY2012 dollars, under the CBO baseline (not accounting for the BCA), the Administration's budget request, the House budget resolution, and the Conrad/Fiscal Commission resolution. All four budgets show increases in spending over the 10-year period, but with a drop between FY2016 and FY2018. Starting in FY2016, the Administration's proposed budget tracks slightly lower than the other three budget lines, which are virtually indistinguishable from each other for most of the 10-year period. As a share of GDP (not shown in the figure), the CBO baseline and all three proposals generally estimate that Function 700 will consume 0.85% of the national economy in FY2013. CBO, the House resolution, and the Conrad/Fiscal Commission resolution all estimate VA spending will fall to 0.71% of GDP in FY2022; this compares to 0.69% in the Administration's budget (see Table A-3 ). There are no significant legislative differences between the three budgets. Conclusion Programs categorized as "human resources" comprise the majority of federal outlays and have grown over the last five decades as a share of the overall national economy. CBO estimates that spending for these programs peaked in FY2010 and will remain at lower levels for most of the coming decade, although human resources spending will remain consistently higher throughout the period than before the 2007-2009 recession. CBO also projects that human resources spending will tick up again toward the end of the decade and return to FY2011 levels by FY2022. All of the expected growth in human resources spending will be in health care (Medicaid and Medicare) and Social Security. All other components of the human resources superfunction are projected to diminish as a share of GDP over the next 10 years. Policymakers are engaged in a high-level debate over short- and long-term strategies to sustain the recovery and further stimulate the economy, reduce the federal deficit, and stabilize the national debt, and hold different points of view about the optimal size and composition of federal spending and revenues. This CRS report compared three FY2013 budget proposals—the President's budget, the House budget resolution, and the Conrad/Fiscal Commission resolution (which is based on recommendations of the Simpson-Bowles Commission)—specifically with regard to programs included in the human resources budget functions. For the human resources superfunction as a whole, the President's budget and the Conrad/Fiscal Commission resolution track closely to the CBO current law baseline for the entire 10-year budget window, although the Administration proposes somewhat higher spending in the initial few years. By contrast, the House budget would result in significantly lower spending for human resources programs throughout the 10-year period. The President proposes an immediate increase in spending for Function 500 programs (education, training, employment, and social services), primarily for activities intended to boost the economy and promote recovery. This increase would be offset by lower spending in the out-years. The House resolution calls for an initial drop in spending for this function, followed by a gradual increase but still significantly lower spending than under either current law, the President's budget, or the Conrad/Fiscal Commission resolution. The House resolution differs most sharply from current law and the other two budget proposals with regard to Function 550, which consists primarily of Medicaid. The House resolution would hold spending in this function relatively flat in real terms, with a slight upward trend in the second half of the decade, while CBO's current law baseline, the Administration, and the Conrad/Fiscal Commission all envision substantial growth in this function. The House budget assumes conversion of Medicaid into a capped block grant, while the other budgets would maintain the current structure of Medicaid, with some legislative changes to the program. It is important to note that CBO's baseline was completed prior to the Supreme Court's June 28 decision on the Affordable Care Act, so the potential impact of that decision on projected spending for Function 550 is not yet known. Projected spending under all three budgets for Medicare (Function 570) looks generally similar to current law estimates, with continued major growth over the next 10 years. The House assumes a significant policy change in Medicare, converting the program into a "premium support" program; however, this change would not occur until after FY2022, so its budgetary effects are not reflected in the 10-year budget window examined in this report. All three budget proposals assume some legislative changes to Medicare in the near term, including a replacement for the current law sustainable growth rate (SGR) formula, among other changes. With regard to Function 600 income security programs, which include a combination of low-income assistance, unemployment, retirement, and disability programs, spending would decline over the 10-year period under current law and under each of the three budget proposals. However, the President and Conrad/Fiscal Commission envision spending at higher levels than current law; the House resolution assumes spending significantly below current law. Key initiatives include conversion of SNAP (food stamps) into a block grant under the House budget, a permanent extension of certain expiring EITC and Child Tax Credit provisions under the Administration's budget, and increased retirement contributions by civilian federal employees (at different levels under the House and Administration budget proposals). Social Security (Function 650) appears virtually identical under current law and all three budget proposals, with outlays continuing to climb over the decade. None of the proposals include specific legislative changes but all express support for achieving bipartisan reform. And finally, none of the three budget proposals assume major legislative changes in veterans programs, so that Function 700 spending generally increases under current law and all of the proposed budgets over the next 10 years. In comparing these three budget proposals for the human resources superfunction, particularly in the context of deficit reduction, it is important to note the significant difference in size among the functions. For example, while the House budget resolution envisions a relatively large reduction in spending for Function 500 (ETESS) than would otherwise occur, this proposal would contribute relatively little toward deficit reduction because of the small size of the function overall. Likewise, the Administration proposes an initial increase in spending for this function, but this additional spending would contribute little to deficit growth. On the other hand, with no change in current law CBO expects that spending for each of Function 550 (Medicaid) and Function 570 (Medicare) will be nearly eight times the size of Function 500 in FY2022, and Social Security will be 12 times its size. Thus, reductions from the baseline in these three functions have the most far-reaching implications for the larger deficit reduction debate. As noted above, the House resolution assumes significantly lower spending for Medicaid than the other two proposals, while spending for Medicare and Social Security over the next 10 years would be generally the same under all three. Appendix. Supporting Tables Table A-1 shows the Congressional Budget Office's March 2012 current law baseline for Medicare (i.e., the "unadjusted" baseline for Function 570) and the "adjusted" CBO baseline as used in the body of this report. As explained earlier, CRS adjusted CBO's baseline for Medicare to make it consistent with the baseline for other functions within the human resources superfunction. CBO's estimate of the budgetary effects of sequestration triggered under the Budget Control Act are not included in the adjusted baseline; however, they are shown in this appendix table. Table A-2 , Table A-3 , Table A-4 , and Table A-5 provide supporting data for the figures and text in the body of this report.

Debate is occurring on short- and long-term efforts to boost the economy, reduce the deficit, and stabilize the debt; this debate includes proposals to alter the overall size and composition of federal spending and revenues. "Human resources" programs account for the majority of federal outlays (67% in FY2011) and would be affected by these proposals. Six categories comprise the human resources "superfunction": education, training, employment, and social services; health (largely Medicaid); Medicare; income security; Social Security; and veterans programs. President Obama submitted a detailed FY2013 budget proposal to Congress in February. The House subsequently passed an FY2013 budget resolution (H.Con.Res. 112), based on a proposal by Budget Committee Chairman Ryan. Several proposals have been offered by Members of the Senate, including a resolution by Budget Committee Chairman Conrad that is based on recommendations of the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles Commission). Although the House and Senate have not agreed on a budget resolution, the FY2013 appropriations process is underway. The House has also passed a reconciliation bill (H.R. 5652) intended to replace an automatic budget reduction (i.e., "sequestration") scheduled to occur on January 2, 2013, under provisions of the Budget Control Act of 2011. Spending for human resources peaked in FY2010 at 16.6% of Gross Domestic Product (GDP) and, according to the Congressional Budget Office (CBO), will have dropped to 15.5% in FY2012. This decline reflects the assumed economic recovery, lower spending for programs that respond automatically to economic conditions (e.g., Unemployment Insurance, Supplemental Nutrition Assistance Program), and expiration of funding under the American Recovery and Reinvestment Act of 2009. CBO projects that human resources spending will rise again as a share of GDP and reach 16.1% in FY2022, due to continuing effects of the baby boom's retirement and enrollment in Medicare and Social Security, real growth in Social Security benefits, medical cost inflation, and spending under the Affordable Care Act (ACA) of 2010. (Note that CBO's baseline does not yet reflect any potential impact of the Supreme Court's June 28 decision on the ACA.) Reflecting these trends, all projected growth in human resources spending will occur in three categories: health (i.e., Medicaid), Medicare, and Social Security. CBO estimates that spending for income security (which includes Unemployment Insurance, the Supplemental Nutrition Assistance Program, and selected low-income, retirement, and disability programs) will contract as a share of GDP over the next decade, as will the two smallest human resources categories (i.e., education, training, employment, and social services; and veterans benefits and services). Both the Administration and Conrad/Fiscal Commission budgets assume human resources spending over the next 10 years at levels close to the CBO current law baseline, although the President requests increased spending in the initial years for economic stimulus. The House resolution assumes gradually decreasing spending for human resources as a share of GDP, but also assumes that spending would rise slightly at the end of the decade. As noted above, CBO projects human resources spending will equal 16.1% of GDP in FY2022 with no change in policy. This compares with 16.1% under the Administration proposal, 16% under the Conrad/Fiscal Commission resolution, and 14% under the House resolution. The most significant reductions from the CBO baseline assumed by the House would occur in three categories: education, training, employment, and social services; Medicaid (which would be converted into a block grant); and income security. The House also assumes conversion of Medicare into a "premium support" program starting in FY2023, which is beyond the budget resolution's 10-year window.

Introduction Cybersecurity issues are gaining national prominence, generating extensive media coverage, and affecting constituents nationwide. The frequency of cybersecurity incidents and their effects on the U.S. economy and national security have elevated congressional interest in cybersecurity issues. This report provides an overview of cybersecurity concepts, the role of selected federal agencies in addressing cybersecurity threats, and a discussion of cybersecurity issues that may be of interest to Congress, including the following: protecting critical infrastructure; data breaches and data security; education and training; encryption; information sharing; insurance; international issues; the Internet of Things; oversight of federal agency information technology; and incident response. This is a coordinated report with multiple authors, who are listed with their contact information in footnotes at the beginning of the section(s) they authored as well as at the end of the report. Cybersecurity Overview Essentially, cybersecurity is the security of cyberspace. Cyberspace can be considered to be the services that use the infrastructure of the internet to deliver information to users through their devices. In practical terms, a person becomes a user of cyberspace when they use devices to access services , such as access to online banking, shopping, email, streaming video, social media, or the news. Those services do not exist independently, but rather rely on a common infrastructure of servers and switches; cable and wireless spectrum; and routers to ensure that a user has access to the service. That same infrastructure is used by other services too, such as utilities and shipping companies to ensure that products arrive as intended—or by businesses to develop new products more efficiently and to manage their operations. Therefore, for policymaking purposes, each of those elements (i.e., the services, infrastructure, devices, and user) are parts of cyberspace. The internet is a publicly accessible network within cyberspace, but cyberspace also contains private networks used by businesses and other users to help obtain greater confidentiality of their communications. The United States government does not have a single definition of cybersecurity. However, the Report on Securing and Growing the Digital Economy by the U.S. Commission on Enhancing National Cybersecurity offers the following definition of cybersecurity: The process of protecting information and information systems by preventing, detecting, and responding to unauthorized access, use, disclosure, disruption, modification, or destruction in order to provide confidentiality, integrity, and availability. The concepts of "confidentiality," "integrity," and "availability" are defined in U.S. Code as part of the "information security" triad. "Confidentiality" refers to the attribute that data are known only to authorized parties and not made available or disclosed to unauthorized parties. "Integrity" refers to the attribute that data have not been altered or destroyed in an unauthorized manner. "Availability" refers to the attribute that data are available for access by an authorized party when they choose. These terms apply to the data stored, processed, and transmitted by information technology (IT) systems, but also to the IT systems themselves. A fourth term for information security is gaining prominence in discussions on cybersecurity: "authentication," or the ability to confirm that parties using a system and accessing data are who they claim to be and have legitimate access to that data and system. Elements to ensure cybersecurity involve policies spanning a range of fields, including education, workforce management, investment, entrepreneurship, and research and development. Software development, law enforcement, intelligence, incident response, and national defense may be involved in the response when something goes awry in cyberspace. Attacks3 Attacks against data and systems are possible because IT systems are large and complex. Through their size and complexity, vulnerabilities exist which can be exploited. Consider a single smartphone. That smartphone may have been designed by a company in the United States, but built abroad by another company using material from yet another country. It runs on software built by one company, but modern operating systems borrow code from other companies. All that complexity exists before the device gets to the user. Once the user has the device it will likely be connected to a variety of networks such as a home wireless network, a corporate network, or a cellular network—each with its own infrastructure, and which share common internet infrastructure. The interconnected nature of all these services necessary to ensure the smartphone works further contributes to the breadth and complexity of the IT system, which is where vulnerabilities may lie. There are many ways to attack an IT system. Some of the commonly seen attacks are described below. Denial of Service (DOS): A DOS attack compromises the availability of data. In this attack, a network or website with information is overloaded with information, monopolizing the system's bandwidth and preventing legitimate users from getting their requests for service through, resulting in the user experiencing the system as unavailable. A DOS attack itself does not constitute an intrusion into the network or website, but it may be combined with other forms of attack to compromise the confidentiality or integrity of the network or its data. A distributed denial of service attack (DDOS) occurs when many disparate devices are used in the attack, as is the case when a botnet is employed for a DOS attack. DOS attacks are illegal under the Computer Fraud and Abuse Act. Ransomware : Ransomware is a specific form of malware (or malicious computer software) that installs itself on a user's computer and encrypts the user's hard drive so that the user cannot access her own files. The attacker then typically provides instructions to the victim to provide payment, payable via a cryptocurrency, usually Bitcoin. Upon receipt of payment, the attacker promises to provide the encryption key to the victim so that the victim may decrypt the attacked hard drive and access her files. However, the payment does not constitute a guarantee that the victim will receive the encryption key. Ransomware is illegal under the Computer Fraud and Abuse Act. Data Breaches : A data breach is a form of an attack against a computer system, but not all attacks are breaches. A data breach has the potential to compromise the confidentiality, integrity, and availability of an information system, and at a minimum violates the confidentiality of that system by exposing it to an unintended third party. In this sense, a breach is "an incident that results in the disclosure or potential exposure of data." Disclosure is different from exposure: disclosure entails a confirmation that an unauthorized third party read the data, while exposure means that a third party merely has the opportunity to do so. Data breaches are illegal under the Computer Fraud and Abuse Act. Attacks against data and system integrity : The previous three types of attack attempt to disrupt the availability and confidentiality of data on a system. Integrity attacks attempt to disrupt trust in the data or the system itself. In an integrity attack on data, a file is accessed without authorization and altered to reflect some information other than what authorized users intend. An example of an integrity attack is someone accessing a system without authorization to change information in a file. Additionally, an entire system may have its integrity compromised by having unauthorized commands executed on that system. An example might be malware that tells a computer to perform an operation without the authorized user's knowledge, while giving the authorized user feedback that the computer is operating as normal. These types of attack are illegal under the Computer Fraud and Abuse Act. The data and information technology systems of any entity, regardless of size, may be the targets of a cyber incident. Attackers may develop tools and techniques for a specific target and then reuse that tool or technique multiple times to attack other targets. Targets can include countries, multinational corporations, the federal government, large businesses, critical infrastructure entities, state and local governments, nonprofit organizations, academia, small businesses, and individuals. Additionally, attackers may have a particular target in mind, but penetrate their target by going through another entity. As such, partner entities, whether companies or other entities, may face an unforeseen risk of cyberattack based on their relationship to a targeted entity. Terrorist Use of Cyberspace13 Terrorist use of cyberspace is growing both in terms of reliance for supporting organizational activities and for gaining expertise to achieve operational goals. While no publicly accessible report has been published regarding a confirmed cyberterrorist attack against the United States, the possibility of one exists. Tighter physical and border security may encourage terrorists and extremists to try to use novel weapons to attack the United States. Persistent internet and computer security vulnerabilities, which have been widely publicized, may gradually encourage terrorists to continue to enhance their computer skills, or develop alliances with criminal organizations and consider attempting a cyberattack against U.S. critical infrastructure, facilities, and activities that support global security interests. Cyberterrorists are state-sponsored and nonstate actors who engage in cyberattacks to pursue their objectives. Transnational terrorist organizations have used the internet as a tool for planning attacks, for radicalization and recruitment, as a method of propaganda distribution, as a means of communication, and for disruptive purposes. The vulnerability of critical life-sustaining control systems being accessed and destroyed via the internet has been demonstrated. In 2009, the Department of Homeland Security (DHS) conducted an experiment that revealed some of the vulnerabilities to the nation's control systems that manage electric power generators and grids. The experiment, known as the Aurora Project, entailed a computer-based attack on a power generator's control system that caused operations to cease and the equipment to be destroyed. Cyberterrorists may be seeking a destructive capability to exploit these types of vulnerabilities in critical infrastructure but progress toward this goal is uncertain. As noted in March 2017 by then-Federal Bureau of Investigation (FBI) Director James Comey, "terrorists have not yet figured out how to use the Internet as an instrument of destruction ... eventually these knuckleheads will." There is no consensus definition of what constitutes cyberterrorism. The closest in law is found in the USA PATRIOT Act statute governing "acts of terrorism transcending national boundaries," which includes in its definition of a "federal crime of terrorism" some violations of the Computer Fraud and Abuse Act (CFAA). One portion of the CFAA referenced by the USA PATRIOT Act makes it illegal for an entity to do the following: knowingly [access] a computer without authorization or exceeding authorized access, and by means of such conduct … [obtain] information that has been determined by the United States Government pursuant to an Executive order or statute to require protection against unauthorized disclosure for reasons of national defense or foreign relations, or any restricted data … with reason to believe that such information so obtained could be used to the injury of the United States, or to the advantage of any foreign nation…. The other CFAA provision referenced in the USA PATRIOT Act prohibits transmitting "a program, information, code, or command" to certain computers (including all government computers and most private ones) and thereby intentionally causing unauthorized damage. Some cyberwarfare experts define cyberterrorism as "the premeditated use of disruptive activities, or the threat thereof, against computers and/or networks, with the intention to cause harm or further social, ideological, religious, political or similar objectives, or to intimidate any person in furtherance of such objectives." The USA PATRIOT Act's definition of "federal crime of terrorism," with its inclusion of certain CFAA violations as predicate acts, has some similarities to this definition, though the statute is limited to only those attacks with political objectives. However, these provisions are also criminal statutes and generally refer to individuals or organizations rather than state actors. Naval Post Graduate School defense analyst Dorothy Denning's definition of cyberterrorism focuses on the distinction between destructive and disruptive action. Terrorism generates fear comparable to that of physical attack, and is not just a "costly nuisance." Though a DDOS attack itself does not yield this kind of fear or destruction, the broader issue is the potential for second- or third-order effects. For example, if telecommunications and emergency services were completely dismantled in a time of crisis, the effects of that sort of infrastructure attack could potentially be catastrophic. If an attack on the emergency services system were to coincide with a planned real-world event, then cyberterror may be an appropriate metaphor. However, in this case, the emergency service system itself would most likely not be a target, but rather the result of collateral damage to a vulnerable telecommunications network. There are a number of reasons that may explain why the term "cyberterrorism" has not been statutorily defined, including the difficulty in identifying applicable activities, whether articulating clear red lines would demand a response for lower-level incidents, and retaining strategic maneuverability so as not to bind future U.S. activities in cyberspace. Selected Federal Roles and Responsibilities Department of Defense20 The Department of Defense (DOD) is responsible for defending the nation and supporting the Department of Homeland Security's (DHS's) coordination of efforts for cyber defense, for protecting the defense industrial base (DIB), and for securing the DOD information networks (DODIN). Both DOD and DHS are charged with defending the U.S. homeland and U.S. national interests against cyberattacks of significant consequence. Military cyber assets may be deployed in the event of a major cyberattack on U.S. critical infrastructure only when directed to do so. DOD's cyberspace operations are composed of the military, intelligence, and ordinary business operations of the DOD in and through cyberspace. Military cyberspace operations use cyberspace capabilities to create effects that support operations across the physical domains and cyberspace. Cyberspace operations differ from information operations (IO), which may use cyberspace as a medium, but may also employ capabilities from the physical domains. Cyberspace operations are categorized into the following. Offensive Cyberspace Operations , intended to project power by the application of force in and through cyberspace. These operations are authorized like operations in the physical domains. Defensive Cyberspace Operations , to defend DOD or other friendly cyberspace. These are both passive and active defense operations and are conducted inside and outside of DODIN. DODIN Operations , to design, build, configure, secure, operate, maintain, and sustain DOD communications systems and networks across the entire DODIN. In 2012, President Obama directed DOD to organize and plan to defend the nation against cyberattacks of significant consequence, in concert with other U.S. government agencies. The resulting DOD Cyber Strategy focuses on three primary cyber missions: Defend DOD networks, systems, and information. Defend the U.S. homeland and U.S. national interests against cyberattacks of significant consequence. Provide cyber support to military operational and contingency plans. Guided by this strategy document, DOD began to build a Cyber Mission Force (CMF) in 2012 to carry out DOD's cyber missions. The CMF consists of 133 teams that are organized to meet DOD's three cyber missions. Specifically, CMF teams support the following mission sets though their respective assignments. Cyber National Mission Force teams defend the nation by seeing adversary activity, blocking attacks, and maneuvering in cyberspace to defeat them. Cyber Combat Mission Force teams conduct military cyber operations in support of combatant commands. Cyber Protection Force teams defend the DOD information networks, protect priority missions, and prepare cyber forces for combat. Cyber Support Teams provide analytic and planning support to National Mission and Combat Mission teams. Cyber Mission Force teams reached initial operating capability in October 2016. Currently comprising around 5,000 individuals, the cyber mission force is expected to grow to 6,200 by the end of 2018. Organizationally, the Cyber Mission Force is an entity of the United States Cyber Command. United States Cyber Command In response to the growing cyber threat, in 2009 the Secretary of Defense directed the establishment of a new military command devoted to cyber activities. The United States Cyber Command (USCYBERCOM) is currently a subunified command, under the U.S. Strategic Command, whose stated mission is to "direct the operations and defense of specified Department of Defense information networks and; prepare to, and when directed, conduct full spectrum military cyberspace operations in order to enable actions in all domains, ensure US/Allied freedom of action in cyberspace and deny the same to our adversaries." Previously existing components, such as the Joint Task Force for Global Network Operations (JTF-GNO) and the Joint Functional Component Command for Network Warfare (JFCC-NW), were absorbed by USCYBERCOM and reorganized to provide centralized planning for cyberspace operations. USCYBERCOM is commanded by a four-star general, who is also the director of the National Security Agency (NSA) and chief of the Central Security Service (CSS). The commander manages day-to-day global cyberspace operations and leads defense and protection of DODIN. Each of the military services provides support to USCYBERCOM. Department of Homeland Security (DHS)25 DHS serves a variety of roles for ensuring cybersecurity, both in the federal government and the private sector. DHS secures federal networks, coordinates critical infrastructure protection efforts, responds to cyber threats, investigates cybercrimes, funds cybersecurity research and development, and promotes cybersecurity education and awareness. In order to accomplish these roles, DHS collects information on cybersecurity threats and shares that information across the federal government and with the private sector so others may be able to better protect themselves. In working to secure federal government networks, DHS deploys tools at the gateway between the internet and agency networks to identify and stop known threats before they are able to access the agencies. DHS also deploys tools on agency networks to continuously identify risks and help to prioritize risk mitigation. Working with all federal agencies, DHS also assists in the implementation of and adherence to the Federal Information Security Management Act (FISMA, P.L. 107-347 , as amended), which, among other provisions, requires the head of each federal agency to take responsibility for managing risks to information security. Pursuant to Presidential Policy Directive 41 (PPD-41) and the National Cyber Incident Response Plan (NCIRP), DHS serves as the federal lead for asset response activities. Asset response activities are those which provide technical assistance to victim entities. The assistance may be for mitigating vulnerabilities, reducing the impacts cyber incidents may cause, identifying other entities that may have been impacted by an incident, assessing risks related to an incident, and coordinating the response delivered by federal agencies to victim entities. DHS's agencies also carry out other cybersecurity responsibilities. The Science and Technology Directorate funds research into cybersecurity threats and invests in mitigating technologies. The U.S. Secret Service and Immigration and Customs Enforcement have authorities to investigate crimes targeting network infrastructure and crimes committed through information and communications technology. DHS serves as the sector-specific agency for 10 of the 16 critical infrastructure sectors, defined by presidential policy, and assists with the cybersecurity of the sectors through threat analysis and the promulgation of mitigating guidance. Department of Justice31 Combatting malicious actors who exploit cyberspace is a mission that cuts across the Department of Justice's (DOJ's) investigative, intelligence, prosecutorial, and technological components. DOJ is responsible for investigating and prosecuting a range of modern-day cyber threats. It is also responsible for protecting its own critical information systems from cyber intrusions. The Obama Administration, through PPD-41, outlined how the government responds to significant cyber incidents. It specified that DOJ, through the Federal Bureau of Investigation (FBI) and the National Cyber Investigative Joint Task Force (NCIJTF), is the designated lead on cyber threat response. This involves "conducting appropriate law enforcement and national security investigative activity at the affected entity's site; collecting evidence and gathering intelligence; providing attribution; linking related incidents; identifying additional affected entities; identifying threat pursuit and disruption opportunities; developing and executing courses of action to mitigate the immediate threat; and facilitating information sharing and operational coordination with asset response." The FBI pursues cybercrime cases ranging from computer hacking and intellectual property rights violations to child exploitation, fraud, and identity theft. Its top priorities involve combating computer and network intrusions and investigating ransomware. Specifically, the FBI's Cyber Division focuses on "high-level intrusions by state-sponsored hackers and global cyber syndicates, and the most prolific botnets." Further, with respect to prosecuting cyber threat actors, the U.S. Attorneys and the Criminal Division at DOJ are both centrally involved. Selected Policy Issues Below is a list of selected policy issues related to cybersecurity which may be of interest to Congress. These issues are organized alphabetically rather than by theme or priority. Critical Infrastructure37 Critical infrastructure (CI) is defined in 42 U.S.C. §5195c(e) as "systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters." Most U.S. CI is controlled by the private sector. Under the Homeland Security Act of 2002, as amended, DHS coordinates CI security, including cybersecurity. CI is classified into sectors, most recently 16 under Presidential Policy Directive 21, issued in 2013, with each sector having a designated sector-specific agency. Some agencies have cross-sector responsibilities, such as DHS, DOJ, and the Federal Trade Commission (FTC). The increasing potential for attacks that might cripple components of CI or otherwise damage the national economy has led to debate about the best ways to protect those sectors. Some, such as the chemical and financial sectors, are subject to federal regulation. The protection of others, such as information technology, relies largely on voluntary efforts. The efficacy of that mix of voluntary and regulatory efforts has long been a source of controversy. In 2013, Executive Order 13636 established an alternative approach, in which the National Institute of Standards and Technology (NIST) facilitated a public-private effort to develop a cybersecurity framework for CI sectors. Subsequently, Congress authorized the framework process in the Cybersecurity Enhancement Act of 2014 ( P.L. 113-274 ). Issued in 2014, the framework consists of three parts: (1) a core set of activities and outcomes applicable to all the sectors, organized into five functions (identify, protect, detect, respond, and recover); (2) a profile describing an entity's current and target cybersecurity postures; and (3) implementation tiers that characterize the entity's current and intended practices. The DHS C 3 (for Critical infrastructure Cyber Community) program works to facilitate its voluntary adoption, and NIST released a draft update in January 2017. Before the development of the voluntary cybersecurity framework, debate about the role of federal regulation appeared to be a significant factor impeding the enactment of cybersecurity legislation. However, events associated with the rapidly evolving threat environment continue to draw attention to the question of the appropriate federal role in protecting CI. Attacks such as the ones in 2016 using the Mirai botnet have led to renewed calls by some observers for broad security regulations. Attempts attributed to Russia at interfering with the November 2016 federal election have renewed concerns about the security of the U.S. election infrastructure, leading to the controversial designation by DHS of state and local election systems as a subsector under the government facilities CI sector. The 115 th Congress may be faced with the need to address such problems and resolve the controversies, which may be made more urgent by the expected continued evolution of cyberspace and more difficult by the unpredictable nature of emerging threats. Data Breaches and Data Security40 Congress has sought policy responses to the loss of data by both private sector companies and government agencies, prompted by high-profile breaches such as those at Equifax and the Securities and Exchange Commission (SEC). Breaches frequently occur because of the reliance of modern business practices on IT. An increasingly used catchphrase among industry analysts is that today "all companies are technology companies," or "all companies are data companies." This concept reflects the role that IT and data play in enabling modern business practices that allow companies to compete and thrive in the marketplace. However, this reliance on IT and data also creates risk for corporate leadership to manage. Cybersecurity initiatives seek to control that risk. Congress has held hearings to examine individual instances of breaches and encourage the breached entities to assist those whose data has been compromised. Additionally, some Members have introduced legislation to address a variety of elements around a data breach, such as standards for securing sensitive data, data breach notification requirements, and the responsibilities affected entities have to those whose data has been breached. Education and Training44 Increasing awareness of cyberattacks—and the increasing connectedness of cyber and cyber-physical systems—have raised concerns about whether U.S. homes, businesses, and government are prepared to secure themselves in our digitally integrated world. Some of this attention to preparedness has focused on the sufficiency of cybersecurity education, training, and workforce development in the United States. Federal policymakers have grappled with questions about both the quality and the quantity of U.S. postsecondary education graduates with cybersecurity credentials (in general) and the civilian and military workforce needs of the federal government (in particular). Federal programs and policies have also sought to increase awareness of secure computing practices (e.g., do not reuse passwords); and policymakers and agency officials often view educational benefits (e.g., scholarships, training) as a tool for attracting and retaining federal military and civilian cybersecurity workers. The federal effort in cybersecurity education, training, and workforce development has not been comprehensively inventoried. However, federal funding supports a wide variety of activities in this area. These activities, which are sometimes offered in partnership with multiple federal and nonfederal entities, include cybersecurity awareness (StaySafeOnline.org), summer camps (GenCyber) and student competitions (CyberPatriot and the National Collegiate Cyber Defense Competition), scholarships for cybersecurity postsecondary students who agree to serve in government after graduation (CyberCorps), and professional development for federal personnel in specialized cybersecurity positions (College of Cyber and the Federal Virtual Training Environment). Federal programs not specifically designed to provide cybersecurity education and training—such as the TechHire and Advanced Technological Education programs—may also provide grants for these purposes. Over the past decade, analysts seeking to document the scope and scale of the U.S. cybersecurity workforce came to realize that the federal government, private employers, and academics were not using the same language to describe cybersecurity jobs or the knowledge, skills, and abilities necessary to hold those positions. This lack of a common language was perceived as a potential barrier in the cybersecurity labor market and an impediment in federal hiring. In response, the National Initiative for Cybersecurity Education (NICE)—the federal coordinating body for cybersecurity education, training, and workforce development—undertook a multiyear effort to develop standard terms and uses. When finalized, the NICE Cybersecurity Workforce Framework ( Framework ) is to provide a standard vocabulary that can be used to better align education and employment in cybersecurity fields. Among its many other cybersecurity education-related activities, NICE also provides grants to regional education-employment partnerships for the purpose of aligning academic pathways with cybersecurity occupations. One key policy issue for the 115 th Congress may relate to the Framework 's implementation. Although the central issue for the Framework is its use as a cybersecurity workforce management tool in federal agencies, cybersecurity education programs may begin to adopt the language (and align curriculum and grantee requirements) during the next few years as well. Other policy topics that may be addressed during the 115 th Congress include the role or expansion of educational benefits as tools for attracting and retaining federal cybersecurity personnel, as well as funding for federal cybersecurity education, training, and workforce development programs. Longer-term policy issues in cybersecurity education may include the ongoing challenge of ensuring that educational content evolves in tandem with the rapidly changing cyber defense and operations landscape; continued training of incumbent workers in the federal government in secure computing practices; and, potentially, the continuing development of existing certifications, or the creation of new, nontraditional educational credentials, such as microcredentialing and digital badging. Encryption47 Encryption is a process to secure information from unwanted access or use. Encryption uses the art of cryptography to change information which can be read (plaintext) and make it so that it cannot be read (ciphertext). Decryption uses the same art of cryptography to change that ciphertext back to plaintext. Data that are in a state of being stored or transmitted are eligible for encryption. However, data that are in a state of being processed—that is, being generated, altered, or otherwise used—are unable to be encrypted and remain in plaintext and vulnerable to unauthorized access. Encryption as a Cybersecurity Tool49 Encryption is used by a variety of users for a variety of purposes. Fundamentally, encryption enables information to remain confidential to a single user or between a user and multiple users. Encryption also enables a level of certainty that the communicating parties are who they say they are and that the communication is only available to intended recipients. Individuals use encryption to keep aspects of their lives that are held on digital platforms private on their devices and among those with whom they share information. Businesses use encryption to ensure that their research is kept confidential from their competitors, and to ensure that their transactions with their suppliers and customers are authentic. Governments use encryption to assure their information is kept and handled in confidence. Even without a user's interaction, devices may use encryption when communicating to other devices to ensure that commands received from one device are authentic and safe to execute. However, those seeking to obscure their malicious activities from legal authorities may also employ encryption to thwart opportunities to disrupt their malicious activity. Encryption and Law Enforcement Investigations55 Changing technology presents opportunities and challenges for U.S. law enforcement. While some feel that law enforcement now has more information available to them than ever before, others contend that law enforcement is "going dark" as their investigative capabilities are outpaced by the speed of technological change. As such, law enforcement cannot access certain information they otherwise may be authorized to obtain. One such technology-related hurdle for law enforcement is strong, end-to-end (or what law enforcement has sometimes called "warrant-proof") encryption. The tension between law enforcement capabilities and technological change has received congressional attention for several decades. For instance, in the 1990s the "crypto wars" pitted the government against technology companies, and this tension was highlighted by proposals to build in vulnerabilities, or "back doors," to certain encrypted communications devices as well as to restrict the export of strong encryption code. In addition, Congress passed the Communications Assistance for Law Enforcement Act (CALEA; P.L. 103-414 ) in 1994 to help law enforcement maintain their ability to execute authorized electronic surveillance as telecommunications providers turned to digital and wireless technology. There has been previous executive and congressional action aimed at helping law enforcement conduct investigations of cybercrimes in the face of changing technology that can hamper such investigations. The going dark debate originally focused on data in motion, or law enforcement's ability to intercept real-time communications. However, more recent technology changes have affected law enforcement's capacity to access not only communications but also stored content, or data at rest. The Obama Administration urged the technology community to develop a means to assist law enforcement in accessing encrypted data and took steps to bolster law enforcement's technology capabilities to do so. In addition, policymakers have been evaluating whether legislation may be an appropriate response to the problem of going dark—particularly with regards to encryption. The Encryption Working Group in the 114 th Congress made several observations to set up the going dark discussion for the 115 th Congress. It noted that (1) any measure to weaken encryption would work against the nation's interest, (2) encryption technology is widely used and increasingly available worldwide, (3) there is no one-size-fits-all solution to the encryption and going dark challenge, and (4) Congress should promote cooperation between the law enforcement and technology communities. Information Sharing60 Cyberspace evolves at a rapid pace. That exacerbates the speed and intensity of the cybersecurity arms race between attackers and defenders. As a result, having timely, accurate information is essential for effective cybersecurity—not only threat information, but also defenses, best practices, and other things. Such information sharing is generally considered an important tool for protecting information systems from unauthorized access. However, barriers to information sharing—both within and across sectors—have long been considered by many to be a significant hindrance, especially with respect to critical infrastructure (CI) sectors. Private-sector entities have often asserted a reluctance to share such information among themselves because of concerns about legal liability, antitrust violations, and potential misuse, especially of intellectual property, including trade secrets and other proprietary business information. Legislation focusing specifically on alleviating such obstacles to information sharing in cybersecurity was first considered in the 112 th Congress, but debate about issues such as regulation and privacy continued until enactment in the 114 th . In December 2015, the Cybersecurity Information Sharing Act (CISA) was signed into law as part of the Cybersecurity Act of 2015 (Division N of P.L. 114-113 ). CISA takes steps to facilitate public- and private-sector sharing of information on cybersecurity threats and defensive measures and to permit private-sector entities to monitor and operate defenses on their information systems. It includes procedures for sharing of classified information; protections for security, privacy, nondisclosure, and correction of errors in shared information; exemptions from liability and antitrust actions for covered activities; and limitations on the uses of shared information by both public and private entities. The Cybersecurity Act of 2015 also makes the DHS National Cybersecurity and Communications Integration Center (NCCIC) the lead agency for federal information sharing. In overseeing implementation of CISA, Congress might consider a number of factors that might affect its successful application: Information that may be usefully shared can be complex in type and purpose, which may complicate determining the best methods and criteria for sharing. The timescale during which shared information will be most useful varies with the kind of information shared and its purpose. A large increase in information sharing could potentially lead to information overload, reducing the effectiveness of the sharing in reducing cybersecurity risks. Protection of confidentiality, privacy, and civil liberties in information sharing remains an area of controversy. The complexity of the current structure for information sharing may complicate implementation and assessment of effectiveness. It includes not only federal agencies and end users such as businesses but also private-sector information sharing and analysis entities (centers called information sharing and analysis centers, or ISACs, established pursuant to Presidential Decision Directive 63 in 1998, and organizations called information sharing and analysis organizations, or ISAOs, established under the Homeland Security Act of 2002 and Executive Order 13691 of 2015), trade and professional associations, and other mechanisms. Sharing of information among private-sector entities might not be substantially improved by CISA. Even if it is successful, information sharing is only one facet of cybersecurity, and the changes made by CISA might by themselves be of limited effectiveness in improving cybersecurity. Information sharing tends to focus on immediate concerns such as cyberattacks and imminent threats. While those must be addressed, that does not diminish the importance of other issues such as education and training, workforce, acquisition, or cybercrime law, or major long-term challenges such as building security into the design of hardware and software, changing the incentive structure for cybersecurity, developing a broad consensus about cybersecurity needs and requirements, and otherwise adapting to the rapid evolution of cyberspace. Insurance62 Businesses and individuals often use insurance for financial risks that they are unwilling or unable to bear on their own. With the uncertainty and potential size of damages from cyberattacks, entities' interest in insurance against such attacks has been growing in the past few years. Although policies covering cyber risk have been offered for over a decade, the market in general is still largely in its infancy. Much of the coverage is offered outside the regular admitted market made up of insurers fully licensed by the state in which they are operating. The National Association of Insurance Commissioners (NAIC) has estimated premiums for cyber insurance at approximately $1.5 billion but recognizes that "a significant amount of premium" is missing from this estimate since it is being offered by non-U.S. companies who do not file information with the states. The actuarial data regarding loss probabilities and severities upon which insurers depend to set premiums are still scarce, and policy language is not standardized, with policies generally including low dollar limits and "a whole slew of exclusions" to limit insurer risk. The immaturity of the cyber insurance market could be seen as purely a matter of private concern bearing mainly on who may suffer losses from a particular cyberattack. In some circumstances, however, insurance may also be seen to have a public policy purpose. Insurance premiums can cause someone to internalize a risk or a benefit that otherwise might go unrecognized. With security on the internet, for example, being such an interdependent system, such recognition can be particularly important and increase security for everyone. Insurers also often act to transmit valuable information on avoiding and mitigating losses. In the 114 th Congress, a Senate subcommittee hearing on cyber insurance was held and legislation was introduced in the House ( H.R. 6032 ) which would have provided a business tax credit for the purchase of "data breach insurance." In addition to the incentive for purchasing cyber insurance inherent in the tax credit, H.R. 6032 would also have required compliance with NIST standards on cybersecurity to be eligible for the credit. Congress has enacted laws and programs affecting a range of other insurance markets such as health insurance (Medicare, Affordable Care Act), flood insurance (National Flood Insurance Program), and terrorism insurance (Terrorism Risk Insurance Act). Should the 115 th Congress seek to encourage cyber insurance, a relatively wide range of approaches from a tax, regulatory, or program perspective could be considered. International Issues Trade67 Cybersecurity poses challenges in the international trade arena as more trade is conducted, or facilitated, online, potentially increasing the susceptibility of commerce to cyberattack and theft of information. Digital trade, including end products like movies and video games, and services such as email and online banking, enhances the productivity and overall competitiveness of an economy, enabling technological shifts that are transforming businesses. According to one study, the global economic impact of the internet is estimated at $4.2 trillion in 2016, and would rank as the fifth-largest national economy in the world. According to the Bureau of Economic Analysis, in 2015, the United States exported $751 billion in services, of which over 60% were information and communication technology (ICT) and potentially ICT-enabled services. The increase in digital trade also raises new challenges in U.S. trade policy, including how best to address new and emerging trade barriers and risks related to cybersecurity. For example, hacks into company databases and systems could disrupt worldwide business operations and global supply chains, and pose a threat to consumers whose personal information may be stolen or manipulated. Publicized cyberattacks on firms may depress stock values. When governments of U.S. trading partners impose trade barriers, such as data localization measures compelling companies to store data within the country's border, a U.S. firm's data may become fragmented, creating vulnerabilities and increasing the risk of a cyberattack. The internet is a key driver of intellectual property-related trade. However, it can make infringement of intellectual property rights (IPR) easier, and identifying those responsible for IPR infringement more challenging. Cyber theft of trade secrets can wipe out the value and competitive advantage of a firm's long-term research, presenting additional, increasingly prominent, barriers to digital trade. In May 2014, DOJ indicted five Chinese individuals for government-sponsored cyber espionage against U.S. companies and theft of proprietary information to aid the competitiveness of Chinese state-owned enterprises (SOEs). U.S. companies see potential challenges as countries develop new cyber regimes, such as China's new cybersecurity law, passed in November 2016. The law imposes several restrictions on internet firms including requiring operators of critical information infrastructure (defined as sectors such as telecommunications, energy, and finance) to store certain data in China, and requiring companies to assist Chinese police and national security agencies. The law's security reviews may force companies to disclose source code, a concern of many U.S. firms who are hesitant to reveal proprietary information about their business intellectual property that could potentially expose them to further cyberattacks. The law states that a key goal is "secure and controllable" technology, a term some see as an attempt to promote local ICT providers and lock out foreign firms. U.S. companies and various U.S. officials, such as former National Security Adviser Susan Rice, have raised U.S. concerns about the potential impact of the law. The United States holds high-level cyber dialogues with multiple bilateral partners, such as China, India, and the European Union, to focus on cybersecurity efforts. Recent bilateral and plurilateral agreements have begun to address digital trade rules and barriers more explicitly. For example, the proposed Trans-Pacific Partnership (TPP) promoted cooperation among the parties on cybersecurity issues and has new enforceable commitments to combat cyber theft of trade secrets and localization barriers. The United States also discusses digital trade and cybersecurity norms in forums such as the Group of 20 (G-20), the Organization for Economic Co-operation and Development (OECD), and the Asia-Pacific Economic Cooperation (APEC). The 2016 G-7 Joint Declaration endorsed the "G7 Principles and Actions on Cyber." Congress has an interest in ensuring the global rules and norms of the internet economy align with U.S. laws and norms, and that U.S. trade policy on digital trade and cybersecurity advances U.S. interests. Congress may consider specific actions to uphold the G-7 commitments to serve as a model for other countries; hold hearings on trade barriers, negotiations, or international forums in relation to cybersecurity; conduct oversight of the relevant executive branch agencies; or consider legislation to respond to cybersecurity threats to U.S. trade and businesses, including the imposition of sanctions. Internet of Things Security74 "Internet of Things" (IoT) refers to networks of objects that communicate with other objects and with computers through the internet. "Things" may include virtually any object for which remote communication, data collection, or control might be useful, such as vehicles, appliances, medical devices, electric grids, transportation infrastructure, manufacturing equipment, or building systems. In other words, the IoT potentially includes huge numbers and kinds of interconnected, "smart" objects. It is often considered the next major stage in the evolution of cyberspace. Smart devices can form systems that communicate among themselves, usually in concert with computers, allowing automated and remote control of many independent processes and potentially transforming them into integrated systems. Those systems can potentially impact homes and communities, factories and cities, and every sector of the economy, both domestically and globally. The IoT can contribute to more integrated and functional infrastructure, especially in "smart cities," with projected improvements in transportation, utilities, and other municipal services. Although the full extent and nature of the IoT's impacts remain uncertain, economic analyses predict that it will contribute trillions of dollars to economic growth over the next decade. Sectors that may be particularly affected include agriculture, energy, government, health care, manufacturing, and transportation. IoT objects are potentially vulnerable targets for hackers. As the number of connected objects in the IoT grows, so will the potential risk of successful intrusions into IoT devices and increases in costs from those incidents. Economic and other factors may reduce the degree to which such objects are designed with adequate cybersecurity capabilities built in. IoT devices are small, are often built to be disposable, and may have limited capacity for software updates to address vulnerabilities that come to light after deployment. The interconnectivity of IoT devices may also provide entry points through which hackers can access other parts of a network. Control of a set of smart objects could permit hackers to use their computing power in malicious networks called botnets to perform various kinds of cyberattacks, such as the 2016 attack using the Mirai botnet that interrupted the internet services of several companies. Access could also be used for destruction, such as by modifying the operation of industrial control systems, as with the Stuxnet malware that caused centrifuges to self-destruct at Iranian nuclear plants. Oversight of Federal Agency Information Technology Security76 The Federal Information Security Management Act (FISMA, P.L. 107-347 , as amended) places the responsibility for the information security of a federal agency with the agency head. Specifically, 44 U.S.C. §3554 states the following: The head of each agency shall — (1) be responsible for— (A) providing information security protections commensurate with the risk and magnitude of the harm resulting from unauthorized access, use, disclosure, disruption, modification, or destruction of— (i) information collected or maintained by or on behalf of the agency; and (ii) information systems used or operated by an agency or by a contractor of an agency or other organization on behalf of an agency[.] In executing this responsibility, each agency head shall also ensure the agency has senior officials who can operationally oversee the management and security of agency information technology. Congress requested an annual, independent evaluation of agency information security performance, conducted by the agency inspector general, to assist in Congress's oversight of the agency's IT management and security of its systems and data. Congress has also passed additional legislation regarding the management of federal information technology. The Federal Information Technology Acquisition Reform Act (FITARA, P.L. 113-291 , Title VIII) expanded the role of the chief information security officer (CIO) in the financial management of planning, programming, and execution of IT acquisitions for agencies. It also requires the Office of Management and Budget (OMB) to report to Congress on the net performance of capital investments. In addition, FISMA 2014 ( P.L. 113-283 ) specifies some operational roles for DHS and the Office of the Director of National Intelligence (DNI) in IT security. It also directs OMB to provide additional reports to Congress on the adoption of security technologies by federal agencies and sets out the guidance for agencies to directly report to Congress when they experience a data breach. Also, the Cybersecurity Act of 2015 ( P.L. 114-113 , Division N) requires the inspectors general of each agency with a national security system or a system that has access to personally identifiable information to report to Congress on the security policies and practices of those systems. The OMB reports to Congress on annual FISMA performance usually arrive in the spring of each calendar year, and agency IG reports on annual information security evaluations or periodic information systems security reports are released throughout the year. These reports, along with those from the Government Accountabily Office (GAO), can assist Congress in executing oversight over agency operations, and can inform Congress on agency performance. Response to Cybersecurity Incidents78 Presidential Policy Directive 41 (PPD-41), issued on July 26, 2016, by the Obama Administration, outlines guiding principles and the government's policy response to a cyber incident. The National Cyber Incident Response Plan (NCIRP) elaborates on those principles by delineating responsibilities and outlining the coordinating of federal agencies. PPD-41 states that response is a shared responsibility among the victims, private sector, and the government; responses must be risk-based to determine which resources to bring to bear; any response must respect the affected entities and must require a unity of effort across federal agencies; and any response should be done in a manner that enables restoration and recovery of operations to the victim, not just retaliation against the hacker. The policy also dictates that a government response is to have concurrent lines of effort. Threat response activities are to be led by the FBI and involve seeking out and delivering a response against the hacker. Asset response activities, as prescribed in PPD-41, are to be led by DHS and involve efforts to help victims mitigate the effects of an attack. The intelligence community is to provide assistance to both lines of effort. Following the release of PPD-41, the government adopted the NCIRP. The NCIRP follows a model developed to support conventional emergency management in the National Preparedness System, especially the National Response Framework. In doing so, it borrows the use of a core capability approach and adopts key aspects of the National Incident Management System (NIMS). Instead of prescribing specific actions for agencies to take, the NCIRP outlines how the government is to activate a Cyber Unified Coordination Group to address the specific incidents. This is similar to how the government activates a multiagency group at a Joint Field Office to deliver federal resources in response to a natural disaster. Lacking specific responses, or even a menu of options for the Cyber Unified Coordination Group to consider, the NCIRP is not an operational plan, and as such may not have a deterrent effect on adversaries. PPD-41 describes two sides to a response: efforts directed at providing support for the victim and efforts directed at tracking down and punishing the aggressor. Similar to how the fire department will put out the fire and get people to safety while the police department pursues the arson, the federal government's response activities are directed toward both the victim and the attacker. Response focusing on victims seeks to remediate the attack's effects. Such activities endeavor to remove any malware installed on systems, repair damaged systems, and work with incident response teams to restore unadulterated operations. Although DHS is the lead federal agency for such activities, it also relies on capabilities from partner agencies such as the DOD or the intelligence community in providing a response, as well as a critical infrastructure sector-specific agency. The federal government may provide resources to victims, but the victim is not under any obligation to accept federal resources. Victims may opt to respond to incidents with in-house teams, or by retaining cybersecurity firms. If the federal government is invited to assist with incident response, its work may only be made public with the victim's consent, by matter of administrative policy. However, the very action of federal resources being delivered to assist with response to a cyber incident can act as an overt federal reaction, signaling to both other victims and adversaries the options the federal government will pursue for cybersecurity. Frequently concurrent to a response directed at helping victims, response focused on attackers seeks to determine who committed the attack and deliver some form of retaliation. Such activities endeavor to attribute the attack to a group or an individual, and develop options which will both punish the attacker and seek to deter additional adversarial action. Options may include an overt cyber-based response, a covert cyber-based attack against the adversary, announcing sanctions against the group or individual, indicting or arresting those responsible, or using some other form of national power. Although the FBI is the lead federal agency for responding domestically in this line of effort, it will also rely on the capabilities of partner agencies, such as DOD for a cyberattack, the intelligence community for attribution, the Department of the Treasury for sanctions, or the Department of State for diplomatic options. Previous Policy Action82 Recent Legislative Action A complete list of bills considered during the 115 th Congress may be found in CRS Report R43317, Cybersecurity: Legislation, Hearings, and Executive Branch Documents , by [author name scrubbed]. More than 10 bills received consideration and action during the first session of the 115 th Congress to address several issues, including management of federal IT, assisting state and local governments investigate cybercrimes, improving information sharing, and the development of voluntary guidelines on ways to reduce cyber risks. More than 30 bills were introduced in the 114 th Congress that would have addressed several issues, including data-breach notification, incidents involving other nation-states, information sharing, law enforcement and cybercrime, protection of critical infrastructure (CI), workforce development, and education. The Obama Administration released proposals for three bills—on information sharing, data-breach notification, and revision of cybercrime laws. Several bills received committee or floor action. On December 18, 2015, H.R. 2029 , the Consolidated Appropriations Act, 2016, was signed into public law ( P.L. 114-113 ). The omnibus law's cybersecurity provisions are located in Division N (Cybersecurity Act of 2015), including Title I, Cybersecurity Information Sharing; Title II, National Cybersecurity Advancement; Title III, Federal Cybersecurity Workforce Assessment; and Title IV, Other Cyber Matters. The bill encourages private companies to voluntarily share information about cyber threats with each other as well as the government. Firms that participate in the information sharing are to receive liability protection. In the 113 th Congress, five cybersecurity-focused bills were signed into law on December 18, 2014: H.R. 2952 , the Cybersecurity Workforce Assessment Act, which requires the DHS to develop a cyber-workforce strategy ( P.L. 113-246 ); S. 1353 , the Cybersecurity Enhancement Act of 2014, which codifies the National Institute of Standards and Technology's (NIST's) role in cybersecurity ( P.L. 113-274 ); S. 1691 , the Border Patrol Agent Pay Reform Act of 2014, which gives DHS new authorities for cybersecurity hiring ( P.L. 113-277 ); S. 2519 , the National Cybersecurity Protection Act of 2014, which codifies DHS's cybersecurity center ( P.L. 113-282 ); and S. 2521 , the Federal Information Security Modernization Act of 2014, which reforms federal IT security management ( P.L. 113-283 ). The National Defense Authorization Act for Fiscal Year 2014, which became P.L. 113-66 on December 26, 2013, included a variety of cybersecurity-related provisions. The below tables summarize recent legislative actions. Recent Executive Action The White House has taken actions independent of Congress to address a variety of cybersecurity issues. Recent executive actions are described below in reverse chronological order, starting with the most recent action. In May 2017, the Trump Administration issued an executive order (E.O. 13800) designed to improve the cybersecurity of both federal networks and critical infrastructure. It requires federal agencies to manage cybersecurity risks holistically across the government. It also directs federal agencies to take specific steps to assist the private sector in managing cyber risks. Previously, the Obama Administration issued an executive order (E.O. 13757) amending E.O. 13694 to allow for the imposition of sanctions on individuals and entities determined to be responsible for tampering, altering, or causing the misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions. Five entities and four individuals were identified in the Annex of the amended Executive Order and added to the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) list of Specially Designated Nationals and Blocked Persons (SDN List). On April 1, 2015, the Obama Administration issued an executive order (E.O. 13694) placing sanctions on certain persons engaging in significant malicious cyber-enabled activities. The executive order established the first sanctions program to allow the Administration to impose penalties on individuals overseas who engage in destructive attacks or commercial espionage in cyberspace. The order declares "significant malicious cyber-enabled activities" a "national emergency" and enables the Treasury Secretary to target foreign individuals and entities that take part in the illicit cyber activity for sanctions that could include freezing their financial assets and barring commercial transactions with them. In February 2015, the Obama Administration issued Executive Order 13691, which, along with a legislative proposal, is aimed at enhancing information sharing in cybersecurity among private sector entities. It promotes the use of information sharing and analysis organizations (ISAOs), which were defined in the Homeland Security Act (6 U.S.C. §131(5)) as entities that gather, analyze, and share information on the security of critical infrastructure to assist in defense against and recovery from incidents. These initiatives broadened the reach of ISAOs beyond CI to any affinity group (e.g., geography, business sector, etc.). In that sense, they differ from the more familiar information sharing and analysis centers (ISACs), created in response to Presidential Decision Directive (PDD) 63 in 1998 specifically to address information-sharing needs in CI sectors. Also in February 2015, the Obama Administration created the Cyber Threat Intelligence Integration Center (CTIIC), established by the DNI. Its purposes are to provide integrated analysis on foreign cybersecurity threats and incidents affecting national interests and to support relevant government entities, including the National Cybersecurity and Communications Integration Center (NCCIC) at DHS, as well as other entities at DOD and DOJ. In February 2013, the Obama Administration issued an executive order (E.O. 13636) designed to improve the cybersecurity of U.S. critical infrastructure. It attempts to enhance the security and resiliency of critical infrastructure through voluntary, collaborative efforts involving federal agencies and owners and operators of privately owned critical infrastructure, as well as the use of existing federal regulatory authorities. Given the absence of comprehensive cybersecurity legislation, some security observers contend that E.O. 13636 is a necessary step in securing vital assets against cyber threats. Others have expressed the view that the executive order could make enactment of a bill less likely or could lead to government intrusiveness into private-sector activities through increased regulation under existing statutory authority. Below is a table of executive action on cybersecurity-related issues. Selected Hearings The House has held over 30 hearings during the first session of the 115 th Congress on cybersecurity issues, and the Senate has held over 25. The House held 84 cybersecurity hearings during the 114 th Congress and the Senate held 35. The House committees holding the most hearings during the 114 th Congress were Homeland Security (17), Oversight and Government Reform (16), Science, Space, and Technology (8), and Energy and Commerce (7). The Senate committees holding the most hearings were Armed Services (8), Commerce, Science, and Transportation (6), and Homeland Security and Governmental Affairs (6). A few topics of interest to 114 th Congress committees were cybercrime (including privat-sector and federal data breaches and the Office of Personnel Management's 2015 cyber intrusions), critical infrastructure vulnerabilities, oversight of federal and military cybersecurity programs, and the Internet of Things.

Cybersecurity has been gaining attention as a national issue for the past decade. During this time, the country has witnessed cyber incidents affecting both public and private sector systems and data. These incidents have included attacks in which data was stolen, altered, or access to it was disrupted or denied. The frequency of these attacks, and their effects on the U.S. economy, national security, and people's lives have driven cybersecurity issues to the forefront of congressional policy conversations. This report provides an overview of selected cybersecurity concepts and a discussion of cybersecurity issues that are likely to be of interest during the 115th Congress. From a policymaking standpoint, cybersecurity includes the security of the devices, infrastructure, data, and users that make up cyberspace. The elements of ensuring cybersecurity involve policies spanning a range of fields, including education, workforce management, investment, entrepreneurship, and research and development. Software development, law enforcement, intelligence, incident response, and national defense are involved in the response when something goes awry in cyberspace. To help secure and respond to incidents in cyberspace federal departments and agencies carry out their authorized responsibilities, run programs, and work with the private sector. While every federal agency has a role in protecting its own data and systems, certain agencies have significant responsibilities with regard to national cybersecurity. The Department of Defense supports domestic efforts on cybersecurity with its capabilities and capacity, and deploys military assets to protect American critical infrastructure from a cyberattack when directed to do so. The Department of Homeland Security secures federal networks, coordinates critical infrastructure protection efforts, responds to cyber threats, investigates cybercrimes, funds cybersecurity research and development, and promotes cybersecurity education and awareness. The Department of Justice investigates and prosecutes a variety of cyber threats, which range from computer hacking and intellectual property rights violations to fraud, child exploitation, and identity theft. Congress passed five laws related to cybersecurity during the 113th Congress and an additional law during the 114th Congress. Congress also held 119 hearings on cybersecurity-related issues during the 114th Congress. The White House issued presidential actions on cybersecurity related to critical infrastructure cybersecurity, information sharing, and sanctions in retaliation for malicious cyber activities. Cybersecurity policy has continued to hold congressional interest during the 115th Congress. Recent congressional hearings have examined several cybersecurity issues, including data breaches, critical infrastructure protection, education and training, and the security of federal information technology. Other issues discussed during the 114th Congress continue to hold stakeholder interest, including debates concerning government access to encrypted data. This report covers a variety of topics related to cybersecurity in order to provide context and a framework for further discussion on selected policy areas. These topics include cybersecurity incidents, major federal agency roles and responsibilities, recent policy actions by Congress and the White House, and descriptions of policy issues that may be of interest in the 115th Congress.

Rationale Many billions of dollars are spent annually on "branded" U.S. food advertising and promotion, where one producer pits its name brand against the names of others offering a similar or substitute product. Perdue chicken and Tropicana orange juice commercials are examples of branded advertising. Generic ads, on the other hand, have no connection to the name of a specific producer. Because producers of a basic agricultural product cannot easily convince consumers to choose a particular egg or potato over another, generic advertising can help to expand total demand for the product, it is argued. Generic advertising uses television, radio, and other media to reach consumers. The Beef: It ' s What ' s for Dinner and Pork: The Other White Meat ads have been examples. The programs also seek to expand foreign markets and to fund research and education, such as development of new or improved products or surveys of consumer behavior. (Such activities are generally directed by the producer boards and approved by AMS.) Producers can and have organized voluntary check-offs, but they account for only a small share of all funding for generic efforts. Since the prototype Florida Citrus Advertising Tax was instituted in 1935, hundreds of mandatory farm commodity promotion programs have been legislated by states or the federal government. Nine out of ten U.S. farmers were contributing to one or more of these efforts by the mid-1990s. Many commodity groups prefer mandatory check-offs as a way to address the so-called "free rider" problem—nonpaying producers who benefit economically from programs that others have funded. Requests to Congress or USDA to authorize mandatory check-offs have been prompted by various factors, including the search for new ways to stimulate product demand, particularly as farm markets have globalized and U.S. producers face more foreign competition domestically and overseas. Legal Challenges Some producers have vigorously challenged mandatory check-off programs. Some have asked USDA to change or abolish orders it has issued on behalf of the commodity boards, or petitioned the department to hold a producer referendum on whether a check-off should continue. Some producers also have filed lawsuits in federal courts. Their key contention has been that the check-off is a "tax" to fund advertising and other activities they would not pay for voluntarily. Three cases have reached the U.S. Supreme Court. In the first, Glickman v. Wileman Brothers and Elliot, Inc. , California peach and nectarine handlers had challenged the USDA marketing order, which is not only a promotion program but also sets quality standards and other marketing rules for those fruits (see footnote 1 ). The 9 th Circuit Court of Appeals had held that the order mandating the assessments violated the affected parties' First Amendment rights and therefore was unconstitutional. The Circuit Court stated that such generic advertising had not been proven necessary or more successful than individual advertising, and also, in effect, violated the free speech of growers who would prefer to use their money to advertise in other ways. The government appealed the case to the Supreme Court, which on June 25, 1997, reversed, by a 5-4 vote, the lower court's ruling. It found that the program "should enjoy the same strong presumption of validity that we accord to other policy judgments made by Congress. The mere fact that one or more producers 'do not wish to foster' generic advertising of their product is not a sufficient reason for overriding the judgment of the majority of market participants, bureaucrats, and legislators who have concluded that such programs are beneficial." In the second case, the Supreme Court on June 25, 2001, ruled 6-3 that mandatory assessments for the mushroom check-off were a violation of the First Amendment because they force producers to pay for commercial speech. Upholding a decision by the 6 th Circuit Court of Appeals, the Supreme Court reasoned, in United States v. United Foods, Inc. , that the program authorized by the Mushroom Promotion Act differs fundamentally from that under Glickman . The Court said that the mushroom check-off is a stand-alone program that is not part of a broader regulatory scheme, as was the peach/nectarine marketing order, and "... for all practical purposes, the advertising itself, far from being ancillary, is the principal object of the regulatory scheme...." The Supreme Court issued its third decision on May 23, 2005. The case, Johanns v. Livestock Marketing Association , stems from a ruling on June 21, 2002, by a U.S. district court in South Dakota that the national beef check-off violates the First Amendment by forcing producers "to pay, in part, for speech to which the plaintiffs object." The district court further ruled in the case that the generic advertising conducted under the Beef Promotion and Research Act and the ensuing Beef Order is not government speech. The 8 th Circuit Court of Appeals announced that it would not reconsider the district court's ruling. Appealing to the Supreme Court, the federal government argued a point that the Justices had not considered in the mushroom case: that check-off messages constitute government speech, and so are not susceptible to a First Amendment challenge. The Supreme Court, in a 6-3 decision, ruled in favor of the government, upholding the program. The Court stated, in part: The message set out in the beef promotions is from beginning to end the message established by the Federal Government. Congress had directed the implementation of a "coordinated program" of promotion, "including paid advertising, to advance the image and desirability of beef and beef products." Congress and the Secretary have also specified, in general terms, what the promotional campaigns shall contain. ... Thus, Congress and the Secretary have set out the overarching message and some of its elements, and they have left the development of the remaining details to an entity whose members are answerable to the Secretary (and in some cases appointed by him as well). The Supreme Court majority also rejected check-off opponents' argument that the program does not qualify as government speech because it is funded by a targeted assessment rather than by general revenues (e.g., taxes). "Citizens may challenge compelled support of private speech, but have no First Amendment right not to fund government speech. And that is no less true when the funding is achieved through targeted assessments devoted exclusively to the program to which the assessed citizens object," the Court concluded. In a May 23, 2005, press release, then Secretary of Agriculture Johanns said that he was pleased with the decision. The House Agriculture Committee Chairman, the National Cattlemen's Beef Association, the National Pork Producers Council, the American Farm Bureau Federation, and the National Milk Producers Federation were among the groups that also reacted favorably to the Supreme Court's decision. The National Farmers Union joined the Livestock Marketing Association in expressing disappointment with the decision. (A subsequent settlement, filed by defendants and plaintiffs, included a check-off funded survey of producers' views toward the program.) Outlook and Issues Since the Johanns decision, several other closely watched legal challenges of the programs have been stalled or even ended, including others on beef, and on dairy, pork, watermelons, and cotton. Johanns also is widely expected to be used to defend future First Amendment challenges. However, it is possible that check-off opponents could continue to challenge other legal aspects of the programs in the courts. For example, the Supreme Court did not address the question of whether or not a check-off might be unconstitutional if it were found that the advertisements are attributable to individuals who disagree with a funded message. As the Supreme Court noted, Congress retains final oversight and statutory authority. It remains to be seen whether check-off advocates—or opponents—will continue to examine the need for, and seek, any statutory changes. Nonetheless, the Johanns decision could inform any new legislation creating or amending check-off programs. Among the other issues are the following. Are Check-offs Effective? All of the federal check-off programs and many state ones are required by law to periodically evaluate their effectiveness. The ultimate measure has been whether those who contribute to the programs gain economically. More to the point, do the economic benefits outweigh the costs of assessments? Researchers examine a variety of indicators such as changes in product sales, producer prices, market share, industry profits, and consumer awareness of the products or product attributes. Examining past and projected market and related industry data is one method for making such determinations; another method is industry and consumer surveys. However, these approaches encounter difficulties in trying to isolate the impacts of program promotion dollars from other variables, such as the relative prices and availability of competing products (e.g., poultry vs. beef and/or pork; milk vs. juice or soft drinks), changes in consumer income, demographics, shopping preferences, and so forth. Economists try to account for these variables through the use of increasingly sophisticated economic models. Most of the studies, including those based on the models, typically have found positive ratios of benefits compared with costs—ranging from 2-1 benefits over costs to as high at 10-1. However, even these analyses can be widely interpreted and may not answer such questions as whether a higher ratio necessarily signals a more "effective" program; whether all types of contributors share equally in the benefits; whether others, such as consumers and processors who do not directly contribute, gain (or lose) economically; or whether investing the funds in some other way—like buying stocks—might yield higher returns. What Types of Activities Are Appropriate? Funds collected can be used by the boards, which meet regularly and submit their plans to USDA-AMS for review, for a wide variety of activities, with the common objective of enhancing product demand. Virtually all check-off laws include language prohibiting the use of funds for any type of activity to influence government policies or actions. However, some critics have regarded the line between advertising and advocacy as a blurry one: for example, at least one group once periodically used its funds for advertisements in Washington, D.C.-based publications that promoted the image of the industry as a whole. This question is further complicated if a check-off program staff is housed in, or near, the same offices as that commodity's trade association or if the association contracts to carry out some "permitted" activities. In another disputed use of funds, the U.S. Environmental Protection Agency (EPA) agreed to a limited and conditional release of liability for past and ongoing violations of air pollution laws by animal feeding operations (AFOs) that participate in a national study of air emissions and that, among other things, pay $2,500 per farm to help fund it. The National Pork Board agreed to commit $6 million in check-off funds to cover the $2,500 fees from the more than 1,800 hog farms with approved agreements. A coalition of groups called the Campaign for Family Farms challenged this commitment. In October 2006, a USDA administrative law judge ruled that the Pork Board spending was "contrary to public policy and not in accordance with law" (AMA PPRCIA Docket No. 05-0001). However, in December 2006 the judge denied the petitioners' motion for an injunction against the board's spending, pending resolution of an appeal. That appeal was still pending in October 2008, and the board spent the check-off funds as planned. Industry Governance and Representation When Congress approves a check-off, it generally does not begin until an industry group proposes and AMS issues an order, following federal rulemaking procedures. Often, but not always, a referendum among affected parties is required before it takes effect. Once an order is underway, periodic referenda may be held to assess support for its continuation. Most check-off laws provide guidance, often specific, on the make-up and establishment of the industry governing boards that oversee program staff and set policy and priorities (which are subject to USDA review and approval). One concern is how to ensure that all contributors are chosen and represented fairly (with regard to geography, operation size, importer or domestic, and so forth). Such questions have become more prominent among those groups, which allege that major structural changes in their industry have enabled what they believe to be more powerful economic interests to dominate check-off efforts. Some believe that the Johanns decision might spur Congress, for instance, to consider exempting certain categories of producers who disagree with generic advertising from paying mandatory assessments under a commodity promotion law similar to the exemption that Congress established in the 2002 farm bill ( P.L. 107-171 ) for persons that produce and market solely 100% organic products. Congress might also seek to further define or expand current provisions in commodity promotion laws that already require councils and projects to "take into account similarities and differences" between certain products and producers. Congress may also be asked to reexamine its position on requiring the advertisements to show that they are, in fact, speech by the government, since this was a major criticism in the dissent and all circuit courts found insufficient governmental control. As mentioned by Justice Ginsburg in her concurring opinion in Johanns and by some experts, a clear indication of who the speaker is may be important to reconcile the message in check-off programs with other speech that is overtly sponsored by the government, particularly the nutritional and dietary guidelines (e.g., "Food Pyramid"). The most recent federal Dietary Guidelines, for example, encourage greater consumption of fruits, vegetables, whole grains, and low-fat dairy, within a balanced, lower-calorie intake diet, while some check-off programs generally encourage more consumption of both low-fat and high-fat beef, pork, and dairy products.

The U.S. Supreme Court in 2005 affirmed the constitutionality of the so-called beef check-off program, one of the 18 generic promotion programs for agricultural products that are now active nationally. Supporters view check-offs as economically beneficial self-help activities that need minimal government involvement or taxpayer funding. Producers, handlers, and/or importers are required to pay an assessment, usually deducted from revenue at time of sale—thus the name check-off . However, some farmers contend they are being "taxed" for advertising and related activities they would not underwrite voluntarily. The Supreme Court's decision to uphold the beef check-off is considered significant for the future of the other programs, although the Court left open the possibility of additional challenges.

The Decided Case Appropriateness of Preliminary Injunction Limiting Military Exercises: Winter v. Natural Resources Defense Council F acts and litigation history : The Navy scheduled 14 training exercises through January 2009 off the coast of southern California. These exercises involve the use of "mid-frequency active sonar" to detect enemy submarines. Environmentalists claim that the high decibel levels used harms whales, causing beach strandings. In February 2007, however, the Navy issued an environmental assessment under the National Environmental Policy Act (NEPA), concluding that the use of mid-frequency active sonar during the exercises would cause minimal harm to marine mammals. Petitioners, mostly environmental groups, sought declaratory and injunctive relief against the exercises, on the ground that they violated NEPA, plus other environmental laws not material to the Supreme Court decision. The district court granted a preliminary injunction barring conduct of the exercises. On remand from the Ninth Circuit, the district court modified the preliminary injunction to allow the Navy to use the sonar if it used mitigation measures. On the Navy's second appeal, challenging two of the mitigation measures, the Ninth Circuit affirmed the modified injunction, noting that plaintiffs (petitioners in the Supreme Court) had carried their burden of showing a "possibility" of irreparable injury and that the balance of hardships weighed in favor of plaintiffs. Holding / rationale of Supreme Court : The Supreme Court ruled November 12, 2008 (by which time 13 of the 14 scheduled exercises had been conducted). The majority opinion, by the five justices generally identified as conservative, held that as an initial matter the Ninth Circuit's "possibility" test for issuance of a preliminary injunction is too lenient; plaintiffs must show that irreparable injury is "likely" in the absence of an injunction. However, the Court continued, even if plaintiffs had shown irreparable injury (and, too, likelihood of success on the merits), it is "plainly outweighed" by the Navy's interest in effective, realistic training of its sailors. That factor alone requires denial of the requested injunctive relief. For the plaintiffs, the most serious possible injury would be harm to an unknown number of marine mammals. In light of the foregoing, the Court reversed the decision below and vacated the preliminary injunction. Parenthetically, said the Court, the same balancing factor requiring vacatur of the preliminary injunction here would also bear on a challenge to any future permanent injunction. The Court did not address the merits of the lawsuit—that is, whether the Navy exercises violated NEPA or the other federal environmental laws claimed to be violated. Comments: This case was accepted by the Supreme Court in an unusual posture: as a challenge to a preliminary injunction, rather than to the merits of petitioners' statutory claims. The Court made clear, however, that its perception of an overriding national security interest in the challenged training exercises should lead the district court to reject a final injunction as well, in the event the military is found to have violated an environmental statute. Note, too, that the United States had sought the judicial rejection of the Ninth Circuit's "mere possibility" test for issuance of injunctions before, succeeding this time. The Ninth Circuit is widely regarded as an environmentally friendly circuit, and the Supreme Court, in reversing it here, was doing what it has done many times before. Three of the four undecided environmental cases this term are also from the Ninth Circuit. The Cases Remaining to Be Decided Propriety of Challenge to Nationwide Application of Rule Based on Site-specific Application of Rule: Summers v. Earth Island Institute Facts and litigation history: On June 4, 2003, acting under the Forest Service Decision-making and Appeals Reform Act (ARA), the Forest Service promulgated regulations codified at 36 CFR §§ 215.12(f) and 215.4(a). These regulations precluded notice, opportunity for comment, and administrative appeals for projects and activities implementing forest plans where those plans and activities are covered by categorical exclusions under the National Environmental Policy Act (NEPA). The following day, the Forest Service designated salvage timber sales of 250 acres or less as categorical exclusions. Later in 2003, the Forest Service approved the timber sale of 238 acres of post-fire forest, stating that the project was not subject to appeal because of the regulations. In a challenge to the 2003 regulations as applied to this timber sale, the district court invalidated the regulations and issued a nationwide injunction against their application. On appeal, the Ninth Circuit in Earth Island Institute v. Ruthenbeck , 490 F.3d 687 (9 th Cir. 2007), held first that plaintiffs had Article III standing because there is injury in fact: here, deprivation of procedural rights and the possibility of reduced recreational enjoyment of the national forests. As a further preliminary matter, the court found the claims against the appeal prohibition ripe because they had been applied to the timber sale in question to block plaintiff Earth Island Institute's administrative appeal. On the merits, the Ninth Circuit found that 36 C.F.R. §§ 215.12(f) and 215.4(a) conflict with the plain language of the ARA, affirming the district court. It also affirmed the nationwide scope of the district court's injunction against the regulations' enforcement. The Supreme Court granted certiorari on January 18, 2008. Paraphrasing the petition for certiorari, the questions presented are: (1) whether the Forest Service's promulgation of 36 C.F.R. § 215.4(a) and § 215.12(f), as distinct from the particular site-specific project to which those regulations were applied in this case, was a proper subject of judicial review; (2) whether respondent environmental groups established standing; (3) whether respondents' challenge to 36 C.F.R. § 215.4(a) and § 215.12(f) remains ripe after the timber sale to which the regulations had been applied was withdrawn, and respondents' challenges to that sale had been voluntarily dismissed with prejudice, pursuant to settlement between the parties; and (4) whether the Ninth Circuit erred in affirming the nationwide injunction issued by the district court. The case was argued before the Supreme Court on October 8, 2008, the same day as Winter , supra , but has not yet been decided. Comments: Environmental groups have long used site-specific challenges to achieve program-wide reform. Thus, the stakes in this decision are potentially large. A defeat for such groups—that is, a holding that site-specific application of a rule does not give a plaintiff the right to a nationwide remedy—could greatly increase the burden on public interest groups seeking to invalidate a government program as contrary to statute by requiring multiple lawsuits where one currently might suffice. That the Court, or at least its conservative justices, might so rule is suggested by the generally restrictive view of the role of the courts held by such justices. Whether Cost-benefit Analysis May Be Used to Determine "Best Technology Available" Under the Clean Water Act: Entergy Corp. v. Environmental Protection Agency Facts and litigation history: "Power plants and other industrial operations withdraw billions of gallons of water from the nation's waterways each day to cool their facilities. The flow of water into these plants traps ... large aquatic organisms against grills or screens, which cover the intake structures, and draws ... small aquatic organisms into the cooling mechanism ... [resulting in] the kill[ing] or injur[ing] of billions of aquatic organisms every year." Addressing this problem, Clean Water Act (CWA) section 316(b) demands that rules under the act require that "the location, design, construction, and capacity of cooling water intake structures reflect the best technology available [BTA] for minimizing adverse environmental impact." In 2004, EPA issued the rule at issue here, governing cooling water intake structures at large, existing power plants. The rule permitted EPA to conduct cost-benefit analysis in determining BTA. In Riverkeeper Inc. v. United States , 475 F.3d 83 (2d Cir. 2007), the Second Circuit invalidated the use of cost-benefit analysis under section 316(b). The language of that provision, it noted, "plainly indicates that facilities must adopt the best technology available and that cost-benefit analysis cannot be justified ..." When Congress has intended that an agency do cost-benefit analysis, said the court, it has said so on the face of the statute, which it did not do in section 316(b). By contrast, EPA may consider cost in two other ways: first, to determine what technology can reasonably be borne by the industry, and second, to do cost effectiveness analysis (the court reasoning that BTA selection based in part on cost effectiveness, while taking cost into account, remains technology rather than cost driven). The Supreme Court granted certiorari on April 14, 2008. As phrased in the petition for certiorari, the question presented is whether CWA section 316(b) authorizes EPA to compare costs with benefits in determining the "best technology available for minimizing adverse environmental impact" at cooling water intake structures. The case was argued December 2, 2008. Comments: In the 1970s, when almost all the federal environmental laws were enacted, there was much resistance to cost-benefit analysis. In part, the opposition stemmed from a belief that one simply cannot put a dollar value on all the things that environmental laws protect and that when agencies do use such dollar values, they are often low. There has been a shift of late, however, to greater acceptance of cost-benefit analysis. This case will test whether the justices on the Supreme Court generally viewed as conservative, often more sympathetic to business concerns such as cost, will continue that shift. Industry presumably would welcome a decision that could be used to legitimize cost-benefit analysis elsewhere in the CWA where it is not expressly authorized, and in federal pollution control statutes generally. This case has also put a spotlight on Justice Breyer, who before becoming a judge on the First Circuit criticized government regulation for not often enough considering costs, as through cost-benefit analysis. This may explain the effort in Riverkeeper's brief to the Court to argue, as did the Second Circuit, that there are avenues for consideration of costs in CWA section 316(b) other than a cost-benefit analysis. Conflicting Regulatory Coverage Under the Clean Water Act: Coeur Alaska, Inc. v. Alaska Conservation Group Facts and litigation history: Coeur Alaska proposes to revive a long-defunct gold mine in Alaska's Tongass National Forest. The company proposes to dispose of the wastewater produced by the mine—210,000 gallons daily, including 1,440 tons of tailings—by piping it to a nearby 23-acre lake in the national forest. The discharge would kill all the fish and nearly all the other aquatic life in the lake. Because the discharge ultimately would raise the lake bottom by 50 feet (necessitating a dam), the Corps of Engineers reasoned that it was covered by the permit program under Clean Water Act (CWA) section 404 for discharges of "fill material" into U.S. waters. The Corps issued the section 404 permit in 2005. In Southeast Alaska Conservation Council v. U.S. Army Corps of Engineers , 486 F.3d 638 (9 th Cir. 2007), the Ninth Circuit addressed the fact that two different CWA regulations, dictating different results, seemed to apply to Coeur Alaska's proposed discharge. First, the Corps and EPA define "fill material" as material placed in waters of the United States that changes the bottom elevation of such waters. No one disputes that the discharge from Coeur's gold mine would do this and, as noted, the "404 permit" has been issued. Second, however, EPA has a new source performance standard promulgated under CWA section 306 that specifically prohibits discharges from Coeur Alaska's type of ore processing ("a froth flotation mill") into waters of the United States. This prohibition is required under the CWA to be incorporated into the mill's section 402 (National Pollutant Discharge Elimination System, or "NPDES") permit. The court concluded that the CWA's plain language requires that the Section 306 performance standard apply, through an NPDES permit. Section 404, said the court, contains no implied exemption from the performance standards whenever a proposed discharge meets the definition of "fill material." Moreover, the court said, EPA's and the Corps' statements when the regulatory definition of "fill material" was adopted show that they did not intend waste products subject to performance standards to be regulated as fill material. Thus, in the court's view, the Corps should not have issued a 404 permit here and the district court's contrary ruling must be reversed. The Supreme Court granted certiorari on June 27, 2008. Paraphrasing the petition for certiorari, the question presented is whether the Ninth Circuit erred in reallocating the permitting authority of the Corps of Engineers under CWA section 404, to EPA under CWA section 402. The case was argued Jan. 12, 2009. Comments: The grant of certiorari was unexpected in this case because there was no circuit split and the United States did not seek review. The consequences of a reversal could be significant if the Court gives the Corps wide latitude to remove discharges from EPA's NPDES program by redefining "fill material." Liability Apportionment and "Arranger" Liability Under the Superfund Act: Burlington Northern and Santa Fe Railway Co. v. United States Facts and litigation history: U.S. EPA and the State of California spent a considerable sum to clean up the toxic contamination at an agricultural chemical storage and distribution facility. EPA and the state then sued to recover their cleanup costs under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA; popularly "Superfund Act"), which attaches liability for such government cleanup costs to past and present owners and operators of a contaminated site, those who transported the hazardous substance to the site, and those who arranged for the disposal of the hazardous substance at the site ("arranger liability"). In light of this liability scheme, EPA and the state sued (a) the company that operated the facility, which later became defunct, (b) two railroads (including Burlington Northern), which owned part of the site when the contamination occurred, and (c) Shell Oil Co., which supplied and delivered some of the chemicals to the facility. The district court found the railroads liable as past and present owners of the site and Shell liable as an "arranger." It then multiplied a variety of percentages (e.g., the percentage of the overall site owned by the railroads) to find the railroads liable for 9% of total cleanup costs, and Shell liable for 6% of total cleanup costs. In United States v. Burlington Northern and Santa Fe Railway Co ., 520 F.3d 918 (9 th Cir. 2008), the Ninth Circuit addressed two questions. First, are the railroads and Shell liable for all the cleanup costs or, as the district court held, only some of them? The court held that as a purely legal matter, the harm at issue here is capable of apportionment—for example, some of the contamination occurred before the railroads' parcel became part of the facility, and only some of the toxic substances were stored on that parcel. But, the court said, neither the railroads nor Shell has provided any reasonable basis for an apportionment here—for example, leakage or disposal evidence cannot suffice to provide such a basis because relative toxicity and migratory potential are also relevant. The second question answered by the court was whether Shell was liable as an "arranger." That term, said the court, is not limited to "direct" arranger liability, where the central purpose of the transaction is to dispose of the hazardous substance. In addition, CERCLA case law includes "broader" arranger liability, where the transaction contemplates disposal as a part of, but not the focus of, the transaction. Here, Shell arranged a transaction in which there necessarily would be leakage or some other form of disposal, and that is sufficient for arranger liability. The Supreme Court granted certiorari on October 1, 2008. As phrased in Burlington Northern's petition for certiorari, the question presented is whether the Ninth Circuit erred by reversing the district court's apportionment of responsibility under CERCLA and by adopting a standard of review that departs from common law principles and conflicts with decisions of other circuits. As phrased in Shell Oil's petition for certiorari, the questions presented are (1) whether liability for "arranging" for disposal of hazardous substances under CERCLA may be imposed upon a manufacturer who merely sells and ships, by common carrier, a commercially useful product, transferring ownership and control to a purchaser who then causes contamination involving that product, and (2) whether joint and several liability may be imposed upon several potentially responsible parties under CERCLA even when there is an objectively reasonable basis for divisibility that would suffice at common law. The case was argued on February 24, 2009. Comments: This case raises fundamental Superfund Act issues that the Court has repeatedly denied certiorari on in the past. Some observers opine that this is the most important Superfund case ever to reach the Court, raising issues as to which the government has enjoyed favorable precedent until now. The heart of the Superfund statute is its expansive liability scheme, designed by Congress to maximize the likelihood that solvent responsible parties would be found at a site to reimburse the government for its cleanup costs. One element of that expansive liability, legislative history shows, is that parties made liable under the act are jointly and severally liable (each is potentially liable for the entire cleanup) unless there is some reasonable basis for apportioning liability. Burlington Northern , in raising the issue of what constitutes a reasonable basis, may critically affect how often the government will be able to recover its costs (through court awards of damages or negotiated settlements). Thus, if the Supreme Court substitutes a lax standard for finding a reasonable basis in place of the Ninth Circuit's demanding one, the federal treasury would very likely have to absorb a portion of total cleanup costs more often than under current precedent. In the same way, if the Court adopts a tighter standard for "arranger" liability than the Ninth Circuit, there could be fewer parties in the pool of potential defendants, and, once again, a greater likelihood that the treasury would have to foot some of the cleanup bill. Industry, of course, is concerned as to what the liability of a manufacturer is in selling a product—that is, in instances when it is not, in an obvious sense, "arrang[ing] for disposal." Concluding Thoughts Though the Navy sonar case is the only one of the five cases accepted by the Supreme Court likely to generate headlines in the popular press, all of these cases are important for their individual programs, and in some cases for standing and administrative law beyond. They are also likely to be revealing of the environmental direction to be taken by the still-emerging Roberts Court, which has split closely on some major environmental cases. Industry views these five cases with optimism; the environmental community with apprehension. For one thing, the environmental side won in the decision below in all five cases. Assuming the conventional wisdom that the Supreme Court does not take cases merely to affirm the decision below, the environmental sweep in the appellate courts suggests decisions going the other way in the Supreme Court (the one decision so far, in Winter v. Natural Resources Defense Council , follows that prediction). Reinforcing this possibility is the fact that four of the five cases are from the Ninth Circuit—as mentioned, a circuit with a high reversal rate in the Supreme Court. As for the principal NEPA case, Summers v. Earth Island Institute , it has been noted that the Supreme Court has voted against the environmental position in each of its 15 NEPA decisions. Finally, as an overall matter, today's Supreme Court, with a few notable exceptions, has been less tolerant of regulation and more sympathetic to business concerns than the Court of the 1970s and early 1980s, the first decade-and-a-half of federal environmental legislation. As for the large number of environmental cases this term, there is always the chance that it is due purely to the random vagaries of the Court's certiorari-granting process (the Court's previous term had no environmental cases ). Another view is that the conservative justices, realizing the possibility of appointments to the Court by President Obama, want to resolve as many environmental issues as possible before their numbers are diminished. Finally, it has been suggested that the most eminent Supreme Court practitioners of the day are taking a greater interest in environmental cases, and that their skills and their names on the petitions for certiorari increase the likelihood that the Court will accept such cases. Finally, it is worth noting that the Court continues to reject repeated petitions for certiorari in the most difficult cases, including in the current term. These include preeminently the question of whether certain intrastate applications of the Endangered Species Act comport with the Commerce Clause of the Constitution (petitions rejected at least four times), and efforts to clarify the Court's fractured opinions as to the geographic scope of the Clean Water Act in Rapanos v. United States (petitions rejected five times). As with the cases granted certiorari above, the reasons for the Court's nonacceptance of cases are speculative, beyond pointing out that the overwhelming majority of petitions for certiorari are turned down. As to Rapanos , however, the reason for nonacceptance (even when, this term, the United States itself was the petitioner) is very likely that the justices on the Court today are the same as in 2006 when Rapanos was decided. In that year, no single rationale commanded the support of a majority of the justices, leaving the lower courts in confusion as to the rule of law to be extracted from the decision. That would also likely be the result if the Court were to accept a post- Rapanos case now.

In the Supreme Court's 2008-2009 term, which likely will conclude in late June, 2009, the Court has accepted for argument five environmental cases—an unusually large number out of the roughly 85 cases accepted for argument. This report reviews the cases, decided and undecided, and then briefly comments. The one case of the five that is already decided is Winter v. Natural Resources Defense Council, holding that the national security interest in the Navy's being able to conduct exercises using "mid-frequency active sonar" clearly outweighs the danger to whales from use of such sonar. In so deciding, the Court also invalidated the Ninth Circuit's lax standard for the issuance of preliminary injunctions. The four cases remaining to be decided are, first, Summers v. Earth Island Institute, raising the question whether a court's awarding nationwide relief from the application of a rule is proper in the context of a site-specific challenge to the rule. Second, the case of Entergy Corp. v. Environmental Protection Agency addresses the Clean Water Act's demand that EPA require the "best technology available" to minimize fish mortality from cooling water intake structures; the issue is whether that demand allows EPA to do cost-benefit analysis in deciding what technology to approve. Third, the case of Coeur Alaska, Inc. v. Alaska Conservation Group poses the issue whether a discharge prohibited by a Clean Water Act new source performance standard can still be allowed pursuant to a "fill" permit under the act. And fourth, the case of Burlington Northern and Santa Fe Railway Co. v. United States takes on two questions at the heart of the Superfund Act's liability scheme: when is there a reasonable basis for apportioning liability for hazardous-substance cleanup costs among responsible parties, in lieu of the joint and several liability that would otherwise apply, and when is a manufacturer liable for having arranged for the disposal of a hazardous substance even though disposal was not the primary purpose of the arrangement. Each of these cases has important implications for the particular program involved, and a few reach well beyond. Industry views these five cases with optimism; the environmental community with apprehension. A principal reason is that in all five cases, the environmental side won in the decision below. Assuming the conventional wisdom that the Supreme Court does not take cases merely to affirm the decision below, the environmental sweep in the lower appellate courts suggests decisions going the other way in the Supreme Court. The one decision so far, in Winter v. Natural Resources Defense Council, follows that prediction.

Coverage of the Buy American Act On its face, the Buy American Act appears to prohibit the acquisition of foreign goods by federal agencies 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 "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 award the contract to the domestic offeror. However, if the foreign offer still has the lowest price, the agency generally awards 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." Determining the act's applicability to specific procurements—and, particularly, determining whether the act's requirements were violated in particular cases—can raise complicated legal and factual questions. Much depends upon how particular terms (e.g., end product, component) are defined and construed for purposes of the Buy American Act. However, the details of manufacturing processes are often also relevant. Acquisitions of services are generally not subject to the Buy American Act. Nor does the act restrict purchases from foreign persons so long as their products are mined, produced, or manufactured in the United States, as required by the act. Purchases of Supplies Under the act, federal agencies procuring goods for use in the United States under a contract valued in excess of the micro-purchase threshold (typically $3,500) may generally purchase foreign (i.e., non-domestic) end products only in exceptional circumstances. The FAR's definition of end product appears straightforward on its face: " End product means those articles, materials, and supplies to be acquired for public use." However, determining whether an item is an end product, or a component of an end product, can be complicated, particularly when the agency seeks to acquire some sort of "system," and judicial and other tribunals often look to the purpose of the procurement in making such determinations. The term domestic end product , in turn, includes unmanufactured end products mined or produced in the United States. The term also encompasses end products 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 end product is a commercially available off-the-shelf (COTS) item. Manufacture is not defined by the Buy American Act, the 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. A component is any "article, material, or supply incorporated directly into an end product or construction material." However, distinguishing between components and end products can be difficult, as previously noted. In addition, it is important to note that components could potentially be deemed to be mined, produced, or manufactured in the United States, regardless of their actual place of origin, if (1) the end product in which they are incorporated is manufactured in the United States, and (2) the components are of a class or kind determined by the government not to be mined, produced, or manufactured in the United States in "sufficient and reasonably available commercial quantities of a satisfactory quality," as discussed below. The costs of components are 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 or construction material), 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, as discussed above), and allocable overhead costs, but excluding profits and any costs associated with the manufacture of the end product. Commercially available off-the-shelf (COTS) items generally include any item of supply (including construction material) that is (1) a "commercial item," as discussed below; (2) sold in substantial quantities in the commercial marketplace; and (3) offered to the government without modification, in the same form in which it is sold in the commercial marketplace. Purchases of Construction Materials The Buy American Act similarly bars agencies from using nondomestic construction materials absent exceptional circumstances. Construction material generally encompasses 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 supplies, not construction materials. Domestic construction material , in turn, includes unmanufactured construction materials 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 construction material is a COTS item. Other key terms, including manufacture , components , and COTS , are defined in the same way for construction materials as for end products. The costs of construction materials are also generally calculated in the same way as the costs of end products. Exceptions to the Buy American Act The FAR lists five "exceptions" to the Buy American Act, or five circumstances in which an agency may purchase foreign end products or use 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 inconsistent with the public interest; (2) domestic end products or construction materials are unavailable; (3) the contracting officer determines that the costs of domestic end products or construction materials would be unreasonable; (4) the agency is procuring information technology that is a commercial item; or (5) the goods are acquired specifically for commissary resale. However, some commentators also view the requirements that purchases be above the micro-purchase threshold, and for use in the United States, as exceptions to the Buy American 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. Contractors are, however, generally not entitled to a determination that an exception applies. Impracticable or Inconsistent with the Public Interest The Buy American Act and its implementing regulations expressly authorize agencies to purchase foreign end products and use foreign construction materials if the head of the contracting agency determines that application of the act's restrictions would be "impracticable" or "inconsistent with the public interest." The "public interest" prong of this exception encompasses agency agreements with foreign governments that provide for the purchase of foreign end products or construction materials, as well as ad hoc determinations that application of the act's restrictions would not be in the public interest. Such determinations are typically seen as entrusted to agency discretion, and generally will not be reviewed by judicial or other tribunals. Nonavailability The act and its implementing regulations also permit agencies to purchase foreign end products and use foreign construction materials when the relevant articles, materials, or supplies are not mined, produced, or manufactured in the United States "in sufficient and reasonably available commercial quantities and of a satisfactory quality." In some cases, the government has made a determination that particular classes of products are nonavailable. However, such "class determinations" mean only that domestic sources can meet 50% or less of the total U.S. government and nongovernment demand, and procuring agencies must generally conduct market research "appropriate to the circumstances," including seeking domestic sources, before acquiring an article listed as belonging to a nonavailable class. In other cases, the head of the contracting agency may determine in writing that individual goods which are not subject to class determinations are nonavailable. However, written determinations of nonavailability are not required if the acquisition was conducted using "full and open competition"; was synopsized as required in Subpart 5.201 of the FAR; and resulted in no offer of a domestic end product. Unreasonable Cost The Buy American Act and its implementing regulations also authorize the purchase of foreign end products and construction materials if the cost of domestic end products or construction materials would be "unreasonable." In practice, this exception is generally implemented through the price preferences granted to U.S. products in procurements where foreign bids or offers are the lowest priced or offer "best value," as discussed above. Resale The FAR expressly authorizes contracting officers to purchase foreign end products (there is no similar exception for construction materials) when the products are specifically for commissary resale. This exception can be seen as consistent with the Buy American Act's requirement that domestic goods be "acquired for public use." Products for resale in commissaries are arguably not for public use, since they are intended for resale to third parties. Information Technology that Is a Commercial Item For acquisitions conducted using FY2004 or subsequent fiscal year funds, agencies are exempt from the Buy American Act when acquiring information technology that is a commercial item. For purposes of this exception, information technology means "any equipment, or interconnected system(s) or subsystem(s) of equipment," used by the agency in acquiring, storing, managing, or transmitting data or information, while a commercial item is [a]ny item, other than real property, that is of a type customarily used by the general public or by non-governmental entities for purposes other than governmental purposes, and (i) [h]as been sold, leased, or licensed to the general public; or (ii) [h]as been offered for sale, lease, or license to the general public ... Use Outside the United States The Buy American Act expressly provides that agencies are not required to purchase domestic end products or construction materials "for use outside of the United States." As used here, the "United States" includes the 50 states, the District of Columbia, and "outlying areas" (e.g., Puerto Rico), but excludes areas over which the United States lacks "complete sovereign jurisdiction," such as military bases leased from foreign governments. (Note, however, that certain international agreements, which are outside the scope of this report, may call for the use of U.S. products in procurements conducted outside the United States.) Purchases Below the Micro-Purchase Threshold The act only applies to contracts whose value exceeds the micro-purchase threshold (generally, $3,500). Waiver Pursuant to the Trade Agreements Act Although not an exception to the Buy American Act, per se, the Trade Agreements Act (TAA) of 1979, as amended, can result in certain "foreign" products being treated the same as "domestic" ones in specific procurements. The TAA generally authorizes the waiver of "any law, regulation, procedure, or practice regarding Government procurement" that would result in "eligible products" from countries with which the United States has a trade agreement, or that meet certain other criteria (e.g., "least developed countries") , being treated "less favorably" than domestic products and suppliers. The Buy American Act has been so waived. This means that products that are wholly grown, produced, or manufactured in certain foreign jurisdictions, or "substantially transformed" into new and different articles within these jurisdictions, may be treated the same as "domestic" ones in particular procurements. However, such nondiscriminatory treatment only applies when (1) the procuring agency is one covered by the agreement; (2) the goods or services being procured are covered by the agreement; (3) the value of the goods or services meets or exceeds certain monetary thresholds specified in the agreement; and (4) the circumstances of the procurement are not such that it is otherwise exempt from the TAA's waiver of the Buy American Act (e.g., procurements set-aside for small businesses). Enforcement and Reporting When the procurement is for the acquisition of supplies, prospective vendors are required to provide a Buy American certificate, wherein the vendor attests that each end product, except [any] listed [below] ... is a domestic end product and that, for other than COTS items, the offeror has considered components of unknown origin to have been mined, produced, or manufactured outside the United States. Similar certificates are not required with construction contracts, although construction contractors are to request any "waivers" of the act at the time when they submit their offer, and must also submit data adequate for the government to evaluate their requests. Agency officials are generally entitled to rely upon the representations made by vendors regarding their products, and need not inquire further into the origins of particular products or components unless they have reason to believe that the contractor might have misrepresented whether its products are mined, produced, or manufactured in the United States, as required by the act. Vendors could potentially challenge an agency's implementation of the Buy American Act, or another vendor's compliance with it, prior to contract award as part of a bid protest. However, after the time for a post-award protest has passed, the vendor's compliance with the Buy American Act is generally viewed as a matter of contract administration. In other words, any noncompliance does not affect the validity of the contract, and cannot be protested by the vendor's competitors. The procuring agency, however, has various contractual and administrative remedies for any noncompliance after contract award. These remedies include monetary damages, termination for default, and debarment or suspension. Prime contractors, in turn, are responsible for ensuring subcontractors' compliance with the Buy American Act. In addition, compliance with the Buy American Act's requirements is also subject to congressional and other oversight. For each of fiscal years 2009 through 2011, agencies were required by statute to submit a report to Congress each year "on the amount of the acquisitions made by the agency in that fiscal year of articles, materials, or supplies purchased from entities that manufacture the articles, materials, or supplies outside of the United States." The information in these reports was based, in part, on contractors' certificates of compliance, discussed above. However, the reports focused on the place of manufacture, per se, without regard to the origin of the components. Thus, certain goods that would not count as domestic end products or construction materials for purposes of the Buy American Act could potentially have counted as made in the United States for purposes of these reports (e.g., goods made in the United States from 100% foreign components). Separate from the annual reports to Congress, agencies are required to input data into the Federal Procurement Data System (FPDS) regarding whether the goods they procure are manufactured inside the United States "in accordance with the Buy American Act." Agencies must also note any exceptions to or waivers of the act's requirements. These requirements are not tied to particular fiscal years, unlike the government-wide reports to Congress.

The Buy American Act of 1933 is the earliest and arguably the best known of various statutes regarding federal procurement of domestic products. Essentially, the act attempts to protect U.S. businesses and labor by restricting the acquisition and use of end products or construction materials that are not "domestic." For purposes of the act, domestic end products and domestic construction materials include (1) unmanufactured end products or construction materials mined or produced in the United States, as well as (2) end products or construction materials manufactured in the United States, provided that (a) the cost of the components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (b) the product is a commercially available off-the-shelf item. End products or construction materials that do not qualify as domestic under these definitions are generally treated as foreign, and offers that supply foreign end products or construction materials are foreign offers, regardless of the offeror's nationality. Purchases of services are generally not subject to the Buy American Act. As implemented, the Buy American Act limits the purchase of foreign end products and the use of foreign construction materials by establishing price preferences for domestic offers. Specifically, the provisions of the Federal Acquisition Regulation (FAR) implementing the Buy American Act provide that, when a domestic offer is not the low offer, the procuring agency must add a certain percentage of the low offer's price to that offer before determining which offer is the lowest priced or "best value" for the government. This percentage generally 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 award the contract to the domestic offeror. However, if the foreign offer still has the lowest price, the agency generally awards the contract to the foreign offeror pursuant to provisions of the Buy American Act permitting the purchase of foreign end products when the costs of domestic ones are "unreasonable." There are also other "exceptions" to the Buy American Act, which permit the purchase of foreign end products and the use of foreign construction material when (1) the expected value of the procurement is below the micro-purchase threshold (generally $3,500); (2) the goods are for use outside the United States; (3) the procurement of domestic goods or the use of domestic construction materials would be inconsistent with the public interest; (4) domestic end products or construction materials are unavailable; (5) the agency is procuring information technology that is a commercial item; or (6) the goods are acquired specifically for commissary resale. In addition, the Buy American Act is often waived pursuant to the Trade Agreements Act. When this happens, certain products that are wholly grown, produced, or manufactured in foreign jurisdictions, or "substantially transformed" into new and different articles within foreign jurisdictions, are treated the same as "domestic" ones for purposes of the procurement. The Buy American Act is of perennial interest to Congress, which has periodically enacted or considered measures to expand the scope of domestic preferences in federal procurements or, more rarely, to narrow it. The act itself has seldom been amended. However, numerous statutory requirements like those of the Buy American Act have been enacted. See CRS Report R43354, Domestic Content Restrictions: The Buy American Act and Complementary Provisions of Federal Law, by [author name scrubbed] et al.

Background Congress established the Office of Science and Technology Policy as an office within the EOP to, among other things, "serve as a source of scientific and technological analysis and judgment for the President with respect to major policies, plans, and programs of the Federal Government." Within the context of its organic statute, OSTP currently defines its mission as having three components: Provide the President and his senior staff with accurate, relevant, and timely scientific and technical advice on all matters of consequence. Ensure that the policies of the Executive Branch are informed by sound science. Ensure that the scientific and technical work of the Executive Branch is properly coordinated so as to provide the greatest benefit to society. To this end, OSTP has established the following strategic goals and objectives: Ensure that federal investments in science and technology are making the greatest possible contribution to economic prosperity, public health, environmental quality, and national security. Energize and nurture the processes by which government programs in science and technology are resourced, evaluated, and coordinated. Sustain the core professional and scientific relationships with government officials, academics, and industry representatives that are required to understand the depth and breadth of the Nation's scientific and technical enterprise, evaluate scientific advances, and identify potential policy proposals. Generate a core workforce of world-class expertise capable of providing policy-relevant advice, analysis, and judgment for the President and his senior staff regarding the scientific and technical aspects of the major policies, plans, and programs of the Federal government. OSTP also has several roles not articulated in these formal statements. These include serving as a sounding board and conduit of information for agency executives seeking to understand, clarify, and help shape science and technology-related policy objectives and priorities and helping to resolve interagency conflicts over areas of S&T responsibility and leadership. OSTP also plays a managerial and executive role with respect to other White House science and technology entities. OSTP manages the NSTC and exercises policy and programmatic oversight of PCAST. Policy Issues Congressional oversight of OSTP and influence over its activities are ongoing processes. The 114 th Congress may opt to consider a variety of issues and legislative options related to OSTP. These include: the compliance of OSTP with statutory restrictions on its use of appropriated funds for certain activities involving China; the reporting structure of the Office of the U.S. Chief Technology Officer; the role of OSTP in ensuring scientific integrity in federally funded and supported research, including the communication of scientific and technical information by federal scientists and engineers; efforts by OSTP to effect change in federal policies regarding public access to the results of federally funded research and development (R&D); and efforts by OSTP to consolidate federal science, technology, engineering, and mathematics (STEM) education initiatives and activities. The following sections address each of these issues, along with Obama Administration efforts and policy options for Congress. Restrictions on OSTP Engagement with China Congress has for several years restricted OSTP from engaging in certain activities with China or any Chinese-owned company by prohibiting the use of appropriated funds for these activities. OSTP may proceed with such activities only if it certifies they pose no risk of transferring technology or information with security implications to China and will not knowingly involve interaction with officials who have been determined by the United States to have direct involvement with violations of human rights. This certification must be submitted to the House and Senate Committees on Appropriations at least 30 days prior to such activities. Some Members of Congress have raised concerns regarding interactions between certain U.S. science and technology officials and the government of China. In part based on these concerns, Congress has sought to restrict OSTP from engaging in certain activities by prohibiting the use of appropriated funds for those activities. Section 1340(a) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) prohibited OSTP from expending funds made available under Division B of the act to develop, design, plan, promulgate, implement, or execute a bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned company unless such activities are specifically authorized by a law enacted after the date of enactment of this division. The appropriations acts since FY2011 that funded OSTP all included similar restrictions. The Department of Justice (DOJ) and OSTP have asserted that the President's constitutional authority to conduct foreign diplomacy precludes Congress from proscribing the use of funds for such specific activities. OSTP expended a portion of its FY2011 appropriation to engage in activities with China that Section 1340(a) sought to proscribe. OSTP has asserted that "certain applications of Section 1340 ... would infringe upon the President's constitutional authority to conduct foreign diplomacy." Subsequently, DOJ issued a supporting opinion on the constitutionality of the application of Section 1340 to OSTP's activities, stating, in part, Section 1340(a) of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 is unconstitutional as applied to certain activities undertaken pursuant to the President's constitutional authority to conduct the foreign relations of the United States. Most, if not all, of the activities of the Office of Science and Technology Policy that we have been asked to consider fall within the President's exclusive power to conduct diplomacy, and OSTP's officers and employees therefore may engage in those activities as agents designated by the President for the conduct of diplomacy, notwithstanding section 1340(a). The plain terms of section 1340(a) do not apply to OSTP's use of funds to perform its functions as a member of the Committee on Foreign Investment in the United States. The Government Accountability Office (GAO)—in response to a request from the Chairman of the Subcommittee on Commerce, Justice, Science, and Related Agencies of the House Committee on Appropriations, Representative Frank Wolf—concluded that OSTP's use of appropriations violated the prohibition in Section 1340. GAO stated that it did not attempt to opine on or adjudicate the constitutionality of a duly enacted statute, but viewed legislation that was passed by Congress and signed by the President as heavily presumed to be constitutional. Citing the GAO conclusion, Chairman Wolf sent a letter to Attorney General Eric Holder stating his expectation that the Attorney General would "ensure comprehensive enforcement of section 1340" of P.L. 112-10 and "hold [OSTP Director] Dr. Holdren to full account for his violation of the Anti-Deficiency Act." Congress subsequently reduced OSTP's FY2012 appropriations by nearly one-third (32.3%). Further, statutory language in OSTP's FY2012 appropriations act ( P.L. 112-55 ) and language in the accompanying report ( H.Rept. 112-284 ) prohibited OSTP from using appropriated funds to support activities that would carry the risk of transferring sensitive technology to China. In contrast with the FY2011 language, Section 539 of P.L. 112-55 allowed OSTP to proceed with activities that it certified pose no risk of transferring technology, data, or other information with national security or economic security implications to China or a Chinese-owned company. P.L. 113-6 , the Consolidated and Further Continuing Appropriations Act, 2013, restored OSTP funding levels and continued the statutory language prohibiting expenditure of OSTP funds. The act retained the prior clarification that this prohibition shall not apply to activities that OSTP certifies have no risk but added a requirement that OSTP certify that such activities will not involve knowing interactions with officials who have been determined by the United States to have direct involvement with violations of human rights. OSTP must submit any such certification to Congress at least 30 days prior to the activity. These requirements reportedly reflected an existing agreement between Congress and OSTP. P.L. 113-76 , the Consolidated Appropriations Act, 2014, reaffirmed and extended the above requirements for FY2014. P.L. 113-235 , the Consolidated and Further Continuing Appropriations Act, 2015, continued this restriction through FY2015. Reporting Structure of the U.S. Chief Technology Officer The position of U.S. chief technology officer (CTO) was created by President Obama. The absence of a statutory foundation for the position has contributed to ambiguity in the CTO's responsibilities, authorities, and reporting structure. In November 2007, Senator Barack Obama announced his intention, if elected President, to appoint a federal chief technology officer CTO. In April 2009, President Obama announced Aneesh Chopra as the first U.S. Chief Technology Officer (CTO), stating that his role would go beyond that performed traditionally by CTOs, to include promoting technological innovation to help the United States create jobs, reducing health care costs, protecting the homeland, and addressing other national goals. In appointing Chopra's successor, Todd Park, the President described his role as helping to "harness the power of data, technology, and innovation" across the federal government. OSTP Director Holdren described the role of Park's successor, Megan Smith, as guiding "the Administration's information-technology policy and initiatives, continuing the work of her predecessors to accelerate attainment of the benefits of advanced information and communications technologies across every sector of the economy and aspect of human well-being." A current issue facing Congress is ambiguity surrounding the formal reporting structure of the CTO, a position shown on at least some iterations of OSTP organizational charts as being a part of OSTP. This issue arose during congressional efforts to obtain testimony from the then-CTO, Todd Park, on his role in the implementation of the healthcare.gov website. Among the factors contributing to the lack of clarity in reporting responsibilities is the absence of specific statutory authority for the CTO position and the lack of a formal position description laying out the authorities and responsibilities of the CTO. In addition, both the first CTO, Aneesh Chopra, and his successor, Todd Park, held multiple titles. Chopra was appointed to serve as CTO, Assistant to the President, and OSTP associate director for technology; Park was appointed CTO and Assistant to the President. In response to questions for the record submitted by the House Committee on Science, Space, and Technology's Subcommittee on Oversight, Mr. Park asserted that these different roles involved different reporting relationships: [As an Assistant to the President,] I took general direction from the White House Office of the Chief of Staff and specific direction from different individuals with whom I would work on each of the technology and innovation initiatives in which I was involved ... As U.S. CTO and part of OSTP's leadership, I focused on technology and innovation policy, consistent with OSTP's mission. As an Assistant to the President, I held the same rank as Dr. Holdren, and therefore operated as his peer and as a partner, though Dr. Holdren holds overall management responsibility for the operations of OSTP. Congress may wish to clarify the roles, responsibilities, and reporting structure of the U.S. Chief Technology Officer in statute or through its OSTP oversight authorities. Several attempts have been made to establish the CTO position in statute. H.R. 1261 (112 th Congress) and H.R. 1910 (111 th Congress) sought to establish the Office of the Federal Chief Technology Officer as a separate office in the Executive Office of the President. In addition, an amendment ( H.Amdt. 658 ) was offered to the National Defense Authorization Act for Fiscal Year 2011 ( H.R. 5136 ), which included, among other things, Subtitle B, "Federal Chief Technology Officer." If Congress chooses to establish the CTO position through statute, there are several questions it may wish to consider, including: What mission, duties, and authorities should be given to the CTO? Should one person serve as both CTO and OSTP associate director for technology? Should the CTO be placed in the Executive Office of the President or elsewhere in the executive branch? If in the EOP, should the CTO directly report to the President, or instead be part of another EOP agency? Should the appointment of the CTO be subject to Senate confirmation? Should the CTO be a stand-alone position or should he or she head an office or agency with its own staff? How should the work of the CTO differ from, overlap with, and/or complement the duties and authorities of offices in the Executive Office of the President, and other executive branch agencies? What should be the relationship between the President's CTO and the existing CTOs and CIOs of individual departments and agencies? OSTP Role in Ensuring Scientific Integrity OSTP plays a role in ensuring the scientific integrity of research conducted and supported by the federal government, as well as in the communication of scientific and technical information developed and analyzed by federal scientists and engineers. For example, OSTP, as part of a process managed by the Office of Management and Budget (OMB), reviews executive branch S&T-related testimony to Congress. OMB has taken actions relating to scientific integrity during both the George W. Bush Administration and the Obama Administration. George W. Bush Administration During the George W. Bush Administration, advocacy groups charged that the Administration's political agenda adversely affected the integrity of science, especially science related to the environment, public health, and national security. These groups contended that Administration officials restricted the ability of federal scientists and engineers to provide information, instructed them to change their research reports, or modified the congressional testimony of federal scientific and technical agency leadership that did not support the Administration's views. OSTP Director Marburger stated that such allegations were "sweeping generalizations based on a patchwork of disjointed facts and accusations that reach conclusions that are wrong and misleading." Policymakers responded to these concerns in several ways. In the America COMPETES Act ( P.L. 110-69 , Section 1009), Congress directed OSTP to develop an overarching set of principles to ensure the communication and open exchange of data by federal scientists and engineers. On May 28, 2008, in response to this requirement, OSTP sent a memorandum to federal agencies that sponsor research. The memorandum provides guidance and what OSTP termed the "Core Principle for Communication of the Results of Scientific Research Conducted by Scientists Employed by Federal Civilian Agencies." It states: Robust and open communication of scientific information is critical not only for advancing science, but also for ensuring that society is informed and provided with objective and factual information to make sound decisions. Accordingly, the Federal government is committed to a culture of scientific openness that fosters and protects the open exchange of ideas, data and information to the scientific community, policymakers, and the public. The memorandum also indicated that the National Aeronautics and Space Administration's (NASA's) science communications policy should be a model for other federal agencies: NASA policy states that, "In keeping with the desire for a culture of openness, NASA employees may, consistent with this policy, speak to the press and the public about their work," with exceptions for privileged and other controlled information. Obama Administration Shortly after taking office, President Obama issued a memorandum for the heads of executive departments and agencies on the subject of scientific integrity. In the memorandum, the President articulated his view of the importance of ensuring scientific integrity; identified several overarching principles; charged the OSTP Director with ensuring "the highest level of scientific integrity in all aspects of the executive branch's involvement with scientific and technological processes"; required the Director to confer with heads of executive departments and agencies, the OMB, and other offices within the EOP in the development of a plan to achieve the identified principles; and directed the OSTP Director to develop recommendations for presidential action to guarantee scientific integrity throughout the executive branch. OSTP Director Holdren subsequently issued a memorandum to the heads of executive departments and agencies providing further guidance on implementing the Administration's policies on scientific integrity. Director Holdren's memorandum provided principles in four broad areas: foundations of scientific integrity, public communications, use of federal advisory committees, and professional development of government scientists and engineers. OSTP reviewed the guidelines developed by each agency to ensure consistency with the guidance provided in President Obama's original memorandum. According to OSTP, some departments decided to develop policies that will apply broadly to a number of their component agencies. OSTP has also stated that individual agencies covered by their departments' policies may develop their own policies with additional elements specific to their missions. At least 19 federal agencies have released final policies; four others have released draft policies and are in the process of finalizing them for release. The agencies' policies have met with mixed reviews. An analysis published by the Union of Concerned Scientists, a not-for-profit advocacy group, lauded the policies of some agencies for their active support for "a culture of scientific integrity," while criticizing the policies of other agencies as inadequate. The Obama Administration also acted to address the concerns of some policy advocacy groups that Executive Order 13422 might be used by OMB to conduct political reviews of scientific documents. On January 30, 2009, President Obama issued Executive Order 13487 rescinding orders, rules, regulations, guidelines, and policies implementing or enforcing Executive Order 13422. S&T policy advocacy groups also proposed other measures, such as the executive branch changing its scientific communication policy. One proposal called for the issuance of an executive order requiring federal agency leadership to monitor scientific integrity within their agencies and submit an annual report to OSTP with their observations and actions. Other proposals included enhancing whistleblower protections, including strengthening the Office of Special Counsel; requiring that scientific studies used to inform regulatory policy be disclosed and docketed prior to the decision-making process; reforming agency communication and media policies; and providing the public with the scientific results or analysis used in policymaking and including a minority report if there are significant dissenting scientific evidence or opinions. Some organizations have suggested that the Obama Administration also address the use of science in regulatory policy, including explicitly differentiating between questions that involve scientific judgments and questions that involve judgments about economics, ethics, and other matters of policy; and develop guidelines on when to consult advisory panels on scientific questions, how to appoint them, how they should operate, and how to deal with conflicts of interest. There are some policymakers who have asserted that the Obama Administration has failed to protect scientific integrity. For example, in a letter to the OSTP Director, several Members of Congress alleged scientific misconduct by the Department of the Interior, the Environmental Protection Agency, the Department of Energy, and the Nuclear Regulatory Commission. Concerns raised in the letter related to data quality, integrity of methodologies and collection of information, agency misrepresentation of the weight of what were asserted as scientific facts, misrepresentation of scientific conclusions in federal courts, and failure to rigorously apply the scientific method. Congress might opt to influence the direction of the existing executive branch activities, provide oversight of the implementation of these activities, or establish alternative reporting mechanisms for issues related to scientific integrity. Congress might establish guidance regarding how agencies should craft and implement scientific integrity policies. Alternatively, Congress might leave establishing and implementing such policies to agency discretion, and require regular reporting from agencies regarding scientific integrity issues and the effectiveness of policy enforcement. Finally, Congress could further empower agency Inspectors General to address issues of scientific integrity or establish alternative reporting mechanisms, such as a federal ombudsman, to receive complaints regarding scientific integrity issues. Public Access to Published Results of Federally Funded R&D In "open access" or "public access" publishing, the entity that holds the copyright to an article grants all users unlimited, free access to the article. In traditional scientific publishing, subscriptions generally fund the costs of journal publication and distribution; in some cases, authors may also pay fees. This contrasts with open access publishers, which typically fund the costs of journal publication and distribution through author fees and give readers free online access to the full text of articles. Some traditional publishers have implemented a hybrid model in which authors may choose to provide their articles free to readers in exchange for increased author fees. Since 2008, Congress has authorized the National Institutes of Health (NIH) to require recipients of NIH grants to submit an electronic version of their final, peer-reviewed articles to NIH. The NIH places these articles in a public repository no later than 12 months after publication. This congressionally authorized policy has raised issues regarding protection of intellectual property and government competition with the private publishing industry. Supporters of federal open access publishing policies have a variety of motivations, including the rising cost of traditional journal subscriptions; beliefs regarding improved scientific collaboration and free information access; and a desire for the public to have access to the results of taxpayer-funded R&D. Proponents of open access policies urge increased federal support for open access publishing. In contrast, traditional publishers and some scholarly associations object to federal open access policies because they believe it may weaken the publishing industry, erode publishing revenues, and consequently restrict the activities of associations whose main source of income is publishing. Opponents of federal open access publishing policies also cite other potential negative consequences, such as uncertain long-term maintenance of electronic archives; increased publication costs for researchers; and the perceptions of the academic community and the academic reward system, which appear to give more status to articles published in traditional journals. The America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) required the OSTP Director to establish a working group to coordinate agency policies "related to the dissemination and long-term stewardship of the results of unclassified research, including digital data and peer-reviewed scholarly publications, supported wholly, or in part, by funding from the Federal science agencies" and report to Congress on these efforts. OSTP issued a public request for information seeking perspectives on various facets of the public access issue. Respondents generally supported increasing public access to such research results. In February 2013, the OSTP Director affirmed the Obama Administration's commitment "to ensuring that … the direct results of federally funded scientific research are made available to and useful for the public, industry, and the scientific community. Such results include peer-reviewed publications and digital data." The Director instructed federal agencies that fund more than $100 million of R&D per year to develop plans to make the published results of federally funded research freely available to the public and provided a guideline of doing so within one year of publication. OSTP identified 20 agencies from which it expected draft public access plans. OSTP and OMB have reviewed the plans that were submitted and provided feedback to those agencies. Two agency plans have received final approval. Once a plan is approved, each agency will determine its own release date. The Department of Energy released its final public access plan in July 2014, and NASA released its in November 2014. Congress has supported OSTP efforts in this area with select statutory and report language. Section 525 of Division G of P.L. 113-235 , the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2015, directs entities receiving funding through that act to implement public access plans if they had R&D expenditures in excess of $100 million. The statute mandates that these policies shall establish "free online public access to such final peer-reviewed manuscripts or published versions not later than 12 months after the official date of publication" and require that "a machine-readable version of the author's final peer-reviewed manuscripts that have been accepted for publication in peer-reviewed journals describing research supported, in whole or in part, from funding by the Federal Government" be submitted "to the agency, agency bureau, or designated entity acting on behalf of the agency." This provision is similar in effect to the requirement called for in the OSTP memorandum, but it specifies the period of embargo rather than leaving it to agency discretion. The reports accompanying other FY2015 appropriations acts contain language expressing support for implementing the OSTP efforts at the Department of Homeland Security, Department of Veterans Affairs, Department of State, United States Agency for International Development (USAID), and Environmental Protection Agency. The report accompanying P.L. 113-235 also directed NIH to report to Congress on its activities to meet the requirements of the OSTP memorandum. Congress provided similar support in FY2014. Section 527 of Division H of P.L. 113-76 , the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2014, directed entities receiving funding through that act to implement public access plans if they had R&D expenditures in excess of $100 million. Also, the report accompanying P.L. 113-76 , the Consolidated Appropriations Act, 2014, encouraged the EPA to comply with the OSTP memorandum and directed the Department of Agriculture to report to Congress on its activities to meet the requirements of the memorandum. The report accompanying FY2014 appropriations for the Department of Homeland Security contained language expressing support for implementing the OSTP efforts. STEM Education Reorganization Congress and the Administration attempted in recent years to address governance concerns about federal science, technology, engineering, and mathematics (STEM) education programs. OSTP has been a focus of these efforts due, in part, to the OSTP Director's role as manager of the National Science and Technology Council. The America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) directed OSTP to establish an NSTC committee "to coordinate Federal programs and activities in support of STEM education." The act charged the committee—established by the NSTC as the Committee on Science, Technology, Engineering, and Math Education (CoSTEM)—with, among other things, conducting a review of STEM education activities and programs to identify potential duplication of efforts, developing a five-year STEM education strategic plan, and establishing an inventory of federally sponsored STEM education programs and activities. In addition, P.L. 111-358 assigned the OSTP Director responsibility for ensuring that the strategic plan is developed and executed and that the objectives of the plan are met. The act also required the OSTP Director to submit an annual report to Congress at the time of submission of the President's budget request. This report is to include, among other things, a description of the STEM education programs and activities for the previous and current fiscal years, the levels of funding for each program and activity, and an evaluation of duplication and fragmentation of the programs and activities. In December 2011, CoSTEM published a detailed inventory of federal STEM education "investments." The inventory included a description of federal STEM education programs (e.g., their purposes, objectives, and funding agencies) and a list of federal STEM education investments, by agency, with FY2008 to FY2010 funding levels. In February 2012, CoSTEM published a progress report on its efforts to coordinate federal STEM education investments. In April 2012, CoSTEM published the 2010 Federal STEM Education Inventory Data Set. In March 2014, OSTP published an update on the Administration's efforts to coordinate federal investments in STEM education. 113th Congress In March 2013, the explanatory statement for the FY2013 Consolidated and Further Continuing Appropriations Act ( P.L. 113-6 ) required OSTP to produce a federal STEM education strategic plan by May 10, 2013. Shortly thereafter, in its FY2014 budget request (released in April 2013), the Administration proposed a reorganization of the federal STEM education effort. The proposed reorganization would have eliminated or consolidated about half of the federal STEM education effort, while increasing total FY2014 funding for federal STEM education activities by about 6% over FY2012 levels. The Department of Education, National Science Foundation, and Smithsonian Institution would have become lead agencies for K-12, postsecondary, and informal STEM education, respectively. Some other federal STEM education programs, including those at the lead agencies, would have been consolidated under the plan. In May 2013, the NSTC released the federal STEM education strategic plan. In deliberations on the FY2014 Commerce, Justice, Science and Related Agencies appropriations acts, neither the House Committee on Appropriations nor the Senate Committee on Appropriations supported the proposed reorganization. (House Energy and Water Development appropriators, in contrast, accepted some portions of the reorganization within their jurisdiction.) In addition, the House committee identified what it saw as flaws in the subsequent federal STEM strategic plan, including the proposed mechanism for dissemination of federal STEM education research and findings. The House committee report sought to direct OSTP to report within 180 days of passage on the resources and authorities necessary to develop a "one stop" style website containing findings from federal research on STEM education. The Senate committee report sought to defer action on such consolidation until OSTP finalizes STEM program assessments and require OSTP to work with non-federal education and outreach communities on any subsequent reorganization proposal. The joint explanatory statement accompanying P.L. 113-76 , the Consolidated Appropriations Act, 2014, was critical of the proposed reorganization, stating: While the Congress is supportive of attempts to improve efficiency and effectiveness in Federal STEM education programs, the proposed reorganization of these programs contained in the budget request was incomplete and lacked sufficient detail. The proposal contained no clearly defined implementation plan, had no buy-in from the education community and failed to sufficiently recognize or support a number of proven, successful programs. Accordingly, the agreement does not adopt the reorganization; all STEM activities are funded in their existing programmatic structures unless explicitly noted otherwise elsewhere in this statement or through language in either the House or Senate report that is not modified or superseded by this statement. The joint explanatory statement further directed OSTP to reexamine other possible reorganizations of federal STEM programs after engaging in an inclusive development process and taking into consideration evaluations and other evidence of program success. The Obama Administration's FY2015 budget request again proposed a government-wide reorganization of federal STEM education programs. According to the Office of Management and Budget, the reorganization would have consolidated or terminated 31 programs at nine agencies. Funding would have remained at each agency, but would have focused on the priorities outlined in the NSTC's 2013 federal STEM education five-year strategic plan. Congress approved portions of this proposal while prohibiting certain consolidations or terminations in report language. For more information on the FY2015 reorganization effort, see CRS Report IF00013, The President's FY2015 Budget and STEM Education (In Focus) (pdf), by [author name scrubbed]. 114th Congress President Obama has proposed additional STEM education consolidations and eliminations within agencies in his FY2016 budget. Publication of the reorganization proposals has raised concerns among some STEM education stakeholders, including questions regarding the role of program assessment in the reorganization and the potential fragmentation of existing networks that connect educational activities to scientific programs. Additionally, some policymakers questioned the capacity of lead agencies to take on their new roles and have expressed support, instead, for the activities to remain with their existing agencies (e.g., NASA). Advocates for the Administration's reorganization proposals have generally asserted that the wide diversity of small STEM education programs distributed across numerous federal agencies presents a substantial barrier to coordination and efficiency. They assert that re-aligning programs and funding would improve program evaluation, reduce fragmentation, and enhance coordination. Some argue that, as a result, resources could be directed to high-priority programs, increasing effectiveness. Activities in the 114th Congress The 114 th Congress is considering a number of bills that would directly affect the operations or priorities of OSTP or NSTC, and they are described below. A number of these bills contain common or similar provisions. H.R. 467 The STEM Opportunities Act of 2015 ( H.R. 467 ) would address certain issues related to STEM workforce and education. Among other provisions, it would require the OSTP Director to carry out programs and activities with the purpose of ensuring that federal science agencies and institutions of higher education receiving federal R&D funding are fully engaging their entire talent pool. The bill would require the OSTP Director to require federal science agencies to establish policies regarding primary investigators who also have caregiving responsibilities; collect data on demographics, primary field, award type, budget request, funding outcome, and awarded budget for all applications for merit-reviewed R&D grants; provide guidance as necessary on policies to implement best practices to minimize implicit bias based on gender, race, or ethnicity during review of federal research grants; and develop and implement practices and policies to conduct periodic laboratory-wide culture surveys of research personnel at all levels, and provide educational opportunities for STEM research personnel to learn about current research in implicit bias in recruitment, evaluation, and promotion of research personnel at federal laboratories. The OSTP Director would report to Congress regarding a description and evaluation of such policies and practices. H.R. 810 The National Aeronautics and Space Administration Authorization Act of 2015 ( H.R. 810 ) would authorize NASA programs and authorize NASA appropriations for FY2015. ( H.R. 2039 , discussed later in this report, contains similar provisions and would authorize NASA programs and authorize NASA appropriations for FY2016 and FY2017.) Among its provisions, the bill would require the OSTP Director to consult with a variety of stakeholders, develop a strategic plan for conducting competitive, peer-reviewed research in physical and life sciences and related technologies on the International Space Station, and transmit the plan to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation. The bill would require the strategic plan to identify various criteria for the proposed research; required instrumentation; necessary capabilities to support direct, real-time communications; and an acquisition strategy for any new support capabilities. H.R. 810 would require the OSTP Director and the NASA Administrator to conduct an analysis of the requirements for radioisotope power system material for robotic missions and the risks to those missions due to a lack of adequate material. The bill would specify the contents of the analysis and require it to be submitted to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation. H.R. 810 would also require the OSTP Director and the NASA Administrator to provide an initial report with recommendations on carrying out a near-Earth object survey program and an associated budget. The report would contain an analysis of possible options to divert an object on a likely collision course with Earth and efforts to coordinate and cooperate with other countries on the issue. In addition, the bill would require the OSTP Director to provide a report on the status of the orbital debris mitigation strategy required under P.L. 111-267 , the National Aeronautics and Space Administration Authorization Act of 2010. H.R. 810 would also require the OSTP Director to carry out a review and assessment of the issues involved in protecting and preserving historically important Apollo Program lunar landing sites and Apollo program artifacts residing on the lunar surface. The OSTP Director would submit the results of this assessment to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation no later than one year after enactment. H.R. 1119 The Research and Development Efficiency Act ( H.R. 1119 ) would address certain regulatory aspects of the research process. It would require the OSTP Director to establish a working group within the NSTC to review federal regulations affecting research and research universities. The working group would recommend how to harmonize, streamline, and eliminate duplicative federal regulations and reporting requirements; minimize the regulatory burden on U.S. institutions of higher learning while maintaining accountability; and identify and update specific regulations to refocus on performance-based goals. The working group would consider input from non-federal stakeholders and report no later than one year after enactment and annually thereafter for three years to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation. H.R. 1156 The International Science and Technology Cooperation Act of 2015 ( H.R. 1156 ) would address international science and technology cooperation and coordination. It would require the OSTP Director to establish a body within the NSTC responsible for identifying and coordinating international science and technology cooperation. The OSTP Director would transmit a publicly available report, updated every two years, to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. The report would contain a description of federal priorities and policies for aligning federal international science and technology cooperative research and training activities and partnerships with the foreign policy goals of the United States; ongoing and new international partnerships; summary views of stakeholder input and the means by which it was received; and the issues influencing the ability of U.S. scientists and engineers to collaborate with foreign counterparts. H.R. 1561 The Weather Research and Forecasting Innovation Act of 2015 ( H.R. 1561 ) would, among other provisions, require the OSTP Director to establish an Interagency Committee for Advancing Weather Services to improve coordination of relevant weather research and forecast innovation activities across the federal government. The bill would require the National Aeronautics and Space Administration, the Federal Aviation Administration, the National Oceanic and Atmospheric Administration, and the National Science Foundation to participate in the committee. The committee would identify and prioritize weather forecast needs, coordinate those needs against federal agency budgets and programs, and share information across federal agencies. In addition, the OSTP Director would take such steps as necessary to coordinate federal activities with the American weather industry, state governments, emergency managers, and academic researchers. H.R. 1764 The United States Chief Technology Officer Act ( H.R. 1764 ) would create the position of United States CTO as one of the OSTP associate directors. The CTO duties would include, among others, advising the President and the OSTP Director on federal information systems, technology, data, and innovation policies and initiatives; promoting innovative technological approaches across the federal government; promoting transparency and accountability for all federal technological implementation; and providing an annual report to the President, the OSTP Director, and Congress on the current state of information systems of all federal agencies. H.R. 1806 The America COMPETES Reauthorization Act of 2015 ( H.R. 1806 ) would address a range of science and technology policy issues. Among its provisions, it would authorize $4.55 million in appropriations for OSTP for both FY2016 and FY2017. H.R. 1806 would also require the OSTP Director to establish a working group within the NSTC that would review federal regulations affecting research and research universities. The working group would recommend how to harmonize, streamline, and eliminate duplicative federal regulations and reporting requirements; minimize the regulatory burden on U.S. institutions of higher learning while maintaining accountability; and identify and update specific regulations to refocus on performance-based goals. The working group would consider input from non-federal stakeholders and report no later than one year from enactment and annually for the next three years to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation. H.R. 1806 would also require the OSTP Director to establish a body within the NSTC responsible for identifying and coordinating international science and technology cooperation. The OSTP Director would transmit a publicly available report, updated every two years, to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. The report would contain a description of federal priorities and policies for aligning federal international science and technology cooperative research and training activities and partnerships with the foreign policy goals of the United States; ongoing and new international partnerships; summary views of stakeholder input and the means by which it was received; and the issues influencing the ability of U.S. scientists and engineers to collaborate with foreign counterparts. In addition, H.R. 1806 would require the OSTP Director to annually submit a report that lists and describes all foreign travel by OSTP staff and detailees to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. Each report would specify the dates and purpose of the trip, OSTP participants on the trip, total OSTP costs associated with the trip, and details of all international meetings, including meeting participants and topics addressed. H.R. 1806 would require OSTP to develop an agreement to be signed by judges of prize competitions that includes nondisclosure, conflict of interest, and judging code of conduct requirements. The OSTP would be required to report to Congress regarding the agreement no later than 30 days after its development and to report to Congress as part of its budget submission on the pilot programs identified and conducted. H.R. 1806 would also create the position of United States CTO as one of the OSTP associate directors. The CTO duties would include, among others, advising the President and the OSTP Director on federal information systems, technology, data, and innovation policies and initiatives, promoting innovative technological approaches across the federal government, promoting transparency and accountability for all federal technological implementation, and providing an annual report to the President, the OSTP Director, and Congress on the current state of information systems of all federal agencies. H.R. 1898 The America Competes Reauthorization Act of 2015 ( H.R. 1898 ) would address a range of science and technology policy issues. Among its provisions, it would require the OSTP Director to create a working group within the NSTC responsible for reviewing federal regulatory and reporting requirements that affect research in an effort to reduce regulatory burdens and to eliminate and harmonize duplicative requirements. The working group would, among other responsibilities, develop and update at least once every three years a strategic plan for streamlining federal regulations and reporting requirements that affect the conduct of U.S. research. The strategic plan would include a priority list of research-related regulations, reporting requirements, and agency guidance to be harmonized, streamlined, updated, or eliminated; and an implementation plan, including a timeline. The working group would consider input from non-federal stakeholders and report to Congress no later than one year from enactment and annually thereafter. H.R. 1898 would require the OSTP Director to establish a body within the NSTC responsible for identifying and coordinating international science and technology cooperation. The OSTP Director would transmit a publically available report, updated every two years, to the House Committee on Science, Space, and Technology; the House Committee on Foreign Affairs; the Senate Committee on Commerce, Science, and Transportation; and the Senate Committee on Foreign Relations. The report would contain a description of federal priorities and policies for aligning federal international science and technology cooperative research and training activities and partnerships with the foreign policy goals of the United States; ongoing and new international partnerships; summary views of stakeholder input and the means by which it was received; and the issues influencing the ability of U.S. scientists and engineers to collaborate with foreign counterparts. In addition, H.R. 1898 would require the OSTP Director to designate an OSTP associate director or other appropriate senior government official as the Coordinator for Environmental, Health, and Safety Research. The Coordinator would be responsible for oversight of the coordination, planning, and budget prioritization of research and other activities related to environmental, health, safety, and other appropriate societal concerns related to nanotechnology. The Coordinator would be responsible for ensuring that a research plan for the environmental, health, and safety research activities related to nanotechnology is developed, updated, and implemented. This research plan would be transmitted to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation within six months after enactment and would be updated at least every three years. H.R. 1898 would also require, among other STEM education provisions, the OSTP Director to establish an OSTP associate or another appropriate senior government official as the Coordinator for STEM Education. The Coordinator would work with appropriate senior officials from other agencies represented on the NSTC Committee on STEM Education. The OSTP Director would develop guidance for federal agencies to increase opportunities and training, as appropriate, for federal scientists and engineers to participate in STEM engagement activities through their respective agencies and in their communities. H.R. 1898 would require the OSTP Director to carry out programs and activities with the purpose of ensuring that federal science agencies and institutions of higher education receiving federal R&D funding are fully engaging their entire talent pool. The bill would require the OSTP Director to require federal science agencies to establish policies regarding primary investigators who have caregiving responsibilities; collect data on demographics, primary field, award type, budget request, funding outcome, and awarded budget for all applications for merit-reviewed R&D grants; provide guidance as necessary on policies to implement best practices to minimize implicit bias based on gender, race, or ethnicity during review of federal research grants; develop and implement practices and policies to conduct periodic laboratory-wide culture surveys of research personnel at all levels, and provide educational opportunities for STEM research personnel to learn about current research in implicit bias in recruitment, evaluation, and promotion of research personnel at federal laboratories. The OSTP Director would report to Congress regarding a description and evaluation of such policies and practices. H.R. 2039 The National Aeronautics and Space Administration Authorization Act for 2016 and 2017 ( H.R. 2039 ) would authorize NASA programs and authorize NASA appropriations for FY2016 and FY2017. ( H.R. 810 , discussed earlier in this report, contains similar provisions and would authorize NASA programs and authorize NASA appropriations for FY2015.) Among its provisions, it would require the OSTP Director to consult with a variety of stakeholders, develop a strategic plan through 2020 for conducting competitive, peer-reviewed research in physical and life sciences and related technologies on the International Space Station, and transmit it to the House Committee on Science, Space, and Technology, and the Senate Committee on Commerce, Science, and Transportation. H.R. 2039 would require the strategic plan to identify various criteria for the proposed research; required instrumentation; necessary capabilities to support direct, real-time communications; and an acquisition strategy for any new support capabilities. H.R. 2039 would also require the OSTP Director and the NASA Administrator to conduct an analysis of the requirements for radioisotope power system material for robotic missions and the risks to those missions due to a lack of adequate material. H.R. 2039 would specify the contents of the analysis and require that it be submitted to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation. H.R. 2039 would also require the OSTP Director and the NASA Administrator to provide an initial report with recommendations on carrying out a near-Earth object survey program and associated budget. The initial report would contain an analysis of possible options to divert an object on a likely collision course with Earth and efforts to coordinate and cooperate with other countries on the issue. In addition, H.R. 2039 would require the OSTP Director to provide a report on the status of the orbital debris mitigation strategy required under P.L. 111-267 , the National Aeronautics and Space Administration Authorization Act of 2010. In addition, H.R. 2039 would require the OSTP Director to carry out a review and assessment of the issues involved in protecting and preserving historically important Apollo Program lunar landing sites and Apollo program artifacts residing on the lunar surface. The OSTP Director would submit the results of this assessment to the House Committee on Science, Space, and Technology and the Senate Committee on Commerce, Science, and Transportation, no later than one year from enactment. Concluding Observations Congress has expressed an abiding interest in the health of the federal science and technology (S&T) enterprise and the roles that it plays in meeting federal mission needs, expanding the frontiers of human knowledge, addressing societal needs, developing the U.S. science and engineering workforce, and promoting U.S. technological leadership, innovation, and competitiveness. For more than half a century, presidential science advisors have played a central role in U.S. S&T policy—informing Presidents on S&T issues, serving as liaisons to the S&T community, and articulating presidential priorities to federal S&T agencies and to the public. In addition, since 1976, presidential science advisors have directed and managed the Office of Science and Technology Policy. OSTP plays an important role in coordinating and integrating the activities of federal S&T enterprise, acquiring scientific and technical advice and information from the private sector, and advising the President on related matters. Congress provides oversight of OSTP in the execution of its statutory authorities. In addition to the legislation currently under consideration, the 114 th Congress may explore issues and legislative options related to the structure of OSTP, its authorities, its relationships with the NSTC and PCAST, and the portfolio of policy issues identified in this report.

Congress established the Office of Science and Technology Policy (OSTP) through the National Science and Technology Policy, Organization, and Priorities Act of 1976 (P.L. 94-282). The act states, "The primary function of the OSTP Director is to provide, within the Executive Office of the President [EOP], advice on the scientific, engineering, and technological aspects of issues that require attention at the highest level of Government." Further, "The Office shall serve as a source of scientific and technological analysis and judgment for the President with respect to major policies, plans, and programs of the Federal Government." The OSTP Director is appointed by the President, subject to Senate confirmation, and may also be appointed Assistant to the President for Science and Technology (APST). The APST manages the National Science and Technology Council, an interagency body established by Executive Order 12881 that coordinates science and technology policy across the federal government. The APST also co-chairs the President's Council of Advisors on Science and Technology, a council established by Executive Order 13539 and composed of external advisors who provide advice to the President. In the Obama Administration, John Holdren is both the OSTP Director and the APST. OSTP is engaged in several activities of potential interest to the 114th Congress. Since FY2011, Congress has restricted OSTP's ability to use appropriated funds "to develop, design, plan, promulgate, implement, or execute a bilateral policy, program, order, or contract of any kind to participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned company" unless authorized to do so by a subsequent law. The 114th Congress may continue its interest in the participation of OSTP in China-related activities. OSTP plays a role in ensuring the scientific integrity of research conducted and supported by the federal government, as well as in the communication of scientific and technical information developed and analyzed by federal scientists and engineers. The 114th Congress may continue congressional consideration of the extent to which OSTP oversees these activities. OSTP has taken actions to provide greater public access to the results of federally funded research and development. In February 2013, OSTP Director Holdren issued a memorandum requiring federal agencies investing at least $100 million per year in research and development to develop policies allowing the general public access to the results of this investment. These policies are in the process of being released and implemented and may spur additional congressional oversight. Finally, OSTP has inventoried federal science, technology, engineering, and mathematics (STEM) education investments and developed a strategic plan for them. In his FY2015 and FY2014 budget requests, the President proposed reorganizations of federal STEM education programs. The extent and success of this reorganization may further focus congressional attention on OSTP's role as a coordinator of cross-agency science and technology activities.

Background Under the Clean Water Act (CWA), an applicant for a federal license or permit to conduct any activity that may result in a discharge to waters of the United States must provide the federal agency with a Section 401 certification. The certification, made by the state in which the discharge originates, declares that the discharge will comply with applicable provisions of the act, including water quality standards. A state's water quality standards specify the designated use of a stream or lake (e.g., for water supply or recreation), pollutant limits necessary to protect the designated use (in the form of numeric or narrative criteria), and policies to ensure that existing water uses will not be degraded by pollutant discharges. Section 401 provides states with two distinct powers: one, the power indirectly to deny federal permits or licenses by withholding certification; and two, the power to impose conditions upon federal permits by placing limitations on certification. Generally, Section 401 certification has been applied to hydropower projects seeking a license from the Federal Energy Regulatory Commission (FERC) and to dredge-and-fill activities in wetlands and other waters that require permits from the U.S. Army Corps of Engineers (CWA Section 404 and Sections 9 and 10 of the Rivers and Harbors Act). It also is applied to permit requirements for industrial and municipal point source dischargers (CWA Section 402). In addition, it has the potential to be applied to a range of other activities that could affect water quality, a point that has increasingly become an issue. Because participation by states in Section 401 certification is optional (they may waive the authority if they choose to do so), state implementation has varied. In recent years, however, many states have come to view Section 401 as an important tool in their overall programs to protect the physical and biological, in addition to the chemical, integrity of their waters. Some have begun using Section 401 to address a wide range of impacts to the quality of their waters, including impacts to aquatic habitat such as wetlands where issues of non-chemical impacts arise. Through Section 401, some states have addressed impacts of a project such as inadequate river flow, inundation of habitat, dissolved oxygen levels, and impacts on fish and other wildlife. This expanded use of Section 401 has, in turn, led to tensions between state and federal agencies (especially FERC) and regulated entities over the scope of the states' Section 401 authority, particularly the extent to which states can legally address water flow requirements in water quality standards. Some state courts have placed limitations on the use of Section 401 (at least for hydropower projects) to address only chemical impacts of projects (such as dissolved oxygen or numeric chemical criteria) and not physical impacts (filling of aquatic habitat in a streambed as a result of the project) or biological impacts (effects on fish migration, for example). Other courts have adopted a broader view and allowed states to condition certification on compliance with all applicable water quality-related laws. A 1990 Supreme Court case addressed the issue of whether hydropower projects must comply with any aspect of state water use law. The Court held that, with regard to federally licensed hydropower facilities, the Federal Power Act preempts state water use law, including states' comprehensive arrangements for allocating water among competing uses. Stakeholder Concerns and Other Court Rulings For the most part, the debate over the Section 401 certification issue has centered on states and hydropower interests. Many states have long favored clarifying the CWA to confirm their broad authority to impose conditions on federally permitted activities. This position was described in testimony at a 1991 Senate subcommittee hearing. [A]n overly narrow reading of section 401 would deprive the States of the ability to maintain the very beneficial uses that the Clean Water Act was designed to protect. Federal agencies could permit activities that would undermine a State's investment in pollution control efforts and impose a double standard for different activities affecting the same in-stream values. It makes no sense to authorize States to implement Clean Water Act programs designed to protect beneficial uses and yet leave them powerless to prevent a federally permitted activity from impairing those values. The comprehensive nature of State management of water quality and water quantity means that the States are best situated to determine whether a federally permitted activity will fully protect beneficial uses. The States have lead responsibility for protecting water quality under the Clean Water Act and for administering laws governing allocation of water quantity. Water quality and quantity are inextricably linked; both are essential to maintaining the integrity of the nation's waters. Hydropower interests favor allowing federal agencies such as FERC to determine what conditions on a project are necessary for protection of water quality or to satisfy other criteria, in light of the important purposes directed by Congress in other laws, specifically the Federal Power Act. The current limitation on the role of the States in the [federal hydropower] licensing process is that ultimately the FERC must make the decision balancing the multitude of resource interests affected by the project. The expansive reading of Section 401 water quality certification being used in some States crosses this barrier, using this mandatory water quality review to effectively take control of all aspects of the project. ... Expansion of 401 certification places authority for an energy resource in the effective control of a State water quality agency, that is not responsible for utility rate stabilization, assuring adequate water supplies, promoting clean air technology, or controlling floods. The Supreme Court again considered the Section 401 issue in 1994. In Public Utility District (PUD) No. 1 of Jefferson County and City of Tacoma v. Washington Department of Ecology , the Court held that a state may impose minimum stream flow requirements as a condition in a Section 401 certification for a proposed hydropower facility because the CWA allows states to condition certification upon any effluent limitation or other appropriate state law requirement, to ensure that the facility will not violate state water quality standards. Imposition of the condition as part of the Section 401 certification does not conflict with FERC's authority to issue a license under the Federal Power Act, the Court said. The ruling said that states may regulate the impacts of a project as a whole, so long as there is a discharge involved. Thus, the conditions a state may require are not confined to the discharge itself but can address a range of conditions as part of their certifications, such as the impacts of a dam's removal of water from a river. Further, federal agencies must include state-imposed conditions in the license or permit. This decision pleased states, which had sought confirmation of their power to impose minimum stream flow and other requirements of state water quality standards. Environmentalists, who have supported states' use of Section 401 to address aquatic habitat alteration and biological diversity of the nation's waters, were similarly pleased. Development and hydropower interests, on the other hand, said that it would make licensing of hydropower facilities more difficult and costly. The utility industry was concerned that state water quality agencies reflect a narrow viewpoint under their mandates and could bias licensing policies by not adequately addressing power needs. The Supreme Court revisited these issues in 2006 in a case brought by the owner of several hydropower dams in Maine who had challenged the state's 401 certification for renewal of its FERC licenses for the dams, arguing that the dams did not produce the requisite "discharge" under the CWA. The Court unanimously held that states, through Section 401 certification, can impose conditions on FERC licensing or relicensing of hydropower facilities that states find necessary to prevent adverse alteration of water quality. States and environmental groups applauded the ruling, as many had feared that an adverse decision would hinder the ability of states to require measures to ameliorate the effects of hydropower dams on water quality and aquatic life. Section 401 and Land Runoff In 1996, a federal district court in Oregon ruled that Section 401 "applies to all federally permitted activities that may result in a discharge, including discharges from nonpoint sources." The case sought to have the U.S. Forest Service obtain state Section 401 certification that cattle grazing under a Forest Service permit would not violate water quality standards. The Forest Service argued that, under the CWA, only discharges from a point source or nonpoint source with a conveyance (i.e., a pipe or channel outlet) are regulated and, while cattle grazing may cause water pollution, it is not a regulated discharge under the act. However, in its ruling, the district court distinguished the definition of "discharge" from "discharge of a pollutant" from a point source and said that "pollution caused by cattle grazing constitutes a discharge into navigable waters within the meaning of section 401 of the Clean Water Act. Therefore, state certification under section 401 was required before the U.S. Forest Service issued a cattle grazing permit." Supporters said that the ruling gave states new regulatory power over federal licenses or permits that affect water quality by clarifying that Section 401 applies to nonpoint source discharges of water pollution, in addition to point source discharges. Point sources are discrete conveyances, such as pipes or ditches, from which pollutants are discharged. Nonpoint source pollution is rainfall and snowmelt runoff from farmlands, ranches, city streets, and similar areas. The ruling had the potential to give states a stronger hand in determining how federal lands should be managed. If so, the impact on states could be significant, since cattle grazing is a common activity on millions of acres of western lands managed by the Forest Service and the U.S. Bureau of Land Management, and states could face a substantial workload in processing Section 401 certifications for hundreds of grazing permits annually. Additional impacts could occur if Section 401 were held to apply to other types of federally permitted activities generally categorized as nonpoint sources, such as timber harvesting or logging. Federal agencies disagreed over how to respond to the Oregon district court's ruling. EPA favored letting the decision stand, on the basis that nonpoint source pollution is the most significant contributor to water pollution in many states, and the decision would give states more power to manage it. The Agriculture Department (parent of the Forest Service), on the other hand, urged the Department of Justice to support an industry group's appeal of the case, and ultimately the government did join in appealing the decision. In 1998, a federal court of appeals reversed the district court's ruling, finding that cattle grazing on federal lands does not fall within the type of pollution covered by Section 401. The court found that Congress intended to permit direct federal regulation of effluent flowing from point sources, but to regulate nonpoint source pollution only through federal grants, not through Section 401 water quality certification. The Supreme Court declined to review the case. The state of Oregon had responded to the 1996 district court decision by adopting rules establishing a certification process for livestock grazing permits on federal lands in Oregon. However, after the court of appeals reversed that ruling and the Supreme Court declined to review it, the state withdrew the rules. Groups representing ranchers, farmers, and similar interests were pleased that the district court's ruling was overturned, believing that Congress did not intend Section 401 to apply to nonpoint source pollution. Other CWA programs and tools such as financial incentives are better means of addressing nonpoint source pollution problems, some say. Environmentalists disagreed with the appeals court's conclusion and the legal outcome of the case, and many continue to argue that Section 401 generally supports a reading that includes nonpoint source discharges. In a broader context, some observers had viewed the district court's ruling as giving a boost to ongoing activities in states to develop total maximum daily load (TMDL) allocations on pollution-impaired water bodies. Efforts to carry out this Clean Water Act requirement have been prompted by lawsuits in more than three dozen states, claiming that EPA and states have failed to fulfill mandates in the law. In many cases, TMDLs are being developed that result in imposition of pollution control requirements and other measures affecting nonpoint sources as well as point sources in order to improve water quality and attain water quality standards. While the 9 th Circuit's 1998 ruling did not directly affect the TMDL process, some persons saw the reversal of the lower court's ruling as removing one possible argument for ensuring that nonpoint sources are addressed in TMDL plans and processes. Following the Supreme Court's 2006 ruling in the S.D. Warren case (discussed above), environmental advocates renewed legal challenge of grazing permits, arguing that the Court's ruling in that case that 401 certification applies to dam discharges could also be applied to agricultural runoff. The environmental group had challenged the failure of the Forest Service to require a company that sought a cattle grazing permit on Forest Service land to obtain a 401 certificate from the state of Oregon. However, the same federal court rejected the challenge, concluding that the facts in the more recent Oregon case differed from those in the S.D. Warren case, thus supporting its 1998 ruling that the CWA only allows states to address point source discharges under Section 401. Legislative Response Since the mid-1990s, Congress has shown interest in these issues in proposals reflecting varying perspectives, but no legislation that would modify Section 401 has been enacted. In the 103 rd Congress, interest in clarifying the scope of Section 401 certification authority led to several proposals. The Senate Environment and Public Works Committee included one such provision in S. 2093 , a CWA reauthorization bill. It would have strengthened Section 401 by clarifying that applicants for a federal license or permit, including applicants for a FERC license to operate hydropower facilities, must obtain state certification that the project will comply with water quality standards and will allow for attainment and maintenance of designated uses included in the state's standards. The Senate did not act on S. 2093 . Following the Supreme Court's 1994 PUD No. 1 decision, disputes over Section 401 became an issue in the Congress. At the end of the 103 rd Congress, legislation was introduced to amend the Clean Water Act and overturn the decision ( S. 2566 ). The sponsor of the bill, Senator Wallop, said that the Court's decision threatened state water law (by limiting the amount of water that could be used for the project in question and, thus, interfering with state water rights systems) and the integrity of the FERC hydropower licensing process. The Senate did not act on this bill. The 104 th Congress addressed the issue in H.R. 961 , a CWA reauthorization bill passed by the House in 1995. Section 507 would have made Section 401 inapplicable to hydropower projects if FERC were to determine that the state's certification is inconsistent with the Federal Power Act. The bill also would have set up a mechanism, to be administered by FERC, to resolve differences arising between the state and FERC on questions relating to the consistency of the 401 certification to a hydropower project. That is, in the event of a dispute between FERC and a state over 401 certification of a hydropower project, FERC would be authorized to resolve the dispute between itself and the state. This provision in H.R. 961 was one of several proposed to address the issue. Some Members favored simply exempting hydropower projects from Clean Water Act regulation, arguing that FERC project review is intended to consider inputs of state and federal agencies, Indian tribes, and the public in connection with licensing and relicensing decisions. Others argued that states should continue to have authority to regulate matters related to water quality concerns. Section 507 attempted to balance those concerns. However, no further action occurred on H.R. 961 during the 104 th Congress, and similar legislation has not been proposed subsequently. Legislative interest in Section 401 also occurred in connection with recommendations on national energy policy by Vice President Cheney's National Energy Policy Development Group in 2001. It recommended that the hydropower licensing process administered by FERC undergo administrative and legislative reform so that hydropower can contribute to meeting the nation's energy needs. At the same time, a 2001 FERC report concluded that the most common cause of delayed hydropower licensing proceedings is untimely receipt of state water quality certification under the Clean Water Act. Responding to these concerns, legislation was proposed that would give applicants for hydropower licenses increased flexibility in complying with conditions imposed by federal agencies such as the Department of the Interior concerning, for example, the need for passageways through which fish can travel around a dam—another issue raised in the FERC report. The 109 th Congress enacted the Energy Policy Act of 2005 ( P.L. 109-58 ) with a provision (Section 241) requiring federal agencies to consider alternative license conditions proposed by the license applicant. While this provision only addressed the roles of federal agencies in hydropower licensing, not state certification under CWA Section 401, these water quality issues remain of interest to some stakeholders. In the 112 th Congress, the House passed legislation that would in part modify Section 401. The bill, H.R. 2018 , the Clean Water Cooperative Federalism Act of 2011, would have amended several CWA provisions to restrict EPA's authority to provide oversight of states' implementation of aspects of the statute. The legislation was seen as a response to concerns that EPA has over-reached in its statutory oversight of state actions on permitting and standard setting. Section 2(b) of the bill would have modified Section 401 to prohibit EPA from taking "any action to supersede the determination" of a state that a particular discharge will comply with applicable provisions of the CWA, including water quality standards. While under current law EPA has no explicit role or conditioning authority over a state's 401 certification, this provision of H.R. 2018 was apparently intended to deter EPA from overriding state determinations. In comments on the legislation, EPA officials questioned the intent of the provision, saying that the agency has not taken formal action to supersede a state's certification, making the practical effect of the provision unclear, in EPA's view. Bills with provisions similar to Section 2(b) of H.R. 2018 also were introduced in the 113 th Congress ( H.R. 1829 and H.R. 1948 ). 114th Congress In the 114 th Congress, the Senate and House are considering comprehensive energy policy proposals, including legislation that some states believe could impinge on states' authority under CWA Section 401 concerning hydropower projects. The proposals include provisions intended to streamline review and approval of hydropower licensing projects. In the Senate, S. 2012 , the Energy Policy Modernization Act, includes provisions in Title III, Part I, that would designate FERC as the lead agency for coordinating all authorizations required under federal law—including 401 certification or other approvals required by federal and state agencies under federal law—and authorize FERC to establish schedules for issuance of all such authorizations. Under these provisions, federal or state agencies responsible for such authorizations would be required to report annually to congressional committees on any of the agency's activities affecting a FERC proceeding, including a demonstration that the agency's actions meet policies established in the Federal Power Act. The federal or state resource agency would be required to maintain a publicly available website that tracks all information required in the annual report. The House has passed related energy legislation, H.R. 8 , the North American Energy Security and Infrastructure Act of 2015. Like the Senate measure, provisions of this bill would designate FERC as the lead agency for coordinating all federal and state authorizations required under federal law. Section 1203 of the bill would require any federal or state agency, local government, or Indian tribe that may consider an aspect of an application for an authorization required under federal law to comply with deadlines established by FERC. The House passed H.R. 8 on December 7, 2015. Several state agencies have raised concerns about aspects of these proposals. Oregon officials said in a letter to House Energy and Commerce Committee leaders that they believe that the House bill would "effectively strip the state's authority to protect its fish, wildlife, and water resources." Washington state officials said in a letter to House Commerce Committee leaders that they oppose the bill because "states' and tribes' authority to issue CWA 401 water quality certifications would be impacted or revoked." State environmental agencies expressed concerns about the bill in a letter to the Speaker of the House, saying, "States also are concerned that provisions of H.R. 8 could eliminate responsiveness to environmental concerns and slow the process of scheduling and licensing." In a Statement of Administration Policy, the Office of Management and Budget said that the Administration strongly opposes H.R. 8 , based in part on the hydropower provisions: "Among the ways that H.R. 8 would undermine [the current hydropower licensing regulatory process] would be by creating a new exemption from licensing that would undercut bedrock environmental statutes, including the Clean Water Act, the National Environmental Policy Act, and the Endangered Species Act." Similarly, in a letter to Senate Energy and Natural Resources Committee leaders, Maryland officials noted objections to S. 1236 , a separate bill that was incorporated in S. 2012 , saying, "In removing or impairing the states' primary role and responsibility under Section 401 to fashion conditions in FERC licenses, S. 1236 relegate[s] the states—the entities with the greatest interest and expertise in protecting water quality—to bystander or second-class status." Press reports indicate that House and Senate committee leaders believe that CWA authority would not be affected by the bills in question.

Section 401 of the Clean Water Act (CWA) requires that an applicant for a federal license or permit provide a certification that any discharges from the facility will comply with the act, including state-established water quality standard requirements. Disputes have arisen over the states' exercise of this authority in protecting water quality. For the most part, the debate over the Section 401 certification issue has been between states and hydropower interests. A 1994 Supreme Court decision, which upheld the states' authority in this area, dismayed development and hydropower interest groups. The Court revisited these issues in a 2006 ruling that unanimously upheld the authority of states to condition hydropower licenses by exercising Section 401. The dispute between states and industry groups about Section 401 authority has been a legislative issue on several occasions, but Congress has not modified the provision's scope since it was enacted in 1972. In the 114th Congress, the Senate and House are considering comprehensive energy policy proposals (H.R. 8 and S. 2012) with provisions that some states believe could impinge on states' authority under CWA Section 401 concerning hydropower projects. In addition, there has been interest in clarifying whether Section 401 certification applies to nonpoint source discharges, such as rainfall runoff, as well as point source discharges from pipes or ditches. This question was raised in lawsuits in Oregon, where a federal court twice ruled that Section 401 does not apply to nonpoint source discharges. Still, some interests continue to favor a broad reading of 401 that would apply to both nonpoint and point sources of pollutant discharges.

Introduction: A Reversal of Fortune The United States has been an integral part of the global energy sector for many decades. It is a global leader in energy production, consumption, and technology, and its energy market is highly sophisticated. Its energy prices, for the most part, are determined in the marketplace and rise or fall with changes in supply and demand. The United States is a major producer of all forms of energy—oil, natural gas, coal, nuclear power, and renewable energy. Since the beginning of the 21 st century, the U.S. energy sector has transformed from a situation of declining production, especially of oil and natural gas, to one in which the United States is a growing producer. Exports of energy are rising while imports are falling. Prices, technology, and regulations have prompted changes in the energy mix. This report provides an overview of U.S. energy issues, and it serves as an initial resource document for related information, data, and CRS contacts. The report is organized around the major fuels and energy sources used in the United States. It also highlights the role of the federal government, particularly the use of federal lands in energy production. It does not focus on energy infrastructure, security, research and development, energy efficiency, or environmental issues, although those areas are also critical to the U.S. energy sector. Issues for Congress Policy Goals Energy policy in the United States has generally focused on three major goals: assuring a secure supply of energy, keeping energy costs low, and protecting the environment. In pursuit of those goals, government programs have been developed to improve energy efficiency, to promote the domestic production of conventional energy sources, and to develop new energy sources, including advanced nuclear and renewable energy sources. Implementing these programs sometimes has been controversial because of the varying importance given to different aspects of energy policy by different stakeholders. For some, dependence on imports of energy, particularly from the Persian Gulf, is the primary concern; for others, the continued use of fossil fuels, whatever their origin, is of greatest concern. The extent to which human-induced global climate change warrants changing U.S. energy policy to reduce the production and use of fossil fuels is particularly controversial. Another dichotomy is between those who see government intervention in the energy sector as a positive force, and those who do not and seek to restrict government intervention as much as possible. Legislation Energy policy has often been legislated in large, complex bills that deal with a wide variety of issues, with debate spanning several sessions. The Energy Policy Act of 2005 (EPAct 2005; P.L. 109-58 ) was the most recent comprehensive general legislation, with provisions and authorizations in almost all areas of energy policy. The Energy Independence and Security Act of 2007 (EISA, P.L. 110-140 ) set new target fuel economy standards for cars and light trucks of 35 miles per gallon by 2020, and expanded the renewable fuels standard (RFS) to require 9.0 billion gallons of biofuels in transportation in 2008 (equivalent to 600,000 barrels per day), rising to 36 billion gallons by 2022 (equivalent to 2.4 million barrels per day). EISA also included energy efficiency standards for appliances and other equipment, and provisions on industrial and building efficiency, which have continued to be of interest in the 115 th Congress. In the 114 th Congress, both the House and Senate considered broad energy legislation, as well as specific topics of key interest. The two primary bills were S. 2012 , the Energy Policy and Modernization Act, and H.R. 8 , the North American Energy Security and Infrastructure Act of 2015. After the House passed S. 2012 with the text of H.R. 8 , a conference committee met to consider the two versions of S. 2012 but did not resolve the differences before the 114 th Congress adjourned. Both bills addressed a variety of energy topics, including energy efficiency in federal buildings, data centers, manufacturing, and schools; water conservation/efficiency; regulation and development of nonfederal hydropower; electric grid cybersecurity; and review of the Strategic Petroleum Reserve (SPR). In the 115 th Congress, a range of energy bills have been proposed. Most notably, the Arctic National Wildlife Refuge (ANWR) was opened to oil and gas development under the 2017 tax revision ( P.L. 115-97 ). The law directs the Secretary of the Interior to establish an oil and gas leasing program in ANWR's coastal plain. Other energy-related bills have been introduced, including S. 1460 , the Energy and Natural Resources Act of 2017. S. 1460 includes provisions on energy efficiency, energy and minerals supply, and energy infrastructure, among other provisions. (Many of the provisions in S. 1460 are similar or identical to provisions in the Senate version of S. 2012 in the 114 th Congress.) The Senate Committee on Energy and Natural Resources held hearings on the bill in September 2017, but no further action has been taken. Other bills in the 115 th Congress include House-passed bills to require federal agencies to coordinate on energy-efficient information technology ( H.R. 306 ), assist states with emergency energy planning ( H.R. 3050 ), and temporarily store nuclear waste ( H.R. 3053 ). U.S. Energy Profile The United States is the second largest producer and consumer of energy in the world, behind China. U.S. primary energy consumption (see Figure 1 ) has held relatively steady since 2000, falling 1%; however, the fuel mix has changed. While oil has remained at almost 40% of the fuel mix, natural gas and renewables have increased in both percentage and absolute terms at the expense of coal. Nuclear generation has stayed flat. The change in the U.S. fuel mix has centered on the electricity sector where there are fuel substitutes (see " The Electric Power Sector "). Electric power generation in 2017 came from coal (30%), natural gas (32%), nuclear (20%), renewables (17%), and petroleum (<1%), according the U.S. Energy Information Administration (EIA). This is a significant change from 2000, when coal accounted for 52% of the electricity fuel mix and natural gas was 16%, nuclear was still almost 20%, and renewables were 9%. Industrial use of energy has also experienced changes, but not to the same degree as electric power generation in recent years. On the other end of the spectrum, energy in transportation is dominated by petroleum, which made up 92% of the fuel used in transportation in 2017, down from 97% in 2000. U.S. energy production between 2000 and 2017 increased 23%, a significant amount, especially considering that historically the United States was viewed as a growing importer of energy. (See Figure 1 .) Renewable energy production has increased by 83% during the time frame, the largest increase of all fuel types. Oil production has risen the next fastest, growing 64%, followed by natural gas production at 42%. The increase in production of both these resources comes from innovations in extraction from unconventional (or tight ) formations, such as shale (see text box below, "Shale Resources Make the Difference"). Coal production, on the other hand, has declined during the time period by about 31%. Energy Resources on Federal Lands12 Federal lands account for a significant amount of total U.S. energy production. For example, in 2017, as a percentage of total U.S. energy production, approximately 24% of crude oil and 13% of natural gas gross withdrawals came from federal lands. In 2016 (the latest year for this data), 40% of coal came from federal lands. Weighing energy production on federal lands against other resource values has long been a fundamental question for Congress. Much of the onshore federal estate is open to energy and mineral exploration and development, including Bureau of Land Management (BLM) and many Forest Service (FS) lands. However, many National Park Service (NPS) lands and areas within the National Wilderness Preservation System, as well as certain other federal lands, have been specifically withdrawn from exploration and development. One previously withdrawn area—the Arctic National Wildlife Refuge—was recently opened to oil and gas development under the Tax Cuts and Jobs Act ( P.L. 115-97 ). The law directs the Secretary of the Interior to establish an oil and gas leasing program in ANWR's coastal plain. Development of oil, natural gas, and coal on federal lands is governed primarily by the Mineral Leasing Act of 1920 (MLA). Geothermal leasing on federal lands is conducted under the authority of the Geothermal Steam Act of 1970, as amended. Development of solar and wind energy sources on BLM and FS lands is governed primarily by right-of-way authorities under Title V of the Federal Land Policy and Management Act (FLPMA). Offshore federal resources, within and beyond the U.S. Exclusive Economic Zone (EEZ), are also open for exploration and development. The federal government is responsible for managing energy resources in approximately 1.7 billion acres of waters belonging to the United States. These offshore resources are governed by the Outer Continental Shelf Lands Act of 1953 (OCSLA), as amended. Federal lands also are available for renewable energy projects. BLM manages the solar and wind energy programs on about 20 million acres for each program and has the authority to manage about 240 million acres for geothermal leasing on federal lands. Geothermal capacity on federal lands represents 40% of U.S. total geothermal electric generating capacity. Oil and Natural Gas on Federal Lands Oil production fluctuated year-to-year on federal lands from 2008 to 2017 but overall it increased by 47% over the 10-year period. However, because crude oil production on nonfederal lands doubled over the decade (primarily due to improved extraction technology, favorable geology, and the ease of leasing), the share of total U.S. crude oil production from federal lands fell from its peak of nearly 36% in 2009 and 2010 to about 24% in 2017. While annual U.S. natural gas gross withdrawals rose by over 7 trillion cubic feet (TCF) to 33.2 TCF since 2008, annual production on federal lands fell by about 2 TCF (or nearly 32%) to 4.3 TCF over the same time period. The share of gross natural gas withdrawals from federal lands fell from almost 25% in 2008 to 13% in 2017. The big shale gas plays have been primarily on nonfederal lands and have attracted a significant portion of investment for natural gas development. The MLA authorizes the Secretary of the Interior—through BLM—to lease the subsurface rights to virtually all BLM and FS lands that contain fossil fuel deposits, with the federal government retaining title to the lands. Based on the federal government's 2008 inter-agency Phase III inventory report, 113 million acres of onshore federal lands are open and accessible for oil and gas development and about 166 million acres are off-limits or inaccessible. The accessible federal land contains an estimated 11.5 billion barrels of oil and 136.5 TCF of natural gas, representing 38% and 59% of the estimated total federal resource potential, respectively. Federal land off-limits to development contains an estimated 19 billion barrels of oil and 95 TCF of natural gas, or 62% and 41% of the total resource potential, respectively. In 2017, the BLM recorded production on 12.8 million acres out of 26 million acres of federal land leased for oil and gas development. For offshore oil and gas, OCSLA requires the Secretary of the Interior to submit five-year leasing programs that specify the time, location, and size of the areas to be offered. The Bureau of Ocean Energy Management (BOEM), which runs the offshore energy leasing program, administers approximately 2,700 active oil and gas leases on over 14 million acres in the outer continental shelf (OCS). In preparing its five-year programs under the OCSLA, BOEM must consider the resource potential of individual OCS regions and planning areas along with other factors, such as potential environmental and socioeconomic impacts of oil and gas leasing. The current five-year leasing program (2017-2022) scheduled 11 lease sales in about 6% of the acreage in the OCS planning areas, but including about 80% of the oil and gas undiscovered technically recoverable resources (UTRR). In January 2018, the Trump Administration introduced a new 5-Year Leasing Program proposal for 2019-2024. This Draft Proposed Program (DPP) includes 47 lease sales (a sale in each of the planning areas except the North Aleutian Basin in Alaska). The DPP would make available 90% of the acreage in the OCS planning areas and 98% of its UTRR. Under the OCSLA, the President may withdraw unleased lands on the OCS from leasing disposition. Congress also has established leasing moratoria; for example, the Gulf of Mexico Energy Security Act (GOMESA) established a moratorium on preleasing, leasing, and related activity in the eastern Gulf of Mexico through June 2022. According to BOEM, the U.S. OCS contains UTRR estimated at 89.9 billion barrels of oil and 327.5 TCF of natural gas. The Gulf of Mexico contains about 54% of the UTRR for oil and an estimated 43% of the natural gas, with the vast majority of the resources in the Central Gulf of Mexico. The OCS around Alaska has the second largest UTRR, and about 90% of Alaska's UTRR estimates for oil and 80% for natural gas are contained in the Chukchi and Beaufort Seas. Congress considers multiple issues related to offshore oil and gas exploration, including questions about allowing or deferring access to ocean areas and how increasing or restricting access may impact domestic energy markets and affect the risk of oil spills. Other issues concern the use of OCS revenues and the extent to which they should be shared with coastal states. Federal Coal Resources There are 298 federal coal leases on about 459,000 acres on federal public domain lands. Coal production on federal lands has consistently accounted for about 40% of total U.S. coal production over the past decade. Production on federal lands peaked in 2008 at 487 million tons. Since then, federal coal production declined by 33% to 326 million tons in 2016, the latest year for this data. On January 16, 2016, President Obama announced a moratorium on federal coal leasing (issued as Secretarial Order 3338) to examine the federal coal leasing program and to determine whether it needs to be "modernized." The Secretary of the Interior directed BLM to prepare a programmatic environmental impact statement (PEIS) of the coal leasing program to serve as the basis for a comprehensive review. On January 11, 2017, the Obama Administration published its scoping report as a prelude to a comprehensive draft and final PEIS. However, on March 28, 2017, the Trump Administration issued an Executive Order that requires the Secretary of the Interior to "take all steps necessary and appropriate to amend or withdraw Secretary's Order 3338" and lift "any and all" moratoria on federal coal leasing. The moratorium has drawn both support and opposition in Congress. On March 29, 2017, Secretary of the Interior Zinke revoked Secretarial Order 3338 under Secretarial Order 3348, lifting the moratorium and ending the work on the PEIS. Secretarial Order 3348 directs the BLM to continue to process coal leasing applications on federal land. Renewable Energy on Federal Land Geothermal Energy Geothermal energy is a renewable energy source produced from heat stored under the surface of the earth. BLM manages geothermal permitting and leasing requirements for federal lands, in consultation with FS. Geothermal capacity on federal lands represents 40% of U.S. total geothermal electric generating capacity. Wind and Solar Energy Wind and solar projects could require large tracts of land to replace or add significant electric generating capacity, in addition to new transmission capacity that may be needed. One issue for Congress is how to weigh solar and wind project applications against other land uses. For example, in 2013, BLM finalized a rule allowing temporary withdrawal of subsurface mineral claims in areas with pending wind and solar project applications. Another issue for Congress is how the leasing process for wind and solar energy projects should be managed. In December 2016, BLM finalized amendments of the regulations governing the process by establishing preferred areas for solar and wind energy development and establishing specific competitive right-of-way leases, among other provisions. Woody Biomass Removing woody biomass from federal lands for energy production has received attention from stakeholders in the biomass supply chain for energy and wildfire management because of its potential widespread availability. Past administration efforts to promote and implement woody biomass energy production focused on developing policy principles, research and development, infrastructure, and capacity building. FS and BLM both award woody biomass utilization research grants pursuant to EPAct2005. Programs such as stewardship contracting and the collaborative forest landscape restoration program authorize both agencies to implement woody biomass utilization projects. Offshore Renewable Energy Sources BOEM is responsible for managing renewable ocean energy resources. BOEM has been in the process of estimating renewable ocean energy resources to facilitate leases for electricity generation from offshore wind, thermal power, and kinetic forces from ocean tides and waves. As of June 2018, BOEM had issued 13 offshore wind energy leases in areas off the coasts of Massachusetts, Rhode Island, Delaware, Maryland, Virginia, New York, North Carolina, and New Jersey. One lease within the Offshore Renewable Energy Program, the Block Island Wind Farm off the coast of Rhode Island, which is a five-turbine, 30-Megawatt (MW) wind farm developed by Deepwater Wind, has achieved commercial production. Congress has considered whether to facilitate the development of offshore wind and other renewables through steps such as grants for research and development, project loan guarantees, extension of federal tax credits for renewable energy production, or oversight of regulatory issues for these emerging industries. Revenue Disbursements from Energy Development on Federal Land The federal government collects revenues from onshore and offshore energy development through a variety of laws. Revenues are derived from development of several energy resources—including oil, gas, coal, geothermal, wind, and solar—and are collected at several stages of the development process. Companies pay bonus bids to secure development rights, rents on energy leases prior to production, royalties during production, and other fees. For offshore energy development, the Outer Continental Shelf Lands Act (OCSLA, 43 U.S.C. §§1331-1356b) provides for limited revenue-sharing with coastal states. States receive 27% of revenues from oil, gas, and renewable energy leases within 3 nautical miles of state waters (43 U.S.C. § 1337(g) and (p)). Also, the Gulf of Mexico Energy Security Act (GOMESA, 43 U.S.C. §1331 note) provides for revenue-sharing with the Gulf coastal states of Alabama, Louisiana, Mississippi, and Texas. These four Gulf coastal states receive 37.5% of revenues on qualified leases, up to an annual cap of $375 million. In addition to revenue-sharing with states, various laws also direct portions of federal offshore oil and gas revenues to specific federal programs such as the Land and Water Conservation Fund Act (LWCF Act; 54 U.S.C. §§200301 et seq.) and the Historic Preservation Fund. Separately, GOMESA disburses to the LWCF state assistance program a further 12.5% of revenues on qualified Gulf leases, up to an annual cap of $125 million. Under OCSLA, the remainder of offshore revenues are deposited as miscellaneous receipts in the U.S. Treasury. For onshore revenues, the Mineral Leasing Act (MLA) provides for the State of Alaska to receive 90% of the revenue derived from federal onshore fossil energy (oil, gas, and coal) leases within the state, except for leases held in the coastal plain of ANWR. Alaska receives 50% of the ANWR–related lease sales revenue and 50% is deposited in the U.S. Treasury. All other states receive 50% (minus a 2% cost-sharing deduction) of the revenues derived from fossil energy leases within their states, while 40% of the revenues are deposited in the Reclamation Fund. The balance stays within the U.S. Treasury as miscellaneous receipts. For geothermal energy on federal land, the MLA provides 50% of the revenues to the state and 25% to the counties from which geothermal energy is produced. The balance of 25% is deposited in the U.S. Treasury. Other renewable energy on federal land such as wind and solar is developed under Title V of the Federal Land Policy Management Act, under which all revenues derived from its development are deposited in the U.S. Treasury. Oil: Moving Towards Self-Sufficiency45 Production of oil in the United States rose in the latter half of the time period 2000-2017, while consumption fluctuated. The rise in production is attributed to increased production from unconventional or "tight" formations, discussed above. Petroleum is mostly consumed in transportation (71%), industrial use (24%), residential and commercial use (5%), and electric power generation (1%). Approximately 92% of transportation fuels come from petroleum. No other sector in the U.S. economy is so dominated by one fuel source as is transportation, which is why fuel efficiency of vehicles (see text box "Fuel Efficiency Standards for Vehicles") is so significant to energy policy. Energy independence and energy security are more associated with petroleum than with any other fuel. Petroleum Refining: A Key Industry The petroleum refining industry processes crude oil and other petroleum-based liquids to produce transportation fuels (including motor gasoline, diesel fuel, aviation gasoline, and jet fuel), home heating oil, petrochemical feedstocks, lubricants, and other products. The United States is the top-producing country of refined products. In 2017, most of the product mix was composed of transportation fuels, with home heating oil, petrochemical feedstocks, lubricants, and other products from liquefied refinery gases to asphalt and road oil making up the rest. While the number of U.S. refineries (see Table 1 ) declined by 23, or 15%, since 2000, the industry's refining capacity has not been in decline. Capital investment in new technologies and processes has resulted in refinery capacity increasing by about 13% since 2000. The data suggest that refineries are becoming larger on average and more efficient. Utilization rates in the industry, which are the ratio of petroleum that runs through a refinery and its operating capacity, are high and relatively stable. However, the economic downturn that began in 2008-2009 resulted in reduced demand for petroleum products, keeping utilization rates below 90% until 2014. The oil and natural gas producing industries and the petroleum refining industry are closely related because of their complementary relationship. There are few, if any, consumer uses for unrefined crude oil, and refiners must use crude oil to produce the useful products the refining process yields. Because of this symbiotic relationship, many times the sectors' contributions to the national economy are combined. For example, according to a 2017 American Petroleum Institute report, the oil and natural gas industries, which included production and refining, supported about 10.3 million jobs and accounted for 8% of U.S. gross domestic product in 2015. Sources of Crude Oil The U.S. refining industry draws on crude oil supplies from around the world as well as domestic production. Table 2 shows key sources of industry supply. The data in Table 2 show that from 2000 to 2008 U.S. production of crude oil was generally declining while U.S. imports of crude oil were increasing. Over the period, U.S. imports from the Organization of the Petroleum Exporting Countries (OPEC) were also generally increasing. This period was consistent with increasing oil import dependence and declining energy security. In 2009, U.S. production of crude oil began to increase, as did Canadian supplies of crude oil to the United States, which crossed the 2 million barrels per day (Mb/d) rate in 2011. As a result, U.S. imports from OPEC began to decline and the United States entered a period of declining oil import dependence and increasing energy security. The rise in crude oil production, in part, prompted a call from industry to lift restrictions on exporting crude oil. At the end of 2015, President Obama signed the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), which lifted the restrictions on crude oil exports. Crude oil exports have risen steadily since the restrictions were lifted, reaching a new high of 1.76 Mb/d in April 2018. Foreign Trade in Petroleum Products In addition to unrefined crude oil, the United States also imports refined products (mostly gasoline), although the primary source of petroleum products for U.S. consumers remains the U.S. refining industry. Recently, the refining industry has increased its presence in foreign markets with increasing exports of refined products; the United States became a net exporter of petroleum products in 2011. The data in Table 3 show that since 2007, U.S. dependence on the world market for petroleum products has been declining. In addition, U.S. refiners now allocate over 28% of their operable capacity to supply buyers in the world market. Without considering both U.S. crude oil imports and increasing petroleum product exports, the raw data may give a somewhat distorted picture of U.S. dependence on imported oil. This is because some of U.S. crude oil imports enter the refining industry for processing and re-enter the world market as petroleum product exports. Issues for the Refining Industry Continued reliance on the world oil market for crude oil supplies and petroleum products, as well as increasing U.S. exports of both crude oil and petroleum products, suggests that any change in U.S. tariff policy will affect the refining industry. The effects of changing U.S. tariff policy might result in a changing pattern of nations that the United States deals with for imports and exports, risking retaliation against U.S. goods, as well as affecting consumer prices for gasoline and other products. Oil prices and the availability of various grades of crude oil will continue to affect the economic performance of the refining industry. Oil prices peaked at over $140 per barrel in 2008 and then began a steep decline that saw the price fall to below $40 per barrel in 2009 before rising above $100 per barrel for much of the early 2010s. Prices dropped again in 2014, reaching a low of less than $30 per barrel in 2016. In September 2018, the price had risen to approximately $70 per barrel. Refiners need an oil price predictable enough so that they can make economically rational petroleum product pricing decisions. However, the price needs to be high enough that it remains profitable for oil producers to continue to invest in production and expand market supply to satisfy demand, and low enough to encourage consumption. Environmental concerns affect the refining industry, including air, water, and land pollution. Permitting a new refinery is an expensive, slow process due to environmental and other challenges, which helps explain why it is more common to expand the capacity of existing facilities rather than construct new facilities. Natural Gas: The United States Goes Global54 The United States became a net exporter of natural gas in 2017, the first time since 1957. The second U.S. liquefied natural gas (LNG) export terminal opened in 2018, with additional facilities under construction. Since prices peaked in 2008, domestic gas production has risen significantly. (See " U.S. Supply " below.) Improvements in technologies such as hydraulic fracturing and horizontal drilling made the development of unconventional natural gas resources such as shale and other lower-permeability rock formations possible. Improved efficiency has lowered production costs, making shale gas economically competitive at almost any price and enabling large-scale exports. As U.S. production increased and prices fell, U.S. consumption of natural gas grew, rising over 16% from 2000 to 2017. (See " U.S. Consumption " below.) The rise in consumption, though, did not keep pace with production, so companies turned to exports, first by pipeline to Mexico and then as LNG to other parts of the world. (See " U.S. Exports ," below.) As shown in Figure 3 , production and imports (supply) of natural gas were still greater than consumption and exports (demand) in 2017, in part because of increasing amount of natural gas held in storage. U.S. Supply The United States is the world's largest producer of natural gas. Since 2005, U.S. natural gas production rose every year until 2016, even as prices declined. Production in 2017 was down from the 2015 peak total of 27,065 billion cubic feet (BCF). 2016 showed the first decline since 2005. The large increase in natural gas production between 2005 and 2017 is mostly attributed to the development of shale gas resources, specifically in the Marcellus and Utica formations in the northeastern United States. The two formations have accounted for 85% of the increase in natural gas production between 2012 and 2015. U.S. Consumption The United States is the largest consumer of natural gas in the world, using about 24,800 BCF in 2017. Electric power generation made up 37% of U.S. natural gas consumption in 2017; industrial use accounted for 32%, residential use for 18%, and commercial use for 13%. (See Figure 4 .) Low natural gas prices, due to the growth of domestic gas resources, contributed to a significant rise in the use of natural gas for electric power generation. Additionally, some federal and state policies promote the use of fuels with lower greenhouse gas emissions. Demand for natural gas for power generation has grown nearly 80% since 2000, and is expected to continue to grow through 2050. The U.S. industrial sector increased its consumption of natural gas by 16% between 2010 and 2017, and the sector is expected to account for the majority of growth in natural gas consumption through 2050. As the United States continues to expand its natural gas resource base, the industrial sector will see a wider array of fuel and feedstock choices, and manufacturing industries could also experience further growth. U.S. Exports61 Between 2000 and 2008, the United States prepared to increase imports of LNG based on forecasts of growing consumption and lack of supply, and companies began constructing LNG import terminals. However, the rise in prices gave the industry incentive to bring more domestic gas to market, reducing the need for import terminals. Imports in 2017 were 34% below their peak in 2007. Because of the expanded U.S. natural gas production, there has been a push for modification and expansion of existing LNG import terminals for export, as well as construction of new terminals, in order to expand U.S. export capacity. The first LNG shipments from the lower 48 occurred in February 2016 from the Sabine Pass LNG Terminal in Louisiana to Brazil, India, and the United Arab Emirates. Natural Gas Liquids Most wells produce a variety of hydrocarbons, including natural gas, oil, and NGLs, as well as other gases and liquids such as nitrogen, hydrogen sulfide, water, and particulate matter. Natural gas liquids (NGLs) have taken on a greater prominence as the price for dry gas dropped, primarily because of the increase in supply. In response to the price drop, the natural gas industry produced more wet gas in order to bolster the value it receives per unit of natural gas produced. Historically, individual NGL products have been priced against oil, except for ethane. When oil prices were high relative to dry gas, it drove an increase of wet gas production, thereby maintaining production of dry gas as a "byproduct" despite its low price. Environmental Issues Natural gas is the cleanest-burning of the fossil fuels. Unlike coal or oil, its combustion produces no sulfur oxides or other hazardous air pollutants that would require pollution controls, except for NOx (nitrogen oxides). By contrast, coal combustion is the leading source of sulfur dioxide emissions and also produces about 20 hazardous air pollutants, including mercury. Combustion of natural gas also produces fewer emissions of greenhouse gases (GHGs, primarily carbon dioxide, CO 2 ) than other fossil fuel—about half the amount generated by coal in producing an equivalent amount of heat or power. However, the primary component of natural gas, methane, is more than 25 times as potent a greenhouse gas as CO 2 . Thus, concerns have arisen regarding the release or leaks of methane from production, transmission, and processing of natural gas. As the use of natural gas continues to expand in the United States, reducing emissions of methane has become a more significant concern for policymakers. The Electric Power Sector: In Flux66 The electric power industry is in the process of transformation. The electricity infrastructure of the United States is aging, and uncertainty exists around how to modernize the grid, and what technologies and fuels will be used to produce electricity in the future. Unresolved questions about transmission and reliability of the grid also are arising due to potential cybersecurity threats as well as continuing interest in harnessing renewable energy and other low carbon sources of electricity. Concerns about reliability and electricity prices are complicated by environmental regulations and the rising production of electric power from unconventional resources such as shale gas. Congress has played a role already in this process (e.g., tax credits for renewable energy), and may continue to be faced with policy issues regarding how the modernization of this industry will unfold. States have also played major roles in this area through renewable portfolio standards (RPS), and regional emissions trading programs, such as the Regional Greenhouse Gas Initiative (RGGI), among other programs. Supply and Demand The electric power sector of the United States consists of all the power plants generating electricity, together with the transmission and distribution lines, and their associated transformers and substations which bring power to end-use customers. Electricity must be available upon demand, is rarely stored in bulk, and is generally consumed as soon as it is produced. Approximately two-thirds of U.S. electricity consumers live in regions of the country that are served by competitive wholesale electricity markets, where utilities compete to supply electricity to consumers at lowest cost. The remaining third of consumers are served by electric utilities that operate under what is called the "traditional model," where rates for electricity are established by a state regulatory body based on the utility's cost of providing electric power to customers (e.g., its cost-of-service). Electric power generation in the United States is currently dominated by the use of combustible fossil fuels, such as natural gas and coal. These fuels are burned to produce steam in boilers to turn steam turbine-generators or, in the case of natural gas, burned directly in a combustion turbine to produce electricity. Another major source of electricity is nuclear power (see " Nuclear Power: An Industry Facing Stress "), which uses heat from the fission of radioactive elements to produce steam to turn a generator. However, electricity can also be generated mechanically by wind turbines and hydropower, or by solar photovoltaic panels which convert light into electricity. Geothermal energy power plants use heat from underground to generate steam to run steam turbines. Generally, electricity must be used as soon as it is produced because the technologies and regulatory regimes to facilitate large-scale, economic energy storage are not yet widely available. The choice of power generation technology in the United States is heavily influenced by the cost of fuel. Historically, the use of fossil fuels has provided some of the lowest prices for generating electricity. As a result, fossil fuels (coal and natural gas) have accounted for about two-thirds of electricity generation since 2000. Figure 5 illustrates the changing mix of fuels used for electric power generation from 2000 to 2017. Beginning in 2016, natural gas surpassed coal as a percentage of net electricity generation. The overtaking of coal by natural gas in 2016 reflects the changing economics of power generation. Electricity production has largely been influenced by regional resources and policies at the state level. Historically, since coal was readily available across a large part of the United States, coal power plants were able to dominate electricity production for many decades. However, improvements in natural gas combined-cycle generation technology since 2000, and the costs of compliance with environmental regulations (discussed later in this section), have led to older, less-efficient coal plants being used less or retired from service. Also as discussed earlier, the use of hydraulic fracturing and directional drilling technology since 2008 has led to an increased supply and availability of natural gas. The resulting cheaper prices for natural gas have added market pressure to shift away from coal to natural gas for power generation. U.S. Consumption For many years, the growth in sales of electricity could be directly related to growth in the economy. However, with energy efficiency in homes and appliances increasing, a decoupling of growth in electricity demand from growth in gross domestic product (GDP) has occurred. According to EIA, the linkage has been declining over the last 60 years, as U.S. economic growth is outpacing electricity use. The trend is illustrated by Figure 6 , which shows growth in electricity use and economic growth over the period. EIA's projections point to a continued decline in electricity use relative to economic growth. While there may be years of relative growth in the future, EIA does not expect a "sustained return to the situation between 1975 and 1995, when the two growth measures were nearly equal in value, or the earlier period in which the growth rate in electricity use far exceeded the rate of economic growth." EIA attributes several factors as drivers of this trend, including "slowing population growth, market saturation of major electricity-using appliances, improving efficiency of several equipment and appliance types in response to standards and technological change, and a shift in the economy toward less energy intensive industry." With growth in demand for electricity having been essentially flat for many years, the need for new power plants has been delayed in many parts of the country. The projections for future demand growth in most regions of the United States are declining. Environmental Issues The electric power sector is a large, but declining, source of air pollution in the United States. Fossil fuel-fired power plants emit conventional pollutants as a result of combustion such as mercury, sulfur dioxide, and nitrogen oxides, as well as greenhouse gas emissions (GHGs). As of 2016 (the most recent data), electric power generation was responsible for 28% of U.S. domestic greenhouse gas emissions, down from 34% in 2008. With the passage of the Clean Air Act amendments in 1970 and major amendments in 1977 and 1990, Congress required EPA to establish standards to reduce potential health and environmental impacts of air pollution by limiting emissions. These environmental regulatory requirements have been evolving in the last decade as EPA continues implementation of the act's requirements. Recently, the Trump Administration announced the initiation or consideration of a number of regulatory changes to rules promulgated under previous administrations. Under President Trump, the EPA has signaled the possibility of modification to or repeal of several rules impacting electric power sector emissions, including the Mercury and Air Toxics Standard (MATS), the ambient air quality standards for ozone, and rules for GHG emissions for new and existing power plants. Recent attention has focused on the announced replacement of the Clean Power Plan (CPP) with the Affordable Clean Energy (ACE) Rule. Promulgated in 2015 under the Obama Administration, the CPP would require states to submit plans to curtail carbon dioxide (CO 2 ) emissions from predominantly coal- and gas-fired power plants. EPA proposed to replace the CPP with the ACE rule on August 21, 2018. ACE would be a less stringent rule focused on improving on-site efficiency of affected plants. It would allow states more input on how to best reduce GHG emissions from the power sector and would revise the New Source Review permitting process, which would affect emissions from existing power plant upgrades or expansions. By contrast, the CPP, in addition to promoting efficiency improvements, would have encouraged states to move towards cleaner-burning natural gas plants or carbon-free sources of electricity, such as wind, solar, or nuclear. The EPA has suggested that the replacement of the CPP with the ACE rule would result in more coal-burning plants remaining open; however, some industry observers have expressed doubt that the new rule will significantly impact the rate of coal plant retirements. The EPA estimates that, under the ACE rule, CO 2 emissions would decline by 0.7% to 1.5% by 2030 compared to a scenario without CO 2 emissions curtailment. Some preliminary analyses have suggested that CO 2 emissions and associated conventional pollutants may actually increase in some states as a result of the rule if it leads to coal plants operating more often than they would otherwise. In seeking to address environmental issues, some utilities are increasing their deployment of renewable energy technologies to meet a portion of their power demands. Proponents of renewable energy contend that it has the potential to provide inexpensive, almost limitless electricity with minimal adverse environmental impacts. However, some of the technologies used today to generate electricity from renewable energy sources, like wind and solar, are variable in nature, which provides challenges for their integration into grid operations. Nuclear power is also considered to be a carbon-free source of electricity. Coal: Declining Use79 The Trump Administration has made it clear that it would like to help revive the U.S. coal industry. The Administration has rolled back or initiated reversing several coal-related regulations that were finalized under the Obama Administration, including the Clean Power Plan (discussed above). This effort coincided with the emergence of three of the largest coal producers from Chapter 11 bankruptcy, higher coal prices, lower inventories, and higher natural gas prices—factors that could lead to coal being more competitive as a fuel source for electricity generation. Coal will likely remain an essential component in the U.S. energy supply picture, but how big a role it will play is an open question. Coal Reserves and Production The United States has the largest coal reserves and resources in the world. EIA estimated in 2017 that there were about 254 billion short tons of recoverable domestic coal reserves. The total demonstrated U.S. resource base (DRB) was estimated at about 476 billion short tons. According to the National Mining Association, the federal government owns about one-third of U.S. domestic reserves. EIA statistics show that more than half of U.S. coal reserves are located in the West, with Montana and Wyoming together accounting for 42%. The top five producing states—Wyoming, West Virginia, Kentucky, Illinois, and Pennsylvania—account for nearly 70% of U.S. coal production. Even though U.S. coal production had remained strong until 2014 (at or near 1 billion short tons per year), and reached its highest level of production in 2008 (1.17 billion short tons), coal is losing its share of overall U.S. energy production, primarily to natural gas in electricity generation. Coal production declined precipitously in 2015 and 2016—a record decline of about 28% over the two-year period (see Table 4 ). EIA short-term projections show coal production under 800 million tons in both 2018 and 2019. The softening of demand for coal has been attributed to utilities opting for low-cost natural gas, declining costs for renewable energy options, increasing regulatory cost associated with coal-fired power plants, a warmer-than-usual winter heating season in 2015 (which resulted in high coal inventories), and lower demand for U.S. coal exports (see Table 4 ). In 2017, coal exports rebounded significantly, up to 96.9 million short tons (much higher than previous EIA projections). Higher demand from Asian countries, particularly India, for U.S. coal fueled this uptick. The EIA projects long-term demand growth in the Asian coal market, but long-term penetration of U.S. coal exports into this market remains uncertain. Coal mining employment declined from 169,300 in 1985 to 71,500 in 2000 (a 57% decline), then rose to a recent high of 86,100 in 2010 before falling again to 51,796 in 2016 (the lowest number on record since EIA began collecting data in 1978). A similar pattern was true for the number of coal mines, as the vast majority of the decline occurred between 1985 and 2000, when the number of coal mines fell by 55% (from 3,355 to 1,513) before declining further by 54% from 2000 to 2015 (from 1,513 to 695). The number of coal mining firms has decreased in the United States, while the size of the average mine and output per mine and per worker have increased. Coal Consumption Coal consumption in the United States was consistently near or over 1 billion short tons per year since 2000 (peaking in 2007 at 1.128 billion short tons) until 2012, when demand fell below 900 million short tons (pre-1990 levels). As shown in Table 4 , consumption has declined further since then, reaching a low of 729 million short tons in 2016. The EIA projects annual coal consumption to be below 700 million short tons through 2019. Power generation is the primary market for coal, accounting for over 90% of total consumption. With the retirement of many coal-fired power plants and the building of new gas-fired plants, accompanied by lower demand for electricity, there has been a structural shift in demand for U.S. coal. A structural shift would mean long-term reduced capacity for coal-fired electric generation. Thus, coal would likely be a smaller portion of total U.S. energy consumption for years to come, replaced by natural gas and renewable energy, particularly as fuel used for power generation. As noted earlier, in 2016, natural gas overtook coal as the number one energy source for power generation. EIA projects a range of coal consumption into the year 2050—from less than 400 million short tons/year (based on the Obama Administration's Clean Power Plan) to about 800 million short tons/year. But in either case (declining or flat), coal is projected to be a smaller share of the total U.S. energy mix, with or without new rules governing power plant emissions. Coal Exports One of the big questions for the industry is how to penetrate the overseas coal market, particularly for steam coal, to compensate for declining domestic demand. EIA forecasts coal exports to continue declining in the short term (2018-2020) but to increase to 85 million tons annually by 2040 in the EIA reference case. Exports to the Asian market are expected to increase, but there are potential bottlenecks such as infrastructure (e.g., port development and transportation) that could slow export growth. Several key factors are likely to influence how much coal will be exported from the United States in the future, one of which is the building of export terminals, particularly for coal from the Powder River Basin (PRB) in Wyoming and Montana. Another major factor is the level of global demand for metallurgical (met) coal, which is used to make steel. Historically, met coal has been the primary coal exported by the United States and primarily to the European market. The European market has been in decline, but experienced a significant uptick in both steam and met coal imports from the United States in 2017. Some PRB coal is exported from Canadian terminals at Roberts Bank (near Vancouver, British Columbia) and Ridley Terminal at Prince Rupert, British Columbia. PRB coal is transported to both facilities for export via railway. However, the Canadian export terminals have reached capacity. PRB coal producers have been searching for a potential domestic export link to the growing Asian market through the Pacific Northwest, so far without success. Three port terminal projects for exporting coal in Washington and Oregon had permit applications before the U.S. Army Corps of Engineers (the Corps), although none have advanced. Two, the Gateway Pacific Terminal and Coyote Island Terminal projects, have been cancelled due to permit denials. Washington State's Department of Ecology, in its final environmental impact statement, rejected the application for a Clean Water Act Certification (for water pollution discharges) for the Millennium Bulk Terminal. Millennium Bulk Terminal filed an appeal with the Pollution Control Hearing Board, but on August 15, 2018, the Board upheld the Department of Ecology's decision in a Summary Judgment. In addition, the State of Washington denied the Millennium project a permit to build on state land. U.S. Coal-Producing Industry The U.S. coal industry is highly concentrated, with a handful of major producers operating primarily in five states (Wyoming, West Virginia, Kentucky, Illinois, and Pennsylvania). In 2016, the top five coal mining companies were responsible for about 53% of U.S. coal production, led by Peabody Energy Corp., with 19.6%, and Arch Coal, Inc., with 13.2% (see Table 5 ). Other major producers include Cloud Peak Energy, Murray Energy Corp., and Contura Energy Inc. Three of the top five coal producers filed for Chapter 11 bankruptcy protection between 2015 and 2016: Alpha Natural Resources, LCC (August 2015), Arch (February 2016), and Peabody (April 2016). Other major producers, such as Patriot Coal, Walter Energy, James River Coal, Armstrong Energy, and FirstEnergy Solutions have filed as well. All told, over 50 coal producers have filed for bankruptcy, with more than $19.3 billion in debt being reorganized. The top-two largest producers, both of which filed for bankruptcy, accounted for nearly 33% of U.S. coal production in 2016. Arch Coal, ANR Inc., and Peabody Energy have emerged from Chapter 11 bankruptcy with a plan to move forward, all three shedding substantial debt. Opponents are critical of the plan and of the long-term viability and reliability of the coal industry. A major challenge for the coal industry will be to get the level of financing needed for new or expanded projects and to become profitable. As U.S. energy policy and environmental regulations are debated, there is ongoing congressional interest in the role of coal in meeting U.S. and global energy needs. The question may not be whether the domestic production of coal will continue, rather, how much U.S. coal will be burned, what type, and under what regulatory framework. Nuclear Power: An Industry Facing Stress97 Nuclear power has supplied about one-fifth of annual U.S. electricity generation during the past three decades. In 2017, nuclear reactors generated 20% of U.S. electricity supply, behind only coal and natural gas. Ninety-eight reactors are currently operating at 59 plant sites in 30 states. They generated electricity at 92.2% of their total capacity in 2017, the highest rate of any generation source. Total net generation of nuclear power in 2016 was 805 billion kilowatt-hours. One new power reactor began commercial operation in 2016: Watts Bar 2 in Tennessee, the first new U.S. reactor since its twin unit began operating in 1996. Two more power reactors are currently under construction in Georgia at the Vogtle plant site. Ten additional new reactors have received licenses from the Nuclear Regulatory Commission (NRC), but construction of those projects is uncertain. No further license applications are under review. Despite the strong operational performance of existing nuclear plants, the U.S. nuclear industry has faced significant stress recently. Seven reactors have permanently closed since 2013, and the owners of 12 more have announced their permanent closure by the mid-2020s. Construction of two new reactors at the Summer plant site in South Carolina was cancelled following a bankruptcy filing in 2017 by the project's lead contractor, Westinghouse Electric Company. Most of the closed and threatened nuclear power plants sell their electricity at competitive market prices, in contrast to plants that recover their costs (including a reasonable rate of return) through regulated rates. Nuclear plants that rely on power markets have seen falling wholesale power prices and stagnant demand, combined with relatively high operating and capital costs in some cases, particularly at plants with a single reactor. (For more information, see CRS Report R44715, Financial Challenges of Operating Nuclear Power Plants in the United States , by [author name scrubbed] and [author name scrubbed].) Some contend that electricity markets are undervaluing the reliability of nuclear generation, its role in diversifying the nation's power supply, and its importance in reducing CO 2 emissions. Nuclear power accounted for 56% of U.S. sources considered to be zero-carbon electricity generation in 2017. A major government effort to preserve nuclear power as a non-direct carbon emitting electricity source is being implemented by the state of New York, which is providing payments in the form of zero emission credits (ZECs) to four upstate reactors that had been at risk of retirement. The state of Illinois enacted legislation in December 2016 to provide ZECs to prevent the planned closure of three at-risk reactors. Nuclear power incentives at the federal level have also been proposed, such as an investment tax credit. A federal nuclear energy production tax credit was extended by the Bipartisan Budget Act of 2018 ( P.L. 115-123 , Sec. 40501). However, some others contend that such drawbacks as accident risk, high costs, and disposal of radioactive waste outweigh the technology's benefits. Focusing on renewable energy and energy efficiency would be far more effective in reducing carbon emissions, they argue. It is not clear, however, that these alternatives can provide sufficient baseload power supplies to replace nuclear. All but three of today's 98 nuclear power reactors ( Figure 7 ) began operating before 1990, and most started commercial operation before 1980. They were initially licensed by NRC to operate for 40 years, a period that for more than half of U.S. reactors expires before 2020. However, most reactors have been issued 20-year license renewals, pushing back the license expiration of almost all nuclear plants at least to the 2030s. Further 20-year renewals, for a total operating life of 80 years, are also allowed. Two plants have submitted license renewal applications for a second 20-year renewal, and another two have indicated their intent to submit in the next several years. Renewable Energy: Inroads in the Energy Mix107 Federal policies supporting the use of renewable energy date mainly back to the mid-1970s, the years following the 1973 oil embargo and energy price volatility that resulted. At that time, support for renewable energy was generally oriented towards achieving energy security goals. Although energy security remains a policy objective, much of the current debate about supporting renewable energy deployment is related to environmental policies, such as reducing GHG emissions from electric power plants. While renewable energy is currently a relatively small portion of the total U.S. energy sector, renewables production and consumption have increased since 2000. Renewable energy consumption increased 113% between 2001 and 2017, as illustrated in Figure 8 . During this same period, the contribution of renewable energy to total primary energy more than doubled, rising from 5.4% to approximately 11.3%. Unlike other energy commodities, such as crude oil, renewable energy is available in a variety of distinct forms that use different conversion technologies to produce usable energy products (e.g., electricity, heat, and liquid fuels). Hydroelectric, biofuels, wood biomass, wind, waste, solar, and geothermal are the renewable energy categories that are tracked and reported by the EIA. Each energy product derived from renewable sources has unique market and policy considerations. Renewable energy is consumed within the electric power, industrial, transportation, residential, and commercial sectors. As indicated in Table 6 , the contribution of the different renewable energy sources to each sector varies. For example, nearly all hydro is consumed in the electric power sector and most of the industrial sector renewable energy use is in the form of biomass energy generation. Much of the growth in renewable energy consumption since 2001 has been within the electric power—mostly non-hydro renewable electricity generation—and transportation (renewable fuels) sectors. The industrial sector is the second-largest renewable energy consumer, although consumption levels have been in a relatively narrow range from 1985 to 2016 and, as mentioned above, the majority of renewable energy consumed in the sector is biomass-generated. It is beyond the scope of this report to include either detailed descriptions or analysis of each renewable energy source or a comprehensive assessment of each consumption sector. Rather, the following sections discuss renewable transportation fuels and renewable electricity generation trends since 2001 and provide some context about the policy and market dynamics that have contributed to the growth of these separate and distinct markets. Renewable Transportation Fuels Renewable energy production and consumption in the transportation sector is in the form of two primary types of renewable fuels: ethanol and biodiesel. The primary use of ethanol is as a blending component of motor gasoline. Generally, although it can vary by vehicle type and access to high level ethanol-gasoline blends, ethanol content represents approximately 10% of gasoline by volume. Biodiesel is a direct substitute for diesel fuel refined from petroleum. U.S. ethanol and biodiesel production and consumption in the United States have experienced growth over the last 16 years. Significant growth occurred following the establishment and expansion of the Renewable Fuel Standard—a mandate that U.S. transportation fuel contain a minimum volume of biofuel. U.S. ethanol production has steadily increased from approximately 1.8 billion gallons in 2001 to just under 16 billion gallons in 2017. Ethanol consumption increased from 1.7 billion gallons in 2001 to more than 14 billion gallons in 2017. During the same period biodiesel production increased from 9 million gallons in 2001 to approximately 1.6 billion gallons in 2017. Biodiesel consumption increased from 10 million gallons in 2001 to approximately 2.0 billion gallons in 2017. 2017 ethanol consumption volumes are more than seven times that of biodiesel. Renewable Electricity U.S. renewable electricity generation, including hydropower and non-hydro renewables, more than doubled between 2001 and 2017. The contribution of renewable energy to the U.S. power sector increased from 9% in 2001 to 17% in 2017. While hydroelectricity generation has represented 6% to 8% of total U.S. electric power generation since 2001, essentially all of the growth in renewable electricity generation during this period was from non-hydro renewables. Non-Hydro Utility-Scale Renewable Electricity Non-hydro renewable energy (i.e., wind, solar, geothermal, and biomass) as a fuel source for electricity generation has been supported by policies at both the state and federal level. Renewable portfolio standard (RPS) policies instituted in many states have been the demand catalyst for renewable power. Tax incentives—in the form of investment and production tax credits, as well as accelerated depreciation—have provided a federal-level financial incentive that has resulted in renewable electricity being financially attractive to both project investors and power purchasers. As a result of these state and federal programs and incentives, in addition to technology cost declines and conversion efficiency improvements, the use of non-hydro renewable sources of energy to generate electric power in the United States increased considerably between 2001 and 2017. In 2017 non-hydro renewable energy sources provided more than 9% of total U.S. electric power generation (see Figure 9 ). Wind and solar have dominated growth in non-hydro renewable electricity generation, while generation from biomass and geothermal has remained essentially flat. Electricity generation from wind energy increased by a factor of 37 between 2001 and 2017, growing from less than 7 million Megawatt-hours (MWh) to more than 254 million MWh. Electricity generation from solar energy increased by more than a factor of 97 between 2001 and 2017, growing from 0.6 million MWh to nearly 53 million MWh (see Figure 9 ). In terms of new utility-scale electric power capacity additions, non-hydro renewable electricity installations—the majority being solar and wind—has exceeded that of coal and natural gas combined every year since 2014. During calendar year 2017, approximately 50% of gross capacity additions were non-hydro renewables (see Figure 10 ). The relatively large contribution of non-hydro renewable energy electricity capacity additions in recent years can be attributed to multiple factors. First, prior to Congress passing a multi-year extension and phase-out of tax credits for wind and solar electricity in 2015, project developers for wind and solar power projects accelerated development activities in order to capture tax credit incentives before their scheduled expiration date. Second, the cost of electricity generated by wind and solar technologies has declined, primarily due to improvements in conversion efficiency and equipment cost reductions. Finally, the U.S. electricity sector is a mature market; overall sector growth is projected to be small. U.S. electric power demand has been relatively flat for several years and is projected to continue along a rather flat trajectory in the near to medium term. As a result, the amount of new power generation capacity needed each year has declined. This low-growth market, combined with increased capacity installations motivated by state requirements and federal financial incentives, has led to large contributions by renewable electricity to annual capacity additions. Distributed Solar Electricity Generation In addition to the increased use of solar energy for utility-scale electric power, distributed solar electricity generation—solar power generated at a residential, commercial, or industrial location—has also increased significantly. Distributed solar generation grew by a factor of 186 between 2001 (129 million kilowatt-hours, kWh) and 2017 (24,139 million kWh). This rapid growth is the result of several policy and market factors, including (1) state-level policies that encourage residential solar development (solar "carve-outs" and net-metering policies), (2) federal tax incentives, (3) decreasing costs of solar electricity generation equipment, (4) price competition with retail prices instead of lower wholesale prices, and (5) solar leasing business models that eliminate the need for homeowners and commercial users to pay for the upfront cost of a solar generation system, such as rooftop solar panels. Appendix A. Key U.S. Government Agencies Army Corps of Engineers (Corps) —part of the Department of Defense, the Army Corps of Engineers manages both federal water resource development projects and regulated activities affecting certain waterways and wetlands, including activities associated with infrastructure. Corps permits are required where energy infrastructure crosses certain waterways, Corps projects, or Corps-controlled lands. Bureau of Land Management (BLM) —part of the Department of the Interior, BLM has oversight of federal lands and manages onshore oil and natural gas operations. Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) —part of the Department of the Interior, BOEMRE oversees the safe and environmentally responsible development of energy and mineral resources on the Outer Continental Shelf. U.S. Coast Guard —part of the Department of Homeland Security, the Coast Guard has oversight of marine terminals used for the import and export of oil and natural gas as well as the security of certain hazardous fuel shipments by water. U.S. Commodity Futures Trading Commission (CFTC) —CFTC has oversight of futures markets, including those for energy. CFTC was given additional oversight responsibilities for futures and derivatives under Dodd-Frank legislation. U.S. Department of Energy (DOE) —a Cabinet-level agency responsible for developing and implementing national energy policy, energy research and development, basic science, energy emergency preparedness and security, and defense-related nuclear activities. Energy Information Administration (EIA) —an agency within DOE, it provides independent data and analysis on the U.S. energy sector. Environment al Protection Agency (EPA) —EPA has a broad range of responsibilities regarding energy as it enforces environmental regulations and sets national standards. EPA has oversight/enforcement of all or part of the Oil Pollution Act, Resource Conservation and Recovery Act (RCRA), Clean Water Act, Clean Air Act, Energy Policy Act, Energy Independence and Security Act, Shore Protection Act, among other laws. Federal Energy Regulatory Commission (FERC) —an independent federal agency which regulates the interstate transmission of electricity, natural gas, and oil. FERC also issues permits for LNG terminals and interstate natural gas pipelines as well as licensing nonfederal hydropower projects. U.S. Fish and Wildlife Service —Fish and Wildlife has responsibilities for environmental oversight on energy issues such as wind and hydropower production, and pipeline rights-of-way through jurisdictional lands. U.S. Forest Service —part of the Department of Agriculture, the Forest Service is responsible for managing energy and mineral resources, and infrastructure development on federal onshore areas that it owns. Maritime Administration (MARAD) —an agency within the Department of Transportation that regulates offshore LNG and oil terminals. National Oceanographic and Atmospheric Administration (NOAA) —part of the Department of Commerce, NOAA has jurisdiction over pipeline project construction in coastal and/or ocean areas. Nuclear Regulatory Commission (NRC) —an independent regulatory commission responsible for licensing and regulation of nuclear power plants and other nuclear facilities. Office of Fossil Energy —part of the Department of Energy focusing on production from U.S. oil fields. It also has input into the construction of liquefied natural gas import and export terminals. Office of Nuclear Energy —part of the Department of Energy responsible for nuclear energy research and federal nuclear waste storage and disposal facilities. Office of Energy Efficiency and Renewable Energy (EERE) —part of the Department of Energy that focuses on energy efficiency, such as appliance standards, and renewable energy. Pipeline and Hazardous Materials Safety Administration (PHMSA) —part of the Department of Transportation, PHMSA administers the regulatory program, through the Office of Pipeline Safety (OPS), to assure the safe transportation of natural gas, petroleum, and other hazardous materials by pipeline. OPS develops regulations and other approaches to risk management to assure safety in design, construction, testing, operation, maintenance, and emergency response of pipeline facilities. Appendix B. Key Energy Laws Appendix C. 2016 U.S. Energy Consumption

Since the start of the 21st century, the U.S. energy system has seen tremendous changes. Technological advances in energy production have driven changes in energy consumption, and the United States has moved from being a growing net importer of most forms of energy to a declining importer—and possibly a net exporter in the near future. The United States remains the second largest producer and consumer of energy in the world, behind China. The U.S. oil and natural gas industry has gone through a "renaissance" of production. Technological improvements in hydraulic fracturing and horizontal drilling have unlocked enormous oil and natural gas resources from unconventional formations, such as shale. Oil has surpassed levels of production not seen since the 1970s. Natural gas has set new production records almost every year since 2000. In conjunction with the rise in oil and natural gas production, U.S. production of natural gas liquids has also increased. The rise in production of these fuel sources has also corresponded with increased consumption and exports of each. The rise in U.S. oil and natural gas production has taken place mostly onshore and on nonfederal lands. Crude oil production from nonfederal land has doubled over the past decade. While production on federal land has increased, it has not grown as fast as oil production on nonfederal land, causing the federal land share of total U.S. crude oil production to fall from its peak of nearly 36% in 2009 to about 24% in 2017. U.S natural gas production shifted even more dramatically, with total U.S. dry production growing 33% since 2008, while gross withdrawals on federal lands declined by almost 32% over the same time period. The federal land share of total gross withdrawals decreased from 25% in 2008 to 13% in 2017. The electric power industry is transforming. Growth in demand for electricity has essentially been flat for many years, and the amount of new power generation capacity needed has declined each year in many parts of the country. The projections for future demand growth in most regions of the United States are declining. Natural gas edged out coal to become the primary electric generation fuel in 2016 and the growth in wind and solar energy has shown little sign of abating. The electricity infrastructure of the United States is aging. Uncertainty exists about how to modernize the grid and what technologies and fuels will be used to produce electricity in the future. Unresolved questions about transmission and reliability of the grid are arising due to potential cybersecurity threats and continuing interest in renewable energy and other low carbon sources of electricity. Concerns about reliability and electricity prices are complicated by environmental regulations, the intermittent nature of wind and solar power, and the rising availability of natural gas for electric power production. Renewables production and consumption have increased since 2000. As a source of total primary energy, renewable energy increased 80% between 2000 and 2017. Unlike some other energy commodities (e.g., crude oil), renewable energy is available in a variety of distinct forms that use different conversion technologies to produce usable energy products (e.g., electricity, heat, and liquid fuels). Therefore, it is important to distinguish between renewable fuel sources and uses. The United States has the largest coal resources in the world. Coal is used primarily for electricity generation. Although its prices have stayed low, coal has faced increasing competition from natural gas and renewables. U.S. coal consumption peaked in 2007 and has since declined by 39%. Coal currently supplies approximately 30% of electricity generation. Nuclear-generated electricity output has stayed flat during the same time period, and faces significant challenges as a future source of electric power generation. Energy production and consumption have been issues of interest to Congress for decades. Current topics of concern to Congress include independence, exports, imports, prices, security, infrastructure, efficiency, the environment, and geopolitics. Legislation has been introduced in both houses of Congress to address these issues and others.

Introduction Recent and planned nuclear reactor closures have raised questions about the future of nuclear power in the United States and its potential contribution to the U.S. electricity mix. The nuclear power industry and its supporters have proposed that Congress take action to prevent the shutdown of currently operating U.S. reactors before the expiration of their operating license. Supporters contend that nuclear power should be valued as a domestic source of highly reliable, low-carbon electricity. However, opponents contend that nuclear power suffers from too many drawbacks (e.g., safety risks) and that federal incentives should focus instead on renewable energy and efficiency. There are currently 60 operating nuclear power plants in the United States comprising 99 reactors and representing 99,316 Megawatts of generating capacity—nearly 10% of existing utility-scale generating capacity, and approximately 20% of total power generation. Generally, U.S. nuclear plants are located in one of two market types: (1) competitive—where the value of electricity fluctuates based on supply-side price offers that are generally a function of fuel (e.g., natural gas) costs and demand-side price bids, and (2) cost-of-service—where the value of electricity is set at a rate based on regulator-approved costs, operating expenses, and a reasonable investment return. Some nuclear plants located in competitive power markets are subject to full or partial rate regulation, which reduces financial risk associated with fluctuating electricity prices. Access to competitive wholesale power market prices can result in regulatory bodies deciding that early nuclear plant retirement is in the best interest of rate payers based on projected electricity prices. Other plants located in competitive power markets operate on a "merchant" basis, where electricity prices and revenues are subject to commodity price fluctuations and supply/demand dynamics. Merchant nuclear power plants are the focus of this report. Competitive power markets are managed by either a Regional Transmission Organization (RTO) or an Independent System Operator (ISO), which operates electricity and capacity markets that determine revenues for nuclear, and other, power generators. Unlike cost-of-service market areas—where generators have electricity price rates that are approved and periodically revised by a state utility commission—competitive power markets are subject to electricity price volatility that results from supply and demand fundamentals as well as fuel (e.g., natural gas and coal) costs for the marginal price-setting generators. While generators operating in cost-of-service market areas are not immune to fuel competition, to date nuclear power plants that have announced early closure or have been identified by financial consultants and ratings agencies as "at-risk" of closure are located in competitive market areas. U.S. nuclear power plants operating in competitive power markets are in an era of challenging economic conditions—increasing operating costs and low wholesale power prices in some locations—that create uncertainty regarding the future of some plants. Six reactors have permanently shut down during the past five years; 10 reactors—at eight plant sites—have announced, since 2010, their intent to close—nine in the past two years (see Figure 1 ); and 10 have been identified by consultants and ratings agencies as "at-risk" of closing prior to the expiration of their operating licenses. In total, these plants represent 22,078 Gigawatts of generating capacity, which is roughly 20% of the current nuclear power fleet. Of the 10 power reactors that have announced their intent to close, some operate under full or partial rate regulation—they receive a set price for electricity sales—and some operate solely as merchant power plants—they are subject to the price dynamics of competitive power markets. However, the one common link among the reactors that have announced their intent to close is that they are located in competitive power markets ( Figure 1 ). Because they are subject to wholesale power price dynamics, merchant generators operating in competitive power markets are the focus of the economic discussion included in this report. This report provides background on the evolution of nuclear power in the United States, discusses recent and announced plant closures, explains the economic conditions creating financial challenges for merchant nuclear power plants, and presents policy considerations associated with the future of existing nuclear power plants. Caveats and Limitations The financial situation for each nuclear power plant is unique. Operating costs, expected capital expenditures, wholesale power prices, capacity payments, hedging exposure, power purchase agreements (PPAs), and full or partial regulated rate structures are financial components that are plant and location specific. Nevertheless, much of the economic and financial information presented in this report is generalized in order to illustrate the cost and pricing trends across the entire industry. While some plant-by-plant analysis is referenced and contained in this report, there are important data assumptions that should be noted. To date, CRS has not been able to locate or aggregate a comprehensive data set that would allow for a plant-by-plant analysis that accurately reflects all financial variables. Overview of U.S. Nuclear Power Generation Commercial-scale nuclear power generation in the United States was inaugurated in 1957 by the startup of the Shippingport reactor in western Pennsylvania. Built by the U.S. Atomic Energy Commission (AEC) and operated by Duquesne Light Company, the relatively small (60 Megawatt) power plant was not considered economically viable. However, Shippingport paved the way for additional demonstration reactors that were rapidly scaled up in generating capacity to provide a viable alternative to power plants fired by fossil fuels. Harnessing the tremendous energy potential of nuclear fission had been a major federal goal since the development of nuclear weapons during World War II. Post-war policymakers widely anticipated that nuclear power plants could generate much or most of the power that would be needed to satisfy the nation's rapidly escalating demand for electricity, particularly if plutonium and uranium from spent nuclear fuel were recycled for use in advanced fast-neutron reactors. It was also hoped that the widespread adoption of nuclear power would mitigate volatile and rising fossil fuel prices, growing dependence on foreign oil, and air pollution. The legal framework for the U.S. nuclear power industry was established by the Atomic Energy Act of 1954 (AEA), which authorized the private sector to own and operate nuclear facilities under AEC licensing. To encourage private-sector adoption of the new and potentially hazardous technology, Congress enacted the Price-Anderson Act as an amendment to the AEA in 1957, establishing a special public liability system for reactor operators and suppliers. Shippingport and other small, early commercial nuclear plants were constructed with subsidies under the AEC's Power Reactor Demonstration Program. Beginning in 1963, reactor suppliers began selling substantially larger units—around 500 megawatts and above—on a "turnkey" basis to electric utilities. By 1965, plants as large as 1,100 megawatts were being ordered by utilities under a non-turnkey basis, with contract terms similar to those of non-nuclear power plants. Rising coal prices and the apparently improved economics of larger reactors prompted electric utilities to order 20 new nuclear units in 1966 and 31 in 1967—only a decade after the startup of Shippingport. Reactor orders continued at a strong pace through 1971 and then jumped to 38 in 1972 and 41 in 1973. However, the wave of reactor orders then receded as dramatically as it had begun. Surging energy prices resulting from the Arab oil embargo in 1973-1974 dramatically slowed the growth of U.S. electricity demand, and it became apparent that electric utilities had ordered too much generating capacity of all types. In addition, nuclear power plant construction costs were sharply escalating, interest rates were rising, and greater safety expenditures were required after the 1979 core-melt accident at Three Mile Island 2. All reactors ordered from 1974 through 1978 were subsequently canceled, and no further reactor orders were placed in the United States until 2008, when contracts were signed for four new units now being built in Georgia and South Carolina. Most of the reactors ordered from 1971 through 1973 were also canceled, for a total of 126 cancellations. In addition to the cancellations, the lower-than-expected growth in electricity demand led electric utilities to slow the construction of many reactors that had not been canceled, stretching their completion into the 1980s and 1990s, and to 2016 in the case of one reactor, Watts Bar 2. Of the 256 reactor orders placed through the 1970s, 134 reactors, including the early AEC demonstration plants, ultimately were completed and placed into service. Throughout the history of the U.S. nuclear power program, reactors have permanently shut down for a variety of reasons. Many of the small, early AEC reactors were not necessarily expected to operate for a long time, and nine of them had been permanently closed by the late 1970s. Three Mile Island 2, a nearly new reactor, closed in 1979 after its accident. Four reactors were permanently closed during the 1980s, including the Shoreham plant on Long Island, NY, which had never begun full-power operation. During the 1990s, 10 reactors shut down, including the large, two-unit Zion plant in Illinois. Rising natural gas prices in the early 2000s significantly improved the economics of nuclear power, because they made gas-fired electric generation more expensive while nuclear generation costs remained comparatively low (discussed in detail later in this report). Existing reactors were no longer being closed, and the first U.S. license applications for new reactors since 1978 were filed with the Nuclear Regulatory Commission (NRC, the regulatory successor to the AEC) beginning in 2007. However, gas prices fell sharply after 2009 and have remained low, primarily because of strong production of domestic shale gas. Six reactors have permanently shut down since the beginning of 2013, and additional closures have been announced. The current economic situation has clouded the outlook for new U.S. reactors. NRC has issued construction and operating licenses to seven new reactors and is currently considering applications for seven more. However, except for the four units in Georgia and South Carolina that are now under construction, no commitments have been made to build any others. As shown in Table 1 , of the 134 commercial reactors that have started operating since the beginning of the U.S. nuclear power program, 35 have permanently closed, leaving 99 currently operating and 4 under construction. The 99 operating U.S. commercial power reactors are located in 30 states at 60 plant sites. Nuclear power plants annually provide about 20% of total U.S. electricity generation, most recently 19.5% in 2015. Nuclear power accounted for 61.6% of U.S. "zero carbon" electricity generation in 2015. Under the Atomic Energy Act, nuclear power reactors are licensed to operate for 40 years and are eligible for 20-year license renewals thereafter. Because about half of U.S. reactors started operating in the 1970s or earlier, the licenses of much of the reactor fleet would have expired by now without renewal. As of July 2016, according to NRC, 80 of the 99 currently operating reactors have received 20-year license renewals, and 12 additional renewal applications are under review. The 20-year renewals, allowing 60 years of operation, would extend the licenses of most current reactors through the 2030s and of almost all the remainder through the 2040s. Further 20-year renewals are also possible under the AEA, extending plant lives to 80 years or longer. Actual, Planned, and Possible Reactor Closures After experiencing no commercial reactor closures during the first decade of the 21 st century, the U.S. nuclear power industry has seen six reactors retire during the past five years, with at least 19 more considered to be at risk of closure by their owners or major credit rating agencies (see Table 2 ). However, New York and Illinois have recently taken action to keep seven of the at-risk reactors operating. These actual, announced, and potential nuclear plant shutdowns fall into several broad and sometimes overlapping categories. The fundamental problem for most of the at-risk plants is that their revenues depend almost entirely on regional wholesale electricity markets, where prices have been insufficient to cover their costs. Some plants, such as Quad Cities, have relatively low operating and maintenance costs, but still cannot bring in sufficient revenue in their regional markets, because of a combination of oversupply, transmission congestion, and other local factors. Several single-unit nuclear plants, which generally have higher costs per megawatt-hour, are having trouble competing even in markets with relatively high power prices. For example, the Pilgrim plant in the New England market is reportedly receiving revenues that are insufficient to cover fuel, operating and maintenance, and capital expenditures, as discussed below. The chronic inability to cover costs during routine operations is not the only source of nuclear plant retirement risk: Marginally economic plants can be vulnerable to closure because of major repairs, capital expenditures, prolonged shutdowns, and other non-routine events. Merchant plants may be especially vulnerable, but such occurrences can even prompt the retirement of rate-regulated plants, as seen at San Onofre and Crystal River. Non-revenue factors, such as concerns about seismic safety at Diablo Canyon, can also contribute to nuclear plant closures. Recent Reactor Retirements The first nuclear shutdown resulting from the recently changing competitive environment was the 566 megawatt single-unit Kewaunee plant in Wisconsin. In its October 2012 announcement that Kewaunee would be closed, plant owner Dominion said the small plant could not cover its costs in the midst of low regional power prices. An industry consultant commented after the announcement, "This might be the beginning of a new wave of shutdowns." Kewaunee closed in May 2013. Duke Energy decided on February 5, 2013, to retire the Crystal River 3 reactor in Florida. Crystal River's previous owner, Progress Energy, had severely damaged the reactor's massive concrete containment structure while attempting to replace the plant's steam generators. Duke Energy, which acquired Crystal River in 2012, said it decided to close the plant because of unacceptable uncertainty about the scope, cost, and duration of repairing or replacing the damaged containment structure. About two-thirds of U.S. nuclear power plants use steam generators to transfer heat from reactor cooling water to a secondary piping loop in which hot water is converted to steam to drive the turbine generators that produce electricity. Most steam generators have required replacement after 20-30 years of service, a capital expenditure of several hundred million dollars per reactor. Steam generators are such large components that temporary holes must be cut in the reactor containment to remove the old ones and bring in new ones. Some nuclear plants have been closed and decommissioned to avoid the cost of steam generator replacement, such as Oregon's Trojan reactor in 1992. However, most nuclear plant owners have opted to replace the steam generators when necessary, and these projects, while requiring complex planning and execution, have become fairly routine in the nuclear power industry. No other steam generator replacement project caused containment damage similar to that suffered by Crystal River 3. Nevertheless, unrelated problems with another steam generator replacement project, at California's San Onofre station, also led to that plant's permanent shutdown just a month after Crystal River 3. Southern California Edison (SCE), the plant's owner, replaced the steam generators in units 2 and 3 in 2010 and 2011, respectively (unit 1 had been retired previously). One of the new steam generators experienced internal leakage about a year later; inspections showed vibration-related damage to all the new steam generators, later attributed by SCE to design flaws. After considering options to repair or replace the damaged steam generators, SCE announced in June 2013 that it would retire San Onofre 2 and 3. The company cited uncertainty about whether and when the units would be allowed to restart at lower power by NRC, pending steam generator replacement or repair, as a major factor in the shutdown decision. Other considerations were the projected price of replacement power while repairs were being implemented and uncertainty about renewal of the two reactors' operating licenses in 2022, according to SCE. The Vermont Yankee plant was permanently closed in December 2014 because, according to plant owner Entergy, low power prices in New England were causing chronic losses. The single-reactor plant had received a 20-year license renewal from NRC in 2011, despite vigorous opposition from the state of Vermont that focused on leaks of radioactive tritium. The license renewal allowed the plant to operate until 2032, but Entergy decided two years later to begin decommissioning the unit at the end of 2014. The company cited competition from shale gas-fired generation, the relatively high cost of operating a single-unit nuclear plant, and "artificially low energy and capacity prices in the region." Another single-unit nuclear plant, Fort Calhoun in Nebraska, was the most recent U.S. reactor to permanently close, on October 24, 2016. Fort Calhoun had been the smallest operating power reactor in the United States. Because it was owned by the Omaha Public Power District (OPPD), which sets its own rates, the nuclear plant had not been directly subject to the relatively low power prices in the region. However, OPPD determined that it could save up to $994 million for its customers over the next 20 years by closing Fort Calhoun and purchasing low-cost replacement power in the wholesale market. "The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable," according to OPPD's chief executive. Announced Retirements and Potential Shutdowns Ten operating reactors are currently facing permanent shutdown dates imposed by their owners or reached through negotiated agreements, as listed in the "announced shutdowns" section of Table 2 . FitzPatrick and Ginna Facing the most imminent closure on this list are two single-unit New York plants, FitzPatrick, owned by Entergy, and Ginna, owned by Exelon. In announcing plans to close FitzPatrick, Entergy cited the relatively high operating costs of single-unit nuclear plants and "excess power supply and low demand" in the plant's upstate New York market. "Current and forecast power prices have fallen by about $10 per megawatt-hour, which equates to a projected annual loss of more than $60 million in revenues for FitzPatrick," said an Entergy statement. Ginna faces a similar economic situation, according to Exelon. The company said the plant's total market-based revenues would be well below the $55-$60 per megawatt-hour required for profitability. In an effort to keep FitzPatrick and Ginna operating, along with Exelon's two-unit Nine Mile Point plant next to FitzPatrick, the State of New York Public Service Commission approved a system of Zero Emission Credits (ZECs) that would provide additional revenue for the four reactors. The ZEC program would require Exelon to purchase FitzPatrick from Entergy and operate all four of the upstate New York reactors through 2029. Exelon has agreed to the purchase and to keep the four reactors running if the program is implemented as planned. This ZEC funding is being provided in the wake of more than 10 years of experience with a market price on carbon in New York State through the Regional Greenhouse Gas Initiative (RGGI). Given the stated economics of the FitzPatrick and Ginna plants, this price advantage under the market price set through RGGI (approximately $5/ton of carbon dioxide or $2.70 per MWh) for low-carbon power units has not been sufficient to make these plants profitable. Clinton and Quad Cities The next two shutdowns currently scheduled are Exelon's single-unit Clinton plant and the two-unit Quad Cities plant, both in Illinois. "Quad Cities and Clinton have lost a combined $800 million in the past seven years, despite being two of Exelon's best-performing plants," the company said in announcing the shutdowns. The two plants must sell their power into wholesale electricity hubs at consistently lower prices than at adjacent hubs, a situation that has been attributed to chronic transmission congestion. The Illinois General Assembly passed a bill (S.B. 2814) on December 1, 2016, that would provide ZECs to the Clinton and Quad Cities plants, along the lines of the New York ZEC program. Exelon had previously indicated that such assistance could keep the plants operating beyond their planned shutdown dates. Palisades Entergy announced on December 8, 2016, that it would close its single-unit Palisades plant in Michigan on October 1, 2018. Palisades is in a competitive wholesale power market but earns nearly all its revenue under a PPA with Michigan utility Consumers Energy. The PPA, scheduled to continue until 2022, was signed in 2007, when power prices were relatively high and expected to continue rising. In announcing the plant's retirement, Entergy said that, since 2007, "market conditions have changed substantially, and more economic alternatives are now available to provide reliable power to the region." As a result, prices under the PPA, which started at $43.50 per MWh in 2007 and were to rise to $63 per MWh by 2022, have risen substantially above the market level. Entergy's announcement said the early termination of the PPA would reduce electricity costs to Consumers Energy by $344 million from 2018 to 2022, and that the savings would be evenly divided between Entergy and Consumers Energy. Pilgrim Entergy plans to close its single-unit Pilgrim plant in Massachusetts in 2019. "The company is retiring the Pilgrim plant because of continued and projected low energy prices, with no expectation of market structure improvements, along with increased costs," according to Entergy's website. A recent analysis by the R Street Institute said the plant's operation and maintenance costs had risen in recent years and that it needed significant capital expenditures to address safety-related equipment problems that had prompted heightened NRC scrutiny. Although wholesale power prices in the New England market are high enough to cover Pilgrim's operation and maintenance costs, according to the analysis, revenue is not sufficient to justify the capital expenditures needed for the long term. Oyster Creek Exelon's single-unit Oyster Creek plant in New Jersey, the nation's longest-operating power reactor, is also scheduled to be retired in 2019. When the plant's initial 40-year NRC license was renewed for 20 years in 2009, the State of New Jersey required it to comply with water discharge requirements by building closed-circulation cooling towers to reduce warm water discharges into Barnegat Bay. Exelon said the cooling towers would have cost $700-$800 million and that it would retire the plant if required to build them. Exelon and the New Jersey Department of Environmental Protection reached an agreement in 2010 to close Oyster Creek in 2019, a decade before its license expiration, without building the closed-circulation cooling system. Diablo Canyon In contrast to the above closures, the planned shutdown of the two-unit Diablo Canyon nuclear power plant in California is not explicitly based on economic factors. Diablo Canyon is a rate-regulated plant, and therefore its owner, Pacific Gas and Electric (PG&E), is allowed to recover the plant's regulator-approved costs from ratepayers. PG&E contends that the plant "provides low-cost, carbon-free energy" and is a "vital energy resource for California." However, plant opponents have argued for decades that Diablo Canyon's location in a seismically active region poses unacceptable safety risks. The environmental group Friends of the Earth calls the plant "dangerous, destructive and expensive." Friends of the Earth and other groups strongly opposed PG&E's 20-year license renewal applications to NRC, which would allow Diablo Canyon 1 and 2 to operate after 2024 and 2025, respectively. They also opposed the extension of a state land lease for the Diablo Canyon site that was to expire in 2018. To resolve the controversy, PG&E reached an agreement with a coalition of environmental and labor groups on June 21, 2016, to abandon the applications to NRC for Diablo Canyon license extensions in return for support from plant opponents for the state land lease extension (which was granted a week later). As a result, the Diablo Canyon reactors are now scheduled to operate until their current NRC licenses expire in 2024 and 2025. By that time, according to PG&E, sufficient alternative electricity generation will be available to meet regional market demand. Other Potential Closures Several nuclear power units have been identified by their owners as being at risk of permanent shutdown but without any specific dates or deadlines. An Exelon official was reported in March 2016 to have said the company's Nine Mile Point plant was "losing a lot of money," despite being a dual-unit plant with relatively large total generating capacity, and that the company might have to retire it in the future. As mentioned above, Nine Mile Point may continue operating because of Zero Emission Credits being implemented by the state of New York. A FirstEnergy executive reportedly told financial analysts in November 2016 that his company would close or sell its merchant nuclear and coal plants within 18 months unless they could return to cost-based rate regulation or receive financial assistance. FirstEnergy's nuclear plants are the single-unit Perry and Davis-Besse plants in Ohio and the two-unit Beaver Valley plant in Pennsylvania. The analysts were reportedly told that the plants could not compete in regional wholesale power markets with low-cost electricity from natural gas plants and wind turbines. In addition to nuclear plants identified by their owners, several other reactors have been singled out by at least one of the major financial ratings agencies as being at risk of early retirement, generally because of market conditions. Byron 1 and 2 in Illinois were listed by UBS, and the single-unit Palisades plant in Michigan and Three Mile Island plant in Pennsylvania were listed by Fitch Ratings. Merchant Nuclear Power Plant Economics At the most basic level, existing nuclear power plants need to generate revenues from electricity sales, capacity markets (where available), and other potential sources that exceed the average total cost (ATC)—fuel, capital, and operating—of producing electricity in order to economically justify continuing operations. Generally, prices for wholesale electricity—the largest source of revenue for merchant nuclear power plants participating in competitive markets—have decreased in recent years while nuclear generation ATCs have increased. As a result, the financial condition of some U.S. nuclear power plants has been stressed and in some cases ATCs have exceeded revenues, resulting in actual and planned closures. However, the degree of financial pressure across the nuclear fleet is not uniform. Each power plant is subject to a unique mix of market and cost variables, including (1) plant site and locational pricing, (2) the Regional Transmission Organization (RTO) market, (3) non-electricity revenue sources (e.g., capacity payments), (4) plant size, (5) transmission constraints, (6) generation mix within the transmission area, and (7) the marginal cost of electricity from price-setting fuels (e.g., coal and natural gas). A limited plant-level assessment of electricity revenues and fuel and operations and maintenance (O&M) costs is included in this report (see the Appendix ). However, a detailed plant-by-plant financial analysis that includes all revenue and cost variables is beyond the scope of this report, as are the economics and levelized cost of electricity (LCOE) considerations associated with constructing new nuclear plants. The following sections provide an overview of concepts and trends that impact the financial and economic conditions considered by existing U.S. nuclear power plants. Nuclear Power Generation Costs Much of the discussion surrounding nuclear power economics has focused on revenue items such as low natural gas prices, the depressed wholesale market clearing prices that result, and low capacity revenues in some organized markets. These items certainly impact the economics of nuclear power, and this report includes discussion of these revenue-related issues. However, the cost portion of the financial equation is also important to understand due to its impact on economic viability. At an industry-wide level, the Nuclear Energy Institute (NEI) reports that average total generating costs—which include fuel, capital, and operating costs—for nuclear electricity increased from $28.27 per megawatthour (MWh) to a peak of $39.70 per MWh in 2012 and in 2015 were reported to be $35.50 per MWh. The NEI analysis indicates that while all cost categories have increased, capital expenditures were the largest contributor to average total costs, having more than doubled over the same time period. NEI also reports that total average costs can vary depending on the number of reactor units at each power plant. Total average costs for multi-unit plants were $32.90 per MWh in 2015 versus $44.52 for single unit power plants. The majority of this difference is in the "operating" cost category. In response to these cost trends, NEI has an active initiative called "Delivering the Nuclear Promise" which aims to reduce fleet-wide total generation costs by 30% by 2018 from the 2012 high of $39.70 per MWh. For the purpose of comparing revenues and costs for the industry as a whole, average total costs of generation are used in order to illustrate the relationship between electricity sales revenue and all cash costs that are incurred. In addition to the NEI industry-wide average total cost information, CRS has access to 2015 plant-level fuel and O&M costs for 33 nuclear power plants that operate in competitive power markets. This plant-level fuel and O&M cost information is compared with nodal electricity prices paid to each generator in order to determine whether revenue from electricity sales exceeds fuel and O&M costs (for additional information see the Appendix ). How Are Competitive Wholesale Electricity Prices Determined? In a competitive power market, the per-unit wholesale price of electricity (e.g., dollars per Megawatthour) paid to generators is their primary revenue source and is based on the economic concepts of supply and demand curves. Price determination in competitive markets is subject to Security Constrained Economic Dispatch (SCED), which takes into account costs, transmission limitations, and reliability requirements. In simple terms, all generators within a competitive market offer electricity at prices and volumes that are organized by the RTO from lowest to highest price in order to construct a supply curve (see Figure 2 ). Once expected demand levels and price bids for this time period (e.g., hourly) are determined, the price at which demand and supply intersect, when taking into account SCED considerations, is referred to as the "market clearing price." This is the price received by all generators that offered electricity at a price equal to or below the market clearing price level. As an example, a nuclear plant might offer to sell a certain volume of electricity at $7 per MWh (approximate value for fuel costs) and a wind generator may offer electricity for $0 per MWh. However, if the clearing price is $40 per MWh (because the marginal generator submitted a $40 per MWh offer) then the nuclear plant and wind generator will be dispatched (i.e., ordered to run) and both will receive $40 per MWh for electricity provided during this time interval. Figure 2 provides a hypothetical illustration of how wholesale electricity prices are generally determined. Nuclear power being offered at less than the market clearing price does not necessarily mean that it is profitable. Merchant nuclear plants are generally viewed as "price takers" in a wholesale power market since the plants generally prefer to operate on a continuous basis, regardless of the market price. However, indications are that some nuclear generators may start following demand load patterns in order to improve electricity sales revenues in some locations. Typically, merchant nuclear plants want to offer prices low enough to clear the market and will participate in the competitive power markets in a way that ensures market clearance and dispatch. As a result, nuclear plant profitability is generally a function of the market clearing price level that is set by price-setting units. In practice, price formation in wholesale power markets can be quite complex, with the RTO/ISO having to manage various system constraints (e.g., transmission, scarcity, reliability) that can challenge the simple application of supply and demand curves. Nevertheless, supply and demand fundamentals are the underlying premise by which wholesale electricity prices are determined. Generally, price offers are a function of the fuel cost needed to generate a unit of electricity, and do not include capital costs. The fuel cost for wind is zero and, according to the Nuclear Energy Institute, the fuel cost for nuclear was approximately $7 per MWh in 2015. Also, nuclear generators—because plants generally prefer to operate on a consistent and near-continuous basis—will offer power at low prices. Wind generators—because many projects receive out-of-market revenue/value sources (e.g., power purchase agreements, tax credits, renewable energy credits)—also want to clear the market and may be motivated to submit zero or even negative price offers, if allowed by the respective RTO, to ensure that they clear and are dispatched (for more information see text box below titled Wind Power and Negative Electricity Prices: What Is the Relationship? ). Coal and natural gas generators, on the other hand, will typically offer electricity prices that are a function of fuel acquisition costs, which can vary based on benchmark fuel prices, the location at which the generator purchases the fuel, and the conversion efficiency (heat rate) of the power plant. How Natural Gas and Coal Impact Wholesale Electricity Prices Natural gas and coal play an important price-setting role in competitive power markets. For the purpose of this discussion, focus is placed on the role of natural gas and how the price of this fuel can affect the wholesale price of electricity paid to generators. Natural gas affects wholesale electricity prices in two primary ways. First, because natural gas power generators are generally able to follow demand/load patterns and can be dispatched with relative ease, they often set prices during peak demand hours—when electricity demand and prices are typically the highest each day. Second, natural gas power generation is a primary price-setting fuel for wholesale electricity prices in competitive power markets. Table 3 indicates the percentage of time intervals that various fuels set the real-time price in three different RTOs during different years. Data contained in Table 3 suggest that natural gas is a primary price-setting fuel within the three RTOs included in the table. The price-setting contribution of natural gas in MISO and PJM has increased over the respective periods included in the table. While the ERCOT price-setting information suggests that natural gas may have declined in terms of its price-setting role within that RTO, the Market Monitor report indicates that the 34% real-time energy price decline observed in this market from 2014 to 2015 was "primarily driven by lower natural gas prices." Commodity fuel prices for natural gas and coal generally have the largest impact on wholesale electricity prices. With natural gas increasing its price-setting role in some competitive markets, a general analysis of fuel costs for natural gas-derived electricity provides an indication about the downward pressure natural gas has exerted on wholesale electricity prices, and therefore revenue for electric power generators. See Figure 3 . The fuel cost range for generating electricity from natural gas has declined since peaking in 2008, while the ATC (fuel, operations and maintenance, and capital) for nuclear power generation has increased, relative to 2008 levels. As discussed above, lower natural gas costs generally translate into lower wholesale power prices. The combination of rising nuclear generation costs and declining natural gas prices is contributing to the financial challenges encountered by nuclear power plants in competitive power markets. Natural gas fuel costs per MWh ranges in Figure 3 reflect U.S.-wide averages, and it should be noted that each individual nuclear plant will be subject to a unique set of market and location-based price variables that can impact revenue from electricity sales. Locational Marginal Prices In competitive power markets, there is not a single wholesale electricity price paid to all electricity generators operating in an RTO region. Rather, electricity revenues received by generators are a function of locational marginal prices (LMPs), which vary within each RTO. LMPs generally include three primary price components: (1) energy, (2) transmission congestion, and (3) energy losses. LMPs can be affected by market variables such as fuel prices, generation mix, and transmission constraints at a specific location. In some locations, the presence of renewable electricity generation from wind and solar projects can affect LMPs and in some instances can cause real-time LMPs to drop below zero for limited periods of time. (See text box below: Wind Power and Negative Electricity Prices: What I s the Relationship ? ) As discussed above, the cost of fuel (i.e., natural gas and coal) affects clearing prices, and fuel costs can also vary by location. For example, due to potential transportation cost and infrastructure limitations, the price of natural gas paid by a power generator in Pennsylvania might be different from that paid by a generator in New York. All else being equal, the electricity market clearing price at these respective locations might also be different. Figure 4 shows the range of LMPs for nuclear power plants operating in competitive power markets along with average total costs for nuclear power generation. LMP and ATC projected estimates for calendar year 2016 indicate that the entire expected electricity price range for nuclear power plants in competitive markets may be less than the ATC of nuclear electricity generation. While this projection does not include other revenue sources and does not suggest that all nuclear power plants will realize revenue that is less than cost, it does indicate that the location and cost structure of each nuclear power facility is an important consideration when assessing the financial challenges of a specific plant. Other Revenue Sources In addition to electricity sales, which are the largest revenue source for nuclear power plants, some RTO/ISO markets provide other revenue opportunities for power generators. Capacity, uplift, and ancillary services—all defined in the following text—are some areas where generators can be compensated for providing certain services other than selling electricity. Figure 5 provides average all-in electricity prices for various RTO/ISO markets by revenue source. The largest source of non-energy revenue in some competitive power markets is in the form of capacity payments. To ensure resource adequacy, most RTO/ISOs have developed and evolved capacity markets that provide an economic signal that would provide incentives for adequate generation for peak power demands and to ensure that generation resources are available to satisfy future demand. Depending on the RTO, capacity payments can be made through either a bilateral contract between a load serving entity (LSE) and a generator or through participation in a capacity auction that is organized and administered by the RTO/ISO. However, not all RTO/ISOs have a capacity market (e.g., ERCOT does not have a capacity market and uses scarcity pricing as an incentive for motivating new generation sources). For those that do, each has a unique market design that determines the value of and time frame for capacity payments. As indicated in Figure 5 , capacity payments can vary by RTO, and some RTOs have changed their capacity market designs in such a way that may benefit nuclear power generators. Additionally, power plant location can impact the value of capacity payments received by nuclear and other power generators. For example, PJM's 2019/2020 Reliability Pricing Model (RPM) capacity market resulted in clearing prices that ranged from $100 per MW-day to $202 per MW-day across different zones. RPM and similar forward capacity markets guarantee payments for new capacity that performs as projected. Nuclear power plants are eligible for capacity payments, although not all merchant nuclear generators clear capacity auctions. Power Purchase Agreements (PPAs) Some nuclear power plants that operate in competitive power markets have separate power purchase agreements (PPAs) outside the RTO market that provide a specified value for electricity generation. The existence of a PPA reduces the price risk to nuclear power producers associated with participating in competitive power markets. It is not clear how many nuclear plants in competitive power markets have PPAs. However, an industry source suggests that at least six nuclear plants have PPAs for either all or a portion of their generating capacity. Depending on the contractual terms—not made available to CRS—included in each agreement, these PPAs could potentially provide some financial stability to plants with such agreements. Case Study: Quad Cities Nuclear Generating Station Located in Cordova, IL, the Quad Cities Nuclear Generating Station consists of two nuclear reactors with a combined net summer electric capacity of approximately 1,820 Megawatts. The plant is partially rate regulated, with 25% of the plant under Iowa rate regulation and the other 75% participating in the PJM power market. On June 2, 2016, Quad Cities owner-and-operator Exelon announced that it was moving forward to shut down and retire the plant before the end of its operating license. Available price information, capacity payments, and production costs (fuel, operations and maintenance) make it apparent that the Quad Cities power plant is under a degree of financial stress. Generally, the nodal electricity price that determines the value of electricity sold by the Quad Cities power plant has been volatile in the years 2013 to 2016 and is expected to be below fuel and O&M costs in 2016. PJM capacity payments for Quad Cities provide some additional revenue. However, the combination of capacity payments and electricity sales is estimated—assuming constant production costs at 2015 levels—to be less than production costs in 2016, not considering any capital expenditures. Current electricity price projections and capacity auction results indicate that electricity sales will not be large enough to pay for production costs, although capacity payments in 2017 may provide supplemental revenue that cover production costs. The Quad Cities plant did not clear the 2018/2019 or 2019/2020 capacity auctions; therefore the plant is not eligible to receive capacity payments during those years. Faced with low electricity price projections and revenues that are expected to be less than fuel and O&M costs, not to mention any capital expenditures, Exelon management decided that it is in the financial best interest of the company to shut down the power plant. The Illinois legislature passed S.B. 2814 on December 1, 2016, which includes a Zero Emissions Credit (ZEC) incentive program for existing nuclear plants in the state. This may result in continued operations of the Quad Cities nuclear plant. Plant-Level Analysis of Electricity Sales Revenue and Fuel and O&M Costs Plant-specific cost and price information available to CRS for 33 nuclear power plants that operate in competitive power markets was used to assess whether electricity revenue did, or is expected to, exceed 2015 fuel and O&M costs for each plant for the years 2015 to 2019. The analysis is unique, compared to materials reviewed for this report, in that it compares plant-level nodal electricity prices with plant-level fuel and O&M costs. Nevertheless, this analysis is inherently limited and is included in this report as an initial financial condition assessment of merchant nuclear power plants. Additional revenue sources (e.g., capacity payments) and other costs (e.g., capital) at the plant level were not available to CRS and were not included in the estimates presented. As a result, CRS is not making an assessment of which reactors are at risk of closure. The estimates provide an incomplete view of nuclear power economic viability. Figure 7 summarizes the results of this analysis. Table A-1 in the Appendix provides plant-specific estimates for each of the 33 plants on a per MWh basis. Generally, from the perspective of electricity revenues versus fuel and O&M costs, calendar year 2016 is projected to have been quite challenging for many existing nuclear power plants. Based on data sources available to CRS, and assuming that all electricity is sold in the wholesale market, 19 of the 33 power plants are estimated to have fuel and O&M costs that exceed electricity sales revenue in 2016. Due to forward electricity prices being projected to increase in the near term, this number is projected to drop to seven for the years 2017 to 2019. While this analysis is limited by available plant-level data for all revenues and costs, it does indicate that some nuclear power plants are encountering financial challenges that may be difficult to manage in the near term. Policy Options and Considerations The increasing number of recent nuclear power plant closures and announced early retirements has motivated discussion about whether the federal government should provide financial support mechanisms for existing nuclear power facilities. The nuclear industry and its supporters contend that such support is in the national interest because nuclear power plants provide large amounts of highly reliable, low-carbon electricity. However, opponents contend that nuclear power suffers from too many drawbacks (such as accident risk and waste management problems) and that federal incentives should focus instead on renewable energy and efficiency. Furthermore, federal financial incentives for existing nuclear power would likely be opposed by owners of other generating assets that could potentially benefit financially as a result of early nuclear plant retirements. Nevertheless, if federal support for nuclear power were pursued, Congress would have a variety of options to consider, each with its own set of policy questions. One challenge associated with federal-level nuclear incentives is that financial conditions across the entire fleet are not uniform. Each nuclear power facility is subject to a unique set of cost, price, and financial performance variables. To date, much of the policy action has taken place at the state level, with several states considering, passing, or implementing legislation/regulations to support nuclear power (see text box below, State-L evel Policy Action to Support Existing Nuclear Power Plants ). Secretary of Energy Ernest Moniz has reportedly indicated that the federal government has limited existing authority to provide financial support for operating nuclear power plants and that doing so is currently a state issue. A recent report by the Secretary of Energy Advisory Board Task Force on the Future of Nuclear Power included this recommendation for the Department of Energy (DOE): For existing nuclear plants, the Task Force endorses DOE's efforts to work with the Federal Energy Regulatory Commission (FERC), State regulatory authorities, and regional and independent system operators to encourage arrangements that will preserve the U.S. fleet until the end of their useful life, subject to continued compliance with prevailing safety and environmental regulations. The Task Force believes this is essential if U.S. carbon goals are to be achieved. A range of policy options are available to Congress, should it choose to act, that could potentially provide some degree of financial support for operating U.S. nuclear power plants. Some of these potential options are discussed in the following sections. Power Market Price Formation Changes In March 2015 the Nuclear Energy Institute (NEI), along with other industry groups, announced a joint effort to pursue market and price reforms in competitive electric power markets. The groups sent a letter to the Federal Energy Regulatory Commission outlining a set of principles for price formation reforms. Generally, the primary market reform argument is that clearing prices do not include all costs (e.g., start-up and uplift) associated with operating an electric power system. As a result, LMPs may be lower than they otherwise would be if all costs were included. FERC has an ongoing Energy Price Formation initiative to evaluate electricity price formation in RTO and ISO markets. In June 2016 FERC issued a rule requiring RTOs/ISOs to change their settlement procedures and shortage pricing triggers in order to more accurately compensate generation resources. FERC is also evaluating other price formation issues (e.g., uplift payments); future rules could potentially impact electricity price formation in wholesale markets. Congressional action in this area could include oversight of how FERC's Energy Price Formation initiative might impact nuclear power generators. This effort is consistent with the Future of Nuclear Power task force recommendation referenced above. Tax Incentives A federal production tax credit (PTC) is currently available for the generation of electricity by new, advanced nuclear power facilities during their first eight years of operation. However, no federal tax incentives are available for existing nuclear power plants. Generally, currently available energy tax credit incentives are designed to encourage construction and operation of new energy production facilities and are based on either energy/electricity production (i.e., production tax credit or PTC) or investment (i.e., investment tax credit or ITC). In addition to the nuclear PTC for new plants mentioned above, two specific energy tax credits currently available to renewable energy technologies are (1) the Renewable Electricity Production Tax Credit, and (2) the Investment Tax Credit for renewable energy. Legislation making existing nuclear power generation eligible for either of these existing tax credit incentives would provide some financial value and could potentially support continued operation of at-risk plants. However, since the financial condition across the entire U.S. nuclear fleet is not uniform there would likely be plants that capture the tax credit value as a windfall, without actually needing it to justify continued operations. Carbon Price Because of the low-carbon attributes of nuclear-generated electricity, a price on carbon emissions could potentially benefit existing nuclear power plants if the carbon price were reflected in wholesale electricity prices. However, the design of such a carbon price policy could determine whether or not existing nuclear power would be financially advantaged. A carbon price policy could take many forms, including a carbon tax, a cap-and-trade approach, or an environmental regulatory approach such as the Clean Power Plan (CPP). A carbon tax would place a value on carbon emissions that, all else being equal, would increase the cost of producing electricity from carbon emitting fuels. To the extent that such costs are included in marginal-unit price offers from coal and natural gas generators, a carbon tax could effectively increase wholesale market clearing prices that determine electricity sales revenue for existing nuclear power plants. However, a regulatory approach such as the CPP, which would likely result in an effective carbon price in many states, may have varied effects for existing nuclear facilities, depending to some degree on whether states achieve CPP compliance with a rate-based or mass-based target. A CPP rate-based standard (metric tons of carbon per megawatt-hour of electricity generation) does not include existing nuclear in the calculation of megawatt-hours. Therefore, if an existing nuclear plant closes, there will be no change in a state's carbon emissions rate under the rate-based approach. Under the rate-based standard, replacement of an existing nuclear plant with a gas-fired plant could reduce a state's calculated emissions rate, if the emissions rate from the new gas-fired capacity were lower than the state average. By comparison, states using a mass-based approach would likely have a stronger incentive to maintain existing nuclear power. Under a mass-based approach, if an existing nuclear plant shut down and was replaced by gas-fired generation, the total carbon emissions in the state would rise, making it more difficult for a state to achieve its CPP reduction goals. According to EPA's analysis of the CPP, "existing nuclear generation could be slightly more competitive under a mass-based implementation than under a rate-based implementation, because the former tends to create more wholesale price support for those generators." Federal Power Purchase Agreements (PPAs) Power Purchase Agreements (PPAs) established between at-risk nuclear power plants and federal agencies are a policy option that could potentially provide a degree of electricity price certainty for both parties. PPAs have been used by the federal government to purchase power from renewable electricity projects over multiple years. A federal agency could potentially contract with a nuclear plant to purchase power at an agreed-upon price over a multi-year period. One possible contractual mechanism might be a Contracts for Difference (CfD) contract model. A CfD contract essentially sets a price level for electricity and requires/entitles the parties to make up the difference between the actual market price and CfD contract price. This contract structure provides price certainty to both the buyer and the seller while eliminating the requirement to physically deliver nuclear electricity to a federal facility. Appendix. Plant-level Analysis of Electricity Sales Revenue and Fuel and O&M Costs Table A-1 below contains analysis of electricity revenues and fuel and O&M costs for 33 nuclear power plants operating in competitive power markets within the United States. For each plant, 2015 fuel and O&M costs are subtracted from electricity sales revenue. Both revenue and cost data used to perform this analysis are at the plant level, with revenues represented by the nodal electricity price paid to each power plant and plant-level fuel and O&M cost information as reported by third-party sources. The analysis in Table A-1 is unique in that it compares plant-level electricity sales revenue with plant-level costs. Published material reviewed for this report included nodal electricity prices compared with industry average costs as well as plant-level costs compared with regional hub prices. Although this combination of plant-level data sets is a unique attribute of this analysis, nevertheless it provides a limited view of the financial state of U.S. nuclear power plants and does not consider other cash expenses such as capital expenditures or additional revenue sources such as capacity payments—where available—and PPA contracts. Additionally, CRS is not assessing whether or not plants are at risk of closure. Estimates included in the table indicate only whether or not electricity sales generate enough revenue to cover fuel and O&M costs. However, total plant-level profitability, and therefore the economic viability of each plant, can be influenced by other cost and revenue considerations that are not included in the estimates presented. Data-access limitations prevented CRS from performing such analysis for this report.

Some of the 60 operating nuclear power plants (comprising 99 nuclear reactors) in the United States have experienced financial stress in recent years due to a combination of low wholesale electricity prices and escalating costs. Six nuclear reactors have permanently shut down during the past five years, and 19 others have announced their intention to close or have been identified as "at-risk" of closure by financial consultants and ratings agencies. Generally, U.S. nuclear plants are located in one of two market areas: (1) competitive—where the value of electricity fluctuates based on supply-side price offers that are generally a function of fuel (e.g., natural gas) costs and demand-side price bids, and (2) cost-of-service—where the value of electricity is set at a rate based on regulator-approved costs, operating expenses, and a reasonable investment return. Most of the U.S. plants considered vulnerable to shut down before expiration of their operating licenses are "merchant plants" that sell all or most of their power into competitive wholesale power markets. The price paid to merchant plants for electric power varies by location and is influenced by the price-setting fuel (usually natural gas and coal), transmission congestion, and other factors. Wholesale electricity prices in certain locations have fallen and electricity sales revenue may be below the fuel and operating and maintenance (O&M) costs of some plants, not considering capital expenditures that may also be incurred. CRS analysis of third-party data indicates that 19 of 33 power plants operating in competitive power markets may incur fuel and O&M costs that exceed electricity revenues for each plant in 2016. However, this number declines to seven in 2017 due to rising forward electricity prices as reported by Bloomberg. While merchant generators do have other revenue sources (i.e., capacity payments where available, power purchase agreements, and hedging positions) and additional costs (e.g., capital), CRS was not able to locate plant-specific information about these revenues and costs that would allow for a holistic financial assessment at the plant level. The nuclear power industry and its supporters have proposed that Congress take action to prevent currently operating U.S. reactors from shutting down before their licenses expire. Supporters contend that nuclear power should be valued as a domestic source of highly reliable, low-carbon electricity. However, opponents contend that nuclear power suffers from too many drawbacks and that federal incentives should focus instead on renewable energy and efficiency. Nuclear power plants annually provide about 20% of total U.S. electricity generation. To date, all of the policy action related to financial support for existing nuclear plants has been at the state level. New York has implemented a Clean Energy Standard (CES) that includes payments to qualified nuclear power plants in the state starting at approximately $17 per megawatt-hour in 2017. The CES has been challenged on legal grounds. A similar program was recently approved by the Illinois legislature, and Ohio has also considered nuclear support. Since each nuclear power plant is subject to a unique combination of financial variables, federal-level incentives are challenged because some nuclear plants are expected to continue operating without federal financial support. Should Congress choose to debate financial incentives for existing nuclear plants, several options may be considered. Tax incentives based on capital investment or electricity production could potentially provide financial support for existing nuclear plants. Establishing a carbon price—carbon tax, cap-and-trade, emissions regulations—could also provide some financial assistance to nuclear power, depending on how a carbon price mechanism was designed and implemented. Finally, Congress could authorize and require the federal government to enter into power purchase agreements with nuclear power plants that would provide a guaranteed price for nuclear-generated electricity. Additionally, the nuclear industry has been advocating that the Federal Energy Regulatory Commission (FERC) institute changes to electricity price formation in competitive power markets.

Introduction Widespread drought is a recurring phenomenon for much of the country, and is especially acute for the We st, where drought conditions such as low water supplies and soil moisture are prevalent. Several western states, including California, Oregon, Nevada, Washington, and portions of Montana and Idaho are experiencing extreme—and in some cases exceptional—drought conditions (see Figure 1 ). Congressional interest in addressing water resource management during drought has been heightened due to the effects drought and water constraints have had on agriculture, communities, industry, recreation, natural resources (e.g., rangelands and forests), and the environment in general. Although the federal government invested heavily in the development of water supplies in the 20 th century – primarily through construction of irrigation projects in the arid West – the federal government generally defers to state and local governments in surface and groundwater allocation. Federal efforts to prepare for and respond to drought and water supply impacts have thus been inherently limited in recent decades. To date, federal legislative proposals to address current drought conditions have focused on managing federal water projects, supporting new or expanded drought-related projects and programs (including those at the state and local levels), and mitigating the effects of drought and water management on agricultural production, municipal and industrial water supplies, recreational resources, and the environment. Several bills introduced in the 114 th Congress would address these issues. These bills include S. 176 , S. 1837 , S. 1894 , H.R. 2898 , H.R. 2983 , and H.R. 3045 , among others. On July 17, 2015, H.R. 2898 , the Western Water and American Food Security Act, passed the House. For months, certain House and Senate Members have been negotiating new language to resolve differences in the bills and address concerns by federal and state governments. A draft House bill was reportedly circulated during discussions on the FY2016 Omnibus; however, no bill was amended nor introduced. There was also discussion of a new Senate bill addressing outstanding issues and state and federal concerns; however no bill was introduced. Negotiations are reportedly still underway, and new language is expected in the second session of the 114 th Congress. This report summarizes and analyzes several key provisions in H.R. 2898 (as passed by the House) and S. 1894 (as introduced). It includes analysis of provisions specific to California, such as the management of threatened and endangered fish populations in relation to pumping operations of the CVP and SWP, as well as provisions that are broader in scope and might have nationwide implications (e.g., water resources financing, permitting issues, project repayment policies, and support for new water storage and water reuse/recycling). This report does not comprehensively analyze each bill, nor does it cover each provision in the bills. Other CRS products on H.R. 2898 and S. 1894 and on drought in general are available. CRS Report R44180, Drought Legislation: Comparison of Selected Provisions in H.R. 2898 and S. 1894 , by [author name scrubbed] et al. summarizes and compares the provisions in H.R. 2898 and S. 1894 , including many of the provisions that are outside the scope of this report. More information about drought in California and in general is provided in the following CRS reports: CRS Report R40979, California Drought: Hydrological and Regulatory Water Supply Issues , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]; CRS Report R43407, Drought in the United States: Causes and Current Understanding , by [author name scrubbed] and [author name scrubbed]; and CRS In Focus IF10196, Drought Policy, Response, and Preparedness , by [author name scrubbed] and [author name scrubbed], Drought Policy, Response, and Preparedness , by [author name scrubbed] and [author name scrubbed] Overview of the Bills Of the bills in the 114 th Congress considered to date, H.R. 2898 and S. 1894 , the California Emergency Drought Relief Act of 2015, have received the most congressional and public attention. These bills were the focus of a Senate Energy and Natural Resources Committee hearing on October 8, 2015. Both bills contain key elements of proposed legislation in the 113 th Congress that was not enacted. Broadly summarizing, both bills contain provisions that focus on water infrastructure and water conveyance in California and some west-wide and national programs that address water management and drought. Some of these provisions would be triggered by drought and water conditions or declarations, and others would result in permanent changes in water management. Further, some provisions in the bills are associated with specified states (typically the 17 western states, Hawaii, and Alaska), whereas other provisions may have national application. Many provisions of H.R. 2898 have no specified authorization of appropriations; S. 1894 , by contrast, contains provisions that authorize either funding subject to appropriations or mandatory funding for certain activities. Many provisions in both bills are specific to the projects and programs of the Department of the Interior's Bureau of Reclamation (Reclamation)—in particular, management of the Central Valley Project (CVP) in California—but others are associated with different federal agencies (e.g., U.S. Army Corps of Engineers [the Corps], U.S. Environmental Protection Agency [EPA]). Some provisions would amend existing programs and activities, whereas others would authorize new federal programs and activities. Both bills focus on water projects and management during drought, and do not attempt to address the broad suite of drought impacts and policies (e.g., effects on wildfire and agricultural assistance programs). H.R. 2898 and S. 1894 have generated both support and opposition from stakeholders and have raised several questions about their implementation, if passed. For example, with respect to managing federal water projects in California, both bills would direct managers to maximize water supplies for users while adhering to applicable laws and regulations. Some contend such provisions provide water managers the directive and authority to increase water supplies; whereas others assert that this provision could lead to long-term negative effects on species. Some controversy is rooted in how the bills address implementation of the federal Endangered Species Act (ESA; P.L. 93-205 ), including water management under federal biological opinions (BiOps) designed to protect Delta smelt and salmon populations (see box on page 9 for information on BiOps). For example, two federal BiOps currently limit operations of the federal CVP and the California State Water Project (SWP) at certain times of the year. These BiOps were developed to assess the effects on threatened and endangered species of proposed changes in the coordinated operations of the CVP and SWP beginning in 2004 and again in 2008. Both BiOps found that the proposed changes in operations, including increased pumping, would likely jeopardize the continued existence of Delta smelt and several salmon and other species listed as threatened or endangered under the federal ESA. As a result, both BiOps include specific actions that limit pumping and call for reservoir releases to protect listed species. Such actions in turn have resulted in reduced water supplies for CVP and SWP water users, particularly in wet or above normal water years. To address CVP and SWP management under the BiOps, both H.R. 2898 and S. 1894 would direct agency officials to maximize water supplies, consistent with applicable laws and regulations; however, H.R. 2898 differs from S. 1894 in that it would alter the implementation of portions of federal BiOps for Delta smelt and salmon. For example, H.R. 2898 includes a new definition or standard for determining the status of listed species and would require higher levels of pumping than currently allowed, unless agency officials showed that the increased levels would be harmful to the long-term health of the species. H.R. 2898 also would direct agency officials to pump at the highest levels allowable under existing BiOps for longer periods. Supporters of H.R. 2898 contend that such changes would improve the flexibility and responsiveness of the management and operations of the CVP and SWP and could potentially make available additional water to users facing curtailed allocations. Opponents contend it could have detrimental effects on species in the short and long term, and may actually limit agency flexibility. S. 1894 also directs agency officials to increase pumping at certain times by pumping at the highest range allowable under existing BiOps, but it does not include a new standard for determining the effects of such pumping on species. S. 1894 also is explicit in refraining from altering existing environmental laws. The bills contain several similar provisions such as addressing nonnative species, expediting environmental reviews, and increasing science and data collection on listed species, among others. The bills differ in their approaches to other policy areas, such as constructing new surface water storage projects and providing support for alternative water supplies, among other things. At the October 2015 Senate Energy and Natural Resources Committee hearing, the Administration expressed concerns with several provisions in H.R. 2898 and noted several concerns with S. 1894 . However, in speaking on both bills, the Administration disagreed "with the idea that new legislation will salvage more water than the operators on the ground are wringing from the system every day." Another question that has been raised is the potential value or effectiveness of each bill providing additional water supplies if a strong El Niño produces above normal precipitation this winter. Some stakeholders have noted that provisions in the bills would afford water managers added flexibility to take advantage of high-precipitation events due to a strong El Niño-influenced weather pattern. Forecasters have noted that although a strong El Niño system could improve water supply conditions, such an event is unlikely to end the current drought. As California experiences its fourth year of drought and the Southwest endures more than a decade of drought conditions, western water management likely will remain an issue before Congress. As a result, elements from one or both of these bills (as well as from other bills) likely will receive continued attention from Congress. Issues Specific to Drought and Water in California H.R. 2898 and S. 1894 address drought-related water issues specific to California, which is among the states experiencing the worst of the current drought. Many of these provisions focus on the CVP, which is one of the largest and most complex water resources projects built and operated by Reclamation, part of the Department of the Interior (DOI). (See Figure 2 .) The project spans hundreds of miles and delivers water stored in reservoirs to farms and cities throughout California's Central Valley. The CVP delivers water to contractors throughout the state, largely serving agricultural water contractors as well as some municipal and industrial (M&I) contractors. A somewhat parallel state system, the California State Water Project (SWP), serves primarily M&I water users and some agricultural users. It is operated in coordination with the CVP. In order to move water through the CVP and SWP, extensive pumping is required. Water deliveries and pumping within the CVP and SWP are often controversial for a number of reasons. Legislation addressing the management of the CVP and SWP is particularly controversial because the coordinated operation and management of these projects involves a complex web of federal and state law—including state water rights priorities; water delivery contracts; federal, state, and local agency policies; and multiagency agreements. Achieving consensus on such legislation is often difficult because a change in any of these factors can affect several parties and interests, including potentially altering the timing or amount of water made available to such parties or the underlying ecosystem. As a result, H.R. 2898 and S. 1894 have raised a number of questions among interested stakeholders. For example, if water pumped from the Sacramento and San Joaquin Rivers' Delta (Delta) is directed to be increased beyond the status quo, where will that increased water come from and what effect might it have on other water users, various species, or in-Delta water quality? Similarly, if involuntary reductions to specified CVP and SWP users are not allowed for certain specified water users (e.g., contractors, or those in certain watersheds as in H.R. 2898 ), could such prohibition result in reduced water supplies or a change in the timing of water available to other water users who are not specified? How would such directions be reconciled with requirements that the CVP be operated in conformity with state water law and under the standard that there shall be "no redirected water supply or fiscal impacts?" How can such impacts be avoided, and, if they cannot, who might bear responsibility or pay for unavoidable costs? Lastly, what would be the implications of constructing the state WaterFix project based on the proposed provisions? This section discusses proposed legislative changes that would address the drought in California, including changes specific to the CVP and SWP, and those that would affect other projects and areas. The topics that are discussed include: Management of Fish Populations and Water Flows, including Definitions in H.R. 2898 and S. 1894 , Managing Delta Smelt Under H.R. 2898 and S. 1894 , Managing Salmon Under H.R. 2898 and S. 1894 , Operational Flexibility During Drought, and Flexibility for Project Operations to Manage OMR Flows During High-Water Events; Water Transfers; Water Rights Protections and Existing Obligations; and New Storage Project Studies in California. Management of Fish Populations and Water Flows Operational changes associated with protecting fisheries in the SWP and CVP are among the most prominent and controversial issues addressed in H.R. 2898 and S. 1894 . These operational changes largely relate to efforts to comply with the ESA and with state water-quality requirements that aim to stabilize salinity levels in the Delta, protect water quality for in-Delta farmers and nearby communities, and provide adequate flows for aquatic species and their habitat. Factors such as water availability, water quality, species needs, and ecosystem functions are all taken into consideration when managing the CVP and SWP. Operation of this water-conveyance system is guided by the Long-Term Operational Criteria and Plan for the coordinated operation of the CVP and SWP. H.R. 2898 and S. 1894 include provisions that would address water conveyance and flows in relation to fish populations listed under the ESA. Specifically, both bills would address certain operations of the CVP and SWP in relation to BiOps associated with the threatened Delta smelt and with threatened and endangered salmon and other species. A discussion and analysis follows on how both bills would address the management of water flows in operating the CVP and SWP in relation to fish populations. Definitions in H.R. 2898 and S. 1894 Both bills would provide definitions to complement other provisions, including definitions of the salmon BiOp and the Delta smelt BiOp. Both bills would define the term Salmonid Biological Opinion (salmon BiOp) as the opinion issued under the federal ESA by the National Marine Fisheries Service (NMFS) on June 4, 2009. Both also would define the term Smelt Biological Opinion (Delta smelt BiOp) as the biological opinion on the Long-Term Operational Criteria and Plan for coordination of the CVP and SWP issued by the Fish and Wildlife Service (FWS) on December 15, 2008. BiOp definitions in H.R. 2898 and S. 1894 appear to codify the specified BiOp as written on its original date. Because either bill, if implemented, could remain in effect for a period of time during which the BiOps could be amended or replaced, it is unclear what would happen if an updated or new BiOp, perhaps based on new conditions or new information, were to conflict with the earlier BiOps whose precedence appears to be mandated under the bill. Under some provisions, this issue is addressed. For example, Section 103(e) of H.R. 2898 would direct the Secretary of the Interior (the Secretary) to consider relevant provisions of the Delta smelt BiOp or "any successor biological opinion" when implementing Old and Middle Rivers (OMR) flows; however, such language does not appear in all cases. H.R. 2898 would also define a new standard to measure the status of species. Under H.R. 2898 , negative impact on the long-term survival would be defined as follows: The term "negative impact on the long-term survival" means to reduce appreciably the likelihood of both the survival and recovery of a listed species in the wild by reducing the reproduction, numbers, or distribution of that species. This term is used several times in H.R. 2898 as the standard for measuring the effects of operational changes on Delta smelt and salmon. S. 1894 does not include such a definition. The term raises questions about how this standard would be interpreted and implemented by water managers, or litigated in the courts. The definition is not found in the statutory language of the ESA; however, a similar phrase is used in federal regulations implementing the ESA. Under federal regulations, the phrase jeopardize the continued existence of means to engage in an action that reasonably would be expected, directly or indirectly, to reduce appreciably the likelihood of both the survival and recovery of a listed species in the wild by reducing the reproduction, numbers, or distribution of that species. Notably, the regulatory definition applies to actions that both directly and indirectly reduce appreciably the likelihood of survival and recovery of a species. The apparent exclusion of indirect actions in the definition under H.R. 2898 could be interpreted to narrow the scope of the law, potentially allowing for the exclusion of some actions covered by current regulations. For instance, it is unclear whether the term negative impact on the long-term survival in H.R. 2898 includes a species' critical habitat, which is considered under the ESA to be essential to the long-term health of the species. Some stakeholders assert that the bill establishes a "new standard" for implementation of the ESA, which could negatively affect healthy commercial and recreational fish stocks, as well as those listed as threatened or endangered under the federal ESA. Others contend that this definition would still require compliance with the ESA standard and that it therefore complements existing standards rather than replacing them. For example, proponents of H.R. 5781 in the 113 th Congress, which also included this definition, stated that actions under the bill would be consistent with existing laws and regulations and that existing ESA provisions and regulations therefore would remain in effect. Either way, the standard would likely require new and additional determinations by DOI for listed species. The phrase negative impact on the long-term survival used in H.R. 2898 sometimes is qualified by other terms, which has the potential to further alter its meaning. For example, Section 103(e)(2) of H.R. 2898 refers to an "imminent" negative impact on long-term survival. The bill provides no definition of what constitutes imminent, and it is unclear how water managers might interpret this term. For instance, some might interpret the term as referring only to effects that could readily be measured in the short term (e.g., take levels at the pumps) and omitting effects that might be realized in the long term. This terminology also raises the question of how managers might relate imminent effects to the long-term survival of the species given the potential uncertainties regarding how the population might react to the effects over time, and how they might respond to other unforeseeable stressors. Managing Delta Smelt Under H.R. 2898 and S. 1894 This section discusses provisions related to Delta smelt, which are listed as threatened under ESA. For the past decade, average Delta smelt abundance has been lower than in the previous decade (see Figure 3 ). Both bills would aim to increase water supplies for users by authorizing changes in how pumps and flow rates are managed in the Delta, and both would attempt to do so while considering the effects of pumping and water flows on listed species. Whereas S. 1894 would aim to achieve this objective in accordance with existing laws and regulations, H.R. 2898 would make changes to how the Delta smelt BiOp are implemented. Recalculating Incidental Take Levels of Delta Smelt H.R. 2898 would authorize a new method for calculating the incidental take level for Delta smelt due to the coordinated operations of CVP and SWP. S. 1894 does not have a similar provision. The approach H.R. 2898 would take differs from the Delta smelt BiOp in some ways. For example, Section 103(b) of H.R. 2898 would use Delta smelt population data since 1993 to calculate the incidental take level. By contrast, the current BiOp uses data from 2006 to 2008 to determine a cumulative salvage index, which is then used to calculate incidental take levels. The recalculation of incidental take under H.R. 2898 is likely to result in a higher incidental take value (allowing more agency flexibility) than is currently used because Delta smelt levels are higher, on average, when calculated using data since 1993 than when calculated using data from 2006 to 2008. A higher incidental take level might in turn allow for increased pumping levels and additional water for users. Some stakeholders who oppose the proposals in H.R. 2898 might contend that such a change could be harmful to the Delta smelt, which are currently at historic lows. (Delta smelt abundance increased sharply in 2011, a wet year, but have declined since that time; see Figure 3 .) Proponents of H.R. 2898 , including the bill's sponsors, state that the incidental take calculation proposed in the legislation would be based on the most up-to-date science and would allow managers to maximize water supplies without harming species. In addition, supporters contend that this proposed method of calculating incidental take is more robust than what is done under the current BiOp because it covers a larger span of time and a greater sample size for Delta smelt population estimates, including higher population levels in 2011 and possibly 2012. If Delta smelt population levels continue to decline over time, the calculation proposed under H.R. 2898 could eventually result in a lower incidental take level than presently used. Data Collection and Real-Time Monitoring Both bills call for greater data collection on Delta smelt population through a distribution study, and both bills would authorize more real-time monitoring of Delta smelt to inform management decisions. However, the bills differ on how they would authorize changes to coordinated CVP and SWP operations based on these data. For example, Section 103(a) of H.R. 2898 would require the Director of FWS to use the best scientific and commercial data available to implement, evaluate, refine, or amend the reasonable and prudent alternatives (RPAs) in the Delta smelt BiOp or successor BiOp. It also would direct the Secretary of the Interior to document all "significant decisions" under the Delta smelt BiOp. This provision appears to set up an active adaptive management approach intended to collect data on smelt distribution in the Bay-Delta and to inform managers how to minimize salvage and maximize pumping. This approach does not appear to be altering the implementation of the BiOp; rather, it is calling for an increase in data collection that eventually may be used to justify modifications to RPAs under the BiOp. It is unclear if these modifications to the Delta smelt BiOp would trigger re-consultation under ESA regulations or if this process would be bypassed and changes implemented immediately. The Administration has stated that H.R. 2898 would "negatively impact our ability to protect Delta fish and wildlife in the long-term," and further contends that H.R. 2898 could create new complexities and conflicts with existing laws leading to delays in implementation. In contrast, S. 1894 does not have a broad directive to increase monitoring of Delta smelt; however, Section 203(b) of S. 1894 would direct the Secretary to monitor turbidity levels daily, conditioned on funding and other conditions, to inform project operations to achieve fish protection and water supply benefits. Further, Section 101(c)(8) of S. 1894 would direct the Secretaries of Commerce and the Interior (the Secretaries) to use all scientific tools to identify changes to the real-time operations of Reclamation and of state and local water projects that could increase water supplies. However, S. 1894 does not contain a directive to implement any changes that have been identified. Implementing changes based on these data might instead be anticipated through directives to maximize water supplies, which are discussed in a section entitled Operational Flexibility During Drought in this report. Old and Middle River (OMR) Flows The Old and Middle Rivers are channels of the San Joaquin River as it enters the Delta. The location of these channels can result in reverse flows when the CVP and SWP pumps are turned on and operating at higher levels, thus resulting in a negative flow rate. Higher pumping levels result in higher negative flows, which in turn increase the probability of fish being drawn into the pumps (entrained) and that habitat will be modified (e.g., increased turbidity and other factors affecting fish habitat). Both bills address negative OMR flows as they pertain to listed species. Under Section 103(e)(2) of H.R. 2898 , OMR flows would be set at -5,000 cubic feet per second (cfs) unless collected information allows the Secretary of the Interior to conclude that a lower flow rate (less negative flow rate) is needed to protect species. If a lower flow rate were to be implemented, H.R. 2898 would require a series of conditions to make the change. Some of these conditions would center on obtaining evidence from real-time monitoring and near-term forecasts using salvage models that show a significant negative impact on the long-term survival of the Delta smelt is imminent. H.R. 2898 also would mandate an increase in flow rates above -5,000 cfs (i.e., increased pumping) if information indicated that the higher flow rate would not have an "imminent negative impact on the long term survival of Delta smelt." This analysis would be done for current as well as future BiOps addressing Delta smelt. Supporters of this approach under H.R. 2898 contend that the provisions addressing Delta smelt and salmon would be implemented within the framework of the existing BiOps. Further, it could be interpreted that setting flow rates higher would increase water supplies available to users immediately and that evidence must be presented by the Secretary before flows are reduced, thus requiring justification for reducing water flows to protect Delta smelt. This change from the Delta smelt BiOp has generated questions and concerns from some stakeholders. For example, some note that the flow rate of -5,000 cfs in the legislation is at the high end of the allowable flows under the Delta smelt BiOp during certain times of the year and might have detrimental effects on Delta smelt and other species. They also contend that the approach of setting a high baseline for flows and then measuring its effect on smelt could harm the species in the short term, decreasing the chances of mitigating effects on the population in the long term. As discussed earlier, the use of undefined qualifiers with the standard included in H.R. 2898 of negative impact on the long-term survival of De lta smelt could create additional uncertainty as to how this standard would be implemented. For example, under Section 103(e)(2) of H.R. 2898 , the term imminent qualifies negative impact on the long-term survival of Delta smelt . It is unclear how managers would measure imminent impacts and whether these impacts (or lack thereof) might indicate any effect on species due to changes in flow rates. In broad terms, S. 1894 would mandate the maximization of flows to benefit water supply contractors, but—unlike H.R. 2898 —it would not specify flow rates in statute. Section 101(c)(3)(B) of S. 1894 contains a directive to managers to manage OMR flows as prescribed by the Delta smelt and salmon BiOps "to minimize water supply reductions" for the CVP and SWP. This would be achieved consistent with applicable laws and regulations according to Section 101(a) of S. 1894 . Some might question how this provision would be implemented and whether it would result in additional water supplies for users. Managers have stated that they are trying to maximize operational flexibility under existing laws and regulations to increase water supplies for users. However, this provision could provide additional legal protection for efforts to maximize water supplies. Managing Salmon in H.R. 2898 and S. 1894 Both bills would address salmon management in the Delta, but they would do so in different ways. H.R. 2898 contains specific directions for incorporating new science and data into the management of salmon stocks and the implementation of the NMFS BiOp; S. 1894 would direct implementation of the National Oceanic and Atmospheric Association's (NOAA's) Salmon Restoration Plan. Under Section 202 of H.R. 2898 , the RPAs in the salmon BiOp would be adjusted to reflect new science and data in accordance with existing adaptive management provisions in the BiOp. Section 202(b) outlines a process for examining new science and data on salmon and providing recommendations to alter the RPAs to reduce the water supply impacts of the salmon BiOp. The recommendations would be implemented if they would have a net effect on listed species that is similar to the operational parameters in the BiOp (Section 202(c)). The recommendations would be limited to those actions that reduce water supply impacts. It is unclear what would be implemented if analysis of scientific data under this adaptive management approach suggested a need to change pumping rates and reduce flows (i.e., a greater water supply impact to users than before). This ambiguity might lead some stakeholders to contend that this provision only mandates increases, not decreases, in pumping rates. In contrast, S. 1894 does not specifically direct that RPAs in the salmon BiOp are to be adjusted to reflect new information. Section 101(c)(8) of S. 1894 would require the Secretaries of the Interior and Commerce to identify any changes to real-time operations that could result in increased water supplies. These changes could occur from adaptive management processes that exist under the salmon BiOp. Since adaptive management processes already exist under the salmon BiOp, some stakeholders might question whether this provision would lead to any changes to the status quo regarding the management of flows under the BiOp. However, S. 1894 elsewhere directs that the Secretaries shall provide the maximum quantity of water to CVP and SWP contractors, within law and regulations, which some believe would result in increased pumping rates. Offsetting Measures Section 202(d) and (e) of H.R. 2898 discuss the evaluation of conservation measures (e.g., physical habitat improvement, predation control, and hatchery programs) that could increase the population of salmon in the ecosystem relative to pumping restrictions. A framework for identifying offsetting actions and estimating how each action would affect the survival of salmonid species is provided in Section 202(e) of H.R. 2898 . After the framework is established, Section 202(g) would direct an evaluation of alternative management measures based on the recommended actions and their potential effect on salmonid survival. If the evaluation determines that an alternative measure would offset the existing effects of restricting water supplies—and that implementing the alternative measure is feasible—then the alternative measure would be implemented to increase pumping rates to the maximum extent possible while maintaining equivalent through-Delta survival rates for listed salmon species. These actions would be intended to offset the effects of pumping on salmon populations. Thus, if conservation actions were to result in greater survival for salmon, more pumping could occur. Section 202(h) of H.R. 2898 discusses oversight responsibilities for adaptive management under the BiOp and would direct that operational criteria be developed to coordinate the management of Delta smelt and salmon under the BiOps. Supporters of this approach contend that scientific studies suggest that multiple factors affect salmon and Delta smelt in the Bay-Delta, including pumping rates, invasive species, and pollutants, among others. (See Figure 4 .) Mitigating the effects of one or a suite of these factors on the salmon population might increase survival, which could allow for more pumping. Critics of this approach, however, might contend that associating a conservation action with an increase in salmon survival may be difficult to determine because of the multitude of factors affecting fish. They might contend that this approach is not needed because if conservation actions increase survival of Delta smelt and salmon, existing processes to calculate incidental take levels in the BiOps might record a greater abundance of individuals, thus allowing for an increase in pumping. The question of how individual conservation actions might lead to an increase in the abundance of Delta smelt and salmon could be answered, in part, by Section 202(f) of H.R. 2898 , which would direct the Assistant Administrator of NOAA to determine the percentage increase in survival of salmon as a result of alternative conservation measures. While scientifically challenging to consider the number of factors that affect salmon in the Delta, this directive might allow managers to quantify the survival of salmon due to conservation measures. With estimates of survival, it might be easier to calculate incidental take levels of salmon when pumping operations are adjusted. Further, adaptive management could be used under the provisions of both bills to determine how alternative management measures are working. S. 1894 would not direct managers to create management regimes that offset the effects of increased pumping beyond what is prescribed in the BiOps. Instead, S. 1894 is tied to the salmon BiOp, which calls for some conservation measures to be implemented but does not propose increasing flow restrictions if these measures are completed. Section 201 of S. 1894 , however, would authorize several actions that aim to help threatened and endangered fish populations. These actions might resemble the alternative conservation measures listed under Section 202(g) of H.R. 2898 . Examples include implementation of nonstructural barriers at Delta Cross Channel gates (see "Operation of the Delta Cross Channel Gates," below), alternative hatchery salmon release strategies, and a trap-and-barge pilot project to increase fish survival in the Delta. S. 1894 also would direct agencies to implement the NOAA Salmon Recovery Plan, which contains several conservation- and flow-related projects to increase salmon populations. S. 1894 further would authorize $4 million per year through 2020 from the Central Valley Project Restoration Fund to carry out the plan. Operational Flexibility During Drought Both H.R. 2898 (Section 302) and S. 1894 (Section 101) would provide broad authority to the Secretaries to approve any project or operational change to address emergency drought conditions, although both also contain limitations on this authority. Under both bills, projects and operational changes would be approved consistent with applicable laws and regulations. H.R. 2898 and S. 1894 would streamline permit decisions and authorize expedited procedures to make final decisions on operations and projects that address their respective sections on maximizing water supplies. In addition, Section 302(f) of H.R. 2898 would require the Secretaries to develop a drought operations plan that is consistent with provisions under the bill. S. 1894 contains no comparable provision. Analysis of Operational Flexibility During Drought Both bills would direct managers to maximize water supplies by approving, "consistent with applicable laws (including regulations)," projects and operations to provide additional water supplies to water users. This provision apparently would require managers to make decisions that would maximize water supplies and provide them with legal authority to do so as long as such decisions are consistent with applicable law. It is unclear how this directive would be implemented and whether it would change CVP and SWP operations, which agency officials believe are already maximizing water supplies. Several stakeholders have expressed concern that maximizing water supplies in the present could have unintended or long-term consequences. For example, projects and actions meeting the minimum requirements under law for addressing species and water quality might not fully account for long-term effects. In addition, requiring managers to maximize water supplies in implementing projects and actions might be interpreted as narrowing their discretionary decisionmaking flexibility to address long-term effects. Therefore, although maximizing water supplies could benefit water users under drought conditions, the long-term effects on factors such as species viability, recreation, and water quality would be unclear. Further, DOI states that this provision in both bills contains potential legal uncertainties associated with the maximum quantity of water supplies standard. The directive to maximize water flows, used in both bills, also might raise the question of how agencies would provide the "maximum quantity of water supplies possible" to CVP and other contractors and, relatedly, how they would make such a determination consistent with laws and regulations. Implementation of the provision could be difficult and possibly contentious, according to the Administration's statement of policy. For example, agencies and water users may not agree that particular actions are providing maximum water quantities. Notably, under the status quo, some observers already believe the agencies are maximizing water supplies to the detriment of species, whereas others contend that the agencies are not doing enough to maximize water supplies within the parameters of existing laws and regulations. Further, some advocates fear that the maximization language may result in reduced reservoir levels, thereby creating larger water supply shortages in future years and jeopardizing urban water supplies. In a broad sense, some may respond that if either bill is enacted, agency actions specified under this provision would be directed to maximize water supplies as a priority over other considerations (e.g., water quality or habitat conservation), albeit within parameters allowed under existing laws and regulations. In response to this concern, some might contend that other factors, such as water quality and species needs, are addressed in laws and regulations that would prevent harm. Flexibility for Project Operations to Manage OMR Flows During High-Water Events H.R. 2898 contains two sections that authorize managers to increase OMR flows above the -5000 cfs required in Section 103(e)(2) under certain situations that are not addressed in S. 1894 . Section 306 would authorize the Secretaries to manage reverse flows in the OMR at -6,100 cfs or more during specific periods if real-time monitoring indicates that there is no significant negative impact on the long-term survival of Delta smelt. Currently, ESA BiOps for salmon and Delta smelt prohibit OMR flows more negative than -5,000 cfs, which were considered unsafe for imperiled fish species when the BiOps were written. This provision would direct managers to maintain -6,100 cfs flow unless a significant impact on Delta smelt is found. It is unclear how this flow rate would be adjusted if impacts to salmon, water quality, or other species are found. Further, some might question the extent of the term significant as used in the provision. The qualification in part implies that some negative effect would be allowed (up to significant ); however, without the term being defined, it is unclear what type of effects on smelt would be needed to lower flows. Such ambiguity could hinder management decisions or leave them vulnerable to criticism. Section 307 of H.R. 2898 also would authorize a new period of temporary operational flexibility for CVP and SWP operations during the winter. The temporary period would be authorized for 56 cumulative days after October 1 of each water year. Temporary period operations would be triggered during certain high-flow conditions on the Sacramento River—specifically, on days that California DWR determines that the daily average flow of the Sacramento River is at or above 17,000 cfs. Under these conditions, more negative flows could occur than otherwise would be allowed on the OMR under the BiOps. However, Section 307(a) of H.R. 2898 would appear to direct flows that lead to a daily average of -7,500 cfs over the temporary period of operational flexibility. This provision likely would result in temporarily increased pumping and additional water supplies for some CVP and SWP contractors compared to what otherwise would be available. Some might question whether additional water supplies exported out of the Delta during this time could lead to short-term or long-term water quality issues. Freshwater flows to the ocean not only help maintain a salinity gradient in the Delta, but also provide dilution of other water pollutants from run-off or other sources. If water flows to the ocean are significantly reduced, the salinity gradient might move further east into the Delta and provide less freshwater for other purposes, potentially causing negative effects to the ecosystem and water quality. However, if water flows are sufficiently high to the ocean to maintain or surpass the desired salinity gradient, and other water quality factors remain stable, then increased pumping might have a diminished effect on water quality. The effects of CVP and SWP operations on water quality and flows for species are addressed, in part, by the State Water Resources Control Board (SWRCB). H.R. 2898 states that the Secretaries actions under this section (Section 307) should be consistent with applicable regulatory requirements under state law, which addresses water quality. Section 307(c) and (d) of H.R. 2898 would limit the extent of these flows due to environmental effects. For example: Section 307(c) would authorize the Secretaries to impose requirements under the salmon and Delta smelt BiOps during the period of temporary operational flexibility if they determine that the requirements would avoid a significant negative impact on the long-term survival of listed species (in the short term) beyond what is allowed under ESA, as long as the requirements do not impose a reduction in water supplies for CVP and SWP users. It is unclear what baseline of water supplies for users is being referred to in this provision. Would the limit be a reduction from -5,000 cfs, the amount prescribed in the BiOps, or from -7,500 cfs, as prescribed for temporary operational flexibility? Managers may impose any requirements under the BiOps during the period of temporary operational flexibility provided that they do not reduce water supplies for the CVP and SWP. It is unclear what requirements could be implemented in situations where there is an effect on species, since water flows to CVP and SWP apparently would not be reduced. Section 307(d) would require actions to be consistent with state law and regulations and would allow for "less negative" OMR flows (i.e., less pumping) during the initial sediment flush each water year "for a minimum duration." This approach might be undertaken to avoid movement of Delta smelt that could increase entrainment at CVP and SWP pumps during this time. Section 307(d)(3) would require that Section 307 not affect implementation of the salmon BiOp from April 1 to May 31 of each year, except to provide emergency water supplies without resulting in additional adverse effects "beyond those authorized under" the ESA. Thus, the application of the salmon BiOp would be effective for a least a two-month period, unless the Secretary of Commerce determined that such actions would not be in violation of the federal ESA. It is unclear how Section 307 would affect the application of the salmon BiOp during other parts of the year. Section 307(d)(4) would direct the Commissioner of Reclamation, in coordination with FWS and NMFS, to undertake a monitoring program that generally would attempt to identify any negative impacts associated with the temporary flexibility being authorized under the section, including exceedance of incidental take levels under the ESA. It also would direct the Commissioner to identify actions to mitigate any negative impacts of the section. This authority would not call for modifying temporary flexibility if negative effects are found, but it would call for identifying actions to mitigate the impacts. The provision is silent on what these actions might be and if they might involve reducing water flows. Section 307(e) would provide that CVP and SWP operations resulting in flows "less negative" than -7,500 cfs (i.e., less pumping) before the 56 cumulative days of operational flexibility authorized would not be counted toward the 56-day cumulative period in the legislation. Therefore, only days with a daily average flow of -7,500 cfs would be counted toward the 56-day cumulative total. This provision would provide a greater chance that a flow rate of -7,500 cfs would be used for at least 56 days. Data for 2014 flow rates at the Freeport gauge on the Sacramento River indicate that this temporary operational flexibility could have occurred for approximately 33 days, when average daily flows were above 17,000 cfs. H.R. 2898 would direct the commissioner to use emergency ESA consultation procedures if actions necessary to implement this provision would exceed 56 days, with certain limitations. Section 307(g) would stipulate that in making determinations under this section, the Secretaries would not be required to provide supporting detail at a greater level than feasible within the time frame given to make a determination. Based on this provision, it is not specified how authoritative or comprehensive the data need to be to make a decision on temporary operational flexibility. Water Transfers Academics and other water resource professionals for decades have advocated the use of water transfers, or water marketing, as a mechanism to stretch water supplies during times of water shortages and to move water to its highest valued use. CVP agricultural water users routinely transfer water within the CVP service area and at times transfer large quantities of water from CVP agricultural use to urban agencies hundreds of miles away. Some impediments exist, however, to completing transfers in a timely manner. Thus, several provisions of H.R. 2898 and S. 1894 address the transfer of water from or through the CVP system. In general, both bills seek to facilitate or expand the use and timing of allowable water transfers and to expedite review of proposed transfers. Both bills also address San Joaquin River inflow-to-export (I:E) ratios as they pertain to pumping and transferred water. H.R. 2898 Section 302(b)(2) requires the Director of FWS and the Commissioner of Reclamation to complete all National Environmental Policy Act (NEPA; 42 U.S.C. §§4321 et seq.) and ESA requirements within 30 days of receiving requests for water transfers and to approve such transfers "to maximize the quantity of water supplies available for non-habitat uses, on the condition that actions associated with the water transfer comply with applicable Federal laws (including regulations)." Section 302(b)(3) directs the Secretaries to adopt a 1:1 I:E ratio from April 1 to May 31 of each year (regardless of water year type) for increased San Joaquin River flows resulting from transfers, unless a written determination specifies that a more restrictive I:E ratio is necessary to "avoid a significant negative impact on the long-term survival of a listed salmonid species" under the ESA. Section 308 of H.R. 2898 would amend the Central Valley Project Improvement Act (CVPIA; Title 34 of P.L. 102-575 ) to require that the Secretary of the Interior take "all necessary actions to facilitate and expedite transfers of Central Valley Project water" in accordance with (1) the bill, (2) NEPA, and (3) Reclamation law. It would require the appropriate entity (i.e., the contracting district from which the water is coming, the agency, or the Secretary) to determine if a transfer proposal is complete within 45 days. The House bill also provides that the Secretaries should "allow and facilitate" water transfers through the two major federal and state pumping plants at the south end of the Delta from April 1 to November 30, provided transfers comply with state law. S. 1894 S. 1894 includes language similar to Section 302(b) of H.R. 2898 ; however, it would require federal officials to complete NEPA and ESA requirements "within the shortest practicable time period after receiving such request" and would apply only to permit decisions on water transfers associated with voluntarily fallowing nonpermanent crops (Section 101(c)(6)). Section 101(c)(4)(a) of S. 1894 would require that any proposal to increase flows in the San Joaquin River through a voluntary sale, transfer, or exchange be evaluated by the Secretary of the Interior in a "timely manner" and consistent with "applicable law." Section 101(c)(4)(b) of S. 1894 would require the adoption of a 1:1 I:E ratio on the San Joaquin River from April 1 through May 31 (the same time period as H.R. 2898 ) for increased flows resulting from voluntary water transfers, sales, and exchanges during the period that the bill is in effect (i.e., during the drought designation). Under the bill, this ratio would be allowed unless the Secretaries determine that implementing the requirement would impact species listed as threatened or endangered under ESA more than currently anticipated through the implementation of the current salmon BiOp. Issue and Legislative Considerations Water agencies wishing to transfer water and those wanting to receive transferred water have highlighted as challenges cumbersome transfer requirements and the length of time it takes to approve CVP water transfers under CVPIA and in general. Although H.R. 2898 would propose a specific limit of 30 days for the Administration to make a decision on water transfers, the Administration has argued that such a deadline is unrealistic and potentially unworkable due to a number of factors. S. 1894 proposes that permits decisions would be made in the "shortest practicable time period" after receiving a request. As noted above, both bills address San Joaquin River I:E ratios as they pertain to pumping water transfers. Section 302(b)(3) of H.R. 2898 provides that the 1:1 I:E ratio, similar to S. 1894 , would be allowed, but the bill would allow for a more restrictive ratio only if the Secretaries make a determination that such a ratio would be required "to avoid a significant negative impact on the long-term survival of a listed salmonid species" under ESA. Thus, whereas S. 1894 uses existing ESA documents as the standard for its determination, H.R. 2898 uses the new "negative impact on long-term survival" standard that appears in other places throughout that bill. S. 1894 also includes other conditions for the 1:1 I:E ratio to apply. Both bills would implement the 1:1 I:E ratio from April 1 to May 31 annually in all types of water years pending the conditions set in the provisions of each bill. The current BiOp allows a 1:1 ratio in "critically dry" years only. As water conditions improve, the BiOp allows for an increase in the ratio, up to 4:1 in "wet" years—meaning 25% of the river's flow may be exported. Water Rights Protections and Existing Obligations Both H.R. 2898 and S. 1894 include titles aiming to protect California water rights priorities under existing law as well as confirming the obligations of the United States to honor state water rights laws and, more broadly, to operate the CVP in conformance with state law. The bills differ, however, in how they address these topics. S. 1894 includes general language stating that nothing in the act authorizes the Secretaries to "take any action" that would (1) alter existing obligations to avoid either extinction of threatened or endangered species or harm to critical habitat beyond actions that are anticipated under existing federal BiOps or (2) alter obligations under the CVPIA. H.R. 2898 Title V of H.R. 2898 includes provisions that aim to protect California water rights priorities under state law, termed area of origin protections. It would specifically direct the Secretary of the Interior to "adhere to California's water rights laws governing water rights priorities and to honor water rights senior to those held by the United States for operation of the Central Valley Project, regardless of the source of priority." Title V goes on to list several specific California Water Code sections. The specificity in Title V of H.R. 2898 may raise questions as to what is not included in the water rights protection language. Section 504 would set specific requirements that Reclamation provide "not less than 100 percent of ... contract water quantities" to agriculture water service contractors in the Sacramento River Watershed during wet, above normal, and below normal water years and "not less than 50 percent of their contract quantities" in dry years. This section also includes instructions for making allocations in all other years. Finally, Section 505 of H.R. 2898 states that nothing in the act shall preempt or modify existing obligations of the United States under Reclamation law to operate the CVP in conformity with state law, including water rights priorities. S. 1894 S. 1894 also includes language on area of origin and water rights protections more broadly, including provisions on no redirected impacts and effects on existing obligations of the United States to operate the CVP in conformance with state law. S. 1894 includes a shorter list than H.R. 2898 of California Water Code citations that "[n]othing in this title" is to limit or otherwise affect; however, the bill also includes an additional qualifier stating that the act should not limit or otherwise affect "any other provision of State water rights law, without respect to whether such a provision is specifically referred to in this act." This provision would appear to negate a concern that some sections of the water code are not specifically listed, but it also raises the question of why some sections of the California code are specifically mentioned but others are not. In addition, S. 1894 includes language on "no redirected adverse impacts" (Section 113), which is similar to language in H.R. 2898 ; however, the language in S. 1894 appears to be broader in that it aims to protect "any other water user or purveyor organized under State law that obtains water based on any other legal right" (e.g., potentially covering contractual rights in addition to state-issued water rights) from direct involuntary reduction of water supply—not solely CVP and SWP contractors or those within certain watersheds, as in H.R. 2898 . S. 1894 also includes a provision requiring documentation and explanation of any secretarial determination that an action under Title I of the bill cannot be carried out without resulting in redirected adverse impacts. H.R. 2898 does not have a similar provision. Lastly, S. 1894 includes more explicit language stating that nothing in the act (1) authorizes federal officials to take any action that would jeopardize threatened or endangered species or cause adverse effects on species or habitat beyond effects anticipated under existing BiOps; (2) preempts or modifies obligations of the United States to operate the CVP in conformance with state law; or (3) affects or modifies obligations under the CVPIA. Issue and Legislative Considerations At issue is how each bill might affect existing water allocations under state law as well as under Reclamation law, including CVP water allocation priorities. Because both bills contain specific directives to operate the CVP in certain ways, some parties want to ensure that in maximizing water supplies to CVP and SWP water users south of the Delta—some of which are junior in priority under state law and CVP allocation priorities—any unintended shortages do not affect other, more senior water users (or other water users in general). Relatedly, both bills include provisions addressing "existing obligations" of the United States to comply with state law. S. 1894 also includes language specific to obligations to avoid jeopardy and adverse modification of habitat of threatened and endangered species and to comply with provisions of the CVPIA. Some, including the Administration, have raised concerns that provisions such as the specific annual allocations tied to various water year types (e.g., 100% in wet, above normal, and below normal years) under Section 504 of H.R. 2898 would make it difficult to meet the multiple authorized purposes of CVP operations. New Storage Project Studies in California H.R. 2898 and S. 1894 both would attempt to expedite work on certain ongoing California surface water storage studies that originally were authorized under Title I of the Calfed Bay-Delta Authorization Act (CALFED; P.L. 108-361 ). To date, only one of the authorized studies (the Shasta Lake Water Resources Investigation) has been completed; the others are in various stages of the study process (see Table 1 ). Both bills would establish deadlines to complete the CALFED studies and include processes to facilitate their construction. However, the new authorities in both bills differ in some ways. H.R. 2898 Section 401 of H.R. 2898 would direct Reclamation to complete ongoing feasibility studies for the new and augmented surface water storage studies in California that were authorized under CALFED. The bill would impose financial penalties on Reclamation for failing to meet the deadlines specified in the legislation. It also would authorize construction of these projects pending a positive feasibility report finding; however, pursuant to Section 404 of the bill, no federal funding could be used to construct the projects. Thus, the construction authority would be contingent on 100% nonfederal funding. H.R. 2898 also includes a directive in Section 402 for Reclamation to complete the study for Temperance Flat Reservoir; it would direct that the Secretary manage any land on the San Joaquin River recommended for designation or designated under the Wild and Scenic Rivers Act (16 U.S.C 1271 et seq.) in a manner that would not impede project activities, including environmental reviews and construction. S. 1894 Section 313 of S. 1894 would direct Reclamation to complete the CALFED studies by the same deadlines as the House bill specifies but would not authorize the projects for construction. However, whereas the House bill would bar federal funding for these projects, S. 1894 stipulates that if and when these projects are authorized, they would potentially be eligible to receive federal funding under Section 312 of the bill. Section 312(b) contains specific requirements that would need to be met for the federal government to provide funding to assist nonfederal water storage construction efforts at three of the CALFED study locations (Los Vaqueros, North of Delta Offstream Storage (NODOS)/Sites Reservoir, and Upper San Joaquin). It notes that the authorization of federal funding for these projects would be contingent on the state finding that the project is, among other things, feasible, and that 50% or more of the project benefits would be attributed to ecosystem and water quality improvements, flood control benefits, emergency response, emergency water supplies, and recreational purposes. Issues and Legislative Considerations In considering federal involvement in the CALFED surface water storage studies, Congress may seek to determine its interest in proceeding with these projects, as well as the potential for each bill's specific provisions to facilitate the studies' completion. Notably, the ability of the studies themselves to eventually further the goal of new water storage in California is unclear and likely will depend on a recommendation by the Administration to proceed with construction. Although many support proposed requirements for expedited completion of the studies as an important step toward construction of the projects themselves, the Administration has noted concerns with these provisions. In October 2015 testimony before the Senate Energy and Natural Resources Committee, the Administration noted that two of these projects (NODOS/Sites Reservoir and Los Vaqueros Reservoir) are dependent on participation and funding by nonfederal partners. The Administration also argued that requiring completion of the remaining ongoing studies (Upper San Joaquin/Temperance Flat and San Luis Low Point Improvement Project) by a specific date could compromise Reclamation's ability to make an informed decision on construction and to include adequate input from partners. In addition, the two bills highlight differing opinions as to the type and extent of future federal involvement in these projects. Although S. 1894 appears to envision federal funding for these projects (either at the 50% or 25% cost-share level, depending on the project type), it would not authorize the projects for construction. H.R. 2898 , by contrast, would authorize the projects to go forward with construction, but only as a nonfederal responsibility. Neither bill would provide federal authority to both finance and construct one or more of these projects, which is a course of action that some may support. Other Drought and Related Water Issues New Surface Water Storage Projects Both H.R. 2898 and S. 1894 would aim to encourage federal involvement in new water storage projects by authorizing new construction and/or improvements to existing facilities. Each bill's approach to new surface water storage is discussed below. H.R. 2898 Under H.R. 2898 , new storage projects potentially would be expedited and authorized for construction by Congress under a reporting process proposed in Title VIII (Sections 801-806) of the bill. Section 803 of H.R. 2898 would provide that any new studies initiated by the Administration after the date of enactment must be completed within three years, at a cost of no more than $3 million per project study. Section 805 would allow for the Secretary to enter into agreements with the nonfederal sponsor to support the planning, design, and permitting of projects. Section 806 would attempt to expedite construction authorizations of all projects by directing an annual report in which the Administration proposes Reclamation studies and construction projects for congressional authorization, including new projects, enhancements to existing projects, and federal projects proposed by nonfederal entities. This report would be similar to that authorized for the U.S. Army Corps of Engineers (the Corps) in the Water Resources Reform and Development Act of 2014 ( P.L. 113-121 ). Congress would have discretion over whether to authorize some or all of the projects proposed by the Administration. These projects also would be authorized to receive an undetermined amount of financial support. In addition, both federal and nonfederal storage projects would be authorized to receive funding from a proposed new Reclamation Surface Storage Account authorized und er Title IX of the bill. S. 1894 Unlike H.R. 2898 , S. 1894 does not contain provisions to expedite study of new projects by nonfederal entities or a reporting requirement in which the Administration would propose new federal and nonfederal studies and surface storage construction projects. Rather, Section 312 of S. 1894 would provide a general authority for federal funding to support the construction or expansion of federal storage projects that have been authorized for construction. It also would authorize federal participation in nonfederal water storage construction projects under certain conditions. The bill would authorize $600 million in discretionary funding under this section, with a maximum federal cost share of 50% of the total project costs for new federal projects and 25% of costs for new nonfederal projects. Issues and Legislative Considerations The bills highlight a number of issues for Congress related to the authorization of new storage projects. These issues include the total amount of discretionary funding to be authorized to support these purposes, who should take the lead on these projects, and who should ultimately pay for them. Neither bill would provide a broad authority for federal study and construction of new projects without congressional authorization. However, H.R. 2898 would authorize a reporting process that would attempt to facilitate the proposal and authorization of new projects to Congress (and potentially would allow for a means to authorize these projects). H.R. 2898 also would provide for a stronger nonfederal role in project implementation, in particular by allowing nonfederal entities to propose and provide financial support for new studies and requiring expedited completion of studies in general. Although both bills would provide for potential appropriations to federal and nonfederal storage projects, their cost shares and approaches to doing so differ. Whereas H.R. 2898 would provide funding support for new federal and nonfederal storage based on existing Reclamation law (i.e., costs to be paid back over time, without interest for irrigation purposes), S. 1894 would provide for a new cost-sharing structure in which the federal government would pay for 50% and 25% of federal and nonfederal projects, respectively. The Administration has argued against new storage that "perpetuates the historical federal subsidies available for financing water storage projects" and instead prefers federal participation in state and locally led projects. The need for and likelihood of authorization for new projects, as well as the appropriate split of responsibilities for new investments in storage could be debated in consideration of these and other drought bills. Nontraditional Water Supplies, Efficiency, and Conservation Congress is considering whether to maintain or alter federal roles in nontraditional water supplies and in water efficiency and conservation. Examples of nontraditional or alternative water supplies include recycling and reuse of treated wastewater, brackish water or seawater desalination, stormwater capture, and groundwater recharge. Examples of water efficiency and conservation include identification and incentives for consumer products that use less water and initiatives to encourage or assist manufacturers, utilities, and others adopting practices and technologies that save both water and energy. Although no comprehensive policy delineates the federal role in nontraditional water supply, efficiency, and conservation activities, some Congresses and some Administrations have acted to create or bolster programs that provide support for or otherwise assist these activities and associated investments. Current federal activities in nontraditional supplies, efficiency, and conservation include the U.S. Department of Agriculture's water conservation assistance; DOI's WaterSMART initiative, including Reclamation's Title XVI wastewater recycling and reuse program; and the Environmental Protection Agency's (EPA's) WaterSense labeling effort. Much of the interest in alternative water supplies, efficiency, and conservation activities potentially would be for augmenting or stretching municipal water supplies. Historically, federal actions for municipal water supplies have been associated primarily with municipal water quality rather than with the augmentation or management of municipal water quantity supply and demand. This tendency has stemmed, in part, from the federal government generally deferring to state primacy in surface and groundwater allocation and in water supply planning (including drought planning). In other policy arenas, such as energy generation and use, the federal government has supported nontraditional sources, conservation, and efficiency. H.R. 2898 H.R. 2898 does not include any provision that is specifically focused on authorizing new alternative water supply, conservation, or efficiency projects or programs. Instead, the bill's attention to alternative supplies appears to be limited to Title VIII's definition of "project," which includes water reuse (as specified in Title XVI of CVPIA). Therefore, qualifying reuse studies and projects that require congressional authorization to proceed would appear to be eligible for inclusion in the annual Report to Congress on Future Water Project Development called for in Section 806. Similarly, these reuse projects apparently also would be eligible for the expedited and accelerated processes for studies and projects established in other sections of Title VIII of H.R. 2898 . S. 1894 S. 1894 includes multiple provisions associated with expanding federal support for alternative water supplies, efficiency, and conservation. The bill would provide the following authorizations for DOI (which typically has a western United States focus for water project eligibility): Section 301 would authorize the Secretary of the Interior to award federal funds competitively for qualifying water recycling projects, desalination projects, and innovative water supply projects. Title IV of the bill also would establish $75 million in funding without further appropriation (i.e., mandatory funding) for desalination projects under Section 301(c) for 25 years beginning in 2026. Section 431 would authorize federal grant funding for qualifying water recycling and reuse projects by expanding Reclamation's existing Title XVI reuse program and prioritizing drought-affected areas. Title IV of the bill would establish $40 million in funding without further appropriation for Title XVI projects for 25 years beginning in 2026. Section 322 would authorize the Secretary of the Interior to enter into voluntary agreements with public water agencies that receive water from Reclamation projects to implement water conservation programs. It also would direct that water conserved from these activities be available as follows: 25% to the water agency and 75% retained by the Secretary for marketing and allocation to wildlife refuges. Section 421 would amend the Secure Water Act (Title IV of P.L. 111-11 ) by authorizing federal assistance for planning, design, and construction of reclamation, reuse, and other water management projects, including water storage and conveyance. The bill also includes several new program authorizations for EPA. (EPA's programs generally have a national scope.) These authorizations include the following: Section 302, which would reauthorize and modify provisions of the Water Desalination Act of 1996 ( P.L. 104-298 ; 42 U.S.C. §10301 note), would create a new grant program at EPA to evaluate and determine the feasibility of a public or public-private desalination project. The bill would authorize EPA to provide assistance up to 50% federal cost sharing for desalination project studies and 25% for desalination project designs. The bill would authorize $10 million per year for FY2016-FY2020 to implement this program. This type of authority would be new for EPA, which currently does not provide assistance for project studies or designs and does not have program authority or institutional experience with desalination projects. Section 321 would authorize WaterSense, a voluntary labeling and recognition program that focuses on reducing water use. EPA established WaterSense administratively in 2006; the program is a companion to the Department of Energy's Energy Star program. Energy Star is authorized in law (Energy Policy Act of 2005, P.L. 109-258 ; 42 U.S.C. §6295), whereas WaterSense is not. Both programs involve partnerships between government, manufacturers, and others to help consumers and businesses identify highly efficient products, homes, and buildings. The bill would authorize $5 million per year to EPA in FY2016-FY2019 to implement WaterSense. Authorized amounts for subsequent years would be the applicable amount for the previous year, adjusted to reflect inflation. Section 327 would create a new program at EPA for research and development of innovative water supply and conservation technologies. EPA would be authorized to award grants or enter into contracts to assist in financing such projects. The bill would authorize to be appropriated $35 million for FY2016-FY2020 and generally would limit assistance to a 25% federal cost share. For rural communities with populations of fewer than 10,000 persons, the bill includes Section 323, which would establish a new program within the U.S. Department of Agriculture's (USDA's) Rural Water and Waste Disposal Program to assist drought-stricken communities. The program would provide up to 100% grants for projects such as point-of-use treatment (i.e., systems to purify incoming water used for cooking and drinking); point-of-entry treatment (i.e., systems to treat all water coming into a home); and the construction of new water-source facilities, such as new wells and connections to existing systems. The bill would authorize $15 million for up to 15 pilot projects to implement this program. Issue and Legislative Considerations The current drought is raising questions about the nature, focus, and size of federal support and responsibilities for these types of projects. Although expanding federal support may bolster adoption of nontraditional water supplies and efficiency and conservation measures, augmented federal support also may raise concerns about the expansion of the federal role, the increased expectations for federal assistance, and the associated fiscal impacts. Potential federal efficiency and effectiveness challenges with these activities include the fragmentation of water-related programs across multiple federal agencies, without one agency identified as a coordinator or lead, and the differing eligibility criteria (e.g., geographic limitations) and differing technological emphases of federal programs. Each technology and water supply source represents a different set of trade-offs among environmental, investment, behavioral, and performance costs and benefits. H.R. 2898 and S. 1894 illustrate the range of perspectives and approaches regarding the federal role in nontraditional water supplies, efficiency, and conservation. S. 1894 would expand federal support for numerous activities by creating or augmenting federal programs and authorities for the different types of technologies, but it is not clear how the new activities would mesh with existing programs and activities or whether the new programs would replace the existing ones. The geographic and other eligibility criteria for these programs vary under the provisions of S. 1894 . Although many western states are currently affected by drought, interest in nontraditional water supplies, efficiency, and conservation exists in other regions, including areas that experience periodic drought (e.g., southeastern states, Puerto Rico) or have limited available freshwater supplies for development (e.g., coastal Florida, insular areas). H.R. 2898 appears to largely limit its increased opportunities for alternative water supplies to western U.S. water reuse projects, whereas S. 1894 would apply more expansively to other U.S. regions. The new and expanded programs proposed in S. 1894 also would involve multiple federal agencies—DOI, EPA, and USDA—and in some cases authority outside an agency's existing expertise (e.g., Section 302's authorization of an EPA grant program to assist desalination projects). Efforts to Streamline Environmental Compliance Congress is currently considering legislative options to expedite federal agency decisionmaking on surface water supply projects. A range of factors affect the timing of these decisions, such as funding availability, project complexity, or the level of state or local support for the project. As Congress has done in legislation authorizing transportation programs and civil works projects, efforts to expedite project approvals in H.R. 2898 and S. 1894 would generally involve procedures or requirements intended to streamline the environmental compliance process. More specifically, those efforts generally would involve making some change to federal agency procedures implementing the National Environmental Policy Act (NEPA; 42 U.S.C. §§4321-4347). Among other requirements, NEPA directs federal agencies to identify, analyze, and consider the environmental impacts of a proposed project before making a final decision about whether and how to proceed. With respect to water supply projects, actions subject to review under NEPA include decisions to approve a project on land administered by a federal agency or a project that requires authorization or financing from federal agencies. NEPA compliance for such projects generally will involve the preparation of an environmental impact statement (EIS) or environmental assessment (EA). An EIS or an EA would be prepared by the federal agency responsible for approving or undertaking the project (known as the lead agency ). Under NEPA, and potentially under other laws, the lead agency must obtain input from any other federal agency that has legal jurisdiction or special expertise with respect to any impact involved in a proposed project (i.e., a cooperating agency ). The lead agency generally also will consult with tribal or state agencies with jurisdiction over an affected resource. Currently, all federal agencies implement NEPA in accordance with regulations promulgated by the Council on Environmental Quality (CEQ). Each federal agency has adopted the CEQ regulations and supplemented them as necessary to take into account that agency's authorities to approve certain projects. How a given agency documents and demonstrates compliance with NEPA may vary depending on the scope of an agency's authority to approve or fund certain projects. For example, Reclamation integrates its NEPA compliance process with its feasibility study process. Many of the legislative options intended to accelerate project delivery pertain to cooperating-agency involvement in the NEPA process and in making decisions under other environmental laws. Broadly speaking, many of the provisions identified as environmental streamlining are intended to coordinate actions or input from federal cooperating agencies, especially with regard to any consultation, authorization, or approval the agency may be required to issue that could affect project development (e.g., FWS consultations required under ESA). H.R. 2898 Provisions in H.R. 2898 aimed at streamlining environmental compliance are found primarily in Titles III, VII, and VIII. Section 302 in Title III ("Operational Flexibility in Times of Drought") specifies conditions under which the governor may request the Secretary of the Interior or Commerce to implement expedited procedures to make a final decision on a project that would provide additional water supplies during emergency drought conditions in California (as defined in the bill). The expedited procedures would require the head of the agency responsible for the project to convene a final project decision meeting with other federal agencies authorized to make some decision regarding the project (presumably cooperating agencies). Within 10 days of that meeting, the agency responsible for the project would be required to issue a final decision on the project, with the conditions that the agency's approval must be for projects that do not otherwise require congressional authorization and must comply with applicable law. Under Section 305, the environmental reviews carried out under Title III must be done in accordance with emergency alternative compliance arrangements, developed in consultation with CEQ. H.R. 2898 would change certain federal decisionmaking processes pursuant to provisions in Titles VII and VIII under H.R. 2898 . Title VII, cited as the Water Supply Permitting Act, would establish new procedures and requirements applicable to the projects undertaken by nonfederal entities (e.g., state agencies or private parties) in the Reclamation states on lands administered by DOI or USDA. Currently, such projects require the issuance of a special use permit or a federal right-of-way grant from the agency authorized to administer the land. Decisions on such approvals must be done in accordance with applicable law, such as the Federal Land Policy and Management Act ( P.L. 94-579 ) or National Forest Management Act ( P.L. 94-588 ). Further, those decisions are subject to review under NEPA. DOI and USDA have integrated their permit application process with their NEPA compliance process. Title VII would establish Reclamation as the lead agency responsible for coordinating all reviews, analyses, opinions, statements, permits, licenses, or other federal approvals required under federal law for new surface water storage projects. Provisions in Title VII would not change existing NEPA requirements associated with permit issuance but would require Reclamation to establish and implement procedures that would be largely similar to those implemented by DOI or USDA as part of their respective permitting processes. Without explicitly referring to NEPA, provisions in Sections 703, 704, and 705 would establish certain responsibilities and requirements for lead and cooperating agencies that would be largely similar to those established by CEQ in its regulations implementing NEPA. That is, it would appear to establish a new review process that Reclamation would coordinate, but would not eliminate the existing process. Each agency's interpretation and implementation of the directives in this title will likely determine whether or the extent to the agencies integrate the Reclamation-lead process and the existing process that DOI and USDA agencies are required to complete to comply with NEPA. Additionally, provisions in Section 704 would require Reclamation to implement a coordination process that involves: instituting a new pre-application coordination process; preparing a unified environmental document that would serve as record on which all cooperating agencies shall base any project approval decisions; ensuring cooperating agencies make decisions on a given project within deadlines specified in Section 704; and appointing a project manager to facilitate the issuance of the relevant final approvals and to ensure fulfillment of any Reclamation responsibilities. Section 706 would allow DOI to accept funds from a nonfederal project applicant to expedite the evaluation of a permit related to the project. Title VIII, the Bureau of Reclamation Project Streamlining Act, would apply to surface water projects undertaken, funded, or operated by Reclamation. According to the House report on H.R. 2898 , Title VIII is modeled after provisions in the Water Resources Reform and Development Act of 2014 (WRRDA 2014; P.L. 113-121 ). The provisions appear to be intended to expedite project completion by accelerating the completion of 1) feasibility studies and reports (pursuant to Sections 803 and 804), and 2) environmental reviews for projects that require a feasibility study or an EIS (pursuant to Section 805). Currently, Reclamation integrates its feasibility report process with the preparation of the required NEPA analysis (EIS or EA). With respect to project acceleration, a number of provisions in Section 805 would codify existing regulations that implement NEPA. However, some provisions could add to or change preexisting agency practices or requirements used to demonstrate compliance with NEPA or change outside agencies' procedures for completing their respective decisionmaking processes, such as by establishing deadlines for comment on a draft EIS that would be shorter than current comment periods; deadlines for outside agencies to make decisions under other federal laws that, if missed, must be reported to Congress; reporting requirements to allow a project's status to be tracked; financial penalty provisions applicable to federal agencies with some jurisdiction over a project if the agencies fail to make a decision within certain deadlines; and a three-year statute of limitations on claims related to a completed project study. S. 1894 Compared to H.R. 2898 , the Senate bill has fewer provisions that involve streamlining environmental compliance. Provisions in Section 101(e) of the Senate bill are largely similar to those in the House bill that would create conditions under which the governor of California could request expedited procedures to make a final decision on a project. Also like the House bill, Section 102 of the Senate bill would allow for the implementation of emergency environmental reviews to address emergency drought conditions in California. In addition, Section 313 of S. 1894 would require Reclamation to complete feasibility studies and environmental reviews for five explicitly identified CALFED storage projects by specific dates ranging from December 31, 2015, to December 31, 2017. Section 409 would authorize the Secretary of the Interior to allow states to assume the role of lead agency responsible for NEPA compliance. That authority could be assumed in accordance with terms specified in a memorandum of understanding. Any authority not assumed by the state would be retained by the Secretary. Issues and Legislative Considerations With respect to the potential for an expedited decisionmaking process for California drought projects, both the House and Senate bills would require a final decision on a proposed project within a certain deadline. The effect of such directives is difficult to determine as an agency might choose to deny the project request if it could not meet the 10-day deadline for a decision. As noted, both bills include a limitation that the expedited decisionmaking process would not allow the responsible federal agency to approve a project that has not followed procedures required by applicable law. Given the relatively short time frame for a decision, it is possible that a state would not request resolution for a project unless or until that project complies with applicable law. Other key provisions that appear intended to accelerate federal decisionmaking are included in Titles VII and VIII of H.R. 2898 . Both titles would establish requirements that are primarily implemented by Reclamation. It is difficult to determine how Reclamation might implement the mandates in Title VII, the Water Supply Permitting Act. As noted, currently, if a water supply project is proposed for construction on land administered by a federal agency, that agency is required to issue a permit or other approval. A decision on whether to issue such an approval is subject to review under NEPA and must be made in accordance with requirements established under separate law (e.g., the Federal Land Policy and Management Act and other federal land management laws). No provision in Title VII would explicitly waive existing NEPA requirements associated with the issuance of permits or grants of right-of-way for federal land. That is, the title would establish procedures that Reclamation must implement to coordinate the environmental compliance process, but it would not explicitly direct DOI or USDA to change their own procedures for implementing NEPA or for processing permit applications. Reclamation's interpretation of the directives in Title VII would determine how they may be integrated with existing DOI and other federal agency procedures; and how any new project coordination procedures would differ from the existing NEPA and permitting processes. However, Title VII does appear to include some requirements that would add steps to the project approval process (e.g., the requirements related to the pre-application process, preparation of a unified environmental document, and data monitoring and record keeping). Title VIII establishes requirements applicable to projects that Reclamation is currently authorized to approve. As noted, many of the provisions in Section 805 of Title VIII would codify requirements that are similar to existing regulations to implement NEPA. How this would be implemented depends on how Reclamation would interpret the study and project acceleration provisions. Whether or the extent to which the provisions in the House or Senate bills would expedite overall project delivery depends on the delay caused by the environmental review process. Expediting the environmental review process may expedite overall project delivery only if some element of the environmental review process represents a routine cause of project delay. While that may be the case for some projects, it may not be a routine cause of delay. In September 2014, DOI provided a statement for the record regarding the Bureau of Reclamation Surface Water Storage Streamlining Act. In that statement, the agency noted that the primary reasons for many projects being identified and/or authorized but not constructed related to individual project economics and the pricing and repayment challenges within the potential markets where projects would be built. Financing Provisions Both bills contain provisions that would provide financial support from the federal government for new and augmented water supply projects through new financing mechanisms. Federal support for water supply projects historically has been provided through discretionary appropriations to Reclamation, the Corps, and USDA. However, demand for appropriations (both in the form of newly authorized federal projects and support by the federal government for nonfederal projects) typically exceeds the availability of appropriations for these agencies; each agency also has been noted to have large backlogs for maintenance and construction expenditures. Although some support increasing traditional forms of discretionary federal funding for some or all of these projects, federal fiscal constraints, earmark moratoria, and congressional budget caps have made it increasingly difficult to do so in recent years. As a result, some support congressional authorization of alternative means of project financing, such as leveraging of federal funds (e.g., grants, public-private partnerships, and credit [loan] programs) or direction of new or existing federal receipts toward specific project types (e.g., accelerated prepayment receipts and mandatory appropriations from the Reclamation Fund). H.R. 2898 Repayment Receipts Directed to Surface Storage Account Title IX of H.R. 2898 would authorize new discretionary funding for surface water storage projects, but it would maintain the traditional Reclamation financing model in which the federal government funds project costs and is repaid over 40-year or 50-year terms (without interest for the irrigation portion of project benefits). Specifically, Sections 901-902 would authorize prepayment by nonfederal Reclamation project users for certain project construction costs that are currently paid over 40-year or 50-year terms. It would allow for the conversion of water service contracts to repayment contracts and for subsequent accelerated repayment (in the form of a lump-sum payment or annual installments) of allocable construction costs for any repayment contract. This provision would allow contractors to forgo certain requirements (e.g., acreage and full-cost pricing limitations) under Reclamation laws (including the Reclamation Reform Act of 1982; P.L. 97-293 ) sooner than otherwise would be the case. Of the proceeds resulting from prepayment under these provisions, 50% would be available to fund projects in a new Surface Storage Account, which would fund the construction of surface water storage projects pursuant to traditional Reclamation project finance. Federal and nonfederal surface water storage projects that may be authorized under Section 806 of H.R. 2898 would be among the projects eligible for this funding. The Congressional Budget Office (CBO) estimated that this title would make available approximately $360 million for these projects over the FY2016-FY2020 period; the spending would be available for expenditure subject to appropriations (i.e., discretionary funding). S. 1894 S. 1894 would authorize several new financing provisions and amend existing financing authorities to direct them to address drought. Together, these provisions could result in priority consideration for drought-related projects under EPA's state revolving fund (SRF) programs; federal funding for loans and credit assistance for certain "innovative" water supply projects in the western United States; and mandatory funding beginning in FY2026 for desalination and water reuse and recycling projects, among other project types. State Revolving Funds Section 103 addresses California's use of monies in its SRF programs that assist wastewater and drinking water infrastructure projects, pursuant to the federal Clean Water Act (CWA; P.L. 92-500) and the federal Safe Drinking Water Act (SDWA; P.L. 93-523 ), respectively. The SRFs provide loans and other types of financing assistance under specific terms set by states, including California. S. 1894 would add no new or supplemental funding for California's SRF programs. Rather, S. 1894 would direct the EPA Administrator, when allocating SRF funds, to require that the state of California review and give priority to projects that will "provide additional water supplies most expeditiously to areas that are at risk of having inadequate supply of water for public health and safety purposes or to improve resiliency to drought." For projects in California that are awarded assistance pursuant to Section 103, the bill would direct the EPA Administrator to expedite review of Buy American waiver requests, if such requests are submitted. It also would authorize 40-year loan repayments to the SRFs. Under the CWA SRF program, loans are to be repaid to a state within 30 years. Under the SDWA SRF program, loans normally are to be repaid to a state within 20 years, but terms may be extended to 30 years in cases such as economically disadvantaged communities. Finally, the bill provides that nothing in Section 103 would authorize EPA to modify existing state-by-state funding allocations, funding criteria, or other requirements related to the CWA and SDWA SRF programs for the state of California. For example, the bill does not appear to add new types of project eligibility under the SRF programs. Instead, it appears intended to direct the state's priorities when awarding assistance among projects that already are SRF-eligible. These projects could include water recycling programs (e.g., recycled water treatment works and recycled water distribution systems) and water conservation measures, which currently are eligible under the state's Clean Water SRF program. They also could include source water and water storage projects that address the state's public health priorities, which are eligible under California's drinking water SRF program. Furthermore, the California agencies that administer the SRF programs have well-established procedures for identifying projects eligible for assistance, and the bill would not alter these procedures. Intended Use Plans are prepared annually and are open to public participation. Moreover, these agencies already have authority to give priority to projects that would provide additional water supplies or meet other priority objectives of the state. Although the apparent intention of this section of S. 1894 is to provide funds expeditiously, it is unclear how quickly this could occur in light of the state's existing priorities. Under Section 124 of the bill, the authority under Section 103 would expire when a state-declared drought declaration is suspended by the governor or on September 30, 2017, whichever is later. Reclamation Infrastructure Finance and Innovation Act Title IV, Subtitle A (§§401-412) of S. 1894 , the Reclamation Infrastructure Finance and Innovation Act (RIFIA) would authorize a new federal financing mechanism for certain water supply projects. Specifically, Subtitle A would authorize $200 million in total through FY2020 to be appropriated for secured loans or loan guarantees under RIFIA, which could fund up to 49% of the costs of certain Reclamation water projects. Under the legislation, projects eligible for funding would be limited to those projects costing a minimum of $20 million that are in the 17 western states, Alaska, Hawaii, and other states where Reclamation is authorized to provide assistance. Eligible project types would include federally authorized water recycling and reuse projects; new water infrastructure (including conduits, pipelines, canals, pumping, and associated facilities); repair and replacement of aging water distribution facilities; brackish or seawater desalination projects; and any water infrastructure project not specifically authorized by law that the Secretary of the Interior determines would "contribute to a safe, adequate water supply for domestic, agricultural, environmental, or municipal and industrial use." Priority would be given to areas facing water resource challenges, but the legislation also lays out other considerations. The RIFIA provisions of S. 1894 are similar, but not identical, to the Water Infrastructure Finance and Innovation Act (WIFIA) enacted in Title V of WRRDA 2014, which created a financing program for EPA and the Corps. The WIFIA program, in turn, was modeled after a similar program for transportation projects, the Transportation Infrastructure Finance and Innovation Act program (23 U.S.C. 601 et seq.). Similar authority for Reclamation has been proposed in other legislation in the 114 th Congress (e.g., S. 176 , H.R. 291 , S. 1837 , and H.R. 2983 ). Although some aspects of WIFIA and RIFIA are similar—for example, both can provide no more than 49% of eligible project costs—their authorities differ in important ways. Among other things, RIFIA is narrower in scope than WIFIA; whereas projects in all states are eligible for assistance under WIFIA, only a subset of states (i.e., the 17 western states; Hawaii and Alaska; and states where Reclamation is authorized to provide assistance) and projects that meet a narrower set of conditions (i.e., areas facing water resource challenges) would be authorized to receive assistance under RIFIA. Additionally, irrigation districts and other similar entities that are not eligible under WIFIA could receive assistance under RIFIA. RIFIA also would allow states to serve as the lead entity for the purposes of NEPA permitting for RIFIA projects (a provision not provided for in WIFIA). Finally, WRRDA 2014 authorized WIFIA as a five-year pilot program, whereas S. 1894 does not include a similar time limitation for RIFIA. However, despite the apparent differences between the two authorities, it appears that many projects that would be eligible for support under WIFIA also would be eligible for funding under RIFIA. State and Local Drought Solutions Fund S. 1894 also includes future mandatory funding for certain alternative water supply projects. Title IV, Subtitle D (§§441-447) would create a new fund that is not subject to annual appropriations, the Federal Support for State and Local Drought Solutions Fund. The new fund would receive surplus receipts in the Reclamation Fund beginning in FY2026 and would be authorized at a level of $150 million per year for 25 years, without further appropriation (i.e., mandatory funding). Starting in 2026, it would fund authorizations under other parts of the bill, including $75 million per year for desalination projects under Section 301(c); $40 million per year for Title XVI projects (which are proposed to receive programmatic authority under Section 431); and $35 million per year for innovative finance projects under the new RIFIA authority (Title IV, subtitle A). Issues and Legislative Considerations The proposed approaches in each bill bring up a number of issues for Congress. The overall magnitude of spending to finance new water projects, and whether this spending is being offset by other changes, is an initial question that Congress may want to consider. H.R. 2898 likely would authorize fewer new programs and expenditures for these purposes, but those that it would authorize would adhere to the previous funding model for Reclamation projects. By contrast, S. 1894 would authorize new appropriations and several financing sources, but by authorizing a federal cost-share of 50% for these projects it would decrease the magnitude of the federal role in financing each new project. The question of whether any of this funding should be offset (and to what extent) highlights a fundamentally different approach between the bills. H.R. 2898 would accelerate current revenue streams by authorizing prepayment of construction costs, and it would use this funding to establish an account to fund water project construction expenses (which would remain subject to discretionary appropriations). By contrast, the new financing sources in S. 1894 that potentially would be made available through RIFIA and the State and Local Drought Solutions Fund would not be offset by changes to federal revenues. Supporters of one or both of these approaches note that these bills have other advantages that might balance out concerns. For instance, RIFIA would leverage a relatively small federal appropriation, and the State and Local Drought Solutions Fund would tap into future balances in the Reclamation fund that many argue Congress intended to use on water resources projects. Other issues for Congress may involve the type of projects and financing supported. H.R. 2898 would authorize appropriations for project types that traditionally have been the primary focus of Reclamation (i.e., new or enhanced surface water storage). For its part, S. 1894 would provide financing support for "alternative" types of supplies, such as desalination and water reuse and recycling projects, while also attempting to alter the requirements for some existing financing sources (e.g., EPA state revolving funds) to give priority consideration to drought projects. It also would provide for new types of financing (e.g., credit financing and mandatory funding) that differ in structure from the traditional Reclamation model. An additional and related question may involve the extent to which state and local entities should share in the financing for proposed drought projects. H.R. 2898 largely would maintain the traditional Reclamation law approach to financing newly authorized projects (i.e., 50-year repayment by project beneficiaries without interest for certain agricultural irrigators), with discretionary appropriations required for these projects and provided as up-front costs. Under this model, beneficiaries would be responsible for repaying their allocated portions of project costs. The Administration has opposed such an approach because of its potential to "perpetuate the historical subsidy" of Reclamation projects. This approach may be contrasted with the financing support that would be authorized in S. 1894 . That bill would authorize federal support of 50% and 25% for federal and nonfederal water storage projects, respectively. The RIFIA approach in S. 1894 also would shift a larger share of costs to nonfederal interests: it would authorize low-interest loans to fund half of the costs of qualifying projects, but the other half would be financed on the private market. The use of the RIFIA approach itself brings up a number of other issues. Several issues that arose during debate on the WIFIA provisions of WRRDA 2014 could come up in connection with consideration of the RIFIA provisions of S. 1894 , including the role of states; whether state water infrastructure financing agencies should be eligible to receive RIFIA assistance; and whether a portion of the RIFIA assistance should be set aside for projects in small communities. The RIFIA provisions also raise federal budgetary and revenue issues. CBO typically scores legislation reported by congressional committees for its effects on discretionary and mandatory, or direct, spending. The Joint Committee on Taxation (JCT) typically scores such legislation for its effects on revenue. Revenue loss to the U.S. Treasury is subject to pay-as-you-go procedures. The JCT estimated that the WIFIA provisions of WRRDA 2014 would reduce revenues because states would be expected to issue tax-exempt bonds for project costs not covered by WIFIA assistance. To avoid the pay-as-you-go problem, Congress included in WRRDA 2014 a provision prohibiting recipients of WIFIA assistance from issuing tax-exempt bonds for the non-WIFIA portions of project costs. However, in the Fixing America's Surface Transportation (FAST) Act ( P.L. 114-94 ), Congress repealed this restriction, in response to criticism by stakeholder groups. The proposed RIFIA provisions would not bar the use of municipal tax-exempt bonds to finance the nonfederal share of projects. However, S. 1894 states that RIFIA may not provide assistance unless sufficient funds have been appropriated to offset any decrease in federal revenue resulting from the use by a state or local government of municipal tax-exempt bonds or specified tax credit bonds for the nonfederal portions of a project. The bill does not identify legislative offsets for any such decrease in federal revenue. A potential issue for Congress is how the offset requirement in S. 1894 might affect the legislation or implementation of the proposed RIFIA program. Broader Issues for Congress This section discusses broader or crosscutting issues for Congress that the bills pose. Some of these issues have been featured prominently in the debate over the two bills. Implementation of the Endangered Species Act H.R. 2898 and S. 1894 contain provisions that could alter the implementation of the ESA and, in some cases, potentially set a precedent for how federal agencies address endangered and threatened species listed under the ESA. This section summarizes some of these provisions and discusses their potential implications for the ESA. The broader implication for ESA under both bills is that agencies would be managing water supplies to the maximum extent possible (according to varying standards set in each bill) for users. It could be interpreted that water needs for Delta smelt and salmon will just be met according to parameters set in the bills. This approach to addressing the resource needs of species listed under ESA could set a precedent for how other listed species are managed with respect to limited resources. This perspective is tempered by proponents of the bills who state that these provisions would support the implementation of ESA and that neither bill would amend ESA. Both bills contain provisions that could limit the discretion of a federal agency to manage water resources to conserve and recover listed species under the ESA. For example, the bills would authorize the approval of projects and activities that aim to maximize water supplies while remaining consistent with existing laws and regulations. This provision might be interpreted to limit agencies' discretion when operating the CVP by directing them to maximize water supplies. This provision could make anticipating and responding to the water needs of species, especially in anticipation of long-term effects on the species, a challenge for federal agencies managing water. For example, maximizing water supplies in the present could have future consequences for species that might not be detected immediately or cannot be addressed before the effects on the population are realized. Furthermore, maximizing water supplies for users might not allow for a buffer to guard against unforeseen environmental circumstances that could affect listed species. This possibility could be countered, in part, by real-time monitoring of species populations, which would be authorized in both bills. Both bills would authorize an increase in data collection and monitoring of Delta smelt and salmon, which would likely improve the scientific understanding of how water operations affect these species. H.R. 2898 would authorize several activities to increase the real-time monitoring of listed species and measure the effects of water operations on the species' populations. In several cases, the data from these activities could be used to alter water operations to increase either water for users or water for species. Proponents of these provisions contend that they will increase scientific support and transparency for water operations. Although critical of several provisions in H.R. 2898 regarding modifications to the implementation of the BiOps, DOI stated that provisions would improve data gathering, monitoring, and scientific analyses that would benefit real-time monitoring and provide a framework for discussion. This could support adaptive management efforts to manage fish in the Delta, and reflect efforts to incorporate adaptive management in other ecosystems where endangered species are located (e.g., the Lower Colorado River). Provisions under H.R. 2898 that would alter some aspects of the Delta smelt BiOp and change the implementation of the salmon BiOp have caused some to contend that H.R. 2898 , if passed, would set a new precedent for how ESA is implemented, put listed species in peril, and politicize the implementation of ESA. Others note that H.R. 2898 would create conflicting directives because some sections would be implemented in a manner consistent with ESA and other sections would direct implementation of operations beyond those allowed under current ESA BiOps (e.g., specifying pumping rates and other activities not currently allowed), potentially causing harm to listed species. These contentions could have nationwide implications for how species are treated under BiOps. For example, some might refer to H.R. 2898 , if passed, as a precedent for proposing exceptions to BiOps created under ESA guidelines on a species-by-species basis. Proponents of H.R. 2898 contend that provisions addressing Delta smelt and salmon would be implemented within the framework of the existing BiOps. Further, they assert that H.R. 2898 would not amend ESA. Other examples of provisions in H.R. 2898 that would alter the implementation of the BiOps include creating a new standard for measuring the effects of projects and activities on listed species, not adhering to seasonally based triggers mandating variable flow rates for salmon under the RPAs of the salmon BiOp, and authorizing a new method to calculate incidental take for Delta smelt. Supporters of the bill contend that changes proposed under H.R. 2898 are needed to update the BiOps with new data, science, and increased monitoring to maximize water supplies for users. Critics argue that these changes would override existing BiOps and increase stress on fish populations that have been steadily declining in the last few years. They also claim that these provisions could have broad implications for other listed species. The overall approach to addressing the needs of Delta smelt and salmon under H.R. 2898 would contrast with the approach taken by the Delta smelt and salmon BiOps. Under the current BiOps, the consultation process determines if a project will affect the species or its critical habitat. If the project will do so, the Secretary will suggest reasonable and prudent alternatives that would not jeopardize the continued existence of the species or result in the destruction or adverse modification of its habitat. H.R. 2898 would set a baseline level for flows to maximize water supplies to CVP and SWP water contractors and then work from that baseline to determine if the flows are harming listed species. This method would require changing flow parameters under the BiOps and creating a new approach to measuring the effects of flows on species. This approach could be interpreted as shifting the responsibility for determining the effects of water operations on species to water managers on a continual basis, rather than relying on analyses done in preparation of the BiOps, which could be based on outdated science. This shift would allow for more operational flexibility for water supply purposes and would increase the data collected on species that could be considered for setting operations. Proponents of this approach state that these proposed changes are within the framework of the existing BiOps. Critics of this approach state that the baseline level of flows proposed under H.R. 2898 is higher than that mandated under the BiOps and could have unknown short- and long-term environmental consequences for species. Further, they contend that this approach could create situations in which the effect of water flows on species might not be realized until after the species has been harmed. DOI also has stated that the approach proposed under H.R. 2898 would include specific operations that appear to be inconsistent with ESA and result in conditions that would be detrimental to species. Maximizing Water Supplies for Users The objective of both bills appears to be to increase water deliveries and reliability for water contractors, in particular water users south of the Delta. Neither bill contains assurances for delivering a certain amount of water or quantifies an amount of additional water to be generated by activities authorized in the bill. Based on this uncertainty, some may question how much more water might be delivered to users by each bill, if enacted. Both bills contain broad language that would direct agencies to maximize water supplies. It is uncertain how much water could be delivered to users from specified projects authorized under each bill and other existing projects. Both bills would provide federal agencies with broad discretion to conduct operations that would maximize water use while still adhering to state and federal laws and regulations. It is unclear how agencies would provide the "maximum quantity of water supplies possible" to CVP and other contractors and, relatedly, how they would make such a determination consistent with laws and regulations. Implementation of the maximizing water supplies provision could be difficult and possibly contentious. For example, agencies and water users may not agree that particular actions would provide maximum water quantities. Notably, under the status quo, some observers already believe that the agencies are maximizing water supplies to the detriment of species, whereas others contend that the agencies are not doing enough to maximize water supplies within the parameters of existing laws and regulations. Some may question if the actions that would result from these bills and the broad direction to maximize water supplies for users might have unintended or long-term consequences for species and ecosystem factors in the Bay-Delta. Some contend that if managers were required to maximize water supplies in implementing projects, their discretionary flexibility to make decisions would be narrower. Therefore, maximizing water supplies would aim to benefit water users under drought conditions; however the long-term effects of these actions on other factors, such as species viability, recreation, and water quality would be unclear. Federal-State Leadership and Coordination A major issue underlying many of the recent proposals to alleviate the effects of drought involves the role of the federal government. Questions related to the federal role may focus on the prominence and substance of the federal role when it comes to drought and related water resources challenges. To date, outside of federal agricultural assistance programs, much of the work on drought preparedness and response has occurred at the state and local level; thus, major alterations to this division of responsibility could entail a significant policy change. Some have proposed that such a change is warranted. They argue that the federal government should focus on strengthening its drought-related activities in specific areas, such as by encouraging alternative water supplies by investing in new Title XVI water reuse and recycling projects or by increasing capital investments in existing or new federal water infrastructure. Others see the federal role as supporting and refining ongoing state investments, such as through planning and technical assistance for major state projects. Still others argue that the federal government's role should be reduced or eliminated. This approach appears to prevail in several of the provisions in H.R. 2898 , which would increase the nonfederal role in permitting and potentially would transfer some projects to the state. Finally, some argue that various "traditional" federal roles should be fundamentally altered. For example, Section 312 of S. 1894 would authorize support to a wide range of projects but would set a nonfederal cost share of 75% for nonfederal projects and 50% for federal projects. Such a requirement would be in notable contrast to past policies, in which the federal government has funded 100% of the construction costs for federally authorized water projects but has required that project beneficiaries repay their shares of the federal investment for these projects over 50-year periods (sometimes without interest). Coordination among federal and state governments (as well as other interests) also may be of interest to Congress. For example, coordinated operations between the federal and state governments are extremely important in determining water deliveries in California's CVP, as well as in other drought-stricken areas. Issues associated with addressing federal, state, and local coordination, including the extent to which the federal government can or should defer to state and local laws and decisions, may receive consideration in drought-related legislation. The federal government also has the ability to directly or indirectly affect drought-related decisionmaking by authorizing governance structures and institutional feedback mechanisms under which some or all stakeholders have input to these matters. Funding Issues related to funding, including the magnitude and type of federal funding to be provided for drought-related and water provisions and whether this funding must be offset or repaid, also may be a consideration for Congress. The two bills provide examples of the variety of potential approaches to funding. H.R. 2898 would authorize only limited new discretionary appropriations, and those would be derived from half of the additional repayment revenues that would accrue to the Treasury under other provisions authorized in the bill (and thus would offset in the short term). This funding would need to be repaid by project beneficiaries in accordance with laws governing Reclamation projects. For its part, S. 1894 would authorize significant new discretionary and mandatory funding in various programmatic areas; some of these funds would not have to be repaid. Additionally, a portion of the discretionary funding that would be authorized under that legislation would provide partial federal credit support for some projects, which would have to be repaid but would allow for the leveraging of significant federal funds at relatively low interest rates. Another funding question may be the extent to which nonfederal entities can contribute or accelerate funding for federal studies and projects by funding these efforts themselves. In many cases, acceptance of funds for these purposes would require additional congressional authority. Scope of Legislation As Congress considers legislative proposals associated with drought and related water infrastructure management and supply in drought-affected areas, discussion may arise regarding the geographic scope of federal actions and assistance. Although some of the recent legislative proposals have focused on those states and federal projects that are currently experiencing or have recently experienced severe drought conditions, other provisions apply throughout the West and a few are national in scope. A broad policy question is whether the issue that Congress is addressing is the current Western drought, drought in arid regions, drought in any part of the United States, or gaps in water supply and demand. Much of the recent legislation has focused on attempting to augment the supply of water during drought. As Congress considers legislative options and proposals for addressing water issues associated with drought, numerous other factors and forces may influence the future consequences of drought. Many of these are related to demographic, development, and water demand trends and actions of state, local, and private entities. That is, the impacts of the next drought will be shaped by the surface water and groundwater supplies that are available and how they are managed before and during the drought; how agricultural, municipal, and industrial consumers use water; the incentives and ability to increase water efficiency and conservation; and the types of assistance available to prepare for and mitigate the economic, social, and environmental consequences of drought. Therefore, discussions of the extent to which federal assistance and programs are promoting drought preparedness and mitigation may expand the legislative debate beyond the augmentation of water supply and operations of federal water infrastructure.

Several western states are experiencing extreme or exceptional drought conditions. The persistence and intensity of the drought, which began in 2011 in some areas, has received considerable attention from Congress. To date, federal legislative proposals have focused primarily on the management of federal water projects, support for drought-related programs, and needs of fish and wildlife for water. A broad policy question is how Congress might address western drought, drought in any part of the United States, and gaps in water supply and demand. Several bills have been introduced in the 114th Congress that would address issues associated with drought. They include S. 176, S. 1837, S. 1894, H.R. 2898, H.R. 2983, and H.R. 3045, among others. Of the bills considered to date, H.R. 2898, the Western Water and American Food Security Act, and S. 1894, the California Emergency Drought Relief Act of 2015, have received the most congressional and public attention. On July 17, 2015, H.R. 2898 passed the House, and on October 8, 2015, both H.R. 2898 and S. 1894 were the focus of a Senate Energy and Natural Resources Committee hearing. There are reports that a draft bill addressing differences between H.R. 2898 and S. 1894 is being negotiated; however no new bills have been introduced. Although H.R. 2898 and S. 1894 address some common issue areas and include some similar provisions, the bills' approaches often differ in important ways. Both bills focus on water projects and management during drought, and do not attempt to address the broad suite of drought impacts and policies (e.g., effects on wildfire and agricultural assistance programs). To date, the focus on both bills has centered primarily on provisions related to the management and operations of the federal Central Valley Project (CVP) and the State Water Project (SWP) in California; however, S. 1894 would authorize several programs and activities that would aim to benefit water users and increase water supplies, including water recycling and desalination. H.R. 2898's supporters contend that the bill would, among other things, improve the flexibility and responsiveness of CVP and SWP operations during the current drought in California and beyond. Supporters also contend that activities authorized under H.R. 2898 could increase water supplies to users facing curtailed allocations and improve the science and data collection activities for identifying the effects of operations on listed species. Broadly speaking, supporters of both H.R. 2898 and S. 1894 contend that the legislation would allow for maximum available water supplies in a manner that is consistent with existing laws and regulations; however, S. 1894 would provide fewer directives for project operations. Others believe the bills could harm listed species under the Endangered Species Act (ESA; P.L. 93-205). H.R. 2898 and S. 1894 have generated both support and opposition from stakeholders and have raised questions about their potential implementation. The bills also raise a number of questions for Congress to consider when addressing drought, including how to reconcile environmental protections with demand for more water and increased pumping from the Sacramento and San Joaquin Rivers Delta to support CVP and SWP water contractors. Related questions include whether the Administration is already maximizing water supplies at federally operated water projects and whether water project management and operations pursuant to the ESA and other laws should be adjusted to better account for water resources challenges. The bills also raise other issues, including what principles and approaches should guide federal involvement in water resources management and how much (if any) support the federal government should provide for drought preparedness and relief efforts. Related topics may include the preferred mix of federal and state leadership in addressing drought; the proper balance of federal investment in surface water storage and in new "alternative" water supplies (e.g., water recycling and reuse, desalination); and the geographic scope of drought-related assistance, authorities, and programs.

Background and Case History In 2005, Indiana enacted a statute requiring citizens voting in person on primary or general election day, or casting a ballot in person at the office of the circuit court clerk prior to election day, to present a photo identification card issued by the government. Often referred to as the "Voter ID Law," it does not apply to absentee ballots submitted by mail and excepts persons who reside and vote in state-licensed facilities such as nursing homes. It further provides that a voter who is indigent or has a religious objection to being photographed may cast a provisional ballot that will only be counted if the voter executes an appropriate affidavit before the circuit court clerk within 10 days after the election. Under Indiana law, photo identification is not required for registering to vote, and for qualified voters, the state offers free photo identification. Shortly after enactment of the Voter ID Law, the Indiana Democratic Party and the Marion County Democratic Central Committee (hereafter referred to as the "Democratic Party") filed suit in federal district court against state officials responsible for enforcement of the law, seeking a judgment declaring the statute invalid on its face and enjoining its enforcement. Seeking the same relief, a second suit was filed on behalf of two elected officials and several nonprofit organizations representing groups of elderly, disabled, poor, and minority voters, and the cases were consolidated. In defense of the law, the State of Indiana intervened. In sum, the plaintiffs alleged that the Voter ID Law substantially burdens the right to vote in violation of the Fourteenth Amendment; that it is neither a necessary nor appropriate means of avoiding election fraud; and that it will arbitrarily disenfranchise qualified voters without the requisite identification and place an unjustified burden on those who cannot obtain such identification. In granting defendant's motion for summary judgment, the federal district court found that the plaintiffs had "not introduced evidence of a single, individual Indiana resident who will be unable to vote as a result of [the Voter ID Law] or who will have his or her right to vote unduly burdened by its requirements." Rejecting an expert's report that up to 989,000 registered Indiana voters did not possess either a driver's license or other acceptable photo identification "as utterly incredible and unreliable," the court estimated that as of 2005 (when the statute was enacted), approximately 43,000 Indiana residents did not possess driver's licenses or state-issued identification. The Democratic Party appealed. In affirming the lower court ruling, the U.S. Court of Appeals for the 7 th Circuit held that the Democratic Party had standing to challenge the constitutionality of the Voter ID Law on its face. Next, pointing out that no plaintiff was claiming that the law would deter him or her from voting, the court inferred that "the motivation for the suit is simply that the law may require the Democratic Party to work harder to get every last one of their supporters to the polls." Finally, rejecting the argument that the law should be evaluated under the same strict standard applicable to a poll tax, the court held that the burden placed on voters was balanced by the benefit of reducing the risk of voter fraud. The Democratic Party appealed. Supreme Court Ruling Voting 6 to 3, in April 2008, the Supreme Court affirmed the decision of the 7 th Circuit, persuaded that both lower courts had correctly determined that the evidence in the record was insufficient to support a facial attack on the constitutionality of Indiana's Voter ID Law. Justice Stevens wrote the "lead opinion," which was joined by Chief Justice Roberts and Justice Kennedy; Justice Scalia wrote a concurrence, joined by Justices Thomas and Alito; Justice Souter filed a dissent, joined by Justice Ginsburg; and Justice Breyer filed a dissent. Lead Opinion by Justice Stevens (joined by Chief Justice Roberts and Justice Kennedy) The lead opinion in Crawford begins with an analysis of the Court's 1966 decision in Harper v. Virginia Board of Elections , which invalidated a Virginia statute conditioning the right to vote on the payment of a $1.50 poll tax. The Harper Court concluded that whenever a state makes the affluence of a voter or the payment of a fee an electoral standard, it violates the Equal Protection Clause of the Fourteenth Amendment. The opinion further notes that under Harper, even rational restrictions on the right to vote are invidious if they are unrelated to voter qualifications. Clarifying that standard, however, the lead opinion finds that in the Court's 1983 decision, Anderson v. Celebrezze , the Court confirmed the general rule that "'evenhanded restrictions that protect the integrity and reliability of the electoral process itself' are not invidious" and indeed, satisfy the Harper standard. As the opinion explains, "[r]ather than applying any 'litmus test' that would neatly separate valid from invalid restrictions, we concluded that a court must identify and evaluate the interests put forward by the State as justifications for the burden imposed by its rule, and then make the 'hard judgment' that our adversary system demands." Application of this balancing test, the opinion further points out, was made in subsequent election decisions by the Court. In making the judgment in Crawford as to whether the Indiana Voter ID Law is justified by a legitimate state interest, the opinion analyzes each of the three interests identified by the State of Indiana—deterring and detecting voter fraud; preventing voter fraud; and safeguarding voter confidence—and finds that they are "unquestionably relevant" to the state interest of protecting the integrity of the electoral process. Furthermore, it notes that even the petitioners in this case, while charging the statute was motivated by partisan goals, did not question the legitimacy of the interests identified by the State of Indiana. On the issue of voter fraud, it determines that the only type of voter fraud that the Voter ID Law seeks to address is in-person voter impersonation at the polls, but that the record contains no evidence of such fraud ever occurring within Indiana. On the other side of the coin, the Crawford lead opinion also discusses the burdens that the Voter ID Law imposes on voters, burdens that are not imposed by non-photo identification requirements. For example, it points out the possible inconveniences of a voter's photo identification being lost or stolen or no longer representing the likeness of a voter, thereby creating an impediment to voting. However, it concludes that "burdens of that sort arising from life's vagaries ... are neither so serious nor so frequent as to raise any question about the constitutionality of [the Voter ID Law]; the availability of the right to cast a provisional ballot provides an adequate remedy for problems of that character." The relevant burdens imposed by the law, the opinion finds, are those that are placed on people who are eligible to vote, but do not possess photo identification that complies with the Voter ID Law. If the State of Indiana required voters to pay a tax or a fee to obtain the requisite photo identification, the fact that most voters already possess a valid driver's license or other acceptable identification would not save the statute under the Court's holding in Harper , the lead opinion notes. However, in Indiana, free photo identification cards are available through the Bureau of Motor Vehicles (BMV). In view of that fact, the opinion concludes that "for most voters ... the inconvenience of making a trip to the BMV, gathering the required documents, and posing for a photograph surely does not qualify as a substantial burden on the right to vote or even represent a significant increase over the usual burdens of voting." For a "limited number of persons," based on evidence in the record and facts of which the Court takes judicial notice, the Voter ID Law may still impose a "somewhat heavier burden." However, the lead opinion determines that the severity of that burden is mitigated by the fact that eligible voters may cast provisional ballots that will ultimately be counted. While casting a provisional ballot requires traveling to the circuit court clerk's office within 10 days to execute an affidavit, it is "unlikely" that the requirement would create a constitutional problem "unless it is wholly unjustified." Moreover, even if the burden cannot be justified to a few voters, it would be insufficient to establish the relief sought by the petitioners in this case: invalidation of the Voter ID Law in all its applications. In view of such relief sought by the petitioners, the opinion finds that they bear a "heavy burden of persuasion," asking the Court "in effect, to perform a unique balancing analysis that looks specifically at a small number of voters who may experience a special burden" and weigh that against the State of Indiana's interests in protecting election integrity. On the basis of the record before the Court, the lead opinion determines that it "cannot conclude that the Voter ID Law imposes 'excessively burdensome requirements' on any class of voters" and that it "'imposes only a limited burden on voters' rights,'" which are justified by the interests advanced by the State of Indiana. It also finds that if a "nondiscriminatory law is supported by valid neutral justifications," those justifications should not be ignored merely "because partisan interests may have provided one motivation" for its enactment. Finally, the opinion cautions that even if the statute constituted an unjustified burden on some voters, the petitioners failed to demonstrate that the proper remedy was to invalidate the entire statute. Concurrence by Justice Scalia (joined by Justices Thomas and Alito) The concurrence, written by Justice Scalia, finds that the Indiana Voter ID Law is "a generally applicable, nondiscriminatory voting regulation" and disputes the notion that "individual impacts are relevant to determining the severity of the burden it imposes." Indeed, according to the concurring opinion, it is the job of state legislatures to assess the costs and benefits of election regulations and "their judgment must prevail unless it imposes a severe and unjustified overall burden upon the right to vote, or is intended to disadvantage a particular class." Judicial review of such election regulations must be applied in such an objective and uniform manner that legislatures know beforehand whether the resulting burden is too severe. Specifically criticizing the lead opinion, the concurrence characterizes it as a "record-based resolution" that "neither rejects nor embraces the rule of our precedents, provides no certainty, and will embolden litigants who surmise that our precedents have been abandoned." In sum, the concurrence labels it an "indulgence" that the State of Indiana accommodates certain voters by permitting the casting of provisional ballots, finding it not to be a constitutional requirement. Instead, it concludes that it is constitutionally sufficient that the Voter ID Law does not significantly increase typical burdens of voting and that the state's interests are enough to sustain that minimal burden. According to the concurrence, "[t]hat should end the matter." Dissent by Justice Souter (joined by Justice Ginsburg) The Souter dissent warns that the Voter ID Law poses a threat of "nontrivial burdens" on the voting rights of tens of thousands of Indiana's citizenry and accordingly, is likely to result in a substantial percentage of those individuals being deterred from voting. It concludes that the law is unconstitutional under the standard the Court established in its 1992 decision, Burdick v. Takushi , finding that a state may not burden the right to vote "merely by invoking abstract interests" even if legitimate or compelling, but must make a "particular, factual showing that threats to its interests outweigh the particular impediments it has imposed." In view of "no evidence of in-person voter impersonation fraud in the State," the dissenting opinion determines that the State of Indiana failed to justify the practical limitations on voting rights created by the law and finds that it creates an "unreasonable and irrelevant burden on voters who are poor and old." Dissent by Justice Breyer The Breyer dissent compares the Voter ID Law with similar laws in Georgia and Florida that require photo identification for voting, but accept a broader range of identification. For example, the State of Florida accepts student ID cards, employee badges and cards from neighborhood associations, and will accept a provisional ballot on the condition that the voter's signature matches the signature on file. The State of Indiana, according to the dissent written by Justice Breyer, did not sufficiently justify the "significantly harsher, unjustified burden" created by its law. Implications In the wake of the Supreme Court's ruling in Crawford , some commentators have speculated that more states are likely to enact laws requiring photo identification for voting. However, even though the Court's ruling strikes down a facial challenge to Indiana's Voter ID Law, it appears to leave open the possibility of "as applied" challenges to such laws, if greater evidence of the burdens imposed on voters' rights can be provided. Furthermore, while three members of the Court—Justices Scalia, Thomas, and Alito—hold the position that a "record-based" evaluation of the impact of such laws on individuals is inappropriate, that view does not appear to be shared by the remainder of the Court.

In a splintered decision issued in April 2008, the Supreme Court upheld an Indiana statute requiring photo identification for voting, determining that lower courts had correctly decided that the evidence in the record was insufficient to support a facial attack on the constitutionality of the law. Written by Justice Stevens, the lead opinion in Crawford v. Marion County Election Board finds that the law imposes only "a limited burden on voters' rights," which is justified by state interests.

Background1 On May 29, 1993, at The Hague, 66 nations approved the final text of a multilateral Convention on Protection of Children and Co-operation in Respect of Intercountry Adoption, popularly known as the "Hague Adoption Convention" (hereinafter "Convention"). The purpose of the Convention is to establish uniform standards and procedures that will protect the rights and interests of adopted children, birth parents, and adoptive parents involved in intercountry adoptions. The Convention mandates that each signatory country establish a national Central Authority on adoptions. The Central Authority is to oversee the Convention's implementation in the signatory country and will have an ongoing role in the country's international adoption process. The Convention has three primary features. First, it reinforces the protection of children's rights concerning international adoption. Second, it establishes a mechanism for the cooperation of signatory countries in international adoption. Third, it ensures the recognition of adoptions undertaken and certified through the Convention provisions. The Convention entered into force among participating countries on May 1, 1995. At the present time, the Convention has entered into force in 75 countries. The United States completed the formal ratification procedures on December 12, 2007, and the Convention entered into force on April 1, 2008, in the United States. The United States and the Convention For the Convention to be fully operative in a participating country, there are three steps which must be fulfilled in sequential order. First, the country must sign the Convention. Second, the country must have a domestic ratification, acceptance, approval, or accession procedure. Third, a formal filing/deposit is required. The instruments of approval (the domestic form of approval) from each country are required to be deposited with the Ministry of Foreign Affairs of the Kingdom of the Netherlands, which serves as the depository of the Convention. The United States became a signatory to the Convention on March 31, 1994, which fulfilled the first step. The Convention was transmitted to the Senate for its advice and consent on June 11, 1998. The United States Senate gave its advice and consent to the United States' ratification of the Convention on September 20, 2000. The Senate provided two specific qualifications in its advice and consent to the Convention. One qualification, discussed below, concerned the approval of adoption service providers by federal and state authorities. The second qualification required that the President was not to "deposit the instrument of ratification for the Convention until such time as the federal law implementing the Convention is enacted and the United States is able to carry out all the obligations of the Convention, as required by its implementing legislation." On September 20, 2000, the Senate passed the domestic implementation legislation—the International Adoption Act of 2000 (IAA). The legislation had previously cleared the House on September 18, 2000, and was signed into law by President William J. Clinton on October 6, 2000. The legislation established the domestic administrative framework for the implementation of the provisions of the Convention. Under this framework, the United States opted to permit private agencies to perform adoptive services that are given to the "Central Authorities" under the Convention. The U.S. Department of State (DOS), as the Central Authority for the United States (USCA), has many administrative, oversight, and other functions under the Convention. Various administrative actions were required by the DOS to put these functions in place before ratification could be completed. These administrative actions are summarized below. The Department of State Federal Regulations On February 15, 2006, the DOS published the final rules on the accreditation and approval of agencies and persons concerned with the international adoption process in accordance with the Convention. The first body of regulations concerns the approval and accreditation of adoption service providers who wish to provide services in adoption cases subject to the Convention (Part 96). The regulations set out the procedures and the standards that will be used in the approval and the accreditation process. The second body of regulations concerns the federal government's preservation of Convention records (Parts 97, 98). Implementation of the Convention On its website, the DOS summarized the extensive preparations that were necessary to be completed prior to Convention implementation and formal ratification. These included the following: 1) establish and staff the Central Authority within the Office of Children's Issues, Bureau of Consular Affairs; 2) promulgate regulations to (a) establish requirements/procedures for the designation and monitoring of accrediting entities, (b) set the standards that must be met for non-profit adoption agencies to qualify for Convention accreditation and for other agencies and individuals to qualify for Convention approval, (c) govern the registration of smaller community-based agencies for temporary accreditation, and (d) provide the procedures and requirements for incoming and outgoing Convention adoptions involving the United States; 3) establish a case-tracking computer system for intercountry adoptions; 4) designate entities to accredit non-profit U.S. adoption agencies to provide adoption services for Convention adoptions and the related approval of adoption providers; 5) prepare designated accrediting entities to (a) process applications for Convention accreditation and approvals and registration for temporary accreditation, (b) deal with complaints, and (c) continuously monitor the compliance by accredited agencies and approved persons with the requirements of the Convention, the IAA, and the regulations; 6) oversee preparations by accrediting entities and the USCA of the first list of providers authorized under the Convention to offer and provide adoption services for Convention adoptions; 7) establish education materials and programs about Convention adoptions; and 8) deposit the U.S. instrument of ratification and entry into force of the Convention between the United States and other party countries. The DOS completed these preparations in late 2007. On December 12, 2007, Assistant Secretary of State for Consular Affairs Maura Harty deposited the United States' instrument of ratification of the Convention at a ceremony in The Hague. As a result of this action, the United States is now a full member of the Hague Adoption Convention, which entered into force for the United States on April 1, 2008. The DOS has various ongoing responsibilities with respect to the Convention and intercountry adoption. Annual reports to Congress are required by the IAA concerning certain aspects of the Convention and the IAA implementation. These reports are to be available to the general public and to the Central Authorities of other countries, beginning about one year after the Convention enters into force in the United States. Prior to Convention implementation, adoptions and placements for adoption made in the United States were subject only to state law and procedures, and were not subject to any federal law. IAA and Convention compliance provide new responsibility for state authorities, and necessitate close cooperation and coordination between the DOS and state authorities in order to guarantee that the United States meets its treaty obligations with respect to intercountry adoptions. Conclusion The United States became a full member of the Convention, and the Convention entered into force on April 1, 2008. The Convention now governs intercountry adoptions between the United States and other Convention member countries in accordance with the provisions of the Intercountry Adoption Act. Prior to ratification, the DOS had numerous duties and responsibilities connected with the implementation of the Convention. The DOS has a continuing role in the operation of the Convention, and has various oversight, reporting, and record-keeping requirements. The DOS maintains a comprehensive website that describes its progress with these activities.

On April 1, 2008, the United States became a full member of the Hague Convention on Intercountry Adoption (hereinafter "Convention"), and the Convention entered into force in the United States. As a result, the Convention now governs intercountry adoptions between the United States and other Convention member countries in accordance with the provisions of the Intercountry Adoption Act (IAA). In order to comply with the Convention membership requirements, the United States had signed the Convention, the Senate had given its advice and consent to the ratification of the Convention, and Congress had approved legislation (the IAA) for the implementation of the Convention. In addition, the U.S. Department of State (DOS) had a number of duties and responsibilities, summarized below, which were required to be completed prior to the formal ratification and the entry into force of the Convention.

Assessing Marriage Penalties or Bonuses It is surprisingly difficult to measure marriage penalties and bonuses. The measure of the marriage penaltyrequires a counterfactual: what would the combinedtaxes of the two spouses be if they were not married? Unfortunately, there is no simple answer to this questionbecause marriage itself tends to be a life-changingevent. Indeed, the answer may be different if the question is: "What would the tax be if the spouses had nevermarried?" rather than "What would the tax be if thecouple divorced?" These issues become much more important for certain types of married couples. Most coupleswould not have had children without marriage,and having children can dramatically reduce tax liability. In divorce, who gets custody of children can alter taxliability. Never marrying would probably alsohave altered career paths (and thus the amount of earned income of each partner), savings behavior (and thus theamount of unearned income), the allocation ofsavings and consumption into different types (including tax exempt forms such as owner occupied housing that alsotend to affect the choices of itemizingdeductions). Getting divorced would probably also alter these effects, unless the divorce were solely for purposesof tax minimization. The decision about how to measure the marriage penalty does not alter the effects of the two proposals (which are still determined with reference to the marriedcouple's joint circumstances), but rather the original magnitude and remaining magnitude. In the next section we calculate the marriage penalty in general for couples without considering the effects of children, where there is much less uncertainty abouthow to measure the penalty. The following section discusses the issues surrounding marriage penalties for couples. Marriage Penalties and Bonuses: Couples Without Children Despite all of the attention focused on marriage penalties, it may be surprising to know that for the middle class,marriage penalties are small or nonexistent,particularly in cases where the penalty is well-defined. According to data from the Internal Revenue ServiceStatistics of Income, about 60% of joint returns thathave tax liability before credits paid taxes at the 15% rate in 1997; for these taxpayers, the marriage penalty can beno larger than $225 (measured at 2001 incomelevels). For taxpayers who itemize and whose itemized deductions are at least as large as the combined standarddeduction for two singles, no penalty exists at all. Marriage Penalties for the "Middle Class" The "middle class" is typically defined very broadly and in this section we discuss effects that cover taxpayers with marginal tax rates of 15% (covering 60% oftaxable returns and 51-52% of all returns) and with marginal tax rates of 28% (covering 26.2% of taxable returnsand 23% of all returns). Overall this broad rangecovers all but the bottom 12-14% of returns that have a zero marginal tax rate and the top 12% or so. (For thebottom, the 12% refers to no liability before creditsand the 14% with no liability after credits; since the earned income credit, but not other credits is refundable, thenumber with a zero marginal tax rate falls inbetween.) Thus, roughly speaking, these taxpayers represent the broad range of the middle three quarters of thedistribution of joint returns. The following examples, based on 2001 income levels, assume that all income is taxable, and assume a constant rule for the choice of itemizing deductions, sothere is a switch at the point of itemizing. Note that these assumptions overstate the marriage penalty as a fractionof economic income, particularly at the top andbottom of the distribution. At these ends of the distribution, untaxed or preferentially taxed income (transferpayments at the lower end and capital gains anduntaxed income, such as tax exempt interest at the higher end) is common. The middle class also has higher incomesthan adjusted gross income indicates,primarily due to untaxed fringe benefits. Note also that the marriage penalties assume evenly divided income wheremarriage penalties are usually at theirmaximum, especially at higher levels of income. (2) Table 1 shows the marriage penalties from the regular income tax for returns falling in the 15% bracket, representing slightly more than the bottom two thirds ofour "middle class." (It excludes the earned income credit (EIC).) These returns assume income is evenly splitbetween the couples. The income points are chosento show peaks and valleys of the penalty as a percentage of income. The highest level of the marriage penalty asa share of income is reached at the exempt levelfor singles, $14,900 in 2001. But for most joint returns, the marriage penalty is relatively small. Both the secondearner credit, and lower rates, in theAdministration proposal would reduce the marriage penalty (and in cases where taxpayers itemize, turn it into abonus). H.R. 6 would eliminate thepenalty, as would optional filing. Table 2 shows the maximum marriage penalties for returns falling in the current 28% bracket. These returns can be affected by the width of the 15% bracket aswell as the standard deduction, and their marriage penalties peak at about 1.6% of income (again, assuming thatincomes are evenly divided). Table 1: Marriage Penalty as a Percentage of Income, Returns in the 15% Tax Bracket, No Children (ExcludesEIC) Note: Assumes income is evenly split. Assumes itemized deductions at 18.8 % of income. 60% of joint returns with tax liability fell in the 15% bracket in 1997.Note that equally divided incomes can produce smaller penalties or larger bonuses under the Administrationproposal because of the second earner deduction. With incomes divided in a way to create the full penalty under current law and minimize the second earnerdeduction the penalty would be 0.4% at $21,240 and $30,000, and 0.3% at $40,425, but would become a bonus of -0.2% at $48,404 and then gradually decline in value. Table 2: Marriage Penalty As a Percentage of Income, Even Earnings Split, Returns in the 28% Bracket, NoChildren Note: Maximum marriage penalty assumes income is evenly split. Assumes itemized deductions at 18.8 % ofincome. 26% of joint returns fell in the 28%bracket in 1997. H.R. 6 is designed to eliminate the marriage penalty arising from standard deductions and rate brackets, so the penalty is zero in each case. However,the administration proposal virtually eliminates the penalty as well. For the 15% bracket, the peak of the penaltyas a percentage of income comes just as thetaxable level for two singles is reached ($14,900). At this point, the current marriage penalty of $225 is 1.5% of income. The lower rates of 10% for the first$12,000 of taxable income reduce the penalty to $150 and the second earner deduction reduces it further, to $75. As the second earner deduction increases, andthe likelihood of itemizing deductions increases, there is actually a net benefit. Optional filing would also eliminatepenalties. Because the second earner deduction is actually larger the more evenly divided incomes are, there could be a smaller effect, as noted in the footnote to Table 1. Regardless of how it is calculated, however, it is clear that the Administration proposal virtually eliminates thesmall marriage penalty that currently exists. The same is true of the 28% bracket shown in Table 2. The maximum marriage penalty as a percentage of income is reached at the top of the 28% bracket for twosingles (and income of $73,768). This penalty is reduced by the second earner deduction until it is only 2/10 of apercent of income. Again, H.R. 6 in most cases eliminates the marriage penalty, although it does not do so entirely because of the phase outs ofitemized deductions and personal exemptions thatbegin at $132.750. When looking at the marriage penalty, therefore, it is clear that both the Administration proposal and H.R. 6 are approaches that eliminate or virtuallyeliminate these middle class marriage penalties, with H.R. 6 being more precise, but with the Administrationproposal being quite successful. The more important differences arise from the effects of the two proposals on marriage bonuses. Table 3 illustrates the marriage bonus (at its maximum) for therelatively common case of the one-earner family. As this table illustrates, marriage bonuses tend to be larger thanpenalties, and are a significant fraction ofincome. Bonuses begin at the exempt level for a single individual. Bonuses reflect both the higher standarddeduction for joint returns compared to a singleindividual, as well as the additional personal exemption associated with the non-earning spouse. The Administration proposal and its rate cuts lower the marriage bonus at very low income levels, because it lowers the rates from 15% to 10%. However, theproposal creates a new type of bonus because the new 10% rate bracket is twice as wide for joint returns as forsingles, a feature that may have been chosen toavoid increasing the marriage penalty. This new bracket, in fact, follows the general approach used in H.R. 6 , but limited to the new 10% bracket. Inthis income category, however, H.R. 6 increases the marriage bonus at lower and moderate income levels onlybecause it increases the standarddeduction. Hence at the points where deductions are itemized, H.R. 6 has smaller bonuses than theAdministration proposal. Optional filing, ofcourse, would not affect bonuses. In addition to the comparison of H.R. 6 and the Administration proposal, a fourth column has been added calculating the effects of combining H.R. 3 and H.R. 6 , that is, keeping the rate structure of the Administration proposal but altering thestandard deduction and 15% ratebracket to make them double the width of the single bracket. These results indicate that choosing this approach,given the rate structure, would lead to higherbonuses than those with the second earner deduction and higher bonuses than in present law in many cases. Table 4 shows the one-earner bonus for returns in the 28% bracket. In this case the bonuses tend to be smaller for the Administration proposal than either forcurrent law, or for H.R. 6 . That effect occurs because of the lower rate, 25%, which offsets the effect of the10% bracket H.R. 6 ,however, expands the bonus because it increases the 15% rate bracket for married couples to twice that of singles. Table 3: One Earner Marriage Bonus as a Percentage of Income, Returns in the 15% Bracket, NoChildren Table 4: One Earner Marriage Bonus as a Percentage of Income,Returns in the 28% Bracket, NoChildren Note: Assumes itemized deductions at 18.8 % of income. 26% of joint returns fell in the 28% bracket in 1997. Lower Income Couples and the Earned Income Credit For lower income individuals, the tax system still has an impact through the earned income credit, and marriage penalties can arise from this system as twoindividuals who marry can be phased out of the EIC. For example, a married couple without children with equalearnings and total income at the filing thresholdwould have a marriage penalty of 4.6% of income due to the phase-out of the EIC. Of course, an equal split at theselow combined income levels would implyvery low annual earnings, probably reflecting part time work. These measures would, however, be much larger inthe case of couples with children where the EICis much larger. Marriage bonuses can also occur with the EIC, if an individual without children and earnings marries someone with children and little or no earnings. None of the proposals includes significant changes in the earned income tax credit. H.R. 6 has a percentage increase in the earned income tax creditfor joint returns as compared to single and head of household, while the bill that passed last year increased thephase-out threshold by $2,000. (The final billincluded an increase in the phase-out threshold of $3,000). These proposals would not have very large effects, andboth would increase bonuses slightly whilereducing penalties slightly. This decision may reflect in part how difficult it is to address the marriage penalty in the case of the EIC where targeting poor families via their total income isparamount. If we simply allowed even the most targeted of the proposals, optional filing, and even ignoring theconsequences of children, we could find coupleswith very large incomes becoming eligible for the EIC. (A similar point could be made for an additional "secondearners" credit.) For example, a family with acombined income of $100,000 where one spouse earned a low salary (say $8,000) would be eligible for the EICwhich does not phase out until slightly over$10,000. This issue would become even more complicated given the larger EICs with children, where the phase outends at slightly over $28,000 for one child and$32,000 for two children. Thus, relatively wealthy families could become eligible for the EIC. Nor do the alternatives become more palatable. To double the phase out points of the EIC, using the same approach as H.R. 6 for marriage penaltyrelief in the regular income tax system, would mean that families with children and with $60,000 or more wouldbe eligible for the credit. Nor is the approach ofincreasing the credit itself very effective, since the problem is the phase out and not the level of the credit. Higher Income Couples Higher income couples, representing the top 12-13% of the income distribution, present their own problems in assessing the marriage penalty, even in the absenceof children. First, as incomes increase, the possibility of excluded income and of capital gains income taxed at flatrates increases. For couples in the 15% bracketabout 3% of income is from capital gains; for couples in the 28% bracket perhaps 6% to 10% of income is fromcapital gains (based on the closest matches toincome categories). At higher income categories, the share that was in capital gains rises to 20%, 30% and 60% ofincome. In 1997, half of the individuals in thisupper part of the distribution had a top marginal tax rate that was due to capital gains. Any penalties that arise fromexisting law would, therefore, be lower as apercentage of income than the penalties listed in table 2, and hence effectively eliminated by either approach for halfof these taxpayers. Secondly, problems about the division of non-wage and unearned income become more important, particularly at the very high end. Adjusted gross income rangesfrom $141,000 to $171,000 for the 31% bracket, and up to $368,000 for the 36% bracket. While about 80% ofincome in the $50,000 to $100,000 class is fromwages, only 70% of the $100,000 to $200,000 class is from wages, and the share declines until it reaches less than30% for income over $1,000,000. In addition, an equal distribution, or even close to equal, distribution of income between the spouses becomes much less likely in the upper end of the distribution,so that illustrations based on even incomes would be much less representative of typical two earner couples. Thus,while calculations of bonuses might be morerealistic, calculations of penalties would be misleading. Despite these uncertainties that make illustrative examples problematic, it is clear that the penalties in most of these higher income categories are not very large,and will decline. For the 31% bracket, which includes about 3.3% of joint returns, the maximum penaltiesassuming even division of income and full taxabilitybegin at about 0.9% of income, rise to a peak of 1.3% and then fall to 1.2% at the top of the bracket; theadministration proposal will reduce those penalties to0.3%, largely because the former 28% and 31% brackets are now combined into a single 25% bracket. Most of thepenalty that would now apply in this group isdue to the itemized deduction phase out and not rate brackets. (A proposal by Senate Finance Committee ChairmanGrassley and Ranking Member Baucus wouldmake the former 31% bracket subject to a 28% rate, however, which would restore the marriage penalty effectbecause it reflects the differences in the two rates. The same proposal, however, would increase the itemized deduction phase-out start point, reducing the penalty andalso includes the H.R. 6 proposals). H.R. 6 would actually leave slightly larger penalties than the Administration proposal in manycases, beginning at 0.1% but rising fairlyquickly, with a peak of 0 .7%, then declining to 0.6%. These penalties occur because the other brackets are notcorrected; penalties would be quite similar tothose in the Administration proposal, however, if H.R. 6 were combined with H.R. 3 . Bonuses wouldalso be reduced by theAdministration proposal in general, and would be increased by H.R. 6 . At higher levels, penalties would remain, although they will be reduced by both bills, but these remaining taxpayers account for only 3% of taxpayers. Couples with Children As noted in the previous section, couples with children present serious problems in modeling marriage penaltiesand bonuses. The presence of children in ahousehold can dramatically alter tax liabilities. Children justify a head of household rate schedule which has widerbrackets than the single return, implying alarger penalty and smaller bonus as compared to joint return than would be the case in comparing single and jointreturns. Children increase personal exemptionsand, if under 17, make the taxpayer eligible for a child credit. Earned income credits, which reach much further upthe income brackets and are much larger,accrue with children. Thus, how children are divided between the spouses can have profound consequences for taxliability. Methods of Allocation At least five potential ways of allocating children's tax consequences might be considered and several have been specifically used in studies. Some of them aremost plausible when thinking of a married couple divorcing rather than never marrying; others are most plausiblewhen thinking of a couple never marrying. (1) The Tax Minimization Model. This model assumes that the children are allocated in a way that minimizes tax liability. If a couple has two children and hassimilar incomes, for example, each would take custody of one of the children and move to a separate household sothat both could obtain head-of-householdstatus. This was the basic approach used initially in the economics literature and by the Congressional BudgetOffice in its study of the marriage penalty. (3) Thischoice tends to lead to the largest measures of penalties and the smallest measure of bonuses. Obviously, as anoptimization strategy, this approach has someshortcomings because it requires not only the emotional and social costs of a sham divorce but also increasedeconomic costs (maintenance of two households) toachieve tax minimization. Except for very high income taxpayers, such a strategy would be unlikely to be followed. (2) Resource Pooling Tax Minimization Model. This model, developed by Treasury, assumes that taxminimization is modified to keep economic costsunchanged, so that divorced individuals continue to share the same household and otherwise maintain theireconomic relationships; i.e. they would be unmarriedcohabitators. (4) Only one parent (the one with thehighest income) would be able to claim head of household status. (3) Divorce Model. This model, used as an alternative by both Treasury and CBO, would allocate children in a way typical of most divorces, where the childrenare allocated to the lesser earning spouse (who is typically the mother). Treasury finds that this model produces anaggregate $28.9 billion net bonus for allcouples, compared to the $1.6 billion net penalty they find in their tax minimization model. (4) Ignore Head of Household Status. In this view, head of household status may be seen as a specialdispensation to help single parents and should not beviewed as the standard against which to measure the marriage penalty. The allocation of children (and their personalexemptions and credits) would still matterfor measuring bonuses and also for measuring penalties where incomes tend to be disparate. One might say thisview is implicit in H.R. 6 and othercongressional proposals where the changes are made to match the single return, not the head of household return. A similar argument might be made for childcredits. (5) Ignore Children. This view would argue that the counterfactual for most couples would be that they would not have had children had they not married. In thiscase the marriage penalties and bonuses would be the same as in the previous section, except there might berecognition that married couples with children willnot have tax liabilities at higher incomes. Because it is impossible to assess these bonuses we do not present tables of penalties and bonuses as we did for single individuals, and it is impossible to makegeneral observations. Nor is it easy to choose a model, in large part because the rationale for the concern about themarriage penalty. In the next section, however,we suggest that common rationales for concern about the marriage penalty would suggest a focus on lower incomeindividuals and then discuss the parameters ofthese bonuses and penalties under various alternatives. Rationales for Concern About the Marriage Penalty As noted at the end of the previous section, part of the uncertainty surrounding the measurement of a marriage penalty is that the reason for being concerned aboutthe penalty has not been clearly articulated. There are two potential reasons to be concerned about the marriagepenalty: fairness and incentives. If the marriage penalty is a case of concern about fairness, then there is a trade-off. There is considerable evidence to suggest that married couples are alreadybeing taxed somewhat more lightly than singles with the same ability to pay, but that in general the system isrelatively even handed. (5) (Families with children aretreated more generously whether headed by married couples or singles.) Thus, any unfairness in the marriagepenalty must arise from the comparison of marriedcouples with cohabitating couples. However, the numbers of these latter groups are very small. According to March1998 Census data, there were 197 millionpeople over 18, and 110 million were married. However, of the 87 million unmarried individuals (some nevermarried, some widowed, and some divorced) onlyabout 8.5 million were living with unmarried partners of the opposite sex. Thus, at most one would be increasinginequities between the 110 million marriedcouples and the slightly under 80 million single individuals, in order to more evenly treat the 110 million relativeto the 8.5 million. Such a fairness argumentdoes not hold up well, especially since some married couples, in fact a significant fraction, receive a bonus frombeing married. Using a "divorce" model(discussed above), CBO found that 37% of married couples have penalties and 60% have bonuses. Thus, simplylowering tax rates for joint returns wouldprobably magnify the existing average favorable treatment of married couples relative to cohabitatingindividuals. It would stress the pursuit of "fairness"between a minority of married couples and a tiny minority of singles, at the cost in increasing the discrepanciesbetween much larger groups. Another reason to be concerned about the marriage penalty is the incentive structure which, again, may cause individuals to cohabitate rather than marry. Thisconcern may be more legitimate, but it is probably of much greater importance for certain types of couples. Ofcourse, the relatively small number of cohabitatingcouples, and the fact that most of them are probably cohabitating for reasons other than tax consequences suggestthat not very many people are discouraged frommarriage or encouraged to engage in a divorce, because of the tax consequences. In particular, it is likely that mostmiddle income individuals would not see thefinancial incentives as large enough to divorce, and that the presence of children, in particular, would make thatoutcome less likely. The characteristics of cohabitating couples also differ from those of married couples in general. About half of married couples have children, but only about athird of cohabitating couples have children; cohabitating couples tend to be relatively young. While no data directlyreport the poverty rates among this group, it islikely that a larger fraction of families with children is not subject to regular income tax liability. These familieswould file tax returns as heads of households orsingles, and the fraction of these groups, particularly heads of household, that do not pay taxes, is higher than in thecase of singles. In 1997, about 35% of head ofhousehold returns had no tax liability before credits, while only 12% of joint returns had no tax liability; 21% ofsingle returns had no tax liability. Data on child poverty are also instructive. In a study that focused on cohabitating couples based on the 1990 census, the poverty rate even after taking intoaccount earnings of both partners was 26.9%, compared to a poverty rate of 5.8% for children whose parents aremarried. (6) If even for those not in poverty, alarge fraction of these families tended not to be much above the poverty line. Another 19% of children would beclassified as poor by considering only one of thepartners, and when income was combined, the average income was only 1.75 times the poverty line. Since thecurrent tax system excludes families with childrenwell above the poverty line from tax and since public assistance received by these families and counted as incomewould not be taxable, it is likely that asignificant fraction of these families do not incur a regular income tax liability. These data do suggest that if our concern is about a comparison to cohabitating couples, there are two important groups: couples, mostly young, who do not havechildren and, in the case of couples with children, mostly lower income couples. The Administration proposal will further remove these families with children from concerns about the tax system, because of the lower rate of 10% and theincreased child credit. Under current law, a family with one child would have no tax liability until income reached$19,633 (assuming that all income is taxable);a family with two children would not have tax liability until income reached $25,866. Under the Administrationproposal, with the larger child credit, theseamounts will rise to $27,684 and $38,456, amounts close to the poverty level, and closer to the income levels whereitemized deductions tend to displace standarddeductions. Thus, a marriage penalty or bonus will be feasible for only a small slice of families in the 15% bracketwhose incomes are high enough to be taxablebut who do not itemize. And even in this case, considering the head-of-household schedule for one of the spouses,the marriage penalty can be no larger than$540. Looking at maximum values, for a $30,000 couple, the penalty would be 1.8%, which would be reduced to$220 (0.7% of income) by the Administrationproposal and to $315 (1.1%) under H.R. 6 . These amounts will decrease as incomes rise and, again, becomesubsidies for itemizers. These taxpayers,along with those with no liability, account for approximately the bottom two-thirds of the joint returns. These couples may experience a penalty due to the earned income credit, but, as noted earlier, none of the proposals are really focused on the EIC and it is difficultto devise a way of correcting for marriage penalties without undermining much of the purpose of the EIC. Andhigher income individuals are not particularlycomparable to most cohabitating couples with children. Conclusion This analysis of the effects of legislative proposals on the marriage penalty indicates that for the middle class,the marriage penalty, which is already relativelysmall, will be essentially removed by the rate reductions and second earner exemptions in the administrationproposal, capturing essentially the same penaltyelimination objective of the original marriage penalty legislative proposals in the previous Congress. The proposalwill also reduce marriage penalties in thehigher brackets by a larger amount than H.R. 6 standing alone. This result is a natural outcome of the ratereduction and flattening in the President'sproposal, and explains why marriage penalty relief in the form of a second earner deduction was eliminated whenrate were flattened in 1986. H.R. 6 , the congressional marriage penalty proposal, would, however, increase existing marriage bonuses, while the administration proposal wouldreduce them. H.R. 6 combined with the rate cuts and credits portion of the proposal passed by the House as H.R. 3 would increasemarriage bonuses compared to the Administration proposal with the second earner deduction, and in many caseswould increase bonuses compared with currentlaw. Since the final bill included rates cuts similar to those in H.R. 3 , there will be some increase in marriagebonuses, but since the top rates werenot cut as much there will be less reduction in the bonuses at higher income levels.

President Bush's tax proposal and H.R. 6 (passed by the House) have different approaches to the marriage penalty. The Administration proposal, inaddition to rate changes, has a second-earner deduction for 10% of income (up to $30,000) earned by the lowerearning spouse. H.R. 6 wouldincrease the standard deduction and width of the 15% rate bracket for joint returns to twice the size of singles,eliminating the penalties for taxpayers in the 15%and 28% brackets but adding to any marriage bonuses. This report compares these alternative proposals. ( H.R. 1836 , signed by the President on June7, includes these latter proposals along with rate cuts). Taxes can go up or down as a result of marriage, depending on the income of the two spouses. These penalties and bonuses arise from the progressive taxstructure and the decision to impose taxes on a household basis. For much of the middle class, marriage penalties are low. For couples without children, the maximum marriage penalty at 2001 income levels for the 60% oftaxable returns subject to the 15% marginal rate in 1997 is $225; most couples that itemize have no penalty at all. The second-earner deduction in theadministration proposal virtually eliminates the marriage penalty for these couples. Even in the 28% rate, whichcovers another 26% of taxable returns, the secondearner deduction along with the flatter rates results in no or negligible penalties. Overall, these taxpayers accountfor the middle 75% of joint returns. Taxpayerswith children could have small remaining penalties, depending on how penalties are defined. Most of those in the15% bracket who might have still havepenalties that are significant relative to income are removed from the tax roles entirely through the additional childcredits. Lower income couples may incur penalties through the Earned Income Credit (EIC) under either proposal, although it is difficult to address EIC marriage penaltiesand bonuses. The 12% of taxpayers in higher brackets may have remaining penalties. A large fraction of thesereturns do not have large penalties because theirmarginal tax rate is the flat capital gains tax rate. Any penalties are substantially reduced or eliminated, however,due to the lower rate structure in theAdministration proposal. The important difference between H.R. 6 and the Administration proposal is that H.R. 6 expandsmarriage bonuses in most cases whilethe Administration proposal generally reduces them due to flatter tax rates. H.R. 6 combined with rate cutswould increase bonuses in comparison tothe Administration proposal and, in many cases, in comparison to current law. Measurement of the marriage penalty for couples depends on the allocation of children for tax purposes. When married couples are compared with cohabitatingsingles, where issues of incentives and fairness suggest attention be focused, cohabitating singles are less likely tohave children and when they do, have lowincomes unlikely to be subject to regular income tax. Thus, the issues of measuring the marriage penalty forfamilies may be relatively unimportant. This reportwill be updated to reflect legislative developments. .

Introduction (1) This report updates the version issued on September 10, 2001, just prior to the September 11 attacks on theWorld Trade Center and the Pentagon that killed about 3,000 persons. It is an analysis of Near Eastern terroristgroups and countries on the U.S. "terrorism list," a list of countries that the Secretary of Commerce and Secretaryof State have determined provide repeated support for international terrorism. (2) This report adopts the samedefinition of terrorism as that used by the State Department in its annual reports: the definition contained in Title22 U.S.C. Section 2656f(d). According to this section, "terrorism" means "premeditated politically-motivatedviolence perpetrated against non-combatant targets by subnational groups or clandestine agents, usually intendedto influence an audience." Five out of the seven states currently on the terrorism list are located in the Near East region -- Iran, Iraq, Syria, Libya, and Sudan. (The other two are Cuba and North Korea, which will not be covered in this report). Thecomposition of the list has not changed since Sudan was added in 1993. The groups analyzed in this reportinclude, but are not limited to, those designated as "Foreign Terrorist Organizations" (FTOs), pursuant to theAnti-Terrorism and Effective Death Penalty Act of 1996 ( P.L. 104-132 ). The last section of the report discussessignificant themes in U.S. unilateral and multilateral efforts to combat terrorism in or from the region. The StateDepartment's annual report on international terrorism, entitled Patterns of Global Terrorism: 2000 (3) is asignificant source for this report; other sources include press reports and conversations with U.S.counter-terrorism officials, experts, investigative journalists, and foreign diplomats. Although the September 11 attacks have placed Near Eastern terrorist groups at the center of U.S. anti-terrorism policy, Near Eastern terrorist groups and their state sponsors have been a focus of U.S. counter-terrorism policiesfor several decades. Since the 1970s, many of the most high-profile acts of terrorism against American citizensand targets have been conducted by these groups, sometimes with the encouragement or at the instigation of theirstate sponsors. However, no single terrorist attack -- either in or outside the Near East region -- compares inscale to the September 11 attacks on the World Trade Center and Pentagon, which killed a total of over 3,000persons. Senior U.S. officials have attributed this attack to the Al Qaeda network, whose leaders enjoyedsanctuary in Afghanistan from 1996 until their defeat at the hands of the U.S. military and its Afghan partners inlate 2001. According to Patterns of Global Terrorism: 2000 (available on the U.S. Department of State's web site at http://www.state.gov/s/ct/rls/pgtrpt/2000/ ; hereafter cited as Patterns 2000 ), worldwideterrorism-relatedcasualties increased to 405 in 2000 from 233 in 1999, but the number of attacks increased only slightly, from 392in 1999 to 423 in 2000. Of these 2000 totals, only 16 of the 423 attacks and 19 of the 405 casualties occurred inthe Middle East, although Patterns 2000 covered only three months of the Palestinian uprising that began in lateSeptember 2000. Since 2001 began, there have been dozens of terrorism-related Israeli casualties resulting fromPalestinian suicide bomb attacks, some of them in retaliation for Israeli actions against suspected Palestinianmilitants. Thirty-one of attacks and 12 of the deaths during 2000 occurred in Eurasia (Central Asia, theCaucasus, and Russia). The terrorist groups analyzed often differ in their motivations, objectives, ideologies, and levels of activity. The Islamist groups remain generally the most active, stating as their main objective the overthrow of secular,pro-Western governments, the derailment of the Arab-Israeli peace process, the expulsion of U.S. forces from theregion, or the end of what they consider unjust occupation of Muslim lands. Some groups, such as the KurdistanWorkers' Party (PKK), fight for cultural and political rights or the formation of separate ethnically-based states. Table 1 below shows the 20 Near Eastern groups currently designated by the State Departmentas FTOs. Thedesignations were mostly made when the FTO list was inaugurated in October 1997 and revised in October 1999and October 2001. A group can be added to the list at any time; Al Qaeda (the bin Laden network) was added onAugust 21, 1998, the Islamic Movement of Uzbekistan was designated on September 25, 2000, and two Pakistanigroups -- Lashkar e-Tayyiba and Jaish e-Mohammad -- were added to the FTO list on December 26, 2001. Under the Anti-Terrorism and Effective Death Penalty Act, the designation of a group as an FTO blocks its assetsin the United States and makes it a criminal offense for U.S. persons to provide it with material support orresources, such as financial contributions. Executive Order 12947 of January 23, 1995, also bars U.S. dealings(contributions to or financial transactions) with any individuals named as "Specially Designated Terrorists(SDTs)." On November 2, 2001, the Secretary of State also subjected all FTOs to the increased financialrestrictions that had been applied to Al Qaeda-related entities under Executive Order 13224 (September 23,2001). Under this new executive order, the United States can close down U.S. branches of foreign banks that donot comply with U.S. requests to end dealings with the FTOs. An SDT, according to the executive order, is aperson found to pose a significant risk of disrupting the Middle East peace process, or to have materiallysupported acts of violence toward that end. Table 1. Near Eastern Foreign Terrorist Organizations (FTOs) In contrast to Patterns 2000, this report analyzes the following: The Palestine Liberation Organization (PLO), which has not been the subject of a separate section in Patterns since Patterns 1995, is analyzed in this report because of the debate over whether PLO leaderYasir Arafat is taking sufficient steps to prevent terrorism by other groups in areas under the control of thePalestinian Authority. Since late 2000, there has been discussion about the degree to which certain PLO factionsare involved in violence against Israel and whether they should be named as FTOs. When the FTO list was reviewed and re-issued in October 1999, the Democratic Front for the Liberation of Palestine (DFLP) was dropped, largely because it has reconciled with Arafat. The group's pastinvolvement in terrorism, and the recent revival of its operations against Israel, are discussed in this report. This report contains a section on the Abu Sayyaf Group operating in the Philippines, as well as analysis of several Pakistani Islamist groups that are fighting Indian control of part of Kashmir Province. These groups are discussed in this report, even though they operate outside the Near East region, because of theiralleged connections to the bin Laden network and the Taliban of Afghanistan. In accordance with the October 2001 redesignation of the FTO list, the two Jewish extremist groups Kach and Kahane Chai will be treated as one group. Radical Islamic Groups Since the 1979 Islamic revolution in Iran, and particularly since the seizure of the U.S. Embassy in Tehran inNovember of that year, radical Islam has attracted widespread press attention as the driving ideology of the mostactive Middle Eastern terrorist groups and state sponsors. Of the 20 FTOs listed above, 12 are Islamicorganizations. Hizballah (Party of God) (4) Lebanon-based Hizballah appears to be groping for direction following Israel's May 2000 withdrawal from Lebanon. Having accomplished its main goal of ousting Israel from southern Lebanon, some in the organizationwant it to focus exclusively on political and social work, primarily through participation in parliament (it holds 8out of 128 total seats) and through its charity and reconstruction works with Lebanon's Shiite community. Somewant Hizballah to accept ministerial positions in Lebanon's cabinet, a step that Hizballah has thus far not taken. Hardliners in Hizballah want it to battle Israeli forces over the border, particularly in the disputed Shib'a farmsarea. (5) Other hardliners in the organization believethat the Israeli withdrawal validated its guerrilla strategy andappear to be helping Palestinian groups apply similar tactics against Israeli forces in the West Bank and GazaStrip. Although initially encouraged by Hizballah's relative restraint following the Israeli withdrawal, Israel and the United States remain wary of Hizballah. Hizballah's 15 year military campaign against Israeli and Israelisurrogate forces in southern Lebanon -- activity that is not technically considered terrorism by the U.S. StateDepartment -- often included rocket attacks on Israeli civilians. Even though the United Nations has certifiedthat Israel's withdrawal is complete, Hizballah has asserted that Israel still occupies some Lebanese territory (theShib'a farms) and, on that basis, has conducted several military attacks on Israel since the withdrawal. InOctober 2000, Hizballah captured three Israeli soldiers in the Shib'a farms area and kidnaped an Israelinoncombatant whom it had lured to Lebanon. Israel announced in early November 2001 that the three soldiersare believed dead. Hizballah has continued to conduct surveillance of the U.S. Embassy in Lebanon and its personnel, according torecent Patterns reports, but no major terrorist attacks have been attributed to it since 1994. However, accordingto numerous press reports and Hizballah leaders' own statements, the organization is providing advice andlogistical support to Islamist Palestinian groups fighting against Israel in the latest Palestinian uprising, whichbegan in September 2000. In January 2001, Israel accused Hizballah of serving as an intermediary in theshipment of 50 tons of weaponry from Iran that was seized by Israel and, according to the United States andIsrael, was bound for the Palestinian Authority. The PA is precluded from fielding the weapons contained in theshipment under its Oslo interim accords with Israel. If true, this suggests that Hizballah is trying to broaden itsassistance to non-Islamist Palestinian elements. In late August 2001, Jordanian officials discovered a cache ofrockets at a Hizballah-owned location in Jordan, igniting fears that Hizballah might fire rockets on Israel fromthere or might provide the weapons to Palestinian militants there or in the West Bank. (6) Jordan's King Abdullahwas said to have raised his concern about growing Hizballah activity in Jordan with President Bush in February2002. Hizballah's History. Founded in 1982 by Lebanese Shiiteclerics inspired by the Islamic revolutionary ideology of Iran's Ayatollah Khomeini, Hizballah's original goalwas to establish an Islamic republic in Lebanon. During the 1980s, Hizballah was a principal sponsor ofanti-Western, and particularly anti-U.S., terrorism. It is known or suspected to have been involved in suicidetruck bombings of the U.S. Embassy (April 1983), the U.S. Marine barracks (October 1983, killing 220 Marine,18 Navy and 3 Army personnel), and the U.S. Embassy annex (September 1984), all in Beirut. It also hijackedTWA Flight 847 in 1985, killing a Navy diver, Robert Stethem, who was on board, and its factions wereresponsible for the detention of most, if not all, U.S. and Western hostages held in Lebanon during the 1980s andearly 1990s. Eighteen Americans were held hostage in Lebanon during that period, three of whom were killed. In the early 1990s, Hizballah also demonstrated an ability to conduct terrorism far from the Middle East. In May 1999, Argentina's Supreme Court, after an official investigation, formally blamed Hizballah for the March 17,1992 bombing of Israel's embassy in Buenos Aires and issued an arrest warrant for Hizballah terrorist leaderImad Mughniyah. Hizballah did not claim responsibility for the attack outright, but it released a surveillance tapeof the embassy, implying responsibility. In May 1998, FBI Director Louis Freeh told Argentina the FBI believesthat Hizballah, working with Iranian diplomats, was also responsible for the July 18, 1994 bombing of theArgentine-Jewish Mutual Association (AMIA) building in Buenos Aires that left 86 dead. (7) In July 1999,Argentine investigators brought charges against 20 suspected Argentine collaborators in the AMIA bombings,and the trial began in late September 2001. Hizballah's Outside Connections. Hizballah maintainsconnections with similar groups in the Persian Gulf. Saudi and Bahraini investigations of anti-regime unresthave revealed the existence of local chapters of Hizballah composed of Shiite Muslims, many of whom havestudied in Iran's theological seminaries and received terrorist training there and in Lebanon. Saudi and U.S.officials believe that Saudi Shiite Muslims, possibly with connections to Lebanese Hizballah, were responsiblefor the June 25, 1996 bombing of the Khobar Towers housing complex for U.S. military personnel, nearDhahran, Saudi Arabia. The United States reaffirmed this allegation in the June 2001 U.S. indictments of 14Khobar suspects. According to Patterns 1998, in November 1998 Bahraini authorities uncovered an allegedbomb plot that they blamed on persons linked to Bahraini and Lebanese Hizballah. Patterns 1999 reiterates that Hizballah receives "substantial" amounts of financial assistance, weapons, and political and organizational support from both Syria and Iran, although it does not mention specific figures. ThenSecretary of State Christopher said on May 21, 1996 that Iran gave Hizballah about $100 million per year, afigure that U.S. officials have not since deviated from. A reported 150 of Iran's Revolutionary Guards remain inLebanon to coordinate Iran's aid to Hizballah. Syria permits Iran to supply weapons to Hizballah through theinternational airport in Damascus, although a recent Turkish shutdown of the air corridor connecting Iran andSyria has made Iranian deliveries more difficult. Specially Designated Terrorists (SDTs). (8) Hizballah membersnamed as SDTs include: (1) Secretary General Hasan Nasrallah, who is about 44 and has led Hizballah since1993; (2) Shaykh Muhammad Hussein Fadlallah, the 64-year-old senior Shiite cleric and leading spiritual figureof Hizballah; (3) Subhi Tufayli, the 54 year old former Hizballah Secretary General who leads a radicalbreakaway faction of Hizballah; and (4) Imad Mughniyah, the 39 year old Hizballah intelligence officer andalleged holder of some Western hostages in the 1980s. He was also implicated in the TWA 847 hijacking. Mughniyah, as well as several alleged perpetrators of the June 1996 attack on the U.S. housing complex ofKhobar Towers in Saudi Arabia, was included on a list of 39 entities and persons issued October 12, 2001 underExecutive Order 13224 (September 23, 2001). The order subjects listed entities to financial restrictions. Blocked Assets. According to the Treasury Department's"Terrorist Assets Report" for 2000, the Bureau of Alcohol, Tobacco and Firearms has seized $283,000 in assetsbelonging to 18 persons arrested in North Carolina in July 2000 on suspicion of smuggling goods to generatefunds for Hizballah. Hamas and Palestinian Islamic Jihad (PIJ) Prior to the September 2000 outbreak of the Palestinian uprising, it appeared that the bulk of the leadership of theSunni Muslim Palestinian group Hamas (Islamic Resistance Movement) was accommodating Yasir Arafat'sleadership of the Palestinian Authority (PA). Hamas leaders also appeared resigned to an eventual final peaceagreement between Israel and the PA, although they continued to criticize Arafat as too eager to compromisewith Israel. Since the uprising began, Hamas and its smaller ally, Palestinian Islamic Jihad (PIJ), have escalatedterrorist attacks against Israelis. Hamas claimed responsibility for the June 1, 2001 suicide bombing of the"Dolphinarium" discotheque in Tel Aviv, which killed 21, and for an August 9, 2001 suicide bombing at a pizzarestaurant in Jerusalem that killed 18, including one American. It also claimed responsibility for the December 1- 2, 2001 suicide bombings in Jerusalem and Haifa that killed about 25 persons, in addition to the three bombers. PIJ has conducted several recent suicide bombings, many of which killed only the bomber(s). Many expertsbelieve that the renewed terrorist activity is at least partly attributable to a breakdown in security cooperationbetween Israel and the Palestinian Authority -- cooperation that was widely credited with keeping terroristattacks to a minimum in the preceding few years. The renewed terrorist threat has led Israel to adopt a policy,criticized by the United States and many other countries, of assassinating Hamas and PIJ activists to preempttheir suspected attacks. Hamas continues to receive funding from businesses it runs in Palestinian controlled areas, from Iran (about 10%of its budget), from wealthy private benefactors in the Persian Gulf monarchies, and Palestinian expatriates,according to Patterns 2000. The Patterns report adds that the group conducts fundraising and propagandaactivities in Western Europe and North America. Many individual donors appear to believe their contributionsgo to charitable activities for poor Palestinians served by Hamas' social services network, and are not being usedfor terrorism. PIJ is politically closer to Iran than is Hamas, and apparently derives most of its funding from statesponsors, especially Iran. PIJ receives some logistical support from Syria, according to Patterns 2000. History. Hamas was formed by Muslim Brotherhood activistsduring the early stages of the earlier Palestinian uprising (intifada) in 1987. Its spiritual leader, Shaykh AhmadYassin, who is paralyzed, was released from prison by Israel in October 1997. He seems to serve as a bridgebetween Hamas' two main components -- the extremists who orchestrate terrorist attacks (primarily through aclandestine wing, the Izz ad-Din al-Qassam Brigades), and the more moderate elements affiliated with Hamas'social services, charity, and educational institutions. PIJ was, in part, inspired by the Iranian revolution of 1979even though PIJ is a Sunni Muslim, not a Shiite Muslim organization. PIJ remains almost purely a guerrillaorganization, with no overt component. It is led by Ramadan Abdullah Shallah, a Gaza-born, 43 year oldacademic who previously was an adjunct professor at the University of South Florida. He was chosen leader in1995 after his predecessor, Fathi al-Shiqaqi was assassinated, allegedly by Israeli agents. Recent Patterns reportscharacterize Hamas' strength as "an unknown number of hardcore members [and] tens of thousands of supportersand sympathizers," and PIJ's strength as "unknown." Hamas and PIJ generally have not targeted the United States or Americans directly, although Americans have died in attacks by these groups, along with Israelis and often the bombers themselves. Five out of the 65 killed ina series of four Hamas/PIJ bombings in Israel during February - March 1996 were American citizens. Thesebombings had the apparent effect of shifting public opinion toward the conservative Likud Party leader BenjaminNetanyahu in Israeli national elections on May 29, 1996, possibly proving decisive in his election victory asPrime Minister over then Labor Party leader Shimon Peres. Neither group conducted major attacks in the run-upto the May 1999 Israeli elections, although they did carry out attacks in an attempt to derail the negotiation andimplementation of the October 23, 1998 Israeli-Palestinian Wye River Memorandum. In total, the two groupshave conducted about 80 suicide bombings or attempted suicide bombings, killing more than 450 Israelis, sincethe signing of the Israeli-PLO Declaration of Principles in 1993. (9) Blocked Assets. The United States has blocked the assets ofsome alleged Hamas/PIJ leaders, using the authority of President Clinton's January 23, 1995 executive order onMiddle East terrorism. As of the end of 2000, a total of about $17,000 in PIJ assets in the United States wereblocked, consisting of a bank account belonging to PIJ leader Shallah. (10) On December 4, 2001, three financialentities believed linked to Hamas were designated for increased financial restrictions under Executive Order13224. The three are the Holy Land Foundation for Relief and Development, Beit al-Mal Holdings, and Al AqsaIslamic Bank. SDTs. Several Hamas and PIJ activists have been named asSDTs. They include (1) Hamas founder Shaykh Ahmad Yassin; (2) PIJ leader Ramadan Abdullah Shallah; (3)PIJ ideologist Abd al-Aziz Awda; (4) Hamas political leader Musa Abu Marzuq; and (5) alleged U.S. fundraiserfor Hamas, Mohammad Salah. The Islamic Group and Al-Jihad Egyptian security authorities continue to gain the upper hand in their battle against the opposition Islamic Group and its ally, Al-Jihad, (11) groups that, over the pastseveral decades, periodically have gone underground and thenresurfaced. This effort could be enhanced by the U.S. defeat of Al Qaeda in Afghanistan, because militants fromthe two groups constitute a large and politically significant faction of Al Qaeda. There have been no large scaleterrorist attacks by these groups since the Islamic Group's November 17, 1997 attack on tourists near Luxor, andno attacks inside Egypt at all since August 1998. The gunmen in the Luxor attack killed 58 tourists and wounded26 others, and then committed suicide or were killed by Egyptian security forces. Even before September 11,these Egyptian groups sensed that they were on the defensive and that terrorism had made them unpopular. Inlate 1997 leaders of both groups, including their common spiritual leader, the 64 year old blind cleric ShaykhUmar Abd al-Rahman, declared a ceasefire with the Egyptian government. Muhammad Hamza, who is inoperational control of the Islamic Group in Egypt while Abd al-Rahman remains incarcerated in the UnitedStates, has abided by the truce. Connections to Al Qaeda and the 1993 Bombing of the World TradeCenter. With the decline of the groups' activities within Egypt and the incarceration of Abdal-Rahman for plots related to the February 1993 bombing of the World Trade Center, factions of the groups thatare in exile have gravitated to the Al Qaeda network. Several SDTs from the Islamic Group and Al-Jihadbecame members of bin Laden's inner circle as his top lieutenants, including Ayman al-Zawahiri, and Abu HafsMasri (Mohammad Atef). According to U.S. military officials, Atef was killed by a U.S. air strike during theU.S. war on the Taliban and Al Qaeda. These Egyptian militants oppose any truce with the Egyptiangovernment and also seek, in concert with bin Laden, to attack U.S. interests directly. Shaykh Umar Abd al-Rahman was not convicted specifically for the February 1993 bombing of the World Trade Center in New York, but he was convicted for related unsuccessful plots in the New York area. Those convictedin the Trade Center bombing were allegedly associated with him. There has been much speculation about therelationship, if any, between Abd al-Rahman and bin Laden at the time of the 1993 Trade Center bombing. Bothrecruited fighters for the Afghan conflict against the Soviet Union through organizations in the United States andelsewhere, particularly one called the Maktab al-Khidamat (Services Office), also known as Al Kifah. (12) Thetwo also had close connections to the Islamic government of Sudan, although Abd al-Rahman left Sudan in 1990,before bin Laden relocated there in 1991. Abd al-Rahman's two sons reportedly have been associated with AlQaeda in Afghanistan since 1989; one was reported killed and one reported captured during the U.S.-led war onAl Qaeda. The alleged mastermind of the 1993 Trade Center bombing, Ramzi Ahmad Yousef, reportedly wasan Al Qaeda member. (13) (See section on AlQaeda, below). Although their recruiting activity in Afghanistanhas raised questions as to whether the United States gave bin Laden or Abd al-Rahman assistance during theAfghan war, the Central Intelligence Agency has told CRS that it found no evidence that the Agency providedany direct assistance to either of them. The U.S. assistance program for the anti-Soviet groups in Afghanistanfocused primarily on indigenous Afghan mujahedin and not Arab volunteers such as those sponsored by binLaden or Abd al-Rahman. History. The Islamic Group and Al-Jihad formed in the early1970s as offshoots of the Muslim Brotherhood, which opted to work within the political system after beingcrushed by former President Gamal Abd al-Nasser. Both seek to replace Egypt's pro-Western, seculargovernment with an Islamic state. Al-Jihad was responsible for the assassination of President Anwar Sadat inOctober 1981. The Islamic Group has been responsible for several attacks on high-ranking Egyptian officials, including the killing of the People's Assembly Speaker in October 1990 and the wounding of the Minister ofInformation in April 1993. The Islamic Group also has a nonviolent arm which recruits and builds supportopenly in poor neighborhoods in Cairo, Alexandria and throughout southern Egypt, and runs social serviceprograms. Al-Jihad has operated only clandestinely, focusing almost exclusively on assassinations. SDTs. The following Egyptian Islamist figures have beennamed as SDTs or as subject to enhanced financial restrictions under Executive Order 13224: (1) Shaykh UmarAbd al-Rahman, who was acquitted in 1984 of inciting Egyptian President Anwar Sadat's assassination, is in amedical detention facility in Missouri following his October 1995 conviction for planning terrorist conspiraciesin the New York area; (2) Ayman al-Zawahiri, about 51, who is a top lieutenant of bin Laden (see below) andwas convicted in Egypt for the Sadat assassination; (14) (3) Mohammad Atef, who, as noted above, was apparentlykilled in the U.S.-led war on Al Qaeda; (4) Rifa'i Taha Musa, about 48, who was arrested in Syria and extraditedto Egypt in October 2001; (5) Abbud al-Zumar, leader of the remnants of the original Jihad who is serving a 40year sentence in Egypt; (6) Talat Qasim, about 44, a propaganda leader of the Islamic Group; and (7) MuhammadShawqi Islambouli, about 46, the brother of the lead gunman in the Sadat assassination. Islambouli, a militaryleader of the Islamic Group, also is believed to be associated with bin Laden in Afghanistan. Al Qaeda (Osama bin Laden Network) Founded in 1988, Al Qaeda (Arabic for "the base"), the network of Osama bin Laden, has evolved from a regional threat to U.S. troops in the Persian Gulf to a global threat to U.S. citizens and national security interests. The September 11, 2001 suicide hijacking attacks, allegedly by Al Qaeda, on the World Trade Center andPentagon were considered a threat to U.S. national security and led to a U.S. military campaign against Al Qaedain its primary sanctuary in Afghanistan, and against Al Qaeda's protector, the Islamic fundamentalist Talibanregime. By December 2001, the war had resulted in the ouster of the Taliban from power and the death orcapture of thousands of Al Qaeda fighters and operatives in Afghanistan. Bin Laden's fate, and that of his topcohort, Egyptian Islamic Jihad leader Ayman al-Zawahiri, are unknown. Pakistan's leader, President PervezMusharraf, has said he believes bin Laden most likely has died, but others, particularly U.S. officials, say there isno evidence bin Laden or al-Zawahiri have died. Most experts believe that, whether bin Laden does or does not survive the war, the effort has seriously disrupted Al Qaeda's ability to plan major new acts of terrorism. At least one of bin Laden's top lieutenants, MohammadAtef, was reportedly killed in the war. Another senior recruiter, Ibn al-Shaykh al-Libi, is in U.S. custody. Zawahiri's family has been killed in the war, according to a death announcement in an Egyptian newspaper. Others say that much of the Al Qaeda network is based outside Afghanistan and its members still pose asubstantial threat to U.S. and other targets in the United States and abroad. The fate of other top operatives,including Abu Zubaydah and Safl al-Adl (Mohammad Makawi), is unknown, and some believe that they or anynumber of other senior Al Qaeda operatives are capable of reconstituting the group even if bin Laden andZawahiri have not survived. Those who believe Al Qaeda can last beyond its defeat in Afghanistan note that, in building this network, bin Laden assembled a broad coalition of disparate radical Islamic groups of varying nationalities to work towardcommon goals -- the expulsion of non-Muslim control or influence from Muslim-inhabited lands. Thenetwork's ideology, laid out in several pronouncements by bin Laden and his allies, has led Al Qaeda to sponsorIslamic fighters or terrorists against Serb forces in Bosnia; against Soviet forces in Afghanistan and now Russianforces in Chechnya; against Indian control over part of Kashmir; against secular or pro-Western governments inEgypt, Algeria, Saudi Arabia, and Uzbekistan; and against U.S. troops and citizens in the Persian Gulf, Somalia,Yemen, Jordan, and the U.S. mainland itself. Some experts believe this ideology is widely held and can outlivebin Laden or Al Qaeda's formal existence as an organization. The backbone of Al Qaeda, according to many experts, is the ideological and personal bond among the Arab volunteers who were recruited by bin Laden for the fight against the Soviet occupation of Afghanistan(1979-1989). Reflecting its initial low level of early activity, Al Qaeda was not discussed in U.S. governmentreports until Patterns 1993. That report, which did not mention a formal group name, said that several thousandnon-Afghan Muslims fought in the war against the Soviets and the Afghan Communist government during 1979to 1992, (15) and that many of these fighters hadsubsequently become engaged in Islamic opposition activity andterrorism. Al Qaeda's Global Reach. U.S. officials say that Al Qaedamay have a presence in up to 60 countries or locations worldwide. The presence varies widely in scope: fromAfghanistan, where Al Qaeda's leadership was welcomed by the Taliban, to Western and Latin Americancountries in which Al Qaeda operatives are unwelcome but might be active unbeknownst to the government ofthat country. In some cases, such as Sudan and Yemen, governments are aware of an Al Qaeda presence butmight be unwilling or ill-equipped to take action to expel Al Qaeda. In other cases, Al Qaeda activists are linkedto opposition movements, such as those in the Persian Gulf countries (Saudi Arabia, Kuwait, Qatar, Bahrain,Oman, and the United Arab Emirates). In other cases, the Al Qaeda presence is a function of the activities of its subordinate or affiliate groups, including: Egypt's Islamic Group and Al-Jihad; Algeria's Armed Islamic Group and Salafist Group for Call andCombat, which have been active not only in Algeria but in past acts of terrorism against former colonial powerFrance; the Abu Sayyaf Organization in the Philippines; Harakat ul-Mujahidin (Movement of Islamic Fighters) inPakistan; the Islamic Movement of Uzbekistan; the Islamic Army of Aden (Yemen); the Asbat al-Ansar(Partisan's Group) in Lebanon; Al Ittihad Islamiya (Islamic Union) in Somalia; and the Libyan Islamic FightingGroup, an opposition movement to Libya's government. (16) Although there are few evident links to Hamas, binLaden was a follower of Dr. Abdullah al-Azzam, a Palestinian of Jordanian origin who was influential in thefounding of both Hamas and Al Qaeda and who was assassinated in 1989. In addition to Afghanistan, Al Qaedaor its affiliates has participated in recent or ongoing wars or insurgencies, such as in Bosnia, Kosovo, Chechnya,and Kashmir. Some Uighur activists in Muslim areas of western China are said to be affiliated with AlQaeda. (17) In still other cases, Al Qaeda's affiliate groups are active in countries near their main areas of operation. For example, the Islamic Movement of Uzbekistan has transited Tajikistan and Kyrgyzstan in an effort to operateagainst the government of Uzbekistan. Chechen guerrillas allegedly linked to Al Qaeda have reportedly transitedAzerbaijan, and there may be ties between Al Qaeda and an Azeri Islamist opposition group called Hizb e-Tahrir(Liberation Party). In east Asia, Abu Sayyaf and other Islamic activists are said to be operating in Indonesia, andMalaysia, and an alleged Al Qaeda plot against the U.S. embassy in Singapore was reportedly uncovered inJanuary 2002. The Singapore plotters are alleged to be members of an organization called Jemaah Islamiah(Islamic Group), which was created in Malaysia in the mid 1990s and also has a presence in Indonesia and thePhilippines. (18) Regarding Indonesia, there isspeculation that a group called Laskar Jihad, founded in early 2000and which advocates anti-Christian violence, is associated with Al Qaeda. (19) Al Qaeda has also been present insome countries in the course of planning or committing acts of terrorism, such as several countries in east Africa,including Kenya, Tanzania, Eritrea, Ethiopia, Somalia, and Uganda. (20) A major Al Qaeda terrorist plot wasfoiled in Jordan in December 1999 (see below), suggesting that there has been Al Qaeda activity there; a segmentof that plot, which also was foiled, was attempted by an Al Qaeda cell in Canada. The September 11 attacks demonstrated that Al Qaeda cells can exist even in countries, such as the United States,where Al Qaeda is clearly considered hostile by the government and the population. These countries areworking together to uncover and arrest Al Qaeda cells that might remain. Previous investigations of Al Qaedaplots, as well as of the September 11 attacks, have turned up Al Qaeda cells in virtually every country in westernEurope, as well as a few countries in eastern Europe, including Poland. Some alleged Al Qaeda activists arereported to have transited a few countries in South America, and those countries are working with U.S.intelligence and law enforcement authorities against Al Qaeda. (21) History of Terrorist Activities. Bin Laden's network has beenconnected to a number of acts of terrorism prior to the September 11 attacks. Bin Laden himself has beenindicted by a U.S. court for involvement in several of them. Bin Laden has claimed responsibility for the December 1992 attempted bombings against 100 U.S. servicemen in Yemen -- there to support U.N. relief operations in Somalia (Operation Restore Hope). No one was killed. In press interviews, bin Laden has openly boasted that he provided weapons to anti-U.S. militias in Somalia during Operation Restore Hope and that his loyalists fought against U.S. forces there. In astreet battle in Mogadishu in October 1993, 18 U.S. special operations forces were killed in a battle withmilitiamen allegedly supplied and assisted by Al Qaeda. Al Qaeda's involvement with the Somali militiasappears to have strengthened bin Laden's view that terrorism and low-technology combat could succeed incausing the United States to withdraw from military involvement abroad. The four Saudi nationals who confessed to the November 13, 1995 bombing of a U.S. military training facility in Riyadh, Saudi Arabia, admitted on Saudi television to being inspired by bin Laden andother Islamic radicals. Three of the four who confessed to the bombing were veterans of conflicts in Afghanistan,Bosnia, and Chechnya. According to Patterns 1997, members of bin Laden's organization might have aided the Islamic Group assassination attempt against Egyptian President Mubarak in Ethiopia in June 1995. There is no direct evidence that bin Laden was involved in the February 1993 bombing ofthe World Trade Center. However, Patterns 1999 says that bin Laden's network was responsible for plots in Asiabelieved orchestrated by Ramzi Ahmad Yusuf, who was captured in Pakistan, brought to the United States, andconvicted in November 1997 of masterminding the Trade Center bombing. The plots in Asia, all of which failed,were: to assassinate the Pope during his late 1994 visit to the Philippines and President Clinton during his visitthere in early 1995; to bomb the U.S. and Israeli embassies in Manila in late 1994; and to bomb U.S. trans-Pacificflights. The August 7, 1998 U.S. embassy bombings in Kenya and Tanzania, which killed 224persons, including 12 American citizens, occurred just after a six month period in which bin Laden had issuedrepeated and open threats, including a February 1998 pronouncement calling for the killing of U.S. civilians andservicemen worldwide. On August 20, 1998, the United States launched cruise missiles on bin Laden's trainingcamps in eastern Afghanistan, based on U.S. evidence of his network's involvement in the bombings. TheUnited States also struck a pharmaceutical plant in Sudan that the Administration alleged was linked to bin Ladenand was producing chemical weapons agents. U.S. officials add that the bombings were intended to disruptplanning for a new attack. For their alleged role in the bombings, 17 alleged members of Al Qaeda have beenindicted by a U.S. court, including bin Laden. Four of the six in U.S. custody have been tried and convicted;three others were arrested and have been convicted in Britain. In December 1999, U.S. and Jordanian law enforcement authorities uncovered and thwarted two alleged plots -- one in the United States and one in Jordan -- to attack U.S. citizens celebrating the newmillennium. The United States plot, allegedly to bomb Los Angeles international airport, was orchestrated by apro-bin Laden cell of Algerian Armed Islamic Group members coming from Canada. In June 2000, Jordan tried28 persons who allegedly were planning to attack tourists during millennium festivities in that country, but 15 ofthose charged are still at large. Also in June 2000, Lebanon placed 29 alleged followers of bin Laden, whobelong to an organization called Asbat al-Ansar (see above), on trial for planning terrorist attacks in Jordan. Thepresence of bin Laden cells in Jordan and Lebanon, coupled with Israeli arrests of alleged bin Laden operatives inthe West Bank and Gaza Strip, suggests that Al Qaeda might plan acts of terrorism in connection with thePalestinian uprising. Some press reports in February 2002 indicate that some Al Qaeda activists who fledAfghanistan after the start of the U.S. war effort have gone to Lebanon. If the reports are true, the fleeing AlQaeda members might be benefitting from the Asbat al-Ansar network there. Patterns 2000 says that "supporters" of bin Laden are suspected in the October 12, 2000 bombing of the destroyer U.S.S. Cole in the harbor of the port of Aden, Yemen. The blast, which severelydamaged the ship, killed 17 and injured 39 Navy personnel. Although most governments have agreed with the United States that the evidence of Al Qaeda's responsibility for September 11 is clear and compelling, there is little agreement on responsibility for thespate of anthrax mailings in the United States that followed the September 11 events. Five people died in thesemailings, which temporarily closed several congressional buildings and post offices. No one has been arrestedfor the mailings. U.S. officials say it appears, based on tests, that the source of the anthrax was domestic, suchas a military research laboratory, but a connection to Al Qaeda has not been ruled out. SDTs/Executive Orders. President Clinton's August 20, 1998Executive Order 13099 amended an earlier January 23, 1995 Executive Order (12947) by naming Al Qaeda as anFTO. The effect of the order was to ban U.S. financial transactions with bin Laden's organization and to allowU.S. law enforcement to freeze any bin Laden assets in the United States that could be identified. The order alsonamed bin Laden as an SDT, along with Rifai Taha Musa, of the Egyptian Islamic Group (see that section above)and Mohammad Atef. Atef and Zawahiri (see above) were indicted along with bin Laden on November 4, 1998,for the Kenya/Tanzania bombings. (22) Al Qaeda Financing. Financially, Al Qaeda drew initially onthe personal fortune of bin Laden, variously estimated at anywhere from $50 million to $300 million. Theorganization, according to most press reports, later became relatively self-sustaining, relying on funding frommany other sources, including contributions, Islamic charities and lending institutions, such as Al Barakat, andsome legitimate businesses, such as a chain of honey shops and bakeries in the Middle East. Executive Order13224 of September 23, 2001, greatly expanded the number of Al Qaeda related entities under financialrestrictions, and increased the scope of the restrictions to include penalties against foreign financial entities thatconduct transactions with the named entities. Many of the entities named are individual leaders of Al Qaeda,including those mentioned in this section. (23) The Deputy Treasury Secretary said on January 22, 2002 that about$80 million in Al Qaeda assets had been uncovered and seized worldwide since Executive Order 13224 wasissued. In addition, about $221 million in assets of the Taliban movement were blocked under Executive Order13129, issued in July 1999 on the grounds that the Taliban continued to harbor bin Laden. However, in January2002 the United States released those funds to the new Afghan interim administration. The Armed Islamic Group(GIA) The Armed Islamic Group (GIA, after its initials in French) is experiencing pressure in Algeria similar to that faced by Egyptian Islamist groups in Egypt. According to Patterns 2000, a GIA splinter group, the Salafi Groupfor Call and Combat, is now the more active armed group inside Algeria, although it is considered somewhat lessviolent in its tactics than is the GIA. Both the GIA and the Salafi Group were subjected to increased financialrestrictions under Executive Order 13224, suggesting the U.S. government considers both groups linked to AlQaeda. Some GIA members, including Ahmad Ressam, were allegedly involved in a thwarted December 1999plot to detonate a bomb in the United States, (24) a plot widely attributed to Al Qaeda by U.S. law enforcementauthorities. As noted above, it now appears that the target of the plot was Los Angeles international airport. The GIA is highly fragmented, (25) in part because it does not have an authoritative religious or political figurewho can hold its various factions together and arbitrate disputes. Founded by Algerian Islamists who fought inAfghanistan, the GIA formed as a breakaway faction of the then legal Islamic Salvation Front (FIS) politicalparty in 1992, after the regime canceled the second round of parliamentary elections on fears of an FIS victory. According to Patterns 2000, the GIA has killed over 100 expatriates in Algeria (mostly Europeans) since 1992,but, in a possible indication of regime counter-terrorism success, no foreigners have been killed in Algeria since1997. Over the past six years, the GIA has conducted a campaign of civilian massacres, sometimes wiping outentire villages in their areas of operations, in an effort to intimidate rival groups and to demonstrate that thegovernment lacks control over the country. The GIA conducted its most lethal terrorist attack on December 31,1997, when it killed 400 Algerian civilians in a town 150 miles southwest of Algiers, according to Patterns 1997. It should be noted that there are allegations that elements of the regime's security forces and other oppositiongroups have also conducted civilian massacres. Over the years, several of the GIA's leaders have been killed battling Algerian security forces. In February 2002, Algerian authorities announced that the GIA's latest leader, Antar Zouabri, was killed in a gun battle withgovernment forces. Among its acts outside Algeria, the GIA hijacked an Air France flight to Algiers in December 1994, and the group is suspected of bombing the Paris subway system on December 3, 1996, killing four. Patterns 2000repeats previous descriptions of the GIA's strength as probably between several hundred to several thousand. The organization receives financial and logistical aid from Algerian expatriates, many of whom reside in WesternEurope and in Canada. Harakat ul-Mujahidin/Lashkar e-Tayyiba/Jaish e-Mohammad/ Other IslamistGroups inPakistan Three Islamic militant organizations based in Pakistan have been named as foreign terrorist organizations. Thesegroups, as well as others discussed below, seek the end of Indian control of Muslim-inhabited parts of thedivided region of Kashmir. They are Harakat ul-Mujahidin (Movement of Islamic Fighters), Lashkar e-Tayyiba(Army of the Righteous), and Jaish e-Mohammad (Army of Mohammad). The latter two were designated asforeign terrorist organizations on December 26, 2001, following a December 13, 2001 attack by Pakistani Islamicmilitants on India's parliament building. The three groups are also designated for financial restrictions underExecutive Order 13224. The largest and most well known of the Pakistani Islamic extremist movements is Harakat ul-Mujahidin (HUM). It is composed of militant Islamist Pakistanis and Kashmiris, as well as Arab veterans of the Afghan war againstthe Soviet Union who view the Kashmir struggle as a "jihad" (Islamic struggle). The HUM was included in theoriginal October 1997 FTO designations when its name was Harakat al-Ansar. It subsequently changed its nameto Harakat ul-Mujahidin, possibly in an attempt to avoid the U.S. sanctions that accompanied its designation asan FTO. Under its new name, the group was redesignated as an FTO in October 1999. An offshoot of the HUMkidnapped and reportedly later killed five Western tourists in Kashmir in 1995. The HUM is believedresponsible for the December 1999 hijacking of an Indian airliner because the hijackers demanded the release ofan HUM leader, Masood Azhar, in exchange for the release of the jet and its passengers (one of whom was killedby the hijackers). The group is allied with or part of the Al Qaeda coalition, but it has been focused primarily on expelling Indian troops from Kashmir and does not appear to be part of Al Qaeda's broader struggle against the United States. Then leader of the HUM, Fazlur Rehman Khalil, signed bin Laden's February 1998 pronouncement calling forterrorist attacks on American troops and civilians, although the HUM has not tended to target Americans. According to Patterns 1999, some HUM fighters were killed in the August 20, 1998 U.S. retaliatory strikes onbin Laden's training camps in Afghanistan. Khalil stepped down in February 2000 as leader of the HUM in favorof his second-in-command, Faruq Kashmiri. Kashmiri is not viewed as closely linked to bin Laden as is Khalil,and the move suggested that the HUM was seeking to distance itself from Al Qaeda. Khalil remained asSecretary General of the organization, but he is said to be in hiding since October 2001, fearing arrest byPakistan after its decision to cooperate with the U.S. war on the Taliban. Other Islamist Groups in Pakistan. The HUM fights alongsideother Pakistani Islamist groups that have not been named as FTOs. They include the following: Jaish-e-Mohammed (JEM, Army of Mohammed). This is a more radical splinter group of the HUM formed by Masood Azhar (see above) in February 2000. The group, which attracted a large percentage(up to 75%) of HUM fighters who defected to it when it was formed, is politically aligned with Al Qaeda, theTaliban, and the pro-Taliban Islamic Scholars Society (Jamiat-i Ulema-i Islam) party of Pakistan. It probablyreceives some funds from Al Qaeda, according to Patterns 2000. On December 25, 2001, Pakistan detainedMasood Azhar, a partial response to Indian demands on Pakistan to curb Kashmir-related terrorism following theDecember 13 attack on India's parliament building. Lashkar-e-Tayyiba (Army of the Righteous) is described by Patterns 2000 as "one of the three largest and best trained groups fighting in Kashmir against India." Led by Professor Hafiz MohammedSaeed and operating through a missionary organization known as the MDI (Center for Islamic Call andGuidance), its fighters are Pakistanis from religious schools throughout Pakistan, as well as Arab volunteers forthe Kashmir "jihad." Pakistan detained Saeed in late December 2001 following the attack on India's parliamentbuilding. A few other Kashmir-related groups are mentioned in press reports or in Patterns 2000, but they are not analyzed separately in the report or discussed in depth. One is the Harakat-ul Jihad Islami (IslamicJihad Movement), many of whose fighters defected to the Jaish-e-Mohammed when it was formed. Anothergroup, Lashkar-e-Jhangvi, has called for attacks on the United States and declared itself an ally of bin Laden. The Hizb-ul Mujahedin (Mujahedin Party) is an older, more established, and somewhat more moderate groupwith few apparent links to bin Laden or to Arab volunteers for the Kashmir struggle. Islamic Movement of Uzbekistan (IMU) The Islamic Movement of Uzbekistan (IMU) was named as an FTO on September 25, 2000 after kidnaping four U.S. citizens who were mountain climbing in Kyrgyzstan in August 2000. The IMU's primary objective is toreplace the secular, authoritarian government of Uzbekistan's President Islam Karimov with an Islamic regime,and it is believed responsible for setting off five bombs in Tashkent, Uzbekistan on February 16, 1999. One ofthe bombs exploded in a government building just minutes before Karimov was to attend a meeting there. Thegovernment of Uzbekistan blamed the plot on two IMU leaders, Tahir Yuldashev and Juma Namangani, both ofwhom reportedly enjoyed safe haven in Taliban-controlled Afghanistan. (26) Anti-Taliban forces in Afghanistansay Namangani was killed in the U.S. war against the Taliban while commanding Al Qaeda fighters around thecity of Mazar e-Sharif in November 2001. Yuldashev's fate is unknown. The government of Uzbekistan ishopeful that the IMU's activities will be significantly reduced by the successful U.S. war effort in Afghanistan. Press reports have indicated that Al Qaeda contributed funds to the IMU, (27) although Patterns 2000 says only thatthe IMU receives "support from other Islamic extremist movements in Central Asia." Among IMU insurgency operations, in August 1999, Namangani led about 800 IMU guerrillas in an unsuccessfulattempt to establish a base in Kyrgyzstan from which to launch cross-border attacks into Uzbekistan. In thecourse of their operations, the IMU guerrillas kidnaped four Japanese geologists and eight Kyrgyz soldiers. Inearly August 2000, about 100 guerrillas presumably linked to the IMU seized several villages just insideUzbekistan, on the Uzbekistan-Tajikistan border. At the same time, a related group of guerrillas battled securityforces in neighboring Kyrgyzstan. Abu Sayyaf Group The Abu Sayyaf Group, which is a designated FTO, is an Islamic separatist organization operating in the southernPhilippines, founded in 1991. Although it is not known to operate in the Near East region, Abu Sayyaf isdiscussed in this report because of its alleged financial and political ties to Al Qaeda. The group is led byKhadafi Janjalani, brother of its founder, Abdujarak Janjanlani, who was killed in a battle with the Filipinomilitary in 1998. It now raises funds for operations and recruitment by kidnaping foreign hostages. Press reportsassess its numeric strength at about 2,000, some of whom have trained in Afghanistan. As of now, it is holdingabout 12 hostages, including two American citizens, in the southern Philippines. It has also expanded itskidnapings into Malaysia and is suspected of shipping weapons to Muslim extremists in Indonesia who arefighting against Christians there. (28) The United States fears that some Al Qaeda fighters who fled the recent fighting in Afghanistan might try to congregate in the Philippines, possibly in territory controlled by the Abu Sayyaf Group. U.S. officials haveannounced that approximately 600 U.S. military officers are now in the Philippines advising the Filipino militaryon how to combat the Abu Sayyaf Group. Islamic Army of Aden The Islamic Army of Aden, also called the Aden-Abyan Islamic Army, is a Yemen-based radical Islamic organization. It has not been designated by the State Department as an FTO, although it is designated forfinancial restrictions under Executive Order 13224. Patterns 2000 did not analyze the group as a distinct entity,although the report did mention it in its discussion of terrorism in Yemen. Little is known about the group, but itadvocates the imposition of Islamic law in Yemen and the lifting of international sanctions against Iraq, andopposes the use of Yemeni ports and bases by U.S. or other Western countries. Some of the group's members aresuspected of having links to bin Laden, and the group was one of three to claim responsibility for the bombing ofthe U.S.S. Cole on October 12, 2000. The group first achieved notoriety in December 1998, when it kidnaped sixteen tourists, including two Americans. Three British and one Australian tourist were killed in the course of a rescue attempt by Yemenisecurity forces; the rest were saved. The group's leader at the time, Zein al-Abidine al-Midhar (Abu Hassan),admitted to the kidnaping and was executed by the Yemeni government in October 1999. No new leader hasbeen publicly identified. Even before September 11, Yemen's President Ali Abdullah al-Salih had publicly vowed to eradicate terrorism from Yemen and there is no evidence that the government, as a matter of policy, supported radical Islamistgroups or alleged Al Qaeda sympathizers living in Yemen. However, there are areas of Yemen under tenuousgovernment control and experts believe that the Yemeni government has, to some extent, tolerated the presenceof Islamic extremists in Yemen. Some government workers are believed to have personal ties to individualIslamists there. Yemen interrogated many people and made a number of arrests in the Cole attack, but some U.S.law enforcement officials have been unsatisfied with its cooperation in that investigation. In mid-December2001, Yemen government forces attacked tribes in central Yemen believed to be harboring associates of binLaden, although the attack was unsuccessful and led to U.S. requests to provide Yemen with military advisoryassistance. The former South Yemen (People's Democratic Republic of Yemen, PDRY) was on the U.S. terrorism list during 1979-1990 for supporting left-wing Arab terrorist groups, but was removed from the list when SouthYemen merged with the more conservative North Yemen in 1990 to form the Republic of Yemen. Radical Jewish Groups: Kach and Kahane Chai Some radical Jewish groups are as opposed to the Arab-Israeli peace process as are radical Islamic groups. TheJewish groups, which derive their support primarily from Jewish settlers in the occupied territories, have beenwilling to engage in terrorism to try to derail the process. The incidents involving these Jewish groups havedeclined in recent years, although settlers possibly linked to them have attacked Palestinians throughout the latestPalestinian uprising that began in September 2000. In the October 2001 reissuing of the foreign terroristorganization list, the State Dept. combined Kach and Kahane Chai into a single designation, suggesting that thetwo have either merged or are so closely associated as to be indistinguishable. Kach was founded by Rabbi Meir Kahane, who was assassinated in the United States in 1990. (29) Kahane Chai(Kahane Lives) was founded by Kahane's son, Binyamin, following his father's assassination. Binyamin Kahaneand his wife were killed on December 31, 2000 by a Palestinian group calling itself the "Martyr's of Al-Aqsa." The two Jewish movements seek to expel all Arabs from Israel and expand Israel's boundaries to include theoccupied territories and parts of Jordan. They also want strict implementation of Jewish law in Israel. To try toaccomplish these goals, the two groups have organized protests against the Israeli government, and threatenedPalestinians in Hebron and elsewhere in the West Bank. On March 13, 1994, the Israeli Cabinet declared both to be terrorist organizations under a 1948 Terrorism Law. The declaration came after the groups publicly stated their support for a February 25, 1994 attack on a Hebronmosque by a radical Jewish settler, Baruch Goldstein, who was a Kach affiliate and an immigrant from theUnited States. The attack killed 29 worshipers and wounded about 150. Patterns 2000 says that the numericalstrength of Kach and Kahane Chai is unknown and repeats previous assertions that both receive support fromsympathizers in the United States and Europe. Prime Minister Yitzhak Rabin was killed by Israeli extremistYigal Amir in November 1995, shortly after signing the Oslo II interim agreement with the Palestinians. NeitherAmir nor his two accomplices were known to be formal members of Kach or Kahane Chai, although Amirappears to espouse ideologies similar to those of the two groups. Blocked Assets. According to the Terrorist Assets Report for2000, about $200 belonging to Kahane Chai has been blocked since 1995. Left-wing and Nationalist Groups Some Middle Eastern terrorist groups are guided by Arab nationalism or left-wing ideologies rather than Islamicfundamentalism. During the 1980s and 1990s, with the collapse of the Soviet Union and the loss of much oftheir backing from state sponsors, the left-wing and nationalist groups became progressively less active and werelargely eclipsed by militant Islamic groups. However, some of the left-wing nationalist groups have reactivatedtheir terrorist and commando operations since the latest Palestinian uprising began in September 2000. Palestine Liberation Organization (PLO) The PLO formally renounced the use of terrorism in 1988, and it reaffirmed that commitment as part of its September 1993 mutual recognition agreement with Israel. The PLO has not been named an FTO by the StateDepartment and Patterns 1995 was the last Patterns report to contain a formal section analyzing the PLO. ThePLO is analyzed in this CRS report because of the debate in Congress and among observers over whether thePLO, as the power behind the Palestinian Authority (PA), is taking sufficient steps to prevent Hamas, PIJ, andothers from conducting terrorist attacks against Israelis. This debate has intensified since the Palestinian uprisingbegan in September 2000: the uprising has been accompanied by a significant increase in the frequency ofHamas and PIJ terrorist attacks. Some observers maintain there is evidence that Hamas and PIJ are increasinglycooperating with militant elements linked to the PLO in conducting acts of violence against Israel. The Bush Administration has become more critical of the PA following Hamas suicide attacks in Jerusalem and Haifa on December 1-2, 2001 that killed 26 persons. The U.S. criticism escalated following Israel's seizure inearly January 2002 of a ship carrying 50 tons of Iranian arms bound for the PA and possibly Hamas, according to press reports. The weapons aboard the ship, including long range mortars and plastic explosives -- all of whichare banned under Palestinian interim agreements with Israel -- suggested that PA elements might be planningterrorist attacks against Israel, trying to build a conventional military option, or attempting to build a capability tocombat reprisal attacks on PA facilities. Patterns 2000 generally credited the PA with working with Israel to disrupt Hamas and PIJ attacks against Israel in the first half of 2000, but the report noted Israel's dissatisfaction with PA anti-terrorism cooperation after theuprising began. An Administration report to Congress on PLO compliance with its commitments (coveringDecember 15, 2000 - June 15, 2001) alleges that factions of the PLO have encouraged or participated in violenceagainst Israel. The factions mentioned include a wing of the Fatah movement called the "Tanzim"(Organization) and a PLO security apparatus called Force 17. On the basis of these allegations, some Membersof Congress maintain that Fatah, the Tanzim, Force 17, and a related armed faction that has been conductingattacks on Israel, the Al Aqsa Martyr's Brigade, should be designated as FTOs. Although some Israelis no longer view Arafat as a partner for peace, others note than many Palestinians have looked to Arafat and the PLO for leadership for more than three decades and that there is no viable alternative tohim. Yasir Arafat, who was born August 1, 1929, used the backing of his Fatah guerrilla organization to becomechairman of the PLO in 1969. After the PLO and other Palestinian guerrillas were forced out of Jordan in 1970and 1971, cross border attacks on Israel became more difficult, and some constituent groups under the PLOumbrella resorted to international terrorism. In the wake of the 1973 Arab-Israeli war, international efforts topromote Arab-Israeli peace caused Arafat to limit terrorist attacks largely to targets within Israel, Lebanon, andthe occupied territories. Popular Front for the Liberation of Palestine -- General Command (PFLP-GC) Ahmad Jibril, a former captain in the Syrian army, formed the PFLP-GC in October 1968 as a breakaway faction of the Popular Front for the Liberation of Palestine (PFLP, see below), which he considered too willing tocompromise with Israel. He also believed that a conventional military arm was needed to complement terroristoperations, and the group operates a small tank force at its bases in Lebanon, according to observers. Jibril'sseveral hundred guerrillas fought against Israeli forces alongside Hizballah during Israel's occupation of a strip ofsouthern Lebanon, which ended in May 2000. Recent Patterns reports have not attributed any significant terroristattacks to the PFLP-GC in the past few years. In May 2001, Jibril claimed responsibility for shipping a boatloadof weapons to the Palestinians in the occupied territories, although the shipment was intercepted by Israel's navy. Probably because of Jibril's service in the Syrian military, Syria has always been the chief backer of the PFLP-GC, giving it logistical and military support. In the late 1980s, the PFLP-GC also built a close relationshipwith Iran, and it receives Iranian financial assistance. Although only Libyan agents have been tried or convictedfor the December 21, 1988 bombing of Pan Am 103, there have been persistent reports that Iran approached thePFLP-GC to bomb a U.S. passenger jet in retaliation for the July 3, 1988 U.S. Navy's downing of an Iranianpassenger airplane (Iran Air flight 655). According to some theories, the PFLP-GC first pursued such theoperation and abandoned it or, according to other versions, handed off the operation to Libya in what became asuccessful effort to bomb the flight. (30) Patterns2000 drops assertions in previous Patterns reports that Libya,formerly a major financier of the group, retains ties to the PFLP-GC. SDTs. Jibril, who is about 64, and his deputy, TalalMuhammad Naji (about 70), have been named as SDTs. Popular Front for the Liberation of Palestine (PFLP) After several years of relative inactivity, the PFLP appears to be reviving its attack operations against Israel, particularly following Israel's August 27, 2001 killing of its leader, Abu Ali Mustafa. Israel killed Mustafa witha missile strike on his West Bank office. Mustafa had replaced his longtime mentor, ailing PFLP founderGeorge Habash, as PFLP Secretary-General in July 2000. (In October 1999, in the wake of the PFLP'sreconciliation talks with Arafat, Israel had allowed Mustafa to return to Palestinian-controlled territory fromexile.) Partly because Mustafa's office was located in a building inhabited by civilians, the United Statesstrongly criticized the Israeli killing of Mustafa -- and Israel's policy of targeted killings -- as an excessive useof force and unhelpful to efforts to quiet the ongoing violence. In October 2001, the PFLP retaliated for Mustafaby assassinating Israeli tourism minister Rehavam Zeevi. Mustafa's successor, Ahmad Saadat, was arrested inmid-January 2002 by PA authorities as part of Arafat's most recent crackdown on Palestinian terrorism. The PFLP was founded in December 1967, following the Arab defeat in the Six Day War with Israel in June ofthat year, by Marxist-Leninist ideologue and medical doctor George Habash, a Christian. The PFLP was activein international terrorism during the late 1960s and the 1970s; on September 6, 1970, PFLP guerrillassimultaneously hijacked three airliners and, after evacuating the passengers, blew up the aircraft. The PFLPopposed the Palestinians' decision to join the Madrid peace process and suspended its participation in the PLOafter the September 1993 Israel-PLO Declaration of Principles. In August 1999, in apparent recognition ofArafat's growing control over Palestinian territory, the PFLP held reconciliation talks with him. Arafatreportedly invited the PFLP to send a delegate to the U.S.-brokered summit talks with Israel at Camp David inJuly 2000, but the PFLP refused. Its terrorist wing had been almost completely inactive in the four years prior tothe latest Palestinian uprising, but since then has conducted five car bombings and a few other attacks on Israelis,according to Israeli officials. Patterns 2000 repeats previous estimates of the PFLP's strength as about 800, andsays that the group receives logistical assistance and safehaven from Syria. The PFLP is headquartered inDamascus and it reportedly has training facilities in Syrian-controlled areas of Lebanon. SDTs. George Habash, who is about 76 years old, is named asan SDT. He suffered a stroke in 1992. Democratic Front for the Liberation of Palestine (DFLP) (31) As have other non-Islamist Palestinian groups, the DFLP has revived some of its operations since the Palestinian uprising began in September 2000. Since then, the group has claimed responsibility for a few attacks on Israelimilitary patrols and settlers in the occupied territories, and has openly encouraged the Palestinian uprising. Twocommandos from the group attacked a heavily fortified Israeli military position in the Gaza Strip on August 25,2001, and killed three Israeli soldiers; the two guerrillas were killed in the exchange of fire. Recent Patternsreports estimate the total strength (for all major factions) of the DFLP is about 500. The DFLP may still receivesome financial assistance from Syria, where it has its headquarters. The DFLP formed in 1969 as an offshoot of the PFLP. The DFLP's most noted terrorist attack was the May 1974 takeover of a school in Maalot, in northern Israel, in which 27 schoolchildren were killed and 134 peoplewounded. It thereafter confined itself largely to small-scale border raids into Israel and infrequent attacks onIsraeli soldiers, officials, and civilians in Israel and the occupied territories. The DFLP, still led by its67-year-old founder Nayif Hawatmeh, abandoned its call for the destruction of Israel in the 1980s. It soughtstringent conditions for Palestinian participation in the October 1991 Madrid peace conference and publiclyopposed the September 1993 Israel-PLO mutual recognition accords and subsequent interim agreements reachedbetween Israel and the Palestinians. The DFLP began reconciling with Arafat in August 1999 and stated that itmight recognize Israel if there were a permanent Israeli-Palestinian peace. In response to the DFLP's apparentmoderation, the State Department removed the group from the list of FTOs when that list was revised in October1999. Also that month, Israel permitted Hawatmeh to relocate to the Palestinian-controlled areas, although heapparently has not moved there permanently. Patterns 1999 was the first Patterns report to exclude the groupfrom its analysis of terrorist organizations. In July 2000, the DFLP was part of the Palestinian delegation to theU.S.-brokered Israeli-Palestinian final status summit negotiations at Camp David. Palestine Liberation Front (PLF) The PLF, founded in 1976 as a splinter faction of the PFLP-GC, has been considered dormant for at least the pastfive years. However, in late November 2001, Israel said it had uncovered a 15-member Iraq-trained PLF cell,which was allegedly responsible for the July 2001 killing of an Israeli youth and a separate bombing that injuredfive. The group's last major attack was a failed raid on the Israeli resort town of Eilat in May 1992. The leaderof the most prominent PLF faction, Abu Abbas (real name, Muhammad Zaydun), has always enjoyed closepersonal ties to Arafat. Abbas at first opposed Arafat's decision to seek peace with Israel, but, since themid-1990s, he has accommodated to that decision. In April 1996, Abu Abbas voted to amend the PLO Charter toeliminate clauses calling for Israel's destruction. In April 1998, Israel allowed Abu Abbas to relocate to the GazaStrip from Iraq, where he had settled after his expulsion from Damascus in 1985. During its most active period, the PLF conducted several high-profile attacks. Its most well-known operation was the October 1985 hijacking of the Italian cruise ship Achille Lauro, in which the group murdered disabledU.S. citizen Leon Klinghoffer and held the other passengers hostage for two days. Abu Abbas and his teamsurrendered to Egyptian forces in exchange for a promise of safe passage. They were apprehended at a NATOairbase in Italy after U.S. aircraft forced down the Egyptian airliner flying them to safehaven. Abu Abbas, whowas not on board the Achille Lauro during the hijacking, was released by the Italian government but latersentenced in absentia. A warrant for his arrest is outstanding in Italy but the Justice Department dropped a U.S.warrant in 1996 for lack of evidence. The four other hijackers were convicted and sentenced in Italy. (32) (OnApril 30, 1996, the Senate voted 99-0 on a resolution ( S.Res. 253 ) seeking Abu Abbas' detentionand extradition to the United States.) On May 30, 1990, the PLF unsuccessfully attempted a seaborne landing,from Libya, on a Tel Aviv beach. Arafat refused to condemn the raid and, as a consequence, the United Statesbroke off its dialogue with the PLO, which had begun in 1988. The dialogue resumed in September 1993,following the mutual Israeli-PLO recognition agreement. SDTs. Abu Abbas, who was born in 1948, has been named anSDT. He underwent guerrilla training in the Soviet Union. (33) Abu Nidal Organization (ANO) The international terrorist threat posed by the Abu Nidal Organization has receded because of Abu Nidal's reported health problems (leukemia and a heart condition), internal splits, friction with state sponsors, andclashes with Arafat loyalists. It still has a few hundred members and a presence in Palestinian refugee camps inLebanon, in addition to its reported headquarters in Iraq, but it has not attacked Western targets since the late1980s. During the 1970s and 1980s, the ANO carried out over 90 terrorist attacks in 20 countries, killing about300 people. One of its most well-known operations was a December 27, 1985 attack at airports in Rome andVienna, in which 18 died and 111 were injured. One month earlier, ANO members hijacked Egypt Air 648,resulting in the deaths of 60 people. On September 6, 1986, ANO gunmen killed 22 at a synagogue (NeveShalom) in Istanbul. The group is suspected of assassinating top Arafat aides in Tunis in 1991 and a Jordaniandiplomat in Lebanon in January 1994. Also known as the Fatah Revolutionary Council, the ANO was created in 1974 when Abu Nidal (real name, Sabri al-Banna), then Arafat's representative in Iraq, broke with the PLO over Arafat's willingness tocompromise with Israel. U.S. engagement with Iraq in the early stages of the 1980-88 Iran-Iraq war contributedto Iraq's expulsion of Abu Nidal to Syria in November 1983, but Syria expelled the group four years later toreduce scrutiny on the country as a sponsor of terrorism. Abu Nidal left his next home, Libya, in April 1998,after a schism between pro and anti-Arafat members of Abu Nidal's group. He relocated to Cairo, where hestayed until December 1998, when more infighting caused his presence in Egypt to become public, and thereforea foreign policy problem for Egypt. He has been in Iraq since, but there is no hard evidence that Abu Nidal isreviving his international terrorist network on his own or on Baghdad's behalf. (34) SDTs. Abu Nidal, who was born in 1937 in Jaffa (part of what is now Israel), is the only ANO member named an SDT. He faces no legal charges in the United States,according to an ABC News report of August 25, 1998, but he is wanted in Britain and Italy. His aide, NimerHalima, was arrested in Austria in January 2000. Other Non-Islamist Organizations Three groups designated as FTOs primarily are attempting to influence the domestic political structures or theforeign policies of their countries of origin. Two of them operate against the government of Turkey and the otheragainst the government of Iran. Kurdistan Workers' Party (PKK) (35) The PKK appears to be in transition from a guerrilla and terrorist organization to a political movement. It was founded in 1974 by political science student Abdullah Ocalan, who is now about 53 years old, with the goal ofestablishing a Marxist Kurdish state in southeastern Turkey, where there is a predominantly Kurdish population. It claims to have changed its goals somewhat to focus on greater cultural and political rights within Turkey. ThePKK generally targeted government forces and civilians in eastern Turkey, but it has operated elsewhere in thecountry and attacked Turkish diplomatic and commercial facilities in several Western European cities in 1993and 1995. The United States sides with Turkey in viewing the PKK as a terrorist organization, but wants to see apeaceful resolution of the conflict, and encourages Turkey to provide greater cultural and linguistic rights to theKurds. The PKK's transition accelerated in October 1998 when Turkish military and diplomatic pressure forced Syria toexpel PKK leader Ocalan and the PKK. Ocalan, who is about 52, sought refuge in several countries, but Turkey,acting on information reportedly provided by the United States, captured him as he was leaving Greece'sembassy in Kenya in early 1999. He was tried and, on June 29, 1999, sentenced to death for treason and themurder of about 30,000 Turks since 1984. The implementation of the sentence has been suspended pendingappeals to the European Court of Human Rights. In August 1999, he called on his supporters to cease armedoperations against the Turkish government, a decision affirmed at a PKK congress in January 2000. PKKviolence against the Turkish government has since subsided, but not ended, and many of the PKK's estimated5,000 fighters remain encamped and active across the border in Iran and Kurdish-controlled northern Iraq andhave conducted a few minor terrorist attacks since. Revolutionary People's Liberation Party/Front (DHKP/C) The DHKP/C is becoming more active after a long period of virtual dormancy. This Marxist organization, still commonly referred to by its former name, Dev Sol, was formed in 1978 to oppose Turkey's pro-Western tilt andits membership in the North Atlantic Treaty Organization (NATO). Since the late 1980s, the DHKP/C (whichcorresponds to its acronym in Turkish) has concentrated attacks on Turkish military and security officials, but ithas since 1990 attacked foreign interests, according to Patterns 2000. The group assassinated two U.S. militarycontractors in Turkey to protest the Gulf War against Iraq and it rocketed the U.S. consulate in Istanbul in 1992. An attempt by the group to fire an anti-tank weapon at the consulate in June 1999 was thwarted by Turkishauthorities. Also foiled was a planned attack by the group in August 2000 on Incirlik air base, which hosts U.S.aircraft patrolling a "no fly zone" over northern Iraq. The group attacked an Istanbul police station, killing onepolice officer, in January 2001. The People's Mojahedin Organization of Iran (PMOI) The People's Mojahedin Organization of Iran (PMOI), the dominant organization within a broader National Council of Resistance (NCR), has left-wing roots but it is not composed of an ethnic minority. It was formed inthe 1960's as an opponent of the Shah's authoritarian rule and was part of the broad movement that overthrew theShah. In 1981, the PMOI turned against the Islamic revolutionary regime of Ayatollah Khomeini when Iran'sclerics violently excluded the PMOI and other groups from major roles in the new government, but the PMOIrebellion was suppressed and some of its leaders fled Iran to continue their political activities in exile. Thegroup claims that it has abandoned what some experts describe as a left-wing past and that it is committed to freemarkets and democracy. However, the State Department noted in a 1994 congressionally-mandated report thatthere is no record of an internal debate over the change in ideology, and there is reason to doubt theorganization's sincerity. The group publicly supports the Arab-Israeli peace process and the rights of Iran'sminorities. The State Department's longstanding mistrust of the group is based not only on the group's past activities, but onits killing of several U.S. military officers and civilians during the struggle against the Shah, its alleged supportfor the takeover of the U.S. Embassy in Tehran in 1979, its authoritarian internal structure, and its use of Iraq asbase for its several thousand member military wing. The State Department named the PMOI an FTO in October1997 on the grounds that it kills civilians in the course of its anti-regime operations inside Iran. In one of its mosthigh-profile attacks, the group claimed responsibility for the April 10, 1999 assassination in Tehran of a seniorIranian military officer. However, the group does not appear to purposely target civilians. In the October 1999revision of the FTO list, the State Department, partly in response to an Iranian government request, named theNCR as an alias of the PMOI, meaning that FTO-related sanctions now apply to the NCR as well. The NCR'soffices in the United States have not been closed by U.S. law enforcement authorities, because its U.S. chapterwas not included in the FTO designation. Seven persons were arrested in California in March 2001 for allegedly soliciting donations for the group, which, if proved, would be a violation of FTO sanctions regulations. Other supporters of the group often operate underthe names of local Iranian expatriate organizations. In 1998, a majority of the House signed a letter questioningthe State Department's designation of the group as an FTO, and some Members state that the group merits U.S.support as an alternative to the current regime in Tehran. Some Members and outside experts believe that thePMOI was designated as an FTO as a gesture of goodwill to Iran after the election of Mohammad Khatemi in1997. (36) The PMOI is led by Masud and Maryam Rajavi. Masud leads the PMOI's military forces based in Iraq and he isPresident of the NCR. His wife Maryam, who is now with him in Iraq after leaving France in 1997, is theorganization's choice to become interim president of Iran if it were to take power. Mozagan Parsaii is theorganization's Secretary General. Middle Eastern Terrorism List Countries U.S. officials maintain that they have made a number of gains in their efforts to reduce state sponsorship ofterrorism. Five Middle Eastern countries are on the terrorism list -- Iraq, Iran, Syria, Sudan, and Libya. (37) In thecase of Libya, Sudan, and, to a lesser extent, Iraq, U.S. and international pressure, coupled with internaldevelopments in some of these states, have reduced their support for international terrorism long beforeSeptember 11. Of the Middle Eastern countries on the list, Sudan appears to be the closest to achieving removal. The State Department openly acknowledges working with Sudan to help it meet the remaining requirements forremoving it from the list, and has praised its cooperation against Al Qaeda after September 11. In the case of Iranand Syria, however, U.S. efforts have had little success in curbing the support of these governments for terroristgroups. Under Section 6(j) of the Export Administration Act, removal from the list requires 45 day advance notification to the House International Relations Committee, the Senate Foreign Relations Committee, and the Senate andHouse Banking Committees, that the country has ceased support for international terrorism and pledges tocontinue doing so. Also under that provision, a major change of government in the listed country can serve asgrounds for immediate removal from the list. Iran (38) Iran's sponsorship of terrorist groups appears to be setting back the prospects for reconciliation between the United States and Iran. U.S.-Iran relations were improving prior to September 11 and subsequently in the courseof tacit cooperation in the war against the Taliban. However, in January 2002, the United States and Israelalleged that Iran sold a large shipment of arms to the Palestinian Authority. Israel seized the ship before its cargowas offloaded. The episode expanded U.S. concerns about Iran's sponsorship of terrorism by indicating a linkbetween Iran and Palestinian groups who are not Islamic in nature and with which Tehran has previously had fewlinks. In his January 29, 2002 State of the Union message, President Bush was highly critical of Iran, calling it apart of an "axis of evil" with Iraq and North Korea. Patterns 2000, as has been the case for the past 6 years, again characterized Iran as "the most active" state sponsor of international terrorism. However, the report, as did Patterns 1999, attributes Iran's terrorism supportto specific institutions -- the Revolutionary Guard and the Ministry of Intelligence and Security -- rather thanthe Iranian government as a whole. These institutions are controlled by Supreme Leader Ali Khamene'i, whoespouses hardline positions on most foreign and domestic policies. This characterization suggests that the StateDepartment believes President Mohammad Khatemi and his allies genuinely wish to overcome Iran's reputationas a "terrorist state" in order to further ease Iran's isolation. Indicating that Khatemi is attempting not to differwith Khamene'i, Patterns 2000 cites statements by Khatemi as well as by hardline leaders calling for thedestruction of Israel. In an apparent positive signal to Iran, Patterns 2000, for the third year in a row, cites PMOIattacks on Iranian officials as justification for Iran's claim that it is a victim of terrorism. Although no major international terrorist attacks have been linked to Iran since Khatemi took office in August 1997, the United States has not publicly noted any diminution of Iranian material support for terrorist groupsopposed to the Arab-Israeli peace process, such as those groups discussed earlier in this paper. Patterns 2000notes that Iran has encouraged Hizballah and Palestinian terrorist groups to escalate attacks on Israel in thecontext of the Palestinian uprising. Iran also has been accused by regional governments of sponsoringassassinations of anti-Shiite Muslim clerics in Tajikistan and Pakistan, and of supporting Shiite Muslim Islamicopposition movements in the Persian Gulf states and Iraq. On the other hand, U.S. officials acknowledge thatIran has improved relations with its Gulf neighbors dramatically in recent years, and that its support for Gulfopposition movements has diminished sharply. Iran also has largely ceased attacks on dissidents abroad thatwere so prominent during the tenures of Khatemi's predecessors. In handing down indictments of 14 people in June 2001, the Department of Justice stated its belief that Iran was involved in the June 1996 Khobar Towers bombing in Saudi Arabia, which killed 19 U.S. airmen. No Iranianswere among those indicted, but the indictments detail the role of Iranian security personnel in inspiring andsupervising the plot, which was carried out by members of Saudi Hizballah. Eleven of the 14 are in custody inSaudi Arabia, and Saudi Arabia says they will be tried there and not extradited to the United States. (39) Manyexperts believe that the Saudi and U.S. governments have sought to avoid firmly pressing the Khobar case againstIran -- legally or diplomatically -- in order not to undermine Khatemi (who was elected after the bombing) orreduce the chance to improved relations with Iran. Syria (40) Syria has expressed public support for the U.S. war on terrorism and has emphasized that Syria itself has long combated Islamic movements in Syria. At the same time, Syria is attempting to deflect U.S. and internationalscrutiny of its role as host to terrorist groups. Syria's position is that the movements it hosts are legitimateresistance movements against Israeli occupation. On that basis, Syria refuses to expel the groups in Syria andareas of Lebanon that Syria controls. Even before September 11, Patterns 2000 was more critical of Syria than was Patterns 1999, which came close topromising that Syria would be removed from the terrorism list if it signed a peace agreement with Israel. Thisappeared to signal that U.S. hopes had receded that President Bashar al-Assad would be more flexible on foreignpolicy than his father, the late Hafez al- Assad, who Bashar succeeded in June 2000 upon his death. Far frompraising Syria for restraining terrorist groups as was the case in some past Patterns report, Patterns 2000 says thatSyria allowed Hamas to open a new office in Damascus in March 2000. The report adds that Syria did not act tostop Hizballah or Palestinian terrorist groups, operating in Syria or areas under Syrian control or influence, fromlaunching ant-Israel attacks. Syria continues to allow Iran to resupply Hizballah through the Damascus airport,and has allowed visiting Iranian officials to meet with anti-peace process terrorist organizations based in Syria. Italso publicly opposed suggestions that Hizballah be disarmed by U.N. peacekeepers after the militia seizedpositions in southern Lebanon vacated by Israel during its May 2000 withdrawal. Syria also provides sanctuary to the PFLP-GC and other non-Islamist Palestinian groups. There are no indications that Al Qaeda members are welcome in Syria. A group active in Lebanon, Asbat al-Ansar (Partisans'Group) is believed linked to Al Qaeda and was named to the list of entities covered under Executive Order 13224restrictions. Syria exercises substantial influence over Lebanon, but Lebanon arrested several Asbat members in1999-2000 and there is no information to suggest that the group operates with Syrian or Lebanese governmentapproval. Patterns 2000 does state that Syria is generally upholding its pledge to Turkey not to support the PKK. Some believe that Syria's position on the PKK is the result of Syria's fear of Turkey's potential threat to use armedforce against Syria, and not a unilateral Syrian desire to sever relations with the PKK. An alternate interpretationis that Syria wants to sustain the recent improvement in its bilateral relationship with Turkey. Also, Patterns2000 states that Syria appears to have maintained its long-standing ban on attacks launched from Syrian territoryor against Western targets. Despite its position on the terrorism list, the United States maintains relatively normal relations with Syria. The two countries exchange ambassadors and most forms of non-military U.S. trade with and U.S. investment inSyria are permitted, subject to various licensing restrictions. Libya (41) The Pan Am 103 bombing issue has been at the center of U.S. policy toward Libya for more than a decade, and will likely prevent any major rapprochement as long as Muammar Qadhafi remains in power. However, somepress reports citing unnamed Administration officials indicate that the Bush Administration might considereasing sanctions, perhaps including removing Libya from the terrorism list outright, if outstanding Pan Am 103issues are resolved. (42) After an article to this effectappeared in January 2002, Bush Administration officialssought to downplay the possibility that Libya would be removed from the list anytime soon. Most experts believe Libya has reduced its involvement with terrorist groups, at least for now. In 1998, prior tothe handover, Libya had expelled Abu Nidal, it was reducing its contacts with other radical Palestinianorganizations, and it expressed support for Yasir Arafat. In an effort to reward Libya's positive steps, in 1999 aU.S. official began meeting with a Libyan diplomat for the first time since 1981, and the U.S. trade ban wasmodified to permit exports of food and medicine. On the other hand, reflecting the difficulties of assessingLibya's intentions, Patterns 2000 stated that it is unclear whether Libya's distancing itself from its "terrorist past"signifies a true change in policy. Pan Am 103 Issues. The Pan Am attack, on December 21,1988, killed 259 people aboard plus 11 on the ground. Three U.N. Security Council resolutions -- 731 (January21, 1992); 748 (March 31, 1992); and 883 (November 11, 1993) -- called on Libya to turn over the two Libyanintelligence agents (Abd al-Basit Ali al-Megrahi and Al Amin Khalifah Fhimah) suspected in the bombing, andto help resolve the related case of the 1989 bombing of French airline UTA's Flight 772. The U.N. resolutionsprohibited air travel to or from Libya and all arms transfers to that country (Resolution 748); and froze Libyanassets and prohibited the sale to Libya of petroleum-related equipment (Resolution 883). In accordance withU.N. Security Council Resolution 1192 (August 27, 1998), the sanctions were suspended, but not terminated,immediately upon the April 5, 1999 handover of the two to the Netherlands. There, their trial under Scottish lawbegan on May 3, 2000 and ended on January 31, 2001 with the conviction of al-Megrahi and the acquittal ofFhimah. Megrahi began the appeal process in January 2002. In March 2000, a group of U.S. security officialsvisited Libya briefly to assess whether to lift the U.S. restriction on the use of U.S. passports for travel to Libya. The restriction has not been lifted. The January 31, 2001 conviction of al-Megrahi brought some closure to the Pan Am case but also reinforced theperception among the Pan Am victims' families and others that Libyan leader Muammar Qadhafi had, at the veryleast, foreknowledge of the bombing. Immediately upon the conviction, President Bush stated that the UnitedStates would maintain unilateral sanctions on Libya and oppose permanently lifting U.N. sanctions until Libya:(1) accepts responsibility for the act; (2) compensates the families of the victims; (3) renounces support forterrorism; and (4) discloses all it knows about the plot. In January 2002, some persons involved in pursuing acompensation agreement with Libya expressed optimism about a settlement. (43) Other Terrorism Issues. There is no evidence that Libya hassupported Al Qaeda, and it appears to view Al Qaeda as more of a threat than a potential ally. A Libyanopposition group, the Libyan Islamic Fighting Group, is linked to Al Qaeda and was designated for financialrestrictions under Executive Order 13224. The group allegedly tried to assassinate Qadhafi in 1996, and Libyahas provided the United States some information on the group subsequent to the September 11 attacks. In theearly 1990s, the Libyan government indicted bin Laden for allegedly supporting the Libyan Islamic FightingGroup. Libya has tried to appear cooperative in resolving other past acts of terrorism. In March 1999, a French court convicted six Libyans, in absentia, for the 1989 bombing of a French airliner, UTA Flight 772, over Niger. Oneof them is Libyan leader Muammar Qadhafi's brother-in-law, intelligence agent Muhammad Sanusi. Although itnever acknowledged responsibility or turned over the indicted suspects, in July 1999 Libya compensated thefamilies of the 171 victims of the bombing, who included seven U.S. citizens. In July 1999, Britain restoreddiplomatic relations with Libya after it agreed to cooperate with the investigation of the 1984 fatal shooting of aBritish policewoman, Yvonne Fletcher, outside Libya's embassy in London. It is alleged that a Libyan diplomatshot her while firing on Libyan dissidents demonstrating outside the embassy. In what some construe as part of the effort to improve its international image, Libya also has tried to mediate anend to conflicts between Eritrea and Ethiopia, and within Sudan and the Democratic Republic of the Congo. However, some believe Libya is trying to extend its influence in Africa rather than broker peace, and some inCongress and the Administration assert that Libya continues to arm rebel groups in Africa, such as theRevolutionary United Front in Sierra Leone. (44) In March 2000, a group of U.S. security officials visited Libyabriefly to assess whether to lift the U.S. restriction on the use of U.S. passports for travel to Libya. Therestriction has not been lifted. Sudan (45) Sudan appears closest of any of the Near Eastern countries on the terrorism list to being removed, despite congressional and outside criticism over its prosecution of the war against Christian and other rebels in its south. Prior to the September 11 attacks, the State Department said it was engaged in discussions with Sudan with theobjective of getting Sudan "completely out of the terrorism business and off the terrorism list." (46) TheAdministration has praised Sudan's cooperation with the U.S. investigation of Al Qaeda and the September 11plot. In recognition of this cooperation, the Administration did not block a U.N. Security Council vote onSeptember 28, 2001 to lift U.N. sanctions on Sudan. In recent years, Sudan has signaled a willingness to assuage international concerns about its support for terrorism. In August 1994, Sudan turned over the terrorist Carlos (Ilyich Ramirez Sanchez) to France. In December 1999,Sudan's President Umar Hassan al-Bashir, a military leader, politically sidelined Sudan's leading Islamist figure,Hassan al-Turabi. In February 2001, Turabi was arrested, and has remained under house arrest since May 2001. Turabi was one of the primary proponents of Sudan's ties to region-wide Islamic movements, including AlQaeda, the Abu Nidal Organization, Hamas, PIJ, Egypt's Islamic Group and Al Jihad, Hizballah, and Islamistrebel movements in East Africa -- the ties that prompted the United States to place Sudan on the terrorism list inAugust 1993. According to Patterns 2000, by the end of 2000 Sudan had signed all 12 international conventionson combating terrorism. One issue that apparently has been resolved is Sudan's compliance with three Security Council resolutions adopted in 1996: 1044 of January 31; 1054, of April 26; and 1070 of August 16. The resolutions demanded thatSudan extradite the three Islamic Group suspects in the June 1995 assassination attempt against PresidentMubarak in Ethiopia, restricted the number of Sudanese diplomats abroad, and authorized a suspension ofinternational flights by Sudanese aircraft, although the last measure was never put into effect. According to the Washington Post of August 21, 2001, the Bush Administration has concluded that Sudan has ended itssupportfor the terrorists involved in the bomb plot. The United States has tried to promote further progress on terrorism by slowly increasing engagement with Sudan. The United States removed its embassy staff from Khartoum in February 1996, although diplomaticrelations were not broken. U.S. diplomats posted to Sudan have since worked out of the U.S. Embassy in Kenya, but have made consular visits to the embassy in Khartoum. Beginning in mid-2000, U.S. counter-terrorismexperts have visited Sudan to discuss U.S. terrorism concerns and monitor Sudan's behavior on the issue. A U.S.envoy for Sudan, former Senator John Danforth, was appointed on September 6, 2001. There is lingering resentment among some Sudanese against the United States because of the August 20, 1998 cruise missile strike on the al-Shifa pharmaceutical plant in Khartoum, conducted in conjunction with the strikeon bin Laden's bases in Afghanistan. The United States destroyed the plant on the grounds that it was allegedlycontributing to chemical weapons manufacture for bin Laden. Although the Clinton Administration asserted thatthe al-Shifa strike was justified, several outside critics maintained that the plant was a genuine pharmaceuticalfactory with no connection to bin Laden or to the production of chemical weapons. The plant owner's $24million in U.S.-based assets were unfrozen by the Administration in 1999, a move widely interpreted as a tacitU.S. admission that the strike was in error. Iraq (47) U.S.-Iraq differences over Iraq's regional ambitions and its record of compliance with post-Gulf war ceasefire requirements will probably keep Iraq on the terrorism list as long as Saddam Husayn remains in power. SomeU.S. officials want to expand the "war on terror" to Iraq despite a lack of hard evidence of Iraqi involvement inthe September 11 attacks. President Bush, in his January 29,2002 State of the Union message, suggested Iraqwas part of an "axis of evil" along with North Korea and Iran, a statement that some took as an indication that theUnited States would eventually take action against Iraq. Even those U.S. officials who oppose extending the warto Iraq assess Iraq's record of compliance with its postwar obligations as poor, and its human rights record asabysmal. However, international pressure on Iraq on these broader issues appears to have constrained Iraq'sability to use terrorism. Patterns 2000, as have the past few Patterns reports, notes that Iraq continues to plan and sponsor international terrorism, although Iraq's activities are directed mostly against anti-regime opposition, those Iraq holdsresponsible for its past defeats, or bodies that represent or implement international sanctions against Iraq. Thesetrends apparently accord with recent Central Intelligence Agency judgments of Iraq's terrorism policy, accordingto a New York Times report of February 6, 2002. That press report added that the CIA has no evidenceIraq hasplanned anti-U.S. terrorism since it organized a failed assassination plot against former President George H.W.Bush during his April 1993 visit to Kuwait, which triggered a U.S. retaliatory missile strike on Iraqi intelligenceheadquarters. The Times report also said that the CIA is "convinced" Iraq has not provided chemicalorbiological weapons to Al Qaeda or other terrorist groups. Among recent developments, in October 1998, Iraqi agents allegedly planned to attack the Prague-based Radio Free Iraq service of Radio Free Europe/Radio Liberty, although no attack occurred. Czech officials say an Iraqiintelligence officer in Prague met with September 11 lead hijacker Muhammad Atta in early 2001, reportedly todiscuss an attack on the radio facility. Some observers believe the meeting suggests an Iraqi role in theSeptember 11 attacks. Iraq, which historically has had close ties to Yasir Arafat, has given some support toanti-peace process Palestinian groups, and hosts the Abu Nidal Organization, Abu Abbas' Palestine LiberationFront, and other minor groups. As a lever in its relations with Iran, Iraq continues to host and provide some oldersurplus weaponry to the PMOI's army, the National Liberation Army (NLA), which has bases near the borderwith Iran. However, Iraq apparently has reduced support for the group as Iraq's relations with Tehran haveimproved over the past two years. Table 2. Blocked Assets of Middle East Terrorism List States (As of End 2000) Principal Source: 2000 Annual Report to Congress on Assets in the United States Belonging to TerroristCountries or International Terrorist Organizations. Office of Foreign Assets Control, Department of theTreasury. January 2001. Countering Near Eastern Terrorism Prior to September 11, there was little agreement on a strategy for countering the terrorism threats discussedabove. The apparent success of the U.S. military campaign against the Taliban and Al Qaeda in Afghanistanapparently has prompted wider acceptance of the utility of military force than was the case previously. Observerstend to agree that the continued success against Al Qaeda and other terrorist groups will depend on sustainedbilateral, multilateral, or international cooperation with U.S. efforts. Not all options focus on pressuring states or groups; some experts believe that diplomatic engagement with somestate sponsors and U.S. efforts to address terrorists' grievances could be more effective over the long term. TheUnited States has claimed some successes for its policy of pressuring state sponsors, but there are signs that theUnited States is now incorporating a greater degree of engagement into its policy framework. At the same time,the United States has not dropped the longstanding stated U.S. policy of refusing to make concessions toterrorists or of pursuing terrorism cases, politically or legally, as long as is needed to obtain a resolution. An exhaustive discussion of U.S. efforts to counter terrorism emanating from the region is beyond the scope ofthis paper, but the following sections highlight key themes in U.S. efforts to reduce this threat. (49) Military Force The success of the U.S. military against the Taliban movement of Afghanistan that had protected the Al Qaeda organization has, according to many experts, validated the utility of military force against terrorism. Somebelieve that many governments are now moving against Al Qaeda cells and other terrorist groups present in theircountries, fearing that U.S. military force might be used against regimes that tolerate the presence of terroristgroups. Advocates of broad application of military force believe that military action against Al Qaeda inAfghanistan has severely disrupted that organization's ability to plan new acts of terrorism. Skeptics of furthermilitary action maintain that conditions in Afghanistan are unique and that the anti-terrorism campaign inAfghanistan cannot easily be replicated elsewhere. U.S. officials say that the continued campaign against AlQaeda might unfold differently elsewhere, including the use of U.S. military advisers to help governmentsdestroy Al Qaeda sanctuaries in other countries. U.S. military attacks were conducted in retaliation for terrorist acts sponsored by Libya and Iraq, as well as those allegedly sponsored by Al Qaeda. On April 15, 1986, the United States sent about 100 U.S. aircraft to bombmilitary installations in Libya. The attack was in retaliation for the April 2, 1986 bombing of a Berlin nightclubin which 2 U.S. military personnel were killed, and in which Libya was implicated. On June 26, 1993, the UnitedStates fired cruise missiles at the headquarters in Baghdad of the Iraqi Intelligence Service, which allegedlysponsored a failed assassination plot against former President George Bush during his April 14-16, 1993 visit toKuwait. (Other U.S. retaliation against Iraq since 1991 has been triggered by Iraqi violations of ceasefire termsnot related to terrorism.) The August 20, 1998 cruise missile strikes against the bin Laden network inAfghanistan represented a U.S. strike against a group, not a state sponsor. The related strike on a pharmaceuticalplant in Sudan could have been intended as a signal to Sudan to sever any remaining ties to bin Laden. The effectiveness of other U.S. military action against terrorist groups or state sponsors is difficult to judge. Libya did not immediately try to retaliate after the 1986 U.S. strike, but many believe that it did eventually strikeback by orchestrating the Pan Am 103 bombing. Since the 1993 U.S. strike, Iraq has avoided terrorist attacksagainst high profile U.S. targets, but it has continued to challenge the United States on numerous issues related toits August 1990 invasion of Kuwait. The 1998 airstrikes against Al Qaeda did not prompt the Taliban leadershipto extradite or expel bin Laden from Afghanistan, nor did the strikes deter bin Laden's network from engaging infurther terrorist activities, including September 11. Unilateral Economic Sanctions The United States has been willing to apply economic sanctions unilaterally, particularly against state sponsors ofterrorism, in an effort to pressure those states to expel terrorist groups they host. Analysts doubt that unilateralU.S. economic sanctions, by themselves, can force major changes in the behavior of state sponsors of terrorism. Major U.S. allies did not join the U.S. trade ban imposed on Iran in May 1995 and the move did not, in itself,measurably alter Iran's support for terrorist groups. On the other hand, virtually all Middle Eastern terrorism liststates have publicly protested their inclusion on the list and other U.S. sanctions, suggesting that these sanctionsare having an effect politically and/or economically. U.S. officials assert that U.S. sanctions, even if unilateral,have made some terrorism state sponsors "think twice" about promoting terrorism. To demonstrate that improvements in behavior can be rewarded, in April 1999 the Clinton Administration announced that it would permit, on a case-by-case basis, commercial sales of U.S. food and medical products toLibya, Sudan, and Iran. The move relaxed the bans on U.S. trade with the three countries. As noted previously,all three have recently shown some signs of wanting to improve their international images. Terrorism List Sanctions. Under a number of differentlaws, (50) the placement of a country on theterrorism list triggers a wide range of U.S. economic sanctions,including: a ban on direct U.S. foreign aid, including Export-Import Bank guarantees. a ban on sales of items on the U.S. Munitions Control List. a requirement that the United States vote against lending to that country by international institutions. strict licensing requirements for sales to that country, which generally prohibit exports of items that can have military applications, such as advanced sensing, computation, or transportationequipment. A U.S. trade ban has been imposed on every Middle Eastern terrorism list state, except Syria, under separate executive orders. Placement on the terrorism list does not automatically trigger a total ban onU.S. trade with orinvestment by the United States. In addition, foreign aid appropriations bills since the late 1980s have barred direct and indirect assistance to terrorism list and other selected countries, and mandated cuts in U.S.contributions to international programs that work in those countries. As shown in Table 2 above,the UnitedStates also tries to maintain some leverage over terrorism list states and groups by blocking some of their assetsin the United States. Some U.S. sanctions are "secondary sanctions," imposing penalties on countries that help or arm terrorism list countries. Sections 325 and 326 of the Anti-Terrorism and Effective Death Penalty Act ( P.L. 104-132 ) amendedthe Foreign Assistance Act by requiring the President to withhold U.S. foreign assistance to any government thatprovides assistance or lethal military aid to any terrorism list country. In April 1999, three Russian entities weresanctioned under this provision for providing anti-tank weaponry to Syria; sanctions on the Russian governmentwere waived. "Non-Cooperating List. " The 1996 Anti-Terrorism act alsogave the Administration another option besides placing a country on the terrorism list. Section 303 of that Actcreated a new list of states that are deemed "not cooperating with U.S. anti-terrorism efforts," and provided thatstates on that list be barred from sales of U.S. Munitions List items. Under that provision, and every year since1997, Afghanistan, along with the seven terrorism list countries, has been designated as not cooperating. No U.S.allies have been designated as "not cooperating," although the provision was enacted following an April 1995incident in which Saudi Arabia did not attempt to detain Hizballah terrorist Imad Mughniyah when a plane onwhich he was believed to be a passenger was scheduled to land in Saudi Arabia. (51) Possibly in an attempt toavoid similar incidents, on June 21, 1995, President Clinton signed Presidential Decision Directive 39 (PDD-39),enabling U.S. law enforcement authorities to capture suspected terrorists by force from foreign countries thatrefuse to cooperate in their extradition. (52) The Clinton Administration rejected several outside recommendations -- most recently those issued in June 2000 by the congressionally mandated National Commission on Terrorism -- to place Afghanistan on the terrorismlist. The Clinton Administration said that placing Afghanistan on the list would imply that the United Statesrecognizes the Taliban movement as the legitimate government of Afghanistan, a position later adopted by theBush Administration. However, President Clinton, on July 4, 1999, issued Executive Order 13129, imposingsanctions on the Taliban that are similar to those imposed on terrorism list countries and on foreign terroristorganizations. The order imposed a ban on U.S. trade with areas of Afghanistan under Taliban control, frozeTaliban assets in the United States, and prohibited contributions to Taliban by U.S. persons. The ClintonAdministration justified the move by citing the Taliban's continued harboring of bin Laden. Also in its June 2000 report, the National Commission on Terrorism recommended naming Greece and Pakistan as not fully cooperating with U.S. anti-terrorism efforts. The Clinton Administration rejected thoserecommendations as well. In Patterns 2000, the State Department implied that Pakistan and Lebanon werepotential candidates for the terrorism list, or possibly the "not cooperating" list, for supporting or toleratingoperations by terrorist groups. (53) On the otherhand, Patterns 2000 did credit both Pakistan and Lebanon withanti-terrorism cooperation in selected cases. In the aftermath of the September 11 attacks and Pakistan's decisionto align itself with the U.S. war effort, the United States has praised Pakistan's cooperation, lifted U.S. sanctions,and begun a new foreign assistance program for that country. Multilateral Sanctions In concert with U.S. unilateral actions, the United States has sought to enlist its friends, allies, and other countriesto employ multilateral sanctions against Middle Eastern terrorism. As noted above, the United States led effortsto impose international sanctions on Libya and Sudan for their support of terrorism, and both those states soughtto distance themselves from terrorist groups. This suggests that the perception of isolation caused by the U.N.sanctions was a factor in the terrorism policy decisions of these countries. In 1998 and 1999, the United Statesand Russia jointly worked successfully to persuade the United Nations Security Council to adopt sanctions on theTaliban because of its refusal to extradite bin Laden. U.N. Security Council Resolution 1267, adopted October15, 1999, banned flights outside Afghanistan by its national airline, Ariana, and directed U.N. member states tofreeze Taliban assets. The United States and Russia teamed up again to push another resolution (U.N. SecurityCouncil Resolution 1333, adopted December 19, 2000) that, among other measures, imposed an internationalarms embargo on the Taliban only, not on opposition factions. (54) These measures began to be implemented justprior to the September 11 attacks, but did not cause the Taliban to waiver in its refusal to hand over bin Laden. Counter-Terrorism Cooperation Successive administrations have identified counter-terrorism cooperation with friendly countries as a key elementof U.S. policy. In one important regional example, the United States has sought to contain Hizballah byproviding military and law enforcement assistance to the government of Lebanon. In the past few years, theUnited States has sold Lebanon non-lethal defense articles such as armored personnel carriers. In 1994, on aone-time basis, the United States provided non-lethal aid, including excess trucks and equipment, to PalestinianAuthority security forces in an effort to strengthen them against Hamas and PIJ. Prior to September 11, the United States had been expanding a counter-terrorism dialogue with Russia and the Central Asian states against Islamic militant groups linked to Al Qaeda. All of these countries subsequentlyaligned themselves, openly or tacitly, with the U.S. war against the Taliban and Al Qaeda. Every year since1999, the State Department hosted a multilateral conference of senior counter-terrorism officials from the MiddleEast, Central Asia, and Asia, focusing on combating the terrorism threat from Afghanistan. These conferencesand meetings have often resulted in agreements to exchange information, to conduct joint efforts to counterterrorist fundraising, and to develop improved export controls on explosives and conventions against nuclearterrorism. (55) For the past few years, the UnitedStates has been providing some detection equipment and a fewmillion dollars in financial assistance to the Central Asian states to help them prevent the smuggling of nuclearand other material to terrorist groups such as Al Qaeda. The measure yielded some results in April 2000, whenUzbek border authorities used this equipment to detect and seize ten containers with radioactive material boundfor Pakistan. (56) The United States has worked with the European Union (EU) to exert influence on Iran to end its sponsorship ofterrorism. In exchange for relaxing enforcement of U.S. sanctions under the Iran-Libya Sanctions Act ( P.L.104-172 ) , which would have sanctioned EU firms that invest in Iran's energy industry, in mid 1998 the UnitedStates extracted a pledge from the EU to increase cooperation with the United States against Iranian terrorism. InMay 1998, the EU countries agreed on a "code of conduct" to curb arms sales to states, such as Iran, that mightuse the arms to support terrorism. However, the code is not legally binding on the EU member governments. (57) Terrorism Fundraising Cooperation. In January 2000, theUnited States signed a new International Convention for the Suppression of Terrorist Financing, which creates aninternational legal framework to investigate those involved in terrorist financing. Since September 11, the UnitedStates has made cooperation against terrorism fundraising a major priority in its dealings with other countries,particularly Middle Eastern countries where much of the fundraising for Al Qaeda is conducted. Selective Engagement As noted in the discussions of terrorism list countries, the Administration has shown increasing willingness to engage state sponsors, once these countries have demonstrated some willingness to curb support for terrorism. U.S. officials justify engagement with the argument that doing so creates incentives for terrorism list countries tocontinue to reduce their support for international terrorism. On the other hand, critics believe that terrorism listcountries are likely to view a U.S. policy of engagement as a sign that supporting terrorism will not adverselyaffect relations with the United States. Of the Middle Eastern terrorism list countries, the United States engages in bilateral dialogue with all except Iranand Iraq. The United States has called for a dialogue with Iran, but Iran has thus far refused on the grounds thatthe United States has not dismantled what Iran calls "hostile" policies toward that country -- a formulationwidely interpreted to refer to U.S. sanctions. Iraq has asked for direct talks with the United States, but the UnitedStates has rejected the suggestion on the grounds that Iraq is too far from compliance with Gulf war-relatedrequirements to make official talks useful. Legal Action Legal action against terrorist groups and state sponsors had become an increasingly large component of U.S. counter-terrorism strategy, although the September 11 attacks and U.S. military response has, to some extent,diminished support among observers for this option. In the case of the bombing of Pan Am 103, the BushAdministration chose international legal action -- a trial of the two Libyan suspects -- over military retaliation. A similar choice has apparently been made in the Khobar Towers bombing case, although that legal effortconsists of U.S. indictments of suspects and not a U.N.-centered legal effort. The United States is planning to trysome Al Qaeda fighters captured in Afghanistan, although the U.S. strategy has been primarily to defeat AlQaeda militarily rather than treat the September 11 attacks primarily as a criminal case. Congress has attempted to give victims of international terrorism a legal option against state sponsors. The Anti-Terrorism and Effective Death Penalty Act of 1996 (Section 221) created an exception to the ForeignSovereign Immunity for Certain Cases (28 U.S.C., Section 1605), allowing victims of terrorism to sue terrorismlist countries for acts of terrorism by them or groups they support. Since this provision was enacted, a number ofcases have been brought in U.S. courts, and several multimillion dollar awards have been made to formerhostages and the families of victims of groups proven in court to have been sponsored by Iran. In 2000, theClinton Administration accepted compromise legislation to use general revenues to pay compensatory damageawards to these successful claimants, with the stipulation that the President try to recoup expended funds fromIran as part of an overall reconciliation in relations and settlement of assets disputes. The provision, called the"Justice for Victims of Terrorism Act," was incorporated into the Victims of Trafficking and Violence ProtectionAct of 2000 ( P.L. 106-386 ). The Clinton and Bush Administrations have opposed directly tapping frozen Iranianassets in the United States, such as selling Iran's former embassy in Washington, on the grounds that doing socould violate diplomatic sovereignty or provoke attacks on U.S. property or citizens abroad. The Domestic Front The September 11 attacks have exposed the vulnerability of the United States homeland to Middle Eastern-inspired terrorism as no other previous event. The October-November 2002 anthrax mailings alsoexposed U.S. vulnerabilities, although it is not known whether these incidents were related to September 11,other Middle Eastern-related terrorism, or activity by groups in the United States not connected to the MiddleEast. The September 11 attacks have sparked stepped up law enforcement investigation into the activities ofIslamic networks in the United States and alleged fundraising in the United States for Middle East terrorism. Some observers allege that Middle Eastern terrorist groups, including Al Qaeda, have extensive political networks in the United States, working from seemingly innocent religious and research institutions andinvestment companies. (58) PIJ leader Shallah,before being tapped to lead PIJ, taught at the University of SouthFlorida in the early 1990s and ran an affiliated Islamic studies institute called the World and Islam StudiesEnterprise (WISE). Some observers believe that extraordinary security measures are needed to ferret out AlQaeda cells in the United States. Others have challenged this view, saying that most American Muslims oppose the use of violence, and donate money to organizations that they believe use the funds solely for humanitarian purposes. Some post-September11 U.S. domestic counter-terrorism efforts, particularly those dealing with immigration and investigative powers,have drawn substantial criticism from U.S. civil liberties groups, which have expressed concern about excessiveintrusions by law enforcement authorities. Some Arab-American and American Muslim organizations have longcomplained that U.S. residents and citizens of Arab descent are unfairly branded as suspected terrorists, and thatthis sentiment increased dramatically after September 11. As part of their criticism, these organizations point toerroneous initial accusations by some terrorism experts that Islamic extremists perpetrated the Oklahoma Citybombing in April 1995.

The Al Qaeda terrorist network founded by Osama bin Laden is believed to pose a continuing, although diminished, threat to the United States at home and to U.S. interests and allies abroad following the network'sdefeat in its base in Afghanistan. As stated in taped appearances by its leaders since the September 11, 2001terrorist attacks on the World Trade Center and the Pentagon, the goal of Al Qaeda is to destroy high profile U.S.targets in order to end what Al Qaeda claims is U.S. suppression of Islamic societies. In these appearances, binLaden virtually claimed responsibility for the September 11 attacks. Throughout its history, Al Qaeda has soughtto oust pro-U.S. regimes in the Middle East and gain removal of U.S. troops from the region. Before September 11, signs pointed to a decline in state sponsorship of terrorism. Since the attacks, some countries that are designated by the United States as state sponsors of terrorism, including Iran and Sudan, havecooperated to an extent with the U.S.-led war against Al Qaeda and its Taliban protectors in Afghanistan. Inspite of its cooperation against the Taliban and Al Qaeda, Iran is still considered a major sponsor of radicalIslamic groups that conduct terrorism against Israel. The Arab-Israeli peace process is a longstanding major U.S. foreign policy interest, and the Administration and Congress are concerned about any terrorist groups or state sponsors that oppose the process. Possibly because ofa breakdown in the Palestinian-Israeli peace process in September 2000, Palestinian organizations such asHamas, as well as older groups such as the Popular Front for the Liberation of Palestine that have been inactivefor years, have stepped up operations against Israelis. Following several major terrorist attacks against Israelissince December 2001, the United States has strongly criticized Palestinian Authority President Yasir Arafat forfailing to exert sufficient efforts to constrain these and other groups. Some analysts assert that Israel's actionsagainst the Palestinians have contributed to increased Palestinian support for violence against Israel. U.S. differences with other governments on the strategies for countering terrorism in the Near East have to some extent narrowed since September 11. The United States, in the past, differed with its allies, particularly on howto deal with state sponsors of terrorism; most allied governments believe that engaging these countriesdiplomatically might sometimes be more effective than trying to isolate or punish them. The United States hasgenerally been more inclined than its European allies to employ sanctions and military action to compel statesponsors and groups to abandon terrorism. Post-September 11 developments seem to have validated theimportance of both diplomacy and, in certain circumstances, more forceful responses in dealing with terrorism. Differences with allies have begun to reemerge as the Bush Administration expands its "war on terrorism,"indicating it will seek to prevent the emergence of threats by regimes -- some of which also have ties to terroristgroups -- that are developing weapons of mass destruction (WMD). This report will be updated annually.

Overview of the By-Elections The Republic of the Union of Myanmar (Burma) held parliamentary by-elections on April 1, 2012. Depending on the conduct of the election, the official election results, and the treatment of the newly elected members of parliament, U.S. policy toward Burma may undergo a major shift, possibly including the waiver or removal of some of the current U.S. sanctions. Other nations and the European Union (EU) are reportedly also considering removing sanctions or restrictions on Burma depending on their assessments of the by-elections. The by-elections originally were to fill 48 vacant seats in Burma's various parliaments. Burma's parliamentary system consists of the bicameral Union Parliament ( Pyidaungsu Hluttaw ) plus separate local parliaments for each of the nation's seven states and seven regions. The two chambers of the Union Parliament are the lower house People's Assembly ( Pyithu Hluttaw ) with 440 seats, and the upper house National Assembly ( Amyotha Hluttaw ) with 224 seats. The number of seats in the local parliaments vary. One-quarter of the seats in each chamber of the Union Parliament and in each of the local parliaments are appointed by the commander-in-chief of Burma's military, the Tatmadaw. The April by-elections were to fill 40 vacant seats in People's Assembly, 6 seats in the National Assembly, 1 seat in Ayeyarwady (Irrawaddy) Region, and 1 seat in the Bago (Pegu) Region (see Figure 1 ). However, on March 23, 2012, the Union Election Commission (UEC) postponed voting for three People's Assembly seats in the Kachin State for security reasons. Forty-five of the seats are vacant because the elected member accepted a position in the Union Government. Two seats are vacant because the elected member was removed from office, and the last seat is vacant due to the member's death. All 48 seats were previously held by members of the pro-military Union Solidarity and Development Party (USDP). In terms of the overall balance of power in the Union Parliament, the by-elections will have only a marginal impact. Less than 9% of the total seats in the People's Assembly and under 3% in the National Assembly were contested (see Table 1 ). The by-elections are largely considered significant because of the participation of the NLD, and its Chair Aung San Suu Kyi, who is viewed both domestically and internationally as the leader of Burma's democracy movement. The election campaign unofficially began in March 2012, after each party registered its slate of candidates with the Union Election Commission (UEC). President Thein Sein and the Union Government pledged to make the by-elections free and fair. However, a number of incidents during the campaign period revealed efforts by government officials to undermine the ability of the NLD to carry out its campaign, as well as intimidate or coerce people to support the USDP. The exclusion of certain political parties and the campaign irregularities also raised doubts about how free and fair the by-elections were. On March 20, 2012, it was reported that the Burmese government had notified the Association of Southeast Asian Nations (ASEAN) that it could send election observers to Burma as of March 28, 2012. Invitations to send election observers soon went out to the European Union, the United States, and a number of other nations. In contrast to election day in November 2010, voting on April 1 went comparatively smoothly. Of particular note, there was no repeat of the mysterious appearance of "advance votes" that had marred the previous parliamentary elections. According to the official results released by the UEC, the NLD won all 37 seats in the People's Assembly, 4 seats in the National Assembly, and both of the seats in the regional assemblies. The USDP won 1 seat in the National Assembly in Sagaing Region. The Shan Nationalities Democratic Party (SNDP) won the seat in the National Assembly in the Shan State. As a result of the by-elections, the pro-military parties—the USDP and the National Unity Party (NUP)—and the military control 77.5% of the seats in the People's Assembly, 82.6% of the seats in the National Assembly, and 79.2% of the seats in the combined Union Parliament. This is more than enough votes to pass laws or amend the constitution without the support of any opposition party members. The initial international response to the by-elections was generally positive. The White House issued a short statement congratulating the people of Burma for the elections. A statement attributable to the Spokesperson for Secretary-General Ban Ki-moon also congratulated "the people, Government, and political parties of Myanmar for the peaceful and largely orderly manner in which Sunday's by-elections for vacant parliamentary seats were held." The 10 ASEAN leaders, who were meeting in Cambodia, called for the removal of all sanctions on their fellow ASEAN member. A spokesperson for the European Commission reportedly hinted that the EU would consider removing some of its sanctions on Burma when it meets in late April. Who's Ran—and Who Did Not Run A total of 17 political parties registered the minimum number of three candidates running for office in the by-elections including the pro-democracy NLD and the pro-military USDP (see textbox ). Two newly registered parties—the 88-Forces of People's Party and the Democratic Alliance Party—were abolished for failing to field at least three candidates for the by-elections. The NLD and the USDP reportedly filed candidates for all 48 seats initially to be contested. A spin-off party from the NLD, the National Democratic Front (NDF), and military's political party in the 1990 elections, the National Unity Party, contested approximately 20 seats. A number of political parties did not participate in the by-elections for a variety of reasons. In addition to the two parties abolished for failing to field enough candidates, at least four political parties were be unable to participate in the by-election because the UEC did not act on their applications. Two political parties—the Chin National Party and the Rakhine National Development Party (RNDP)—are not participating because none of the contested seats are located in their home states of Chin and Rakhine, respectively. Four political parties—the Arakan League for Democracy, the Mon National Democratic Front, the Shan Nationalities League for Democracy, and the Zomi National Congress—announced plans to register with the UEC, but not run candidates in the by-elections. Members of the 88-Generation students group, an informal association of the student leaders of Burma's 8888 Uprising, also announced that they would not run candidates as part of a separate political party, but would support the NLD. Several political parties—such as the Karen National Union, the Karenni National Progressive Party, and the Pa-O National Liberation Organization—also decided not to participate in the by-elections because some of their members remain in detention and/or because the Burmese militia continue to attack their associated militias. The Campaign President Thein Sein and the Union Government repeatedly promised free and fair by-elections. Each of the 17 political parties was provided air time on the radio and television during the month of March. In addition, each party was allowed to print a party policy statement in the government-run newspaper, The New Light of Myanmar . However, both the texts of the broadcasts and the printed policy statements had to be submitted in advance and were subject to censorship. The election campaign was marred by reports of government officials using their official powers to hinder the NLD's ability to hold political rallies, as well as intimidating and threatening voters to support USDP candidates. In addition, the USDP allegedly developed a "dirty tricks" campaign to ensure their candidates win the elections. The Union Election Commission (UEC) took steps to undo the roadblocks placed before the NLD candidates, but reports of unfair campaign practices continue to appear in the press. One of the most common impediments placed before the NLD campaign was the refusal of the Ministry of Sports to allow the NLD to hold rallies in football (soccer) stadia. NLD rallies at which Aung San Suu Kyi spoke routinely drew over 10,000 people, making it desirable to use the stadia. On February 17, 2012, the NLD wanted to hold a rally at Pyapon Stadium in the Irrawaddy region, but the sports ministry refused permission and the event was relocated to the outskirts of the city. Previous requests to use a football stadium on February 15 in the Rangoon region and in Mandalay on February 4 were also denied by the sports ministry. On February 20, 2012, the UEC instructed the sports ministry to lift its restrictions on the use of sports stadia. While the block on NLD access to sports stadia seemed over, the Mon State Election Commission refused to grant permission for the NLD to hold a rally at Than Lwin Garden in the city of Moulmein. Besides their apparent attempts to block NLD rallies, it was alleged that local government officials and the USDP intimidated and threatened voters to support the USDP as part of what opposition groups saw as a larger "dirty tricks" campaign. Civil servants in the capital of Nay Pyi Taw (Naypyidaw) were reportedly told not to attend NLD rallies. The residents of one village were told they would not be connected to the electric grid if someone in their household attended an NLD rally. Factory workers reportedly were warned that they will lose their jobs if they do not vote for the USDP. One report alleged that the USDP had a secret election strategy paper calling for the use of bribery, vote-buying, intimidation, and fraud to win the parliamentary seats in the by-election. The NLD also reported other forms of campaign irregularities. It claimed that the official voter registration lists included a significant number of dead people, but omitted many eligible voters. In addition, the NLD reported that in some parts of the country, advance ballots had been collected well ahead of the official dates of March 30 and 31. It was alleged that advanced ballots were used by the SPDC, the UEC, and the USDP to steal some of the seats in the November 2010 parliamentary elections. The UEC's decision to postpone the voting for the three People's Assembly seats from the Kachin State was criticized as being politically motivated. Some of the opposition party candidates for those seats disputed the UEC's claim of security problems, maintaining that the districts were not in areas where the Tatmadaw and the Kachin Independence Army (KIA) have been fighting. The NLD, NDF, USDP, and the Shan Nationalities Democratic Party had candidates running in one or more of the postponed constituencies. The Alternative ASEAN Network on Burma (ALTSEAN) released an overview of the by-elections on March 27, 2012, asserting that the conduct of the elections had fallen short of international standards. According to ALTSEAN's assessment, the by-elections fell short of international standards in several ways, including: The election laws limited political participation; The UEC is neither independent nor impartial; Campaign restrictions remained in place; The complaint process is ineffective and inaccessible; Government officials and UEC representatives interfered in the activities of opposition parties; Government officials and USDP members threatened, harassed, or attempted to bribe voters; Thousands of voters were disenfranchised because of inaccurate voter registration lists; and Campaign materials were censored. Despite the reported irregularities, rallies at which Aung San Suu Kyi spoke proved to be very popular. Turnout at these rallies regularly topped 10,000 people, and in some cases over 40,000 people attended the event. The press did not provided much coverage of the political rallies held by the USDP or the smaller opposition parties, but it is presumed that these events were not as well attended. The Union Government was under significant international pressure to allow international election monitors or observers for the April by-election. The Burmese government initially said that international observers were not necessary, but President Thein Sein indicated on February 21 that the Burmese government was "seriously considering" allowing observers from ASEAN. On March 20, 2012, the Association of Southeast Asian Nations (ASEAN) announced that it had been invited to send 5 observers and 18 parliamentarians (2 from each of the other 9 ASEAN member nations) starting on March 28, 2012. On March 22, the European Union (EU), the United Nations, and the United States were also invited to send a limited number of election observers. Other nations also were allowed to send election monitors. However, at the same time reports of the invitation of international observers from ASEAN, the EU, the United Nations, and the United States appeared in the press, an election monitor for the Bangkok-based Asian Network for Free Elections was deported by the Union Government. The Vote By most accounts, voting on April 1, 2012, proceeded largely without a repeat of the irregularities that marred the parliamentary elections held on November 7, 2010. By and large, the polling centers opened and closed on time, with few technical difficulties. While there were allegations of inaccuracies in voter registration rolls, people were able to vote and the participating political parties, members of the diplomatic community, international election witnesses, and the local and international press were able to observe from inside the polling centers. After the polls were closed, the ballot counting was generally conducted in the presence of witnesses for the contesting political parties and members of the public. In some cases, spoiled ballots were shown to demonstrate that they were not valid. After sorting, the ballots were counted before witnesses and the results for the polling center were recorded. The April by-election vote differed from the November election in several important ways. For example, no unexplained boxes of "advanced votes" appeared after the polling centers were closed on April 1, as happened in November 2010. In addition, the ballot counting and recording of the results on April 1 was done before witnesses, in contrast to being done behind closed doors in many polling centers in November 2010. The Results The UEC announced the official results on April 2 and 3, 2012, and the text of the official announcements were printed in the government-run newspaper, The New Light of Myanmar , on April 3 and 4, 2012. The NLD won all 37 seats in the People's Assembly, four seats in the National Assembly, and both of the seats in the regional assemblies. Aung San Suu Kyi was among the NLD winners; she will be a member of the People's Assembly for the Yangon (Rangoon) Region. The USDP won one seat in the National Assembly located in the Sagaing Region. The Shan Nationalities Democratic Party (SNDP) won one the National Assembly located in the Shan State. While the results may be considered a landslide victory for the NLD and a stunning defeat for the USDP, they do not significantly alter the balance of power in the two chambers of the Union Parliament (see Table 2 ). The pro-military parties—the USDP and the NUP—combined with the appointed military seats hold an overwhelming majority in both chambers and 79.2% of the seats in the Union Parliament, enough to pass laws and amend the constitution without support from opposition parties. The NLD has become the largest opposition party in both chambers of the Union Parliament, overtaking the SNDP in the People's Assembly and the Rakhine Nationals Progressive Party in the National Assembly. U.S. Response After the UEC officially announced the dates for the parliamentary by-elections, the Obama Administration called upon the Burmese government to take the measures necessary to ensure that the elections would be held in a free and fair manner. During his trip to Burma three weeks before the by-elections, Special Representative and Policy Coordinator for Burma Derek Mitchell reiterated the U.S. position, saying, "What we're interested in is the process. We're committed to a free, fair, and transparent process that truly represents the will of the people of this country." In addition, senior U.S. officials indicated to the Burmese government that it should consider allowing international observers to watch the election campaign, the balloting process, and the vote-counting to confirm that the election was conducted according to internationally accepted standards. The day after the by-elections, the White House issued a brief statement, saying: We congratulate the people of Burma on their participation in the electoral process, and Aung San Suu Kyi and the National League for Democracy on their strong showing in the polls. This election is an important step in Burma's democratic transformation, and we hope it is an indication that the Government of Burma intends to continue along the path of greater openness, transparency, and reform. The Obama Administration has signaled that it would consider modifying or waiving some of the existing sanctions on Burma if it determines that the elections were sufficiently free and fair to warrant such a response. It has not, however, announced what changes in the sanctions are being considered. Nor has it disclosed the manner in which the possible changes would be made, including whether it intends to approach Congress to pass legislation. Among the criteria to be considered in determining if the by-elections were sufficiently free and fair are the conduct of the campaign, the voting process, and the official results. Many observers believe that Aung San Suu Kyi's assessment of the election process will influence the Obama Administration's decision as well. Some analysts suggest that the U.S. response may be done in a series of steps, with some possible sanction modifications being made only after the winners of the by-elections have been sworn into office and sufficient time has passed to assess how the new members of Parliament are being treated by the USDP majority. The Obama Administration's response to the by-elections may also be influenced by how other countries and the EU react to the election results. On January 23, 2012, the EU suspended a visa ban against 87 individuals, including President Thein Sein, the nation's two vice presidents, its cabinet members, and the speakers of the two houses of Burma's parliament. In addition, the EU has indicated that—pending the conduct of Burma's by-elections and continuing progress in a number of areas—it could relax other restrictive measures during the next comprehensive review of Burma sanctions, most likely to occur in late April. Australia and Japan have also signaled their intent to review their sanctions on Burma following the by-elections. The Obama Administration may decide to weigh its response after consultation with other entities that have imposed sanctions on Burma. Other Developments in Burma While the parliamentary by-elections are drawing much of the attention in Burma, important developments have occurred with respect to other major issues of concern for the United States, particularly the continued detention of political prisoners, the Tatmadaw's continued attacks on ethnic militias, and the continued human rights violations of civilians in conflict areas. The perceived status of these issues is likely to influence the Obama Administration's potential response to the outcome of the parliamentary by-elections. Political Prisoners Since assuming office in April 2011, President Thein Sein has authorized four separate amnesties or pardons for large groups of prisoners in Burma, including several hundred political prisoners (see Table 3 ). However, hundreds of political prisoners remain in detention. Burma's political prisoners include members of the NLD and other opposition parties, representatives of various ethnic groups in Burma, Buddhist monks and nuns, student and youth organizers, news reporters, and other dissidents. Conditions for the political prisoners are reportedly harsh. According to the Thailand-based advocacy group Assistance Association for Political Prisoners (Burma) (AAPP(B)), 458 political prisoners reportedly remained in detention in Burma as of March 17, 2012. The AAPP(B) has also compiled a list of 403 additional political prisoners allegedly under detention but whose location has not been verified. The Organization of Former Political Prisoners (OFPP), a group of recently recent political prisoners, has released a list of 619 political prisoners still under detention. The State Department's Bureau of Democracy, Human Rights, and Labor has compiled and continues to update a list of all known political prisoners in Burma based on nongovernmental organization (NGO) and government sources, which forms the basis of the State Department's ongoing engagement with the government of Burma on political prisoners. The Burmese government has given significantly different estimates of the number of political prisoners in custody. President Thein Sein told reporters in Bali, Indonesia, on November 20, 2011, that there were no political prisoners in Burma and that "all prisoners have broken the law." However, Ko Ko Hlaing, a close political advisor to President Thein Sein, estimated the number of political prisoners in detention in Burma at about 600 prior to the October 2011 prisoner amnesty. Following the January 13 release, Home Affairs Minister Lieutenant General Ko Ko told the press that 302 of the 651 people released were "prisoners of conscience," and that 128 dissidents remain in detention. Ethnic Conflicts and Ceasefire Talks The Union Government has apparently abandoned the SPDC initiative to transform the various ethnic militias into Border Guard Forces (BGFs) and returned to a policy of negotiating ceasefire agreements with the militias' representative organizations. Nine of the 16 ethnic minority groups have signed initial ceasefire agreements with the Union Government, but in many cases fighting continues. Ceasefire talks with the larger ethnic groups—particularly the Kachin Independence Organization (KIO)—have been unsuccessful. President Thein Sein has instructed Commander-in-Chief General Min Aung Hlaing to order his troops to stop all offensives against the ethnic militias, but such assaults reportedly continue. In addition, the Tatmadaw allegedly continue their past practices of mistreating the civilians in conflict areas, resulting in the internal displacement of tens of thousands of people and the flight of an unknown number of people across the borders into China and Thailand. As a result, the human rights situation in Burma—particularly in conflict areas—has not improved significantly over the last year, according to a recent report by Human Rights Watch. A negotiating team headed by Minister of Railways Aung Min has concluded initial ceasefire agreements with several ethnic organizations. A second negotiating team, headed by member of Parliament Aung Thaung and responsible for the talks with the KIO, has had less success. The negotiating teams' goals appear to be to secure promises to not secede from Burma and stop hostilities in exchange for autonomy in militia-controlled areas and a promise for future talks aimed a more permanent ceasefire or peace agreement. The two major stumbling blocks in the negotiations are the general terms of the permanent ceasefire or peace agreement and the militias' lack of trust of the Burmese government and the military, given their past history of breaking ceasefire agreements. Preliminary ceasefire agreements have been signed with the Chin National Front, the Democratic Karen Buddhist Army, the Karen National Union, the New Mon State Party, the Shan State Army—North, the Shan State Army—South, and several smaller ethnic militias. Talks with the KIO have so far failed to come to a preliminary agreement. To date, the Union Government has refused to hold ceasefire talks with the Arakan Liberation Party. Human Rights The ongoing fighting in the ethnic conflict areas and reports of continued political repression in Burma's urban areas indicate that progress on human rights remains slow. According to Human Rights Watch, "Burma's human rights situation remained dire in 2012 despite some significant moves by the government…." The organization noted the relaxation of some media restrictions and censorship of the press, as well as the passage of legislation allowing the formation of trade unions and the holding of peaceful protests. However, pre-publication censorship is still required for most publications, and certain topics remain forbidden, such as coverage of the ongoing fighting in conflict areas or criticism of the Tatmadaw. In addition, the new laws have yet to be enforced. For example, attempts to register labor unions have been rejected supposedly because of a lack of implementing rules and regulations. In the conflict areas, reports of grievous human rights abuses conducted by the Burmese military continue to appear in the international press. The Tatmadaw allegedly have engaged in the following activities since the Union Government took power: Summary execution of militia members and civilians; Rape and sexual assault of women and girls in conflict areas; Forced labor of civilians as porters, human shields, or as human "minesweepers"; Impressments of under-aged children as "child soldiers"; and Destruction and expropriation of property. Similar allegations have been made against some of the ethnic militias. The continued fighting in Burma has resulted in ten of thousands of internally displaced people (IDPs) and thousands of new refugees fleeing into China and Thailand. The situation is apparently quite severe for the IDPs in the Kachin state, where the Union Government and the Tatmadaw have largely refused to allow international relief organizations access to the IDPs. The Chinese government recently admitted that hundreds of Burmese refugees have crossed the border. Thailand has also acknowledged that the recent fighting in eastern Burma has led to an inflow of refugees. Implications for Congress The April parliamentary by-elections provide Burma's Union Government, its Union Parliament, and the Tatmadaw another opportunity to demonstrate their commitment to political reform and national reconciliation. They also provide Congress with more evidence by which to assess the present situation in Burma and to possibly re-examine current U.S. policy. In addition, Congress may be asked by the Obama Administration to alter or amend one or more of the existing laws governing U.S. sanctions on Burma, depending on the outcome of the parliamentary by-elections. One of the key issues likely to be considered is the criteria by which to assess the by-elections. Events to date suggest that the elections did not achieve the four standards set forth by U.N. Special Rapporteur Tomás Quintana—free, fair, transparent, and inclusive. The exclusion of some political parties, constraints on campaigning activities, and censorship of campaign speeches and materials are examples of actions where expectations for inclusive, free, and fair elections may not have been fully met. Another likely key issue is the establishment of the criteria by which to select and construct a U.S. response. One criterion used in the past has been the rewarding of positive developments by providing Burma with something it desires. A second criterion suggested is to respond in a manner that is expected to encourage or create incentives for the Burmese government to undertake further reforms. A third criterion is to take actions that bolster the political power or authority of Burmese officials identified as being pro-reform, and/or undermine the power or authority of Burmese officials views as being barriers to progress in Burma. Other criteria for the formation of the U.S. response have been discussed, but it may benefit Congress to consider its goals and objections when taking up the issue of a possible response to the April by-elections. Finally, the Obama Administration may approach Congress with specific requests for the alternation or amendment of existing laws imposing sanctions on Burma. In many cases, the President has the authority to temporarily or permanently waive existing sanctions. However, in some cases, such authority does not exist and reduction or removal of the sanctions will require congressional action. The Obama Administration has already begun consultations with Congress on the future development of U.S. policy towards Burma. During the period prior to and after the by-elections, Congress may decide to conduct hearings and undertake other forms of investigation into the situation in Burma in preparation for its response to a request from the Obama Administration.

The Republic of the Union of Myanmar (Burma) held parliamentary by-elections on April 1, 2012. According to the official results announced by Union Election Commission (UEC), the National League for Democracy (NLD) won all but two of the 45 seats, including NLD Chair Aung San Suu Kyi winning a seat in the lower house of Burma's national parliament. Depending its assessment of the conduct of the election and the official election results, the Obama Administration may seek to alter policy towards Burma, possibly including the waiver or removal of some current sanctions. Such a shift may require congressional action, or may be done using executive authority granted by existing laws. The by-elections originally were to fill 46 vacant seats in Burma's national parliament (out of a total of 664 seats) and 2 seats in local parliaments. On March 23, the UEC postponed voting for three seats from the Kachin State for security reasons. A total of 17 political parties ran candidates in the by-elections, including the NLD and the pro-military Union Solidarity and Development Party (USDP). The by-elections are viewed as significant primarily because of the decision by the NLD to compete for the vacant seats. The NLD and others allege that some Burmese officials and the USDP took steps to disrupt the NLD's campaign and possibly win the by-elections by fraudulent means. Despite these problems, events at which Aung San Suu Kyi spoke routinely drew tens of thousands of people. In response to international pressure, the Union Government invited the Association of Southeast Asian Nations (ASEAN), the European Union (EU), the United Nations, the United States, and other nations to send election observers. Although largely free and fair by-elections would be a significant development, the current political situation in Burma remains a source of serious concern for U.S. policy makers. Hundreds of political prisoners remain in detention. Despite ceasefire talks, fighting between the Burmese military and various ethnic militias continues, resulting in a new flow of internally displaced people (IDPs) and refugees into nearby countries. Reports of severe human rights abuses by the Burmese military against civilians in conflict areas regularly appear in the international press. The response of the Obama Administration to Burma's by-elections will depend on the conduct of the campaign, the balloting process, the veracity of the official election results, and possibly on how the winners of the elections are treated once they become members of Burma's parliaments. In addition, the assessments of opposition parties (particularly the NLD and its chairperson, Aung San Suu Kyi), other nations and the EU to the by-elections may influence the U.S. response. Under current law, President Barack Obama has the authority to waive many—but not all—of the existing sanctions on Burma, and he may choose to exercise that authority following the by-elections. Alternatively, the White House may ask Congress to consider legislation removing or altering some the existing sanctions. For its own part, Congress may decide to re-examine U.S. policy toward Burma and make whatever changes it deems appropriate. For additional information on Burma, see CRS Report R41971, U.S. Policy Towards Burma: Issues for the 112th Congress; CRS Report R41336, U.S. Sanctions on Burma; and CRS Report R42363, Burma's Political Prisoners and U.S. Sanctions. The report will be updated following the announcement of the official results of the by-elections, and as circumstances warrant.

Introduction The world economy may now be undergoing its most severe crisis since the Great Depression. The economies of the United States, Japan, and Europe are in recession and the emerging economies in Asia and Latin America are experiencing slower growth as well. According to the International Monetary Fund (IMF), world economic activity is projected to contract by 1.3% in 2009, the first such fall in 60 years. Developed countries are projected to be the hardest hit, with a 3.8% decline in overall output. Developing countries are expected to grow on average by only 1.2%, after growing by 5.9% in 2008 As economic activity has slowed around the globe and trade finance has become harder to obtain, world trade flows have also declined. The decline, which began in the summer of 2008, has affected all the major trading countries. Overall, the World Bank is predicting that world trade flows will decline by 10% in real terms in 2009 after growing by 4% in 2008. Exports of developed countries are forecast to drop by roughly 14% and the decline for developing countries is projected to be about 7%. Emblematic of these concerns, the leaders of the most-developed G20 countries proposed at a November 2008 meeting "to refrain from raising new barriers on trade in goods and services" for at least 12 months. A second G20 leaders meeting in April 2009 similarly committed to "... refrain from raising new barriers to investment or to trade in goods and services, imposing new restrictions, or implementing WTO inconsistent measures to stimulate exports" until the end of 2010, and to "rectify promptly any such measure." Underlying these declarations was a view that government efforts to shield local companies from the global economic downturn through the imposition of trade barriers would only curb economic growth and prolong the global downturn. More starkly, there was an additional concern that a rise in trade barriers could turn the global downturn into a global depression. In the view of some analysts, this is what happened in the 1930s as a result of the passage of the U.S. Smoot-Hawley Tariff Act of 1930, an event which triggered a cycle of retaliation and counter-retaliation. The specter of widespread protectionism or trade wars has been the subject of numerous newspaper and press articles. Until recently it was possible to dismiss many mass media alarms on the grounds that today's global economy has numerous firewalls against protectionism that did not exist in the 1930s. But the accelerating global economic decline has increased pressures on policymakers to adopt a number of measures to assist distressed industries that are considered by some observers to be "protectionist." Protectionism is a very elastic concept with multiple meanings. For many economists, no form of protection is legitimate because such interventions distort prices and misallocate resources over time. For some trade lawyers, only measures that are not consistent with WTO rules and obligations are protectionist and considered unacceptable. For many political realists and policymakers, protective measures that provide help to constituents in times of economic distress are a political responsibility and necessity, not protectionism. For some historians, efforts by countries to improve their own trade position and help domestic industries at the expense of others by imposing measures that artificially increase exports or limit imports describe protectionism. Still other historians define protectionism as a return to the policies of the 1930s, which are characterized by substantial across the board increases in trade barriers often directed at particular countries and cycles of retaliation and counter-retaliation. To analyze the relationship between the economic downturn and protectionism, this report constructs three scenarios. Each scenario reflects a different dimension of the relationship between the economic downturn and protectionism. The scenarios are a continuum based on an analysis of the situation today to the direction that trade protectionism could take under different assumptions and circumstances. The scenarios are not predictions, but descriptions of how and why protectionist pressures could be manifested and transmitted under very different situations and policy responses. Under a low impact s cenario existing WTO rules and obligations, bolstered by a high level of global interdependence, keep pressures for protection under control. Proposals for protection, if implemented, have a modest impact on global trade flows. Under a medium impact scenario WTO rules prove inadequate or are disregarded due to the exigencies of the economic crisis. As a result, trade and investment flows over time could be diverted or fall outside WTO surveillance, thereby weakening the world trading system. Under a high impact scenario WTO rules are violated or ignored, major trade conflicts occur, and the world trading system is damaged. This threat arises from longstanding trade imbalances driven by distorted global savings and consumption patterns. The depth and duration of the economic downturn likely will be a major determinant of which scenario or scenarios prevail. At the same time, the degree to which protectionist measures are adopted could affect the course of the economic downturn as well. A concluding section discusses several policy challenges that rising pressures for trade protection may pose for policymakers and the 111 th Congress. This issue has been on the agenda of the G-20 countries when the leaders met in London in April 2009 and on the agenda of the G-8 countries when the finance ministers met in Trieste in June 2009. Low Impact Scenario: Firewalls Hold As WTO Rules and Obligations Constrain Protectionist Measures There are a number of reasons why the threat of a return to protectionist, beggar-thy-neighbor policies could be vastly overstated. Unlike the 1930s, today's global economy has several strong firewalls to prevent governments from raising trade barriers that result in a cycle of retaliation and counter-retaliation. These firewalls include more institutionalized obstacles to protectionism built into the WTO system, more policy instruments to address the economic slowdown, and a more interdependent and open world economy than existed in the 1930s. In addition, some in today's media may tend to overstate the threat of protectionism by not always distinguishing between protectionist actions and protectionist pressures and/or by equating legitimate forms of protection with protectionism. The fact that there is ample room for increases in trade measures and barriers that are consistent with the rules and obligations of the WTO often may go unappreciated in some press coverage. These trade measures and barriers include increases in applied tariffs to bound rates, and imposition of countervailing and antidumping duties, so-called 'defensive' trade measures. Protection for limited periods of time and under prescribed conditions is built into the rules of the WTO as a political safety valve and as a recognition of the human and social costs that are associated with the often wrenching adjustments that accompany increased trade competition. Firewalls Against Protectionism WTO rules today serve to keep a lid on trade barriers of its 153 members through an elaborate set of mutual obligations and dispute settlement procedures. Unlike the 1930s when countries could impose higher trade barriers unilaterally without violating any international agreements or anticipating a foreign reaction, under today's rules members can take their disputes to the WTO for settlement rather than engaging in reciprocal retaliatory actions. The fact that countries violating WTO obligations can face WTO-sanctioned retaliation helps constrain outbreaks of unilateral actions that could be mutually harmful. Pressures for protection are also dampened by a world economy that is much more interdependent and integrated than in the 1930s. Leading producers have become so international in their production operations and supply chains that they have developed a vested interest in resisting protectionism. Many industries that have faced import competition in the past – such as televisions and semiconductors—have found that international diversification or joint ventures with foreign partners are a more profitable way of coping with global competition than blocking goods at the border. In addition, many domestic industries have less incentive to ask for import restrictions because foreign rivals now produce in the domestic market, eliminating the benefits of trade barriers for domestic firms. Unlike the early 1930s, when governments took little responsibility for propping up financial institutions and were unable to pursue expansionary monetary policies due to fixed exchange rates under the gold standard, policymakers around the world today are adopting expansionary fiscal and monetary policies. These expansionary policies, in turn, have the capability of dampening protectionist pressures and demands that stem from job losses and related economic hardship with lower interest rates and increased expenditures on unemployment benefits and health care benefits. A related consideration is that today's world economy is much more open than the world economy of the 1930s. Average tariffs on world trade have come down from the 50% range in the 1930s, to the 25% range in the 1980s, and to less than 10% today. Under these circumstances, it would require tremendous increases in protection to get the world back to anywhere near the conditions of the 1930s, although a major increase in tariffs (e.g. a doubling) would be disruptive even if it left tariffs well below the 1930s levels. Scorecard of Protective Measures To Date Empirical support exists for the view that existing legal, economic, and political firewalls are restraining today's protectionist pressures. Most importantly, Pascal Lamy, the WTO's Director General, reported in January 2009 that most WTO members have successfully kept domestic protectionist pressures under control "with only limited evidence of increases in trade restricting or trade distorting measures" taken during the last six months of 2008. This assessment was based on the first report of the WTO secretariat on the trade effects of the global economic crisis. The report found only "limited evidence" of an increase in tariffs, non-tariff barriers or trade-remedy actions by member countries, but noted that the most significant actions taken in response to the global crisis have involved "financial support of one kind or another to banks and other financial institutions and to certain industries, notably the automobile industry." The WTO report notes tariff increases on selected products being implemented by India, Russia, Ecuador, and Ukraine. Countries adopting non-tariff measures include Indonesia (port of entry barriers) and Argentina (import licensing requirements). Argentina was cited for measures that attempt to boost exports of selected products. But the report indicates that there has been "no dramatic increase" in antidumping investigations in the second half of 2008 compared to first half of 2008, but raised the possibility of increased trade remedy actions in 2009. In two follow-up reports to date, the WTO has reached similar conclusions of mixed trade policy developments. On the one hand, WTO monitoring efforts have detected an increase in trade restrictions and distortions in selected tradable goods sectors of the world economy. On the other hand, the WTO has noted that more governments have introduced trade-opening and facilitating measures in 2009 to date. The World Bank, which has also been monitoring trade restrictions proposed and adopted since the beginning of the financial crisis, reached a conclusion similar to that of the WTO. Its initial report determined that there have been 47 trade restrictive measures imposed since the financial crisis began last summer, including 17 from G-20 countries, but that "these measures have probably had only marginal effects on trade flows to date." In addition to the measures cited by the WTO, the World Bank report cited China's import ban on various food products from the EU, and export subsidies provided by the EU, China, and India. Contrary to the WTO report, the World Bank report determined that "the number of antidumping cases (both investigations initiated and imposition of duties) surged in 2008." Proposals Modified Further support for the "firewalls are holding" perspective can also be found in the evolution of proposals for protection that have been either modified or withdrawn. The two most prominent cases that fit this description are a Buy American provision contained in the U.S. stimulus legislation ( P.L. 111-5 , Sec. 1605), and a French proposal to require its carmakers to produce and source locally. As originally passed by the House on January 28, 2009, the stimulus bill contained a provision that would have required the use of U.S. iron and steel for infrastructure projects funded by the bill. The Senate's amended version of the provision, which prevailed in conference, went further in requiring the use of U.S. manufactured goods (in addition to iron and steel) in specified projects, but also included language requiring that the provision had to be implemented in a manner consistent with U.S. international trade obligations. This language was vigorously supported by U.S. multinational companies and trading partners such as the European Union and Canada. Some observers maintain that the Buy American provision agreed to in the stimulus bill may have only a very limited impact on international trade flows. This is because the law waives Buy American restrictions according to a number of broad public interest tests, including if "the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities." With imported goods now comprising nearly 40% of all manufactured goods sold in the United States, imports in a large number of areas may not be constrained. Supporters also say the Buy American provision is the kind of measure that is often dubbed "protectionist" on questionable grounds. Up until 1979, when the Tokyo Round of trade negotiations reached agreement on a voluntary Agreement on Government Procurement (AGP), government procurement was entirely excluded from international trading system obligations. Today only 39 of 153 WTO members have joined the AGP, an agreement that opens up government procurement according to negotiated sectors, agencies, and thresholds. The limited nature of the AGP reflects, in part, the fact that government procurement decisions are still viewed largely as a means of achieving legitimate domestic policy goals, including increasing the probability that public spending will generate domestic jobs. Opponents dispute the claims that this provision may have a small impact on international trade and is not "protectionist." A key assertion is that many major U.S. trading partners that are not signatories to the AGP, such as Brazil, China, and India, will face discrimination in bidding on the projects covered by the law. Facing such discrimination, these countries may decide to retaliate by pressuring their companies perhaps to buy from European producers instead of U.S. suppliers or by pursuing their own buy-national policies. For example, while China recently removed from one of its recent stimulus bills a provision instructing "governments of different levels to give priority to home-grown light-industry products," the mere public introduction of the clause reportedly has been enough to get provincial authorities to favor local over foreign suppliers in the procurement of a broad range of products. The French government's decision in February 2009 to provide $3.9 billion in preferential loans to Renault and Peugeot-Citroen was similarly controversial due to buy-local or buy-national concerns. As a condition for the loans, it was initially reported that the French government was requiring these two automakers to source from French suppliers and to close factories in other countries to ensure that car factories located in France keep operating. This apparent effort to prevent outsourcing of French car production provoked a strong reaction from the Czech Republic and Slovakia, countries where Peugeot-Citroen had factories. The Czech Republic immediately called for an emergency European summit to protest France's "protectionist plan" and the European Commission (EC) agreed to investigate what appeared to be a violation the EU's single market rules. After weeks of discussion with the EC, French authorities pledged not to implement measures that would breach the principles of the single market by requiring manufacturing activities to be maintained in France. Medium Impact Scenario: WTO Rules Prove Inadequate, Particularly for Sector-Specific Assistance, and Trading System Is Weakened Under this scenario, WTO rules and obligations are disregarded or prove ineffective and trade and capital flows are diverted or misallocated. As a result, the global trading system could be weakened over time. This scenario involves sector specific financial assistance programs that governments around the world have developed in response to the economic crisis. To date these programs have been directed primarily to auto companies and banks. In the auto sector, almost every producing country—the United States, Canada, Sweden, Germany, France, Australia, Argentina, Brazil, South Korea, and China – has launched programs to aid producers or stimulate car sales. One estimate totals these subsidies at $48 billion worldwide, including $17.4 billion thus far in the United States. In the financial services sector, the WTO reports that 58 different programs worth trillions of dollars have been announced by 26 countries in an effort to strengthen struggling institutions. Much larger estimates have been provided independent researchers. These financial assistance programs have been devised and implemented in response to extraordinary conditions. In the financial sector, as some major banks and institutions have appeared on the edge of bankruptcy, government rescue packages and takeovers have increased in scope and magnitude in an effort to avoid contagion or systematic risk—not by a desire to save failing companies. The destruction of wealth in the financial sector has also hurt the real economy and key industrial sectors, with large firms facing bankruptcy and large cut-backs in their labor force. While alleged subsidies contained in the rescue packages under some circumstances can improve national economic performance and resource allocation, they may also be a vehicle for a kind of murky protection and misallocation of resources. Whether any of the many different rescue packages discriminate against foreign firms may also become an important consideration in judging their impact on the trading system over time. Auto Sector Rescue Programs Slumping sales and employment have led the major auto producing countries to adopt or consider a range of financial assistance programs. The measures vary in the degree to which they help companies directly through loans and guarantees or indirectly through tax incentives and credits for buying new cars. The programs also differ to the extent they try to insure that only domestic companies may benefit. Because many of these programs are still evolving or lack publicly-announced details, the trade consequences are mostly speculative. Some experts have argued that these assistance programs could be challenged as violations of the subsidies rules under the WTO Agreement on Subsidies and Countervailing Measures (ASCM). Under Article 3 of the ASCM, subsidies that are contingent upon export performance or upon the use of domestic over imported goods are prohibited. Countries could also challenge another country's assistance programs on the grounds that loans were not provided on a commercial basis. However, such a challenge would also need to prove that trade injury occurred (either "serious prejudice" or a "threat of serious prejudice") to car producers of other WTO signatories. This could prove a difficult hurdle since several years of evidence are required to show that imports have been displaced or impeded, prices have been suppressed or undercut, and imports have lost market share. As a practical matter, many observers think that WTO cases are unlikely to be filed. This is because a country bringing the challenge could expect that its own auto industry assistance program could be similarly challenged. Considerable cross-ownership of companies complicates such filings as well. In addition, foreign carmakers operating in the United States, such as Toyota and Honda, may be unwilling to support any WTO complaint given that they have received tax-breaks or subsidies to build factories from U.S. state governments. Foreign auto-assistance measures such as loans or loan guarantees could also be challenged under each country's countervailing duty (CVD) laws. If successful, countervailing duties could be imposed to offset any competitive advantages that an auto exporting company may have received from its government. Such cases must meet similar tests to a challenge under the ASCM, but it is the industry, rather than the government, that would bring a case. While it could be easier to obtain an affirmative finding in a countervailing duty case because national authorities, not WTO panels, make the injury determinations, these cases can take up to two to three years to resolve. Assuming a duty eventually was imposed on imported autos, a car company in the targeted country could file a similar case against the country that imposed the duty. If the CVD cases proved successful, subsidies may stay in place and generate inefficient production over time, with world trade in autos becoming more fragmented and protected. Other concerns have been raised beyond trade diversion. One is that the various subsidy packages being implemented around the world may not only strain national budgets, but also result in a misallocation of resources. Firms that have access to the largest subsidies, under this perspective, will be able to ride out the global economic downturn longer, raising concern that access to state funds rather than commercial viability determines success. Another concern is that more industries will be encouraged to lobby for preferential financing, encouraging a subsidy race in other sectors. For example, auto parts manufacturers in some countries are now requesting assistance similar to what the automakers have received. A final concern is that the auto industry could become isolated from WTO rules and disciplines, similar to the situation in the shipbuilding and steel industries. Under this perspective, if countries set up their own criteria for permissible subsidies with little regard for market conditions, the world trading system could be weakened. Financial Sector Rescue Programs As the financial crisis has spread over the world, governments have launched extensive rescue programs for troubled banks and other institutions, along with other monetary and fiscal policy initiatives. For example, Iceland has nationalized all its major banks, and the United Kingdom has taken a 68% share of the Royal Bank of Scotland. The United States has taken control over Fannie Mae and Freddie Mac and has extended billions of dollars to American International Group (AIG) and Citigroup. In U.S. cases, the government has received interest or equity stakes in return for assistance with the subsidy element taking the form of more favorable terms and financing than the companies could receive on the open market. From a trade perspective, a concern is that some governments, like Britain, are directing their banks with global operations to lend to domestic companies and citizens before providing loans to foreigners. While these actions may not violate any international legal obligations (WTO rules on subsidies pertain only to goods and disciplines on services do not regulate subsidies), this form of financial protectionism may undermine the spirit of globalization that supports an open world trading system. At the same time, it can be noted that there has been substantial international cooperation in the financial sphere among the key central banks of the world to deal with the financial crisis. High Impact Scenario: WTO Rules Are Violated, Major Trade Conflicts Occur, And Trading System Is Undermined Under this scenario, WTO rules are violated or ignored and major trade conflicts occur. As a result, the functioning and legitimacy of the world trading system is undermined. This threat arises from the longstanding presence of highly skewed trade balances driven by distorted global consumption and savings patterns—patterns that were an underlying cause of the global economic downturn. High savings countries such as China, Japan and Germany produced more than they consumed and had to rely on export-led growth to help keep their economies growing. In the process, these three countries, plus the oil-exporting countries, experienced large and growing current account surpluses. In 2008, the current account surpluses were estimated to be around $2 trillion. The United States, on the other hand, was a low savings country, consuming much and having to borrow from the rest of the world to finance its investment needs. Re-balancing Trade Flows Overall trade imbalances are caused by different international savings and investment levels. Much of the earnings of the current account surplus countries were recycled to U.S. capital markets in the form of purchases of U.S. securities, helping make capital abundant and cheap in the United States. Cheap and abundant capital, in turn, facilitated rising levels of U.S. consumption and investment in housing. When U.S. consumption began to contract due to the rapid decline in housing prices and the credit crisis, the pattern of global trade and financial flows was no longer tenable. Policies that correct the imbalances and provide for more balanced growth in the next decade are important both for a global economic recovery and an avoidance of an outbreak of trade conflict. For current account deficit countries like the United States, where domestic spending exceeds current production, spending must decline and savings rise. This can be achieved by a reduction of consumption or investment (or a combination of both). This, of course, is happening quickly in the United States with rising unemployment and the credit crunch forcing drastic reductions in domestic spending, particularly investment spending. The U.S. current account deficit has now begun to fall, from 6% of GDP in 2006 to 4.5% in 2008, and possibly to 3% or even 2% in 2009. For the current account surplus countries, the rapid U.S. adjustment means that they will have to sustain their growth more by stimulating domestic demand and less by net exports. For these countries, where domestic spending is less than current production, domestic spending will need to rise. This, in turn, can be accomplished by increases in consumption, investment, or government spending (or a combination of all three). While expansive government spending programs or higher domestic consumption generally are the preferred path for the demand increases to take place, sharp reductions in supply or production in current account surplus countries are also possible. For example, China, the largest current account surplus country, would have to be able to increase its consumption to an estimated 17% of GDP—a 40% expansion—to offset the expected decline in U.S. consumption of 5% of GDP. It has been argued that this would be a huge adjustment, and one that is perhaps beyond the ability of government spending programs alone to stimulate. Given the prominent role that China and the United States play in the global imbalances, two flashpoints for any outbreak of protectionism can be identified. The first involves the possibility that some countries could be perceived as "free riders" in the international effort to increase global aggregate demand. The second relates to the daunting task many countries, particularly China, Japan and Germany, face in shifting their economies towards a greater reliance on domestic demand. Dealing with Fiscal Stimulus "Free Riders" This flashpoint stems from the need for an increase in global aggregate demand to rescue the world economy from a continuing downward slide. To offset retrenchments in private consumption, investment, and exports and to avoid the trade imbalances of the past, countries are being urged to adopt coordinated fiscal stimulus packages. But some concerns have emerged in the United States, which has adopted a $787 billion stimulus program, over the size and composition of the plans and commitments of other G-20 countries. These concerns have been directed primarily towards China and some European countries. China, which adopted a $585 billion stimulus program in November 2008, has been urged to spend more given its huge holdings of foreign reserves, as well as to make its spending more transparent. For example, it is unclear how much of the spending from China's November stimulus will be new expenditures versus already announced plans. Plus it is unclear how much of the new spending will benefit industrial development and China's exporting industries versus consumers and domestic demand. France, the United Kingdom, and Germany are European countries that some observers believe could be doing more to support world demand. According to IMF staff estimates ( Table 1 ), their stimulus packages as a percent of GDP tend to lag behind the U.S. and Chinese plans. These European countries counter that the relative size of various stimulus packages need to account for spending on automatic stabilizers such as unemployment benefits, health care, and training. Given that European countries tend to have larger such expenditures, an IMF analysis taking these expenditures into account indicates much stronger contributions to global demand are being made by Germany, the United Kingdom and Italy and a much weaker contribution being made by China (see Table 2 ). The IMF analysis also points out that due to already large public debt, some countries, like India, Italy, and Japan, have less "fiscal space" or leeway to undertake expansionary fiscal policies. In addition, some countries may be reluctant to undertake a fiscal expansion because the recession is not yet deep for them. And some developing countries may be unable to use fiscal stimulus because of fears that investors will lose confidence in their credit worthiness. Moreover, in every polity, including the United States, there are stakeholders opposed to the use of expansionary fiscal policy on the grounds that it either won't work or will pass on to future generations debt that current citizens should pay. While the United States is the world's largest economy and perhaps the only one capable of increasing global demand quickly, it is no longer large enough to be the single locomotive of the world economy or the global consumer of last resort. Because stimulus in any country will boost demand for both domestically produced goods and imports, the United States needs help from the other trade surplus countries to spur its exports and economic growth at a time when its spending and consumption are being diffused to help countries like China that are the world's major producers. Absent such help, some observers say protectionist pressures could grow in the United States if the large U.S. stimulus increases U.S. indebtedness by far more than it increases demand for U.S. goods. Stated differently, if the U.S. economy after a year or two has little to show for running expansionary policies and incurring increased public debt—for example, unemployment remains high, there is little or no economic recovery, and the increased public debt begins to weaken the value of the dollar —the American public may ask why such a large share of U.S. stimulus spending is leaking abroad and generating jobs in countries that have not stimulated their own economies sufficiently to increase imports of U.S. products. The fiscal policies of the countries with large external surpluses, thus, are critical for the world economy to recover in a timely manner and, over time become more balanced in terms of spending patterns relative to production. In a deep recession, some analysts maintain that failure of the current account surplus countries to increase domestic demand in a substantial manner is a form of a beggar-thy-neighbor policy as they import demand from the rest of the world. According to this perspective, current account surplus countries are also exporting their unemployment to the rest of the world and "cannot be surprised if deficit countries even resort to protectionist measures." Interestingly, the United States was the world's largest current account surplus country in the 1930s, and, thus, was essentially in China's position today. Current Account Surplus Countries – Transitioning To Domestic-Led Growth A second flashpoint relates to the task that many countries, particularly China, Japan, and Germany, face in shifting their economies towards greater reliance on domestic demand – that is producing more for themselves rather than exporting to the rest of the world. Stated differently, these countries need to reduce their heavy reliance on exports by reorienting their economies more towards domestic consumption and investment. But for a variety of cultural, political and economic reasons, the transition may be extremely difficult. In the case of China, efforts to increase consumption and domestic demand will not be easy or quick. Chinese households, for example, have one of the highest savings rates in the world (up to 25%). Chinese families, especially those in rural areas, save at such high rates because they receive little government support with education costs, medical care, and retirement. The average hospital stay can cost the equivalent of two years wages for the average Chinese worker. In addition, some of the items Chinese people may want to consume are not necessarily the goods being produced for export. Some production, thus, may need to be re-engineered and some workers retrained and re-deployed because China's economy biases the economy towards exports rather than domestic consumption. Yet, requests from factory managers to make goods for the domestic market may take up to two years for all the necessary approvals to be made. Moreover, lending of the Chinese banking system continues to be biased towards boosting manufacturing and infrastructure projects, not consumer spending. Japan's longstanding export dependence has been fueled by a mind-set of export or perish. Based on a shortage of natural resources, most Japanese have adopted a mercantilist perspective tied to the notion that Japan's power is dependent upon exporting manufactured goods in exchange for raw materials and generating trade surpluses with the rest of the world. This mind-set has been bolstered by a banking system that places priority on allocating credit to big exporting companies. Given that Japan's economy declined by 3% in the last quarter of 2008, there may be added urgency for the government to undertake additional spending programs. For such spending to generate increases in private demand, much of the new money would have to be channeled to education, housing, and improving Japan's health care infrastructure. Hundreds of thousands of small- and medium-sized businesses, which employ two-thirds of Japan's workforce, stand to benefit from a redirection of credit. At the same time, Japan has had interest rates near zero for several years and still has been unable to stimulate domestic demand. Germany's economy is heavily dependent on the world economy for its growth as well. It is the world's largest exporter of goods and 25% of its jobs are export dependent. Moreover, it has objected to implementing larger spending programs on historical and structural grounds. Savings were wiped out by policies that created hyperinflation in the 1920s and German economic policy, ever since the end of World War II, has emphasized stability over economic growth. Opposition to additional spending, thus, is rooted in both fears of its inflationary impact, plus concerns that additional debt could be a drag on growth in the future. Because the economic crisis to date has had few palpable effects on ordinary Germans (except for their automobile industry), efforts to induce already high saving Germans to spend any extra cash could prove difficult. Assuming the transition to domestic-led growth by China takes years to accomplish, a major concern is that the current account surplus countries could try to avoid massive factory closings by resorting to tariff and trade policies designed to export their overcapacity to the rest of the world. This concern was highlighted by one Chinese trade official who recently stated that "China will resort to tariff and trade policies to facilitate exports of labor-intensive and core technology-supported industries." Providing export subsidies, increasing import tariffs, and depreciating a currency were the tools most often utilized in the 1930s to boost exports. As the history of this period demonstrated, countries cannot all export their way to growth unless they collectively act to boost imports. Without an import boost, trade tensions will likely escalate and possibly lead to serious trade conflicts. Policy Challenges for Congress The global economic downturn is deep and broad. Job cuts and declining levels of economic activity are affecting countries around the globe. Even before the crisis hit, there had been an erosion of public support for trade and globalization in many countries, including the United States. As a result, increased pressures for protection should not be unexpected. Policymakers and Members of Congress, thus, find themselves situated between a rock and a hard place. On the one hand, they are under increased pressure to respond to pleas from voters to take action that will alleviate immediate distress. On the other hand, they are cognizant of the need to keep markets open and trade and investment flowing. How to balance considerations of constituent requests for relief—national and political demands—with recognition of the growing imperatives of an integrated global economy—which requires international cooperation—is an overarching dilemma. In this context, three broad policy challenges can be derived from the analysis presented in this report. The first deals with international coordination and surveillance of fiscal stimulus programs. The second relates to multilateral surveillance of trade pressures and barriers adopted during this crisis. The third pertains to the management of U.S. trade relations, particularly as it relates to trade with China and other current account surplus countries. Coordination and Surveillance of Stimulus Programs Most economists maintain that governments need to place high priority on bolstering aggregate demand in an effort to arrest deteriorating economic conditions around the world. Expansionary economic policies, via tax cuts, increased public spending, and budget deficits, are one way to get national and global economic activity moving again. In addition to its beneficial impact on bolstering global demand and addressing the recession, such policies can also be channeled to alleviating some of the losses (jobs and health care benefits) workers are experiencing from the economic downturn—losses that often intensify protectionist pressures. Expansionary policies, including monetary policies, are not universally supported. Some critics worry about consequences of larger public debt. Many European governments maintain that financial regulatory reforms are a more important priority. Other critics believe that it is more efficient to allow markets to adjust without government interference. And still others maintain that expansionary policies are unlikely to prove sufficient in achieving long-term rebalancing of domestic demand. The current account surplus countries generally are in the best position to run expansionary fiscal policies. Such policies are also necessary if current account deficit countries, which are trying to save more than before, are able to improve their net export position, a development critical for economic recovery. Moreover, the United States, the world's largest deficit country, will be hard pressed to employ expansionary economic policies for many years without adverse consequences for the value of the dollar and its overall debt position. In the absence of help from these countries, political frustration in the United States could grow if it is perceived that other countries are shirking their global economic responsibilities. Under these circumstances, it could prove helpful if policymakers and Members of Congress had available an objective analysis of the extent to which all major countries are pursuing expansionary policies, given their differential circumstances. Such public information could be used in discussions with their counterparts (in all major countries) to do their "fair" share in keeping the world economy moving forward and as a way to hold everyone to account. The analysis could include targets for demand growth and monetary policy, perhaps differentiated by individual country circumstances. U.S. Treasury Secretary Tim Geithner has called for each G20 country to set a spending target equaling 2% of aggregate GDP for 2009 and 2010, and for the IMF to monitor progress towards that goal. Some economists are calling for a more ambitious 3% spending target given the deterioration in the outlook for world economic growth. The IMF's Fiscal Affairs Department has produced an analysis that addresses this objective in part. Whether such an analysis or macroeconomic scorecard could benefit from a formal mandate from the leadership of the IMF or the G-20 countries is something that could be considered. Multilateral Surveillance of Trade Barriers The WTO Secretariat has begun tracking trade and trade-related measures taken in the context of the current economic crisis. These efforts are designed to bolster policymakers' resolve to reject calls for protection by making the measures transparent and public. The idea is that by raising public awareness of what barriers are being imposed, countries may realize that they are not acting alone and that their restrictive measures could be emulated quickly by their trading partners. An initial concern about the WTO effort is that the data have been drawn primarily from secondary sources such as press reports. Member governments currently are obliged to notify the WTO about changes in applied tariffs and subsidies only on an annual basis. For the tracking system to become more useful and relevant, there may be a need for greater involvement of member governments in providing information on new measures adopted. Along with this information, the member country could be asked to provide some justification for taking the action, along with a promise to remove the new protection within a certain period of time. It also has been suggested that an inventory of new protective measures, many of which are likely to be WTO-consistent or legal, could also prove useful once the global recession ends. Much of the damage from the higher tariffs of the 1930s was that they remained in place for decades. Thus, devising a plan to remove the barriers induced during the economic crisis arguably could also be contemplated. Management of U.S. Trade Relations The global economic downturn creates numerous challenges for Congress and the President in managing U.S. trade relations. Based on a longstanding division of responsibilities -- Congress's constitutional responsibility to "regulate foreign commerce" and presidential responsibility to negotiate with foreign countries—the legislative and executive branches of government are challenged to consult and cooperative closely. This is true on a range of issues, including constituent requests for protection, facilitating the adjustment of current account surplus countries, and formulating trade liberalization priorities. Responding to Requests for Protection As constituent requests for protection are likely to increase as the recession persists, Congress is faced with balancing the political imperative of being responsive to constituent needs against U.S. international obligations under the WTO. On the one hand, current WTO and other international trade obligations do grant member countries some leeway to raise tariffs, protect domestic producers for limited periods of time, and provide domestic preferences or financial assistance to specific sectors under certain circumstances. Such protection provides a political safety valve for absorbing the political pressures associated with efforts of companies and workers to adjust to increased competition. On the other, protection that falls outside existing international trade obligations has less legitimacy. Under these circumstances, the policy challenge is not necessarily protection versus no protection, but under what circumstances might protection be appropriate and for how long. As the history of U.S. trade policy suggests, providing no protection when it may be warranted can often backfire, generating support for greater and perhaps excessive protection at a later date. Dealing with Current Account Surplus Countries How best to facilitate a more rapid adjustment of current account surplus countries is a second large challenge for Congress and the Executive Branch. Legislative initiatives threatening trade sanctions, for example, are likely to hurt both sides if imposed, but they could also provide the President with useful leverage in pressing counterparts in Europe and Asia to do more in terms of boosting aggregate demand. In an ideal world, international cooperation and institutions are a better way to encourage the current account surplus countries to undertake necessary structural changes and to head off protectionist actions. As part of any agreement, a realistic amount of time may be required for these countries to make the necessary adjustments. In return for open markets in the deficit countries while these changes are being made, the surplus countries could agree not to employ predatory trade policies. Problems and possible conflict likely will occur, however, if it becomes clear that current account surplus countries are trying to export their overcapacity and unemployment to the United States by manipulating their exchange rate, subsidizing exports, or blocking imports. Challenging these practices through the available international channels may be less politically contentious and more effective than unilateral actions, but such challenges can often take years to be resolved. In the meantime, trade can take on a zero sum game appearance as the choice between preserving jobs at home or abroad becomes more stark. Considering the Role of Trade Liberalization A third challenge for the Congress and Administration involves weighing the role that trade liberalizing agreements can play during the current recession. On the one hand, in a time of great economic uncertainty and retrenchment, many stakeholders may prefer to preserve benefits (subsidies or tariffs) that they already have. This is because trade liberalization rests on a willingness to swap current benefits derived by protection or subsidies in return for future benefits offered by promises of greater access to foreign markets that are growing. On the other hand, trade liberalization, by cutting protection, may provide an effective economic stimulus and, in the process, appear more attractive. As the economic downturn has placed added demands on the use of public funds to stimulate economic activity, conducting negotiations that free up public funds through the reduction of subsidies may become more appealing. One key practical question is whether the global economic downturn could cast the long-stalled Doha Round of multilateral negotiations in a new light. Some observers believe that some WTO members may reevaluate the basis for their opposition to some version of the agreement proposed in July 2008 based on today's radically different economic environment. This is, in part, due to the fact that shrinking trade flows have highlighted the importance of open markets for economic development among a broad group of countries, and in the process, increased the value of concessions left on the negotiating table last year. This group includes the export-dependent countries in Asia countries and India. Other observers think that the kind of political leadership that is necessary to push trade liberalization will be in short supply and difficult to secure in a time of a global recession and increased protectionist pressures. Moreover, the U.S. business community is not enthusiastic about the package of market opening concessions that was proposed last July, thus providing little stakeholder support in the United States for an effort to reach a partial Doha agreement.

In today's severe global economic downturn, concerns are being raised that countries may try to improve their own trade positions in order to help domestic industries at the expense of others by imposing measures that artificially increase their exports or restrict imports. Such efforts are considered by some to be a form of "protectionism" and are often referred to as beggar-thy-neighbor policies. This report develops three scenarios to approximate different dimensions of the relationship between the global economic downturn and protectionism. The scenarios are not predictions, but descriptions of how and why pressures for protection could be manifested and transmitted under different circumstances and assumptions. Under a low impact scenario, existing World Trade Organization (WTO) rules and obligations, bolstered by a high level of global interdependence, discourage trade restrictions and trade diverting measures from being proposed. If implemented, the measures conform to WTO rules and/or have a limited impact on trade flows. Recent reports issued by the WTO and World Bank provide preliminary support for this scenario. Under a medium impact scenario, WTO rules are violated or are disregarded due to the exigencies of the economic crisis and demands to provide financial rescue plans for the banking and auto sectors. As a result, trade and investment flows over time could be diverted or fall outside WTO surveillance, thereby weakening the global trading system. Under a high impact scenario, WTO rules are violated, major trade conflict occurs, and the world trading system is undermined. This threat arises from the longstanding presence of large trade imbalances driven by distorted global consumption and savings patterns—patterns that were an underlying cause of the global economic downturn. Given the prominent role that China and the United States play in the global imbalances, two flashpoints for any outbreak of protectionism can be identified. The first could stem from U.S. public concerns that other countries are gaining a "free ride" in terms of international efforts to increase aggregate spending and get the world economy growing again. The second could arise if China and other surplus countries try to avoid massive factory closings and layoffs by exporting their overcapacity to the United States and Europe with trade policy measures such as export subsidies and currency depreciation. Three broad policy challenges for Congress are derived from the analysis. The first deals with international surveillance of fiscal stimulus programs. The second relates to multilateral surveillance of trade pressures and barriers proposed and adopted during the economic crisis. The third pertains to the joint management of U.S. trade relations by Congress and the administration, particularly as it bears on responding to constituent requests for protection, facilitating the adjustment of current account surplus countries, and formulating trade liberalization priorities.

Background and Context This report answers frequently asked questions about presidential primaries and caucuses, and the national party nominating conventions that follow them. The nominating process elicits questions because it relies on a dense combination of national and state party rules and state election laws to conduct the primaries and caucuses, and it proceeds according to a seemingly haphazard calendar of events. Furthermore, the conventions officially select the presidential candidates, but the nominating contest is almost always resolved earlier, during the primary season, as soon as one candidate can claim a majority of delegates. The role of the modern conventions is to officially ratify the primary season results. Despite its complicated nature, the presidential nominating process is simply a race among presidential candidates to accumulate a majority of delegates, in order to claim the nomination at the national convention. This report discusses selected aspects of the convoluted process of choosing delegates in the primaries and caucuses and the national conventions that officially mark the end of the nominating season. Selecting the Delegates State parties use two basic methods to select the national convention delegates, the caucus and the primary. Some state parties combine the two to select delegates. A caucus is a local meeting, usually at the precinct level, where participants register their presidential candidate preference in a public way by joining a group of supporters for that candidate. In some caucuses, participants simply write their presidential candidate preference on a slip of paper. The presidential candidate supporters then elect delegates from the group to the next level, usually county conventions, where the same process is repeated. The national convention delegates are usually elected at the congressional district and state conventions. In contrast to primary elections, the caucuses are run by the political parties. A presidential primary is run by elections officials in the state, and the voter goes to his or her regular polling place to cast a ballot. The voter may mark the ballot for a presidential candidate only, called a preference primary, or may mark it for a presidential candidate and for a certain number of delegates pledged to that candidate, called a direct election primary. In the latter case, the delegates are elected in the primary based on individual delegate vote tallies. In both types of primaries, the national delegate slots are assigned to presidential candidates according to the primary results. The primary and caucus processes are discussed in greater detail in the body of this report. Winning the Nomination Until recent decades, the national party conventions played the key role in choosing the presidential nominees. In the era of "party bosses," state and local party leaders often controlled blocs of delegates or entire state delegations, because the delegates were chosen in closed party meetings or conventions. Presidential candidates needed the support of the party leaders and bosses to win the nomination, and deal-making was crucial to the process. The focal point of this activity was the national convention itself, where the outcome was often unknown until the convention conferred the nomination, following a roll call vote of the state delegations. Some conventions required repeated voting by the delegates before one candidate emerged with a majority of support. These multiple ballot, or brokered, conventions were fairly common, but the last one occurred in 1952, when Democrats needed three ballots to nominate Governor Adlai Stevenson to face General Dwight D. Eisenhower in the general election. The last Republican convention to require multiple ballots was in 1948, when Governor Thomas Dewey claimed the nomination on the third ballot over Senator Robert Taft and former Governor Harold Stassen. There has been speculation that no candidate will secure a majority of support from delegates to the 2016 Republican convention, which could result in pre-nomination maneuvering or even multiple ballots to declare a nominee. Since the 1970s, reform of the nominating process has diminished the importance of the conventions and increased the importance of primaries in choosing the nominees (discussed in the following section entitled "The Contemporary Nominating Process"). Although the conventions no longer select the candidates, but simply ratify the results from the primary season, they perform an important political function by showcasing the political parties, their presidential and vice presidential candidates, and kicking off the general election campaign. The Contemporary Nominating Process In the turbulent decade of the 1960s, various reform movements focused attention on perceived inequities in society and on the political process in particular. Within the Democratic Party, the 1968 national convention in Chicago gave rise to a reform effort after the convention erupted in controversy and violence. Inside the convention hall, disputes arose because of the boss-controlled selection process while, outside the hall, police and anti-war protesters clashed repeatedly over a six day period. When the convention ended, the party appointed a group to examine the nomination process. The Commission on Party Structure and Delegate Selection, better known as the McGovern-Fraser Commission, made various recommendations to democratize the delegate selection process that were subsequently adopted by the Democratic National Committee. The new rules, first in effect for the 1972 election, transformed the process by making it more open and responsive to rank and file party voters, and by reducing the power of party leaders and bosses to control delegations to the national conventions. One result of the rules changes was that many state parties, both Democratic and Republican, adopted the primary to elect the delegates, rather than choosing them in caucuses, conventions, or meetings of party officials and leaders. The primary was perceived as more open and transparent. The rising number of primaries shifted the suspense of choosing the nominee from the convention to the primary season, because the delegate count was now public. A candidate could publicly claim the nomination as soon as he or she won a majority of the delegates, as every candidate in both major parties has done in recent decades, with one exception. In 1976, President Gerald Ford and Governor Ronald Reagan competed for delegate support until the start of the national convention, with Ford prevailing. Some candidates in recent primary seasons have claimed the nomination as early as March, after just a few weeks of voting, because of the trend known as "front-loading." Over the past 25 years, an increasing number of states and state parties scheduled events at the beginning of the primary season to attract candidate and media attention, resulting in a calendar that featured a large cluster of early primaries and caucuses. On the positive side, front-loading has often meant that the nomination was resolved early in the primary season, allowing the presumptive nominee to begin campaigning for the general election. Two criticisms of the front-loading trend were that the contest could be resolved only weeks after its start, without much of a testing period for the candidates, and that the contest was usually over before voters in states with later primaries and caucuses could cast their ballots. The calendar for 2012 was less front-loaded than at any time in recent decades, which contributed to a more prolonged contest on the Republican side but also generated complaints as a result. The 2016 calendar is even less front-loaded and features the latest start since 1996, with the Iowa caucuses on February 1 and the New Hampshire primary on February 9, nearly a month later than in 2012. The contemporary nominating system is only a few decades old, having grown out of the 1970s reforms that replaced the boss-dominated convention system with a process that emphasized rank and file participation. Among the concepts that define the current system is that primaries are the dominant method for selecting the delegates, front-loading of the calendar has been prevalent for most of the past three decades, and the national conventions are largely symbolic with respect to conferring the nomination. Perhaps the most important result of the reform era is that, despite the system's complexities, the contest for delegates among the presidential candidates is now a mostly transparent, democratic process. How This Report is Organized The report is organized into two sections. The first section includes questions that pertain to the primary season and the second section includes questions about the national party conventions. The section on the primary season includes basic questions about caucuses and primaries; the calendar; the rules for selecting the delegates, including new Republican Party rules for 2016; and questions about the delegates, such as their bound or unbound status, and the disposition of delegates who support a candidate who has left the race. The second section provides answers to questions about the national party conventions, including questions about how they are financed, what transpires once they convene, and a brief history of brokered, or multi-ballot, conventions. The Primary Season How Does the Caucus Process Work? A conventional caucus system relies on a tiered series of meetings to choose national convention delegates. Rank-and-file voters participate in precinct caucuses or local mass meetings (where a presidential preference vote is taken and delegates are elected to the next level based on those preferences), followed by county conventions, congressional district (or perhaps state legislative district) conventions, and a state convention. The national convention delegates are usually chosen at the congressional district and state conventions. As with other elements of the delegate selection process, there is a great deal of variation in how state parties employ the caucus/convention system and, therefore, few generalizations can be made about it. The key to understanding a particular state party's caucus/convention system is whether the preferences of rank-and-file voters at the first stage of the process are or are not the determining factor in choosing national convention delegates. If the preferences of rank-and-file voters are not the determining factor, the system is more likely a meeting or series of meetings of party activists and leaders who, as "free agents," choose the national convention delegates. One generalization that applies, however, is that the caucus/convention system is party-run, whereas a primary election is conducted and paid for by the state (with rare exception). As a result, although some precinct voting places might be used for caucuses, other unofficial election venues could include schools, fire stations, government buildings, private businesses, community centers, and private residences. From a participant's point of view, a conventional caucus is different from a primary because the voting may be public, rather than by secret ballot, and may require a time investment of a few hours, often on a weekday evening. The rules for participating in a caucus are also more complicated than those for participating in a primary, in which a voter simply marks the ballot to record his or her choice. In a precinct caucus, a voter would typically check in upon arrival to verify his or her eligibility and to facilitate a count of all attendees. Once the caucus begins, supporters of the various presidential campaigns might make short speeches in favor of the candidates, after which voters would be asked to separate into groups according to their presidential candidate or uncommitted preference. To be eligible to elect delegates to the next stage, a group may need to constitute a certain percentage of all attendees—the minimum threshold for viability—such as 15%, which Democrats require under national party rules. The viability threshold at this level might be higher than 15%, depending on the total number of delegates to be elected from the particular precinct. Republicans do not mandate a specific viability threshold, although the party advises states to establish a threshold that is no higher than 20%. Once the viable groups have been determined, participants from non-viable groups are given an opportunity to join a viable group or leave. Members of a viable group may try to persuade them to join the group on the basis of candidate traits or positions, or even by offering delegate or alternate slots at the next level, in order to increase the size of the viable group. When the time period for re-caucusing has expired, a count of the members of each of the viable groups is taken to determine the number of delegates and alternates to be elected to the next level, usually county caucuses, within each preference group. A similar process occurs at the county caucuses, where viable preference groups elect delegates to the next two levels, the congressional district conventions and the state convention, where the national convention delegates and alternates are chosen. Procedures to determine viability and elect the delegates and alternates by preference group at the congressional district and state conventions are similar to those used at earlier stages, although delegate and alternate candidates may require approval at this level from a representative of the respective presidential campaigns or someone designated as such. The caucus/convention process typically takes several months to complete, from the date of the initial caucuses until the state convention. For example, this year's Iowa Republican caucuses will be held on February 1; county conventions will be held on March 12; congressional district caucuses will be held on April 9; and the state convention will be held on May 21. Voter turnout in caucuses tends to be lower than in presidential primaries. In 2012, there were 25,000 Democratic voters and 121,354 Republican voters in the Iowa caucuses, for a combined turnout rate of 6.5% of eligible voters. Turnout in the other prominent early contest, the New Hampshire primary, was 31.1%. The turnout range for other (two party) primaries was 3.0% (Rhode Island) to 31.5% (Ohio). The Iowa Example To illustrate how varied the caucus system is, Iowa is the best-known caucus state, but Democrats and Republicans do not use the same design to elect national convention delegates. For Republicans, the February 1, 2016, precinct caucuses involve taking a simple presidential preference vote using blank ballots handed out to participants. Delegates are elected to the next stage county caucuses on March 10, but their selection is not connected to the presidential preference vote. At the county conventions, delegates are elected to the congressional district conventions on April 21 and the state convention on June 16, where the national convention delegates will be chosen. All of the national convention delegates are unbound. Consequently, the premier event of the presidential primary season features a presidential preference "straw" vote for Republicans, but the state's delegation was chosen in a separate and unconnected process. Democrats use a conventional caucus system as described previously in this section, with precinct caucuses, followed by county, congressional district, and state conventions. What Are the Different Types of Primaries? Generally, there are two types of primaries: a preference primary and a direct election primary. A preference primary simply allows a voter to mark his or her ballot for a presidential candidate or uncommitted preference. A direct election primary includes a presidential preference vote and instructs the voter to mark the ballot for a certain number of delegates (and alternates, possibly) pledged to a presidential candidate. In a preference primary that uses winner-take-all rules, the presidential candidate with the highest vote total statewide wins the at-large delegates, and the winner in each congressional district is awarded the congressional district delegates. In a direct primary election, the delegates may be awarded on a proportional basis, according to the vote for presidential candidates, and elected within each presidential candidate preference according to their own individual vote totals. Some state parties have both a primary and a caucus event, although the two events do not always work together when choosing national convention delegates. Some states have a "beauty contest" primary in which voters mark their presidential preferences, but the results have no effect on the selection of national convention delegates. Kentucky Republicans, for example, will vote in a presidential primary on May 17, 2016, but the national convention delegates will be selected in a separate caucus/convention process that begins with precinct caucuses on March 5. In preference primary states, the primary results usually determine the number of delegates each presidential candidate receives. The delegates may be slated in pre-primary caucuses and awarded according to the results or chosen in post-primary caucuses, based on the presidential vote in the primary. What Is Front-loading? Front-loading is the decades-long trend among the states or state parties to schedule primaries and caucuses near the beginning of the nominating season, resulting in a crowded calendar of events in the first several weeks of the contest. Front-loading came about largely because of the prominence of the New Hampshire primary and the Iowa caucuses in the nominating process. The trend was reversed to an extent in 2012 and even more so for 2016—as the result of cooperation between the two major parties regarding the calendar, as shown in Figure 1 . The era of rules changes that Democrats initiated after the 1968 national convention encouraged state parties to adopt primaries, but the subsequent rise in the number of primaries did not initially result in a more front-loaded calendar. Scattered efforts to schedule early events in other states to attract candidate attention or promote a "native son," either individually or as part of a regional effort, only resulted in Iowa and New Hampshire scheduling even earlier events over time to protect their "first-in-the-nation" status. (The New Hampshire primary was held at the end of February in 1976, 1980, and 1984, and it was held on January 8 in 2008 and January 10, 2012; the Iowa caucuses were held in late January and February between 1976 and 1984; they were held on January 3 in 2008 and 2012.) In addition to being the first to assess the candidates, the two states benefit economically from hosting the various presidential campaigns in the months before the voting begins. One estimate in 2012 noted that New Hampshire could reap $264 million because of its early date. With a few exceptions, other states did not challenge Iowa and New Hampshire's claim to being first. Democrats continued to revise their rules after each election and the party eventually adopted its current timing rule in 1980, which provided an exemption from the party's sanctioned "window" for delegate selection events for Iowa and New Hampshire. In 1988, when Iowa voted on February 8 and New Hampshire voted on February 16, the creation of the southern Super Tuesday regional primary on March 8 accelerated the "front-loading" phenomenon. The Super Tuesday event was organized by the Southern Legislative Conference (SLC), a group of southern and border state legislators, and included primaries in 14 states on a single date. It was designed to increase the impact of southern voters in the nominating process and to possibly encourage and promote southern candidates who might enter the race. In the presidential election cycles that followed, Iowa and New Hampshire continued to vote in February until the 2000 election, when Iowa held caucuses on January 24 and New Hampshire held its primary on February 1. In the meantime, however, large numbers of states that were not exempt from the Democratic Party window began scheduling primaries or caucuses at the beginning of the window. This accelerated the nominating season because so many delegates were at stake within the first few weeks of voting. The last primaries traditionally have been held in early June. The front-loading phenomenon meant that clusters of state contests on a single date dominated the early part of the calendar, but the length of the nominating season was not shortened. This, in turn, reinforced the view that the contest was over before voters in later state contests had cast their ballots. A front-loaded primary season also limited the testing period during which voters in different parts of the country could evaluate the candidates once the campaign was in full swing. Conventional wisdom also suggests that a strongly contested primary better prepares the nominee for the general election. On the positive side, front-loading has often meant that the nomination was resolved early in the primary season, allowing the presumptive nominee to begin campaigning for the general election. The effort to reduce front-loading for the 2012 election was largely successful. The early part of the calendar was very similar to 2008's, with Iowa on January 3, followed by New Hampshire (January 10), South Carolina (January 21), and Nevada (February 4). However, while the 2008 calendar featured more contests in February than in any other month—including 15 primaries and four caucuses for both parties on the first Tuesday—there were only a handful in 2012. The new timing rule adopted by both parties that established March as the starting point for nonexempt states partly explains this shift. The 2016 calendar features a February start for the first time since 1996, with Iowa on February 1 and New Hampshire on February 9, and a comparatively orderly format thereafter, in contrast to 2012. The largest number of contests held on a single day will occur on March 1, the first day that nonexempt states are permitted to hold contests. As a result, the front-loading problem that has characterized the primary process for many election cycles has been reduced for 2016 and, except for the exempt states, primary and caucus contests have been contained within the calendar design that the two parties have agreed to follow. Why Do Iowa and New Hampshire Go First? The New Hampshire primary has been an important event since 1952, when the primary ballot allowed a voter to mark his or her presidential candidate preference for the first time. The preference vote was not connected to the selection of delegates, but the results boosted the candidacies of General Dwight D. Eisenhower and Senator Estes Kefauver at the expense of favorites Senator Robert Taft and President Harry Truman, for the Republican and Democratic nominations, respectively, and captured the attention of the media because they provided an early gauge of candidate strength or weakness. Although New Hampshire had first adopted its presidential primary in 1913—eventually moved in 1915 to the second Tuesday in March to coincide with town meetings—voters in the primary cast their ballots for unpledged delegates. The primary rose to prominence because of the preference vote that debuted in 1952. New Hampshire has protected its "first-in-the-nation" primary status by legislating that it be held on the second Tuesday in March, but gives the secretary of state the power to change the date so that it precedes any similar contest by seven days. The national Democratic Party has protected, in effect, New Hampshire's frontrunner primary status since 1980 by restricting the period during which state parties may hold contests (and exempting Iowa and New Hampshire), and the national Republican Party recently formalized that arrangement as well. The Iowa caucuses rose to prominence largely as the result of events in 1972, when Democrats first held their caucuses in January (Republican caucuses were in April). Democrats were operating under entirely new nominating rules designed to democratize the delegate selection process. The reforms had been implemented as a result of the violence and upheaval at the 1968 Democratic National Convention in Chicago. The reforms were based on subsequent recommendations from the party's Commission on Party Structure and Delegate Selection, also known as the McGovern/Fraser Commission. Iowa was the first event of the nominating season under the new rules. Although the results of the January 24, 1972, precinct caucuses were imprecise, presumed frontrunner Senator Edmund Muskie was unexpectedly challenged by Senator George McGovern (of the McGovern/Fraser Commission), who finished third behind Muskie. "Uncommitted" was first. Although Muskie was the leading candidate in Iowa, his campaign had performed below so-called media expectations, to some extent, which damaged his frontrunner status. For his part, McGovern had recognized both the importance of the new rules and Iowa's January 24 caucuses and had begun organizing in the state months before other candidates. A closer than expected result in the New Hampshire primary that followed on March 7, which Muskie won with McGovern second, further slowed Muskie's campaign. McGovern eventually prevailed in winning the nomination, only to lose to President Richard Nixon in the general election (520 to 17 in the electoral college). Who Has Authority Over the Rules for Delegate Selection? The presidential nominating process is the single most complicated feature of the nation's electoral system, because it relies on national and state political party rules and practices, as well as aspects of federal and state election laws. Consequently, there are overlapping authorities for different aspects of delegate selection primaries and caucuses. Democrats Democrats rely on the Delegate Selection Rules for the 201 6 Democratic National Convention and the Call for the 201 6 Democratic National Convention to set national rules . State Democratic parties are required to submit delegate selection plans to the Democratic National Committee Rules and Bylaws Committee to determine compliance with national party rules and receive approval in the year before the presidential election. The Rules and Bylaws Committee is required to act on proposed delegate selection plans by September of the year preceding the election, or four months before the state's first determining step, whichever is earlier. Republicans For Republicans, the national party sets certain general parameters for the nominating process in The Rules of the Republican Party and the Call of the Convention , but leaves many of the details of delegate selection to the state parties. Consequently, there is a great deal of variation in how each state party elects its delegates to the national convention. Various aspects of state and territory election laws apply to presidential primaries, and some caucuses as well, such as whether they are open to all voters or closed, meaning participation is restricted to registered party voters only. Minnesota and Iowa, two states with a long-standing caucus tradition, codified many of the rules in state election law, although this is likely the exception and most caucus procedures depend on state party rules rather than state election law. What Rules Are Different for 2016? A number of new Republican party rules changes were adopted for the 2012 presidential primary season that may also impact the 2016 election. These changes included a timing rule for when primaries and caucuses could be held and a rule that required the use of proportional allocation of delegates under certain conditions, rather than the winner-take-all system preferred by state parties. The changes shaped the contest for the first three months and led to pronouncements that the nomination would be unresolved until the national convention in September. Ultimately, Governor Romney was able to claim a majority of delegates needed for the nomination once the May 29 Texas primary results were tallied. Timing Republicans began evaluating the performance of the nominating process before the primaries and caucuses had concluded in 2008. The 2008 convention created the "Temporary Delegate Selection Committee" to review delegate selection procedures and make recommendations to the RNC. Subsequently, at its 2010 summer meeting the RNC approved a window for holding delegate selection events that was similar to the Democratic Party's long-standing rule on the timing of delegate selection events. As the result of a revision to Rule 16 of The Rules of the Republican Party , delegate selection events cannot be held before the first Tuesday in March, with exceptions for Iowa, Nevada, New Hampshire, and South Carolina, which can hold their events on or after February 1. The change imposed a timing rule for the first time for Republican delegate selection events. Proportional Allocation A related change to Rule 16 requires states that hold contests before March 16 to allocate delegates on a proportional basis, but it does not impose a specific proportional system (although the threshold to receive delegates may not be higher than 20%). The party did not previously require the use of a specific allocation method, and the new requirement is intended to further decompress the calendar by delaying the use of a winner-take-all system until the second half of March. Many state parties used winner-take-all in the past. In guidance that was provided to the state parties, the RNC counsel's office outlined a number of ways to implement proportional allocation. The requirement to award delegates proportionally applied in general, but the guidance left open the possibility that district level delegates could be awarded on a winner-take-all basis, with only the at-large delegates awarded on a proportional basis. The four states that are exempt from the timing rule are also exempt from this requirement. What Are the Methods for Determining Number of Delegates and Alternates from the States and Territories? Democrats Democrats have two categories of delegates, pledged and unpledged. Delegates in the pledged category are required to express a presidential candidate or an uncommitted preference as a condition of election. Pledged district delegates are allocated and elected at a district level (usually the congressional district, but sometimes by state legislative district), and at-large delegates are allocated and elected at the statewide level. A third type of pledged delegate is called an "Add-on" delegate, which allows for representation by party leaders and elected officials within the state. The number of such delegates is calculated by multiplying the number of total base delegates for a state by 15%, so it is also based on the allocation factor. The add-on delegates are usually chosen in the same manner as the at-large delegates. Democrats begin the allocation process with a base of 3,200 delegate votes, which are assigned to the states and the District of Columbia based on the allocation factor. The allocation factor is a formula that relies on the state's Democratic vote in the previous three presidential elections and the assigned number of electoral college votes, divided by the corresponding national totals, to assign the delegates. The formula is expressed as follows: A = allocation factor SDV = state vote for Democratic candidate in the year indicated TDV = total vote for Democratic candidate in the year indicated SEV = state electoral college vote For example, South Dakota's allocation factor is .00399, so its base number of delegates is: .00399 x 3,200 = 12.76, or 13 delegates. The base delegates are assigned as district level delegates (75% of the base, or 10 delegates) and at-large delegates (25% of the base, or 3 delegates). South Dakota is also entitled to two add-on delegate slots for party leaders and elected officials in the state. Delegates in these three categories are pledged delegates and required to express a presidential candidate or uncommitted preference as a condition of election. The state is also allocated a number of unpledged delegates, including four for its members of the Democratic National Committee and one for the former Senate majority leader as a Distinguished Party Leader delegate. These are the superdelegates (discussed in greater detail in the next section). Thus, the total number of delegates for South Dakota is 20, with 2 alternates, for a total delegation of 22. Democrats also allocate delegates for six entities for which the allocation factor cannot be computed because they do not participate in presidential elections: American Samoa, Democrats Abroad, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands. The party assigns at-large delegates to each entity, which also receives delegate slots for its members of the DNC, Members of Congress, and Democratic Governors. Republicans Republicans use a simpler delegate allocation method than Democrats. The party assigns 10 at-large delegates to each state, as well as 3 delegates per congressional district. In addition, the party assigns bonus delegates to a state that cast its electoral votes (or a majority thereof) for the Republican nominee in the preceding election, and also assigns a single at-large delegate to states in which Republicans were elected to the following: the governor's office, at least one half of the seats in the U.S. House of Representatives, a majority of the members of a chamber of the state legislature (if the presiding officer is a Republican elected by the chamber), a majority of members in all chambers of a state legislature (if the presiding officers are Republicans elected by each chamber), or a U.S. Senate seat (in the six-year period preceding the presidential election year). Republicans assign one alternate for each delegate. Republicans assign at-large delegates to American Samoa, the District of Columbia, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands. The District of Columbia is also eligible for bonus delegates if it cast its electoral vote (or a majority thereof) for the Republican nominee in the preceding election. There will be 4,763 delegates and 319 alternates to the Democratic National Convention and 2,470 delegates and 2,302 alternates to the Republican National Convention in 2016. A candidate needs 2,382 Democratic delegates to secure the nomination and 1,236 delegates to secure the Republican nomination. How Do Primary and Caucus Results Determine the Election of National Convention Delegates? Democrats For Democrats, the preferences of rank-and-file voters in primary or caucus events always translate into the selection of pledged delegates (the superdelegates are unpledged): Delegates shall be allocated in a fashion that fairly reflects the expressed presidential preference or uncommitted status of the primary voters or, if there is no binding primary, the convention and/or caucus participants. Furthermore, those who wish to be elected as delegates at any level of the process must make known their presidential candidate preference: All candidates for delegate and alternate in caucuses, conventions, committees and on primary ballots shall be identified as to presidential preference or uncommitted status at all levels of a process which determines presidential preference. Finally, the national party mandates the use of a proportional allocation of delegates according to the presidential candidate and uncommitted preferences of voters in primaries and caucuses, with a minimum threshold of 15% to be eligible to receive delegates. Consequently, the caucus and primary results determine the allocation of delegates according to presidential candidate or uncommitted preferences. Republicans Republican rules for translating 2016 primary and caucus results into the selection of national convention delegates vary considerably. In some contests, the preferences of rank-and-file voters in a primary or caucus have no effect on choosing the delegates, while in others, the outcome results in a proportional or winner-take-all allocation of delegates at the congressional district and statewide levels. One measure to gauge the effect of primary and caucus results on the elected delegates is whether the delegation is "bound" to reflect those results when voting at the national convention, and for how long (discussed in greater detail in the next section of this report below). Some state parties bind the national convention delegation for one ballot or more. Delegates who are unbound presumably are free to vote for any candidate, regardless of the caucus or primary results in the state. Furthermore, national Republican Party rules state that: Any statewide presidential preference vote that permits a choice among candidates for the Republican nomination for President of the United States in a primary, caucuses, or a state convention must be used to allocate and bind the state's delegation to the national convention in either a proportional or winner-take-all manner, except for delegates and alternate delegates who appear on a ballot in a statewide election and are elected directly by primary voters. Further instructions say that: Delegates at large and their alternate delegates and delegates from Congressional districts and their alternate delegates to the national convention shall be elected, selected, allocated, or bound in the following manner: (1) In accordance with any applicable Republican Party rules of a state, insofar as the same are not inconsistent with these rules; or (2) To the extent not provided for in the applicable Republican Party rules of a state, in accordance with any applicable laws of a state, insofar as the same are not inconsistent with these rules; or (3) By a combination of the methods set forth in paragraphs (b)(1) or (b)(2) of this rule; or (4) To the extent not provided by state law or party rules, as set forth in paragraph (e) of this rule (which outlines the national party rules for electing national convention delegates in congressional district and state conventions). The category of automatic delegates to the national convention—who are the three members of the Republican National Committee from each state—are usually bound along with the rest of the delegates. What Happens to Delegates Pledged to a Presidential Candidate Who Drops Out of the Race? As noted, Republican rules for binding or not binding the delegates to vote for a certain candidate at the convention vary from state to state. Consequently, in some states, the entire delegation is bound for one or more ballots at the national convention, whereas in other states, some delegates are bound and some are not, or the entire delegation is unbound. Some states specify that delegates are bound unless released by a presidential candidate or when the candidate has dropped out of the race, or by a vote of the delegation. For Democrats, the relevant national party rule states that "[d]elegates elected to the national convention pledged to a presidential candidate shall in all good conscience reflect the sentiments of those who elected them." A related provision states that "[n]o delegate at any level of the delegate selection process shall be mandated by law or Party rule to vote contrary to that person's presidential choice as expressed at the time the delegate is elected." Who Are the Superdelegates? Among the many differences between the parties in delegate selection is the number of automatic delegate slots each party reserves for party or elected officials. Although the Republican Party designates as automatic delegates the three members of the Republican National Committee from each state, the term "superdelegate" has generally been used in reference to a group of unpledged Democratic Party delegates. During the 2012 election cycle, the media referred to the automatic RNC delegates to the convention as superdelegates as well. The Democratic Party superdelegates are designated automatically and are not required to make known their presidential candidate or uncommitted preference, in contrast to all the other elected delegates. They include all Democratic Party Members of Congress and governors; members of the Democratic National Committee; distinguished party members, who include former Presidents and Vice Presidents, former Democratic leaders of the Senate, Speakers of the House, and minority leaders; and former chairs of the Democratic National Committee. The superdelegates were added after the 1980 election when incumbent President James E. Carter lost to Governor Ronald Reagan in a 489-49 electoral vote landslide. The belief was that superdelegates, as party and elected leaders, could serve as a counterweight to rank and file party voters in evaluating presidential candidates. In this way, the superdelegates represented an effort to reduce somewhat the effect of the 1970s reforms that diminished the influence of "party elders." Democrats increased the number of such delegates every four years since they were introduced in 1984 until the 2012 convention, for which they were slightly reduced. They made up nearly 20% of all delegates in 2008, were 14% of all delegates in 2012, and will be a little more than 16% of the total delegates to the Democratic convention. For Republicans, the automatic delegates to the convention make up slightly less than 7% of the total national convention. They are unbound in most states, but a few state parties bind them to vote as part of the whole delegation at the national convention. For most of their existence, the superdelegates attracted little attention, but in 2008, it appeared that they might decide the contest. By February, Senator Hillary Clinton and Senator Barack Obama were so evenly matched in the fight to win delegates that the campaigns courted individually many of the 796 superdelegates, who were nearly 20% of the convention total. The contest was not resolved until the last events on the calendar, the June 3 primaries in South Dakota and Montana. Obama claimed victory with 1,764 pledged delegates and 438 superdelegates (2,201), as compared to 1,640 pledged delegates and 256 superdelegates for Clinton (1,896). A candidate needed 2,118 to win the nomination. The National Party Conventions How Are the Primaries, Caucuses, and National Party Conventions Financed? Presidential primaries are paid for by each state, or more specifically, by local election jurisdictions within each state, as are other federal elections. On rare occasions, a state party will conduct its own primary, sometimes called a "firehouse" primary, but generally presidential primaries are financed by the state. A state party might hold a firehouse primary to exert greater control over the delegate selection process. An issue that emerged for the 2012 election cycle was the additional cost of a separate presidential primary in some states, if the regular state primary was held on a different date, which caused a few to cancel the presidential primary altogether. Caucuses are conducted and paid for by the state parties. Between 1976 and 2012, the two major parties and qualifying minor parties received funds from the taxpayer checkoff program to finance the national nominating conventions, as part of the presidential public financing system—the Presidential Election Campaign Fund (PECF). The amount for the major parties was initially set at $2 million, with an inflation adjustment for future elections. The program provided $17.7 million each to the Democratic and Republican convention committees for 2012. The program was eliminated with the enactment of P.L. 113-94 in April 2014. Additional federal funds have been provided since 2004 for convention security, coordinated by the U.S. Secret Service in conjunction with state and local law enforcement in jurisdictions where the conventions were held. Congress appropriated $100 million for convention security in 2004, 2008, and 2012, of which $50 million was for each convention in each year. What Occurs at the National Nominating Conventions? Contemporary national nominating conventions give the parties a rare opportunity to showcase nominees, party leaders, and positions before a national television audience, but they are no longer the venue in which the nominee is chosen. Although some observers speculated that a contested convention could occur at the 2012 Republican national convention, that did not occur. There has been speculation that the 2016 Republican nomination could be contested in some fashion, if a candidate does not emerge from the primary season with a majority of delegates. If that does not occur, the 2016 conventions will again be largely ceremonial, campaign driven events. In recent decades, the role of the national conventions has been to ratify, rather than select, the party nominees. Elections without an incumbent President running, even if they are competitive, are usually resolved early in the primary season, well before the convention meets. Elections that include an incumbent President are usually concluded without much drama as well, and the delegates are elected in primaries and caucuses that attract little attention because of the lack of competition (i.e., President Reagan in 1984, President Clinton in 1996, President Bush in 2004, and President Obama in 2012). Both the 1976 Republican and 1980 Democratic conventions provided a reminder that incumbents can be endangered under certain conditions, but Presidents Ford and Carter ultimately prevailed in 1976 and 1980, respectively, despite strong challenges from Governor Ronald Reagan and Senator Edward Kennedy. As the conventions have evolved into media events, the traditional format of past years has been replaced by a television-friendly script designed for a prime time audience each night. As in the past, delegates ratify the choice of nominee in a roll call vote and various party leaders and rising stars give speeches, but the action is targeted to viewers, rather than the delegates inside the convention venue. Finally, the party may have a traditional keynote speaker or multiple keynote speakers address the convention, followed by a vice presidential candidate speech on the second to last night and, on the last night, a speech by the nominee to kick off the general election campaign. Could There Be a Brokered or Multi-ballot National Convention in 2016? A brokered, or multi-ballot, convention was a phenomenon of the mid-20 th century and earlier, when the convention delegates were sometimes required to vote multiple times before a candidate could achieve a majority of vote to claim the nomination. For the past 60 years, the major party nominees have always accumulated a majority of delegate votes before the convention, with one exception (discussed in the following section). The competitive results of 2012 Republican primaries and caucuses through the first three months of the contest and rules changes that were adopted—particularly the requirement until April 1 for the proportional division of delegates based on the results—raised speculation that no candidate would amass a majority of delegates before the convention. That possibility did not come to pass, as the presumed nominee, Governor Willard M. Romney, claimed a majority of the delegates following the results from the Texas primary on May 19. One phenomenon that fuels speculation in 2016 about an extended primary season and a brokered Republican convention is the fact that the state parties do not have uniform rules for whether the delegations are "bound" to vote a certain way at the national convention, and that the results of some contests have no effect on the selection of delegates. In several of the primaries and caucuses, the results will not determine which candidates receive delegates or how many they receive, which makes the process somewhat unpredictable. To win the nomination, a candidate needs1,236 of 2,470 total delegates to secure the Republican nomination. There has been on similar speculation regarding the Democratic convention; a candidate needs 2,382 of 4,763 total delegates to secure the nomination. When Was the Last Brokered or Multi-ballot Convention? In the years since the nominating reforms of the late 1960s were adopted, the party nominees have usually been decided before the conventions. The principal reason for this phenomenon was the widespread adoption of the primary to choose delegates, allowing one of the candidates to secure a majority publicly, before the convention met. An exception was the 1976 Republican convention, when President Gerald Ford and Governor Ronald Reagan personally lobbied for support among delegates in the days before the convention began; President Ford eventually won on the first ballot. The primary was perceived to be more democratic than the previously popular caucus/convention method, in which party leaders and bosses controlled the nomination, occasionally "brokering" the outcome at the convention itself. Rank-and-file voters had little say in choosing the delegates to the conventions. The reforms sought to democratize the nominating process in the aftermath of the Democrats' violent 1968 national convention in Chicago. The Democratic Party subsequently convened in 1969 the Commission on Party Structure and Delegate Selection, also known as the McGovern/Fraser Commission, which made recommendations to democratize the process. Democrats continued to revise delegate selection rules every four years throughout the 1970s and up to the present, while Republicans made few changes to their rules. The new rules encouraged the use of the primary to achieve compliance and, as a result, the rising number of presidential primaries shifted the setting for selecting the nominees from the national conventions to the primary season itself. Even before the reforms of the 1960s and 1970s, multi-ballot conventions had become somewhat rare. The last major party convention to require more than one ballot to choose the nominee was in 1952, when Democrats needed three ballots to nominate Illinois Governor Adlai Stevenson. Prior to that, the 1948 Republican and 1932 Democratic conventions took multiple ballots to choose the nominees. Deadlocked conventions were more common in the 19 th and early 20 th centuries and often required multiple votes to choose the nominee. The longest in history was the 1924 Democratic convention that famously took 103 ballots and 17 days to nominate John W. Davis of New York. Where and When Are the 2016 National Conventions? Republicans will meet in Cleveland, OH, from July 18-21, and Democrats will meet in Philadelphia, PA from July 26-28.

This report provides answers to frequently asked questions about the presidential nominating process, including how the delegates to the national conventions are chosen, the differences between a caucus and a primary, national party rules changes for 2016, and the national conventions themselves. It is not a comprehensive report on all aspects of the presidential nominating process. The Nominating Process The presidential nominating process is a subject of enduring congressional and national interest. Presidential elections are the only nationwide elections held in the United States and the initial phase of primaries and caucuses is subject to change every four years. Congress has a legislative, as well as a practical and political, interest in the presidential nominating process. Presidential nominees lead the party ticket in the fall election; the elected President will set many policy and political goals in the ensuing four years; and many Members of Congress will serve as delegates to the major party conventions. No legislation has been introduced in the 114th Congress to reform the presidential nominating process; taxpayer financing of the national party conventions was eliminated with the enactment of P.L. 113-94 in April 2014. The Rules Republican Party rules changes for 2012 set the background for the 2016 presidential primary season. The 2012 election featured a protracted contest for Republicans that began in January and continued until the end of May, partly due to two new Republican Party rules that led to a comparatively long primary battle. In an effort to decrease the large cluster of contests at the beginning of the primary and caucus calendar—the phenomenon known as front-loading—the Republican Party adopted two important changes to national party rules for 2012: delegate selection events could not be held before the first Tuesday in March, with exceptions for Iowa, Nevada, New Hampshire, and South Carolina, which could hold their events on or after February 1 (regardless, Iowa, New Hampshire, and South Carolina scheduled January events for 2012); and states that held contests before April 1 were required to allocate delegates on a proportional basis, according to primary or caucus results. Many state parties had used winner-take-all in the past, but the new rule required that delegates be awarded to presidential candidates in proportion to their primary vote totals, in some fashion. The rules changes reduced front-loading, but they also prolonged the contest in comparison to past primary cycles and led to speculation that the Republican convention might need more than one ballot to choose the nominee, an unprecedented occurrence in recent decades. That possibility did not occur. Republicans made additional revisions to party rules for 2016 that might impact the contest for the nomination. The proportional allocation of delegates is required for events held between March 1 and 14, rather than for the entire month, as was done in 2012. Delegates are bound according to the results, either on a proportional or winner-take-all basis (permitted after March 14). Finally, the calendar window imposed for only the second time by Republicans (Democrats have imposed a window for many years) appears to have contained efforts by some state parties to "front-load" the calendar by scheduling events early in the year in order to attract media and candidate attention. The National Conventions The national party conventions have evolved over the past half century and now serve as the forum for officially ratifying the results of the primary season, rather than the place where the nominee is actually chosen. The last time more than one ballot was required to nominate a presidential candidate—a so-called "brokered" convention—occurred in 1952. Even so, the conventions remain important as media events that launch each major party's general election campaign. In 2016, the major parties' nominations will be officially conferred when Republicans meet in Cleveland from July 18-21 and Democrats meet in Philadelphia from July 26-28.

Introduction The Administrative Procedure Act (APA) was enacted in 1946 to ensure fairness and due process in executive agency actions or proceedings involving rulemaking and adjudications. In pursuit of this goal, the APA created the position of the Administrative Law Judge (ALJ) within the federal government. ALJs were originally called hearing examiners, and the APA established certain protections to preserve the independence of these hearing officers. Because ALJs are employees of federal agencies, one of the primary goals behind the creation of the position of ALJs was to ensure that such hearing officers are able to conduct trial-like hearings free from agency coercion or influence. To the extent that the APA or other relevant laws are applicable, parties in agency proceedings are afforded protections that include, among other things, a hearing on the record with an impartial presiding officer. The APA provides that when a statute requires an agency adjudication to be determined on the record, an ALJ or the agency head must preside. The subject matter of the hearing or proceeding varies among the agencies and includes disability determinations as well as licensing, sanctions, and civil penalty determinations. In general, ALJs have two primary duties in the administrative adjudication process. The first duty is to preside over the taking of evidence at agency hearings and act as the finder of facts in the proceedings. In support of this duty, ALJs are authorized to regulate the course of the hearing, issue subpoenas, rule on offers of proof and receive relevant evidence, take depositions or have depositions taken, hold settlement conferences, rule on procedural requests, question witnesses, and make findings of fact and conclusions of law. An ALJ's other main duty is to act as a decision maker by making or recommending an initial determination about the resolution of the dispute. In all of these regards, ALJs, who are executive branch employees, function much like trial judges in the judicial branch. Hiring and Appointment of ALJs According to the Office of Personnel Management (OPM), there were 1,422 ALJs assigned to 30 federal agencies as of March 2009. Of these, the agency that hires by far the most number of ALJs is the Social Security Administration (SSA). Although the federal agency itself hires its ALJs, OPM "has been exclusively responsible for the initial examination, certification for selection, and compensation of ALJs." ALJs are selected through a merit selection process that is administered by OPM and advertised on the federal government's job listing site, http://usajobs.opm.gov . Under this process, OPM periodically conducts competitive examinations and uses the results of these examinations to rank applicants for ALJ positions according to their qualifications and skills. Under 5 U.S.C. § 3105, agencies are authorized to appoint as many ALJs as necessary for agency proceedings that are required to be on the record. The qualification standard for ALJ positions prescribes minimum requirements for ALJ positions. Applicants must be licensed attorneys "authorized to practice law under the laws of a State, the District of Columbia, the Commonwealth of Puerto Rico, or any territorial court," who have a minimum of seven years of "experience as a licensed attorney preparing for, participating in, and/or reviewing formal hearings or trials involving litigation and/or administrative law at the Federal, State, or local level." Applicants who meet these minimum qualification standards and pass the examination are then assigned a score and placed on a register of eligible hires. Under the regulations, applicants who receive a passing score are entitled to five to ten preference points if they are veterans. Agencies then select an ALJ from the top three available candidates, taking into account the location of the position, the geographical preference of the candidate, and veterans' preference rules. Although ALJs are generally hired by specific agencies, they can be transferred or detailed to another agency to hear cases if necessary, and if OPM approves. The preference criterion for veterans led to a long-running lawsuit and caused OPM to temporarily suspend the ALJ hiring process for a period of over four years, from 1999 to 2003. The litigation arose out of changes that OPM made in 1996 to the scoring formula that is used to rate and rank potential ALJs. These changes, which did not conform to existing regulations but which OPM approved pursuant to its authority to issue variances from the regulations, resulted in a scoring system that assigned proportionally greater weight to the veteran's preference than the previous system had, thus giving veterans a significant hiring advantage over non-veterans. As a consequence, non-veteran applicants for ALJ positions sued, claiming that the new scoring formula was unlawful. Although the Merit Systems Protection Board (MSPB) found that the scoring formula violated OPM regulations and the Veteran's Preference Act and ordered OPM to suspend use of the formula, the United States Court of Appeals for the Federal Circuit eventually overturned the MSPB decision, holding that the MSPB did not have jurisdiction to review the Veteran's Preference Act claim and that the new scoring formula did not violate OPM regulations. As a result of the court decision, OPM resumed use of the 1996 scoring formula in 2003, but the agency did not accept new applications at that time because it planned to hire new ALJs from the pool of available applicants who qualified prior to the lawsuit. OPM had worked to develop a new ALJ examination that would replace the old one. As part of the move to update the ALJ selection process, OPM issued a final rule in 2007 that, among other things, (1) eliminated the detailed regulations describing the ALJ examination process; (2) required an active bar membership or current state license to practice law; (3) disallowed an agency's grant of a monetary or honorary award to an ALJ for any "superior accomplishment," so as to maintain ALJ independence; and (4) revised ALJ pay to allow an agency to reduce an ALJ's pay for good cause after a disciplinary proceeding or based on an ALJ's voluntary request for personal reasons. OPM created the pay reduction procedure because it "periodically receives [such] requests from agencies" due to "the [ALJ's] desire for a position of less responsibility." According to OPM, the elimination of the regulations describing the ALJ examination process will provide OPM with the flexibility to adopt, via the online job vacancy announcement on the USAJOBS website, periodic changes in the ALJ examination process. The Association of Administrative Law Judges, seven ALJs, and three private practice attorneys filed suit under the APA against OPM regarding the final rule with regard to the requirements that ALJs have active bar membership or a current state license to practice law and with regard to OPM's qualification standard, advance notice to federal agencies of the vacancy announcement's posting, and the number of applications allowed to be filed before a cutoff number was reached. After OPM issued an interim rule suspending the requirement in the final rule that incumbent ALJs, but not applicants for ALJ positions, have a current license to practice law, or have active or judicial status, or be in good standing to practice law, the district court stayed the relevant parts of the case. The court granted summary judgment in favor of OPM on the other claims, finding that the plaintiffs lacked standing to challenge the qualification standard, that OPM's notice was not a final agency action subject to judicial review, and that the cutoff number for applications was not arbitrary or capricious. The ALJ application process remained closed until OPM issued a vacancy announcement for ALJs on May 4, 2007, which closed a few days later after it reached a cutoff number of 1,250 applicants. Individuals who remained on the previous ALJ register were required to reapply if they still wished to be considered for an ALJ position. On October 30, 2007, OPM announced that it had established a new register for filling open ALJ positions, which was based on the May 2007 vacancy announcement. At least one agency has already hired from this register. OPM has reopened the ALJ register several times since then. Selective Certification In the past, several agencies used the controversial concept of selective certification "to avoid the restrictions upon their appointment of ALJs." Under selective certification, "an agency, upon a showing of necessity and with the prior approval of OPM, [would be] permitted to appoint specially certified eligibles without regard to their ranking in relation to other eligibles on the register who lack the special certification." In 1941, prior to the enactment of the APA, the Attorney General's Committee on Administrative Procedure advocated specialization of hearing examiners, the predecessors to ALJs, for efficiency reasons. In 1947, OPM's predecessor, the Civil Service Commission, established a system of ranking ALJs that allowed agencies to pick from the top three candidates on a register. A 1954 report by the President's Conference on Administrative Procedure "criticized the system of appointments that purported to constrain agency discretion in appointing [ALJs] to the top three on the register, but that, in fact, permitted agencies to escape the full effects of this constraint," by requesting selective certification, among other methods. The President's Conference wanted agencies to be able to choose from any candidate on the list of eligible hires. However, this recommendation "that agencies be free to appoint any person on the qualified list effectively ensured that agencies wishing to appoint persons with specialized knowledge would be free to do so." In 1962, a Civil Service Commission advisory committee on ALJs recommended "allowing individual agencies to require special qualifications for appointment." The same year, however, the Staff Director of the Administrative Conference wrote a report opposing selective certification "on the ground that general capabilities and intelligence were more important than skill in the law and politics of a particular agency." This report noted that selective certification led to "undesirable inbreeding," because agency ALJs who were selectively certified as having met the specific subject matter criteria were most likely to previously have been agency staff attorneys. A later report, in 1969, confirmed this: In a five-year span, "52 of 66 ALJs appointed by the agencies using selective certification had previously been employed on the staffs of those agencies." Additionally, according to a 1968 law review article, at that time, "about half of the hiring agencies formally required special subject-matter expertise for selection." From 1973 until a 1984 ALJ examination announcement by OPM, eligible ALJs "with the types of special expertise recognized by the selectively certifying agencies were, in effect, asterisked on the registers, and those agencies were permitted to select from the asterisked eligibles." Many agencies had selective certification—including the Coast Guard, Securities and Exchange Commission, National Labor Relations Board, Federal Communications Commission, Department of Agriculture, Civil Aeronautics Board, Federal Energy Regulatory Commission, Department of Labor, Interstate Commerce Commission, Social Security Administration (for positions in Puerto Rico), and Bureau of Alcohol, Tobacco, and Firearms. In 1984, OPM ended the selective certification procedure in Examination Announcement No. 318. Agencies were no longer allowed to formally require subject-matter expertise. The announcement did not explain the reason for the change, but stated: "Where agencies can justify by job analysis that special qualifications enhance performance on the job, agencies may give priority consideration in filling vacant positions to applicants with special qualifications." However, the announcement did not define the meaning of the terms "priority consideration." From text later in the announcement, it appears to mean that an agency could "give priority consideration" to applicants with agency-specific experience that have the same numerical ranking as ALJs without agency-specific experience. Irrespective of the 1984 announcement, agencies must select from "the highest three eligibles available for appointment on the certificate, taking into consideration veteran preference rules." Agencies such as the International Trade Commission have requested that OPM allow them to choose an ALJ candidate from the entire list of eligible hires, based on the candidate's agency experience and technical qualifications, rather than the candidate's placement as one of the top three candidates. The Social Security Administration and others have argued in favor of granting bonus points to candidates who have subject matter experience "to provide such candidates with a reasonable opportunity for selection." However, it does not appear that OPM is willing to allow this practice of selective certification again. Additionally, the American Bar Association has opposed the ITC's proposal, and in the past, one section of the American Bar Association appeared to oppose selective certification. ALJ Independence and Performance Evaluations To insulate ALJs from agency influence, the APA expressly provides that an ALJ may not "be responsible to or subject to the supervision or direction of an employee or agent engaged in the performance of investigative or prosecuting functions for an agency." Additionally, 5 U.S.C. § 554(d) provides that, for many types of proceedings, agency employees who are performing investigative or prosecuting functions "may not, in that or a factually related case, participate or advise in the decision, recommended decision, or agency review ... except as witness or counsel in public proceedings." A 1937 Committee on Administrative Management report had initially recommended the "separation of adjudicatory functions and personnel from investigative and prosecution personnel in the agencies." Additionally, an OPM regulation further emphasizes that employing agencies of ALJs have "[t]he responsibility to ensure the independence of the administrative law judge." However, the APA does not specifically prevent agencies from undertaking performance evaluations of ALJs. Rather, civil service performance appraisal statutes prohibit an agency from conducting performance evaluations of its ALJs for the purpose of pursuing some action to modify the behavior of its ALJs by adjusting salary, tenure, or the like. For example, 5 U.S.C. § 4301(2)(D) expressly excludes ALJs appointed under 5 U.S.C. § 3105 from the definition of employees subject to performance appraisals and ratings. Otherwise, for most agency employees, 5 U.S.C. § 4302 provides that each agency must develop one or more performance-appraisal systems for its employees, using the results as a basis for training, rewarding, reassigning, promoting, reducing in grade, retaining or removing employees, and assisting employees in improving unacceptable performance. OPM regulations also provide that "[a]n agency may not rate the job performance of an administrative law judge," or grant monetary or honorary awards or incentives to ALJs. In the past, Congress has addressed proposals which would establish an ALJ Performance Review Board or standards for evaluations of ALJ performance. For instance, three bills in the 96 th Congress— S. 262 , H.R. 6768 , and S. 755 —would have provided, respectively, that performance evaluations of ALJs should be conducted once every 10 years, at least every six years, or that appointment of ALJs should be for seven- to 10-year terms, with reappointment based on performance evaluations. These bills would not have vested the employing agencies with the authority to evaluate ALJs. Rather, other entities were chosen, such as the Administrative Conference of the United States (ACUS) and OPM. Extensive hearings were held, and witnesses reaffirmed the need for ALJ independence and evaluations free from agency pressures. These or other similar proposals were not enacted. ALJ Removal, Productivity, and Discipline ALJs are not subject to probationary periods. Rather, an ALJ position is considered a career appointment. Section 7521 of Title 5, United States Code states: "An agency may remove, suspend, reduce in level, reduce in pay, or furlough for 30 days or less an administrative law judge only for good cause established and determined by the [MSPB] on the record and after opportunity for a hearing before the Board." However, Congress did not define what constitutes "good cause." The general rule appears to be that "[a]ctions by an ALJ that undermine confidence in the administrative adjudicatory process constitute good cause for disciplinary action." The MSPB has found that good cause existed or that the agency showed substantial evidence of good cause in cases where ALJs: sexually harassed employees; refused to travel or refused to schedule cases that required travel; "refused to deliver legal documents"; showed reckless disregard for the personal safety of others; failed to meet financial obligations; misused official mail envelopes; violated agency rules and an agency settlement agreement regarding the unauthorized practice of law; demonstrated an inability to work due to a disability or extended absence; declined to set hearing dates; and had "a high rate of significant adjudicatory errors." Low productivity does not likely constitute "good cause" to remove or otherwise discipline ALJs. Performance appraisal cases involving the Social Security Administration established that agencies may keep case disposition statistics and use them in disciplinary, removal, or other actions under 5 U.S.C. § 7521. An agency's statistics should take into account comparative productivity, which the MSPB indicated could be shown by measuring different types of statutory appeals, different types of dispositions, the complexities of the cases, evidence demonstrating that all ALJ cases were not "fungible," and evidence disproving that "even with a random assignment method, a single ALJ could have been assigned a disproportionate share of difficult, and therefore more time-consuming, cases." Disciplinary actions brought by the agency that relate to low productivity will not meet the standards for good cause removal if the agency action itself improperly interferes with an ALJ's performance, such as "interference with the writing of opinions or interference with the way in which an ALJ conducts hearings." While not necessarily directly related to low productivity, some agencies have set timelines for ALJs to issue their decisions in regulation. For example, a Federal Reserve regulation states that the ALJ must file and certify to the Board of Governors, for its decision, a record of the proceedings within 45 days after the time for filing reply briefs has expired. The record of the proceedings includes the ALJ's recommended decision, findings of fact, conclusions of law, and proposed order, among other materials. According to a 1992 report, agencies had brought less than 24 cases to remove or discipline ALJs since 1946; only five forced removals occurred between 1946 and 1992. Agencies may "think twice before mounting an expensive, time consuming, and disruptive case against one of [their] own sitting judges." The procedures for MSPB hearings are set forth in 5 C.F.R. Part 1201. Although an ALJ's pay may only be reduced for good cause, as mentioned above, the 2007 OPM final rule allows the employing agency to reduce the basic pay of an ALJ if the ALJ "submits to the employing agency a written request for a voluntary reduction due to personal reasons" and OPM approves. Additionally, ALJs may be subject to an agency reduction in force, which may occur "when there is a surplus of employees at a particular location in a particular line of work." An ALJ who is part of a reduction in force may have his or her name placed on OPM's ALJ priority referral list as well as the agency's own reemployment priority list. Adjudication by ALJs and Non-ALJ Hearing Officers In general, ALJs hear cases that fall into four different categories: (1) enforcement cases; (2) entitlement cases; (3) regulatory cases; and (4) contract cases. Enforcement cases typically involve claims that federal agencies bring against individuals and companies in order to enforce federal law. Entitlement cases usually involve adjudication of an individual's claim that he or she is eligible to receive certain federal benefits. Regulatory cases generally involve decisions about rates, licenses, or other requirements that govern certain industries. Contract cases typically involve claims against the government for contractual breaches. Not all executive branch agencies use ALJs to adjudicate disputes before the agency. For example, immigration judges in the Executive Office of Immigration Review are not required to be ALJs; nor are hearing officers at the Veterans Administration who review certain benefits cases. There are numerous non-ALJ hearing officers who review similar administrative appeals throughout the federal government. In fact, when the APA was enacted, the statute did not require agencies to use ALJs because Congress "intended to leave the decision to employ ALJs to agency-specific legislation by stating that ALJs would only be required where statutes called for 'on the record' hearings." Thus, upon enactment of the APA, the ALJ provisions became applicable only to those agencies that were required to conduct "on the record" hearings or that subsequently were subject to such a requirement. Agencies that are not required to conduct hearings on the record may also use hearing examiners to preside over various agency proceedings, but the decision-making independence of these non-ALJs is generally less protected than that of their ALJ counterparts. Although there is ample precedent for using non-ALJs to conduct administrative adjudication in the federal agencies, there are significant differences between ALJs and non-ALJs in terms of independence, training, experience, and compensation that may affect how these two types of hearing officers review administrative appeals. Indeed, despite the fact that ALJs are agency employees and are located within and paid by the agency, they are not subject to agency management. Certain requirements operate to preserve the ALJs integrity, independence, and insulation from agency influence. For example, the competitive selection process described above is conducted by OPM, not the agency; appointment is restricted to those determined eligible by OPM; and an agency may remove, suspend, reduce in grade, reduce in pay, or furlough for 30 days or less an ALJ only for good cause, which is established and determined by the MSPB on the record and after opportunity for a hearing. Thus, ALJs are largely independent of their employing agencies in matters of their salaried compensation and tenure. Since non-ALJs are appointed by the agencies that employ them rather than a neutral party, the terms and conditions of their employment are controlled by their respective agencies. Therefore, non-ALJs are potentially subject to a greater degree of agency influence than ALJs. In addition, the ALJ merit selection procedure ensures that ALJs are highly qualified and trained. In contrast, non-ALJs come from a variety of backgrounds and range widely in terms of experience and legal training. For example, hearing officers may be non-ALJ judges or even non-lawyers or non-governmental examiners. Nevertheless, "[m]any of these presiding officers preside over relatively formal proceedings and perform functions virtually indistinguishable from those performed by ALJs," according to one law professor. Such hearing officers are prevalent throughout the federal government. A 1991 study identified "over 2700 federal agency employees who preside at hearings but are not ALJs." As a result of these perceived differences between ALJs and non-ALJs, proponents of using ALJs argue that their independence and generally superior training and experience make ALJs better qualified to review administrative appeals. On the other hand, proponents of using non-ALJs point to the successful use of non-ALJs in a variety of administrative settings as evidence of the merits of non-ALJs. In addition, some observers argue that ALJ independence has disadvantages as well as advantages: "When many similar cases have to be decided in circumstances where consistent outcomes are desirable, maximum independence of deciders may not be an institutional asset. It is at least arguable, in other words, that the great value of the ALJ—that of decisional independence—is diminished in a system where caseload management must be the critical variable." Ultimately, it appears that both types of hearing officers—ALJs and non-ALJs—have strengths and weaknesses. If, however, Congress is concerned about approving the use of non-ALJs, it could consider alternatives, such as imposing time limits on any use of non-ALJs or by specifying precisely what types of review mechanisms the agency should use.

Administrative law judges (ALJs) preside at formal adjudicatory and rulemaking proceedings conducted by executive branch agencies. ALJs make decisions in these proceedings, and their administrative determinations must be based on the record of trial-type hearings. An ALJ's function as an independent, impartial trier of fact in agency hearings is comparable to the role of a trial judge presiding over non-jury civil proceedings. Although there are many ALJs working in state government, this report describes the role of federal ALJs, with a specific focus on the mission, responsibilities, and appointment of such ALJs. This report also discusses the differences between ALJs and non-ALJ hearing examiners who conduct administrative adjudication in federal agencies. In the 111th Congress, several bills have been introduced regarding ALJs, including H.R. 2850, S. 372, and S. 1228.

Tort Claims Generally A tort is a civil wrong for which an injured party may obtain remedy, typically in the form of damages. Torts arise from breaches of duties imposed by law. In contrast, contractual remedies typically result from breaches of duties imposed by oral or written agreements between the parties to a contract. A tort suit against a contractor therefore generally results from the contractor's breach of duties imposed by law rather than its breach of contractual obligations. With some exceptions, tort duties are typically imposed by state law, and every state has its own tort laws. Tort law encompasses a number of civil wrongs, including intentional interference with the person of another by assault, battery, and false imprisonment; various types of interference with property; and negligence. Negligence indicates culpable carelessness or unintentional injury. To successfully establish a claim for negligence, a plaintiff must generally prove, by a preponderance of the evidence, that (1) the defendant owed the plaintiff a legal duty; (2) the defendant breached this duty, which generally requires the plaintiff to show that the defendant failed to exercise the care that a reasonably prudent person would have exercised in a similar situation; (3) the defendant's action or failure to act actually or proximately caused the plaintiff's injuries; and (4) the plaintiff suffered harm as a result of the defendant's action or inaction. Many tort claims against contractors allege negligence on the part of contractor employees in either performing their obligations under a service contract or producing goods pursuant to a contract for goods, though some also allege intentional torts. Furthermore, under the theory of respondeat superior, contractors may be held liable for the wrongful acts of their employees that are committed within the scope of employment. Contractor Defenses to Tort Claims Contractors often raise the FTCA, the political question doctrine, and/or derivative immunities when defending against tort claims, particularly claims arising from their involvement in military operations. These defenses often implicate fundamental legal issues, such as the interaction of federal and state law, separation of powers and which branches of government are best equipped to consider particular types of questions, and protection of the federal government's monetary interests. Preemption Under the FTCA The federal government is a sovereign, and thus enjoys sovereign immunity. The Supreme Court has long held that "[i]t is elementary that the United States, as sovereign, is immune from suit" unless it unequivocally and expressly consents to suit. The FTCA is one such unequivocal and express consent to suit, and it specifies that the federal government is liable for tort claims "in the same manner and to the same extent as a private individual under like circumstances, but shall not be liable for interest prior to judgment or punitive damages." However, though the FTCA generally waives the federal government's immunity from tort liability, it contains a number of exceptions through which the government retains its sovereign immunity in specified circumstances. Under these exceptions, for example, the government retains sovereign immunity from suit for any claim arising in a foreign country and any damages claim caused by regulation of the monetary system. Contractors have argued that the protections of some of the FTCA's exceptions should be extended to them under the doctrine of preemption. Under the Supremacy Clause of the U.S. Constitution, federal law is "the supreme Law of the Land" and applies instead of, or preempts, state law to the degree that the two are incompatible. The FTCA is not directly applicable to contractors, but courts have occasionally used its exceptions to craft rules that protect contractors from tort suit. Where courts have done so, they have rationalized that the FTCA and its underlying policies, as federal law, preempt tort claims, which are frequently rooted in state law. The two FTCA-based preemption defenses that contractors appear to invoke most frequently when defending against tort liability are the government contractor defense and the combatant activities exception. Government Contractor Defense One FTCA exception permits the government to retain its sovereign immunity against any claim based on its or its employees' "exercise or performance or the failure to exercise or perform a discretionary function or duty … whether or not the discretion involved be abused." It is the tension between this FTCA exception, known as the discretionary function exception, and imposing tort liability on government contractors for harms caused by defects in some government-approved designs that spurred the Supreme Court to create the government contractor defense in its 1988 decision in Boyle v. United Technologies Corporation . After the Boyle decision, lower courts were left to determine whether the Supreme Court's rationale applies only to design defect claims, or whether it also supports immunizing contractors from manufacturing defect claims and claims originating in the performance of service contracts. Boyle and the Origins of the Government Contractor Defense In Boyle , a Marine pilot died when his helicopter crashed off the coast of Virginia Beach, VA. The Marine survived the initial crash, but subsequently drowned when water pressure apparently prevented him from opening the submerged helicopter's outward-opening escape hatch. His estate sued the contractor that built the helicopter to government specifications, arguing, among other things, that the escape hatch's design was defective because it opened outward rather than inward and equipment obscured the hatch handle. In response, the defendant contractor argued that the Court should recognize contractor immunity from liability for harms caused by defects in government-selected designs through a judicially created tort immunity based on the FTCA's discretionary exception. The plaintiff countered that courts could not create rules preempting state law by immunizing contractors from tort suit in the absence of express legislative authorization. However, the Court disagreed, holding that judicially created rules can preempt and replace state law in a few areas implicating "uniquely federal interests," meaning committed to federal control by the Constitution and U.S. laws. Having thus found that preemption by a judicially created rule is possible, the Court then fashioned and applied a two-part test for determining when preemption of state law by a judicially created rule is appropriate. This test focuses upon (1) whether the claim involves "uniquely federal interests," and (2) whether the state law "significantly conflicts" with an identifiable federal policy or interest, or impedes specific objectives of federal legislation. Based on this test, the Court found state law preemption by judicially created rule appropriate in this instance. The Court did so by first noting that contractors' civil liabilities arising under equipment contracts involve "uniquely federal interests" because imposing tort liability on contractors would directly affect government contracts by causing contractors to either decline to make equipment for the government or raise prices. The Court then concluded that a significant conflict exists between the discretionary function exception to the FTCA and holding contractors liable under state tort law for design defects in military equipment when the government selected the equipment's design. The discretionary function exception removes the government's own tort liability arising from its discretionary acts, and the Court determined that selecting the appropriate design for military equipment is plainly a discretionary act within the meaning of the discretionary function exception. The Court further concluded that contractors would "substantially if not totally" pass through to the government the costs of any tort liability derived from the government's discretionary selection of equipment design by increasing prices to "cover," or insure against, potential liability. In effect, this would make the government bear liability costs resulting from its discretionary acts, which the discretionary function exception sought to prevent. Thus, the Court found a conflict between the discretionary function exception and holding contractors liable under state tort law for defects in government-selected designs and preempted state tort law with a judicially created rule. After applying its two-part test and determining state law preempted by the discretionary function exception, the Boyle Court then created a rule for contractor immunity from tort liability. In doing so, the Court considered the extent to which state law should be displaced, and thereby the degree to which contractors should be immune from tort liability, necessary to protect the federal interest underlying the discretionary function exception. Specifically, in determining the scope of preemption, the Court sought to avoid frustration of the discretionary function exception's underlying policy of preventing the government from bearing the costs of liability caused by its discretionary acts, while simultaneously preventing contractors from perversely altering their behavior because of overly broad immunity from tort liability. The Court was particularly concerned that contractors might withhold from the government knowledge of risks relevant to the government's discretionary design decisions because disclosing such risks might disrupt the contract, and withholding would produce no liability on the part of the contractor if it were entirely immune from tort liability. With these considerations in mind, the Court created a rule that immunizes contractors from state tort liability when 1. the United States approved reasonably precise specifications; 2. the equipment conformed to those specifications; and 3. the [supplying contractor] warned the United States about the dangers in the use of the equipment that were known to the [contractor] but not to the United States. Manufacturing Defect Claims and the Government Contractor Defense The government contractor defense that the Supreme Court created in Boyle immunizes contractors from tort liability stemming from defects in government-approved product designs. However, Boyle does not address whether contractors enjoy similar immunity from tortious acts arising not from a defect in the product's design, but rather from a defect in the product's manufacturing. Lower courts have differed regarding when, if ever, judicially created rules should preempt state tort claims against contractors for manufacturing defects. Initially, the U.S. District Court for the Central District of California relied, in part, on the Supreme Court's holding in Boyle to immunize contractors from tort liability for manufacturing defects under narrowly prescribed circumstances in its 1993 decision in Bentzlin v. Hughes Aircraft Co mpany . There, six Marines had been killed in Kuwait when a missile fired from a U.S. aircraft struck their vehicle. Their estates sued the missile maker, claiming that the manufacturer should be held liable because a manufacturing defect caused the missile to miss its intended target and hit the Marines' vehicle. The court disagreed. Resting its decision on the FTCA's discretionary function exception, as the Supreme Court did in Boyle , the district court held that contractors enjoy immunity from tort liability when "sophisticated weaponry designed exclusively for combat use" leads to a manufacturing defect claim that is rooted in state tort law against a contractor. The court did so because it determined that tort suits against contractors would interfere with the government's discretionary manufacturing decisions, given the government's inextricable intertwining with the manufacturing process as a result of the governmental security clearances and quality controls that it imposes throughout the process. More recently, however, in its 2013 decision in McMahon v. General Dynamics Corp oration , the U.S. District Court for the District of New Jersey determined that the discretionary function exception does not apply to a mistake or defect in manufacturing and therefore held Boyle inapplicable. In this case, the plaintiff alleged injury caused by a machine gun manufacturing defect and sued the contractor that supplied the machine gun to the government. The contractor attempted to argue that Boyle immunized it from the plaintiff's manufacturing defect claim. However, the court disagreed. It distinguished Boyle from the case at hand by noting that Boyle immunized contractors from liability arising out of the government's exercise of its discretion, while manufacturing defect claims are caused by errors in process, not errors in the government's discretionary decisions. The court thus concluded that "the discretionary function exception to the FTCA does not apply here," and without applicability of the discretionary function exception, there can be no Boyle defense. Given the differing outcomes in McMahon and Bentzlin , the viability of the government contractor defense to manufacturing defect claims is unsettled. It is unclear whether other courts might apply Bentzlin 's approach, apply McMahon 's approach, or try to reconcile the two by, for example, finding that the government contractor defense generally does not extend to manufacturing claims unless Bentzlin 's rule applies (i.e. the contract is for sophisticated weaponry designed exclusively for combat use). Service Contracts and the Government Contractor Defense Boyle was also silent as to whether the government contractor defense extends to contractors performing service contracts, and how it might extend to such contractors. Based on the Supreme Court's rationale in Boyle , lower courts have disagreed on the scope of Boyle 's extension to contractors performing service contracts. For example, in its 2003 decision in Hudgens v. Bell Helicopters/Textron , the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) expanded the government contractor defense so that it immunizes some contractors whose tort liability stems from performance of service contracts. In this case, a contractor entered an agreement with the U.S. Army to maintain aircraft pursuant to Army publications and directives, and Army personnel closely monitored the contractor's performance to ensure compliance with Army protocols. The plaintiffs were injured when piloting a helicopter whose tail fin separated from the aircraft. The helicopter's faulty tail fin would likely have been discovered if the contractor had followed industry-recommended inspection protocols, but Army guidelines that the contractor was obligated to follow did not incorporate such protocols. The plaintiffs alleged that the contractor had negligently failed to properly maintain the helicopter at issue and repair the faulty tail fin. In response, the defendant asserted that is was entitled to Boyle 's government contractor defense, apparently because government procedures governed its contract performance. Over the plaintiffs' argument to the contrary, the Eleventh Circuit held that the government contractor defense can extend to service contracts because articulating maintenance performance protocols requires the government to use its discretion, just as it must when creating design specifications. Therefore, in the Eleventh Circuit's view, the government contractor defense's underlying rationale (i.e., preventing circumvention of the purpose of the discretionary function exception by permitting contractors to pass on the costs of the government's exercise of its discretion to the government) can point toward government contractor immunity applying in the context of service contracts. As for when the government contractor defense applies to service contracts, the Eleventh Circuit modified the traditional government contractor defense, holding contractors immune from tort liability when 1. the United States approved reasonably precise maintenance procedures; 2. [the contractor's] performance of maintenance conformed to those procedures; and 3. [the contractor] warned the United States about the dangers in reliance on the procedures that were known to [the contractor] but not to the United States. The Eleventh Circuit then appeared to consider the totality of the maintenance procedures governing the contract between the government and the defendant contractor, as opposed to the procedures that specifically govern tail fin inspection. The court found the government contractor defense applicable and affirmed the district court's entry of summary judgment in favor of the contractor. Similarly, in its 2010 decision in Katrina Canal Breaches v. Washington Group International , the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) recognized that the government contractor defense can extend to service contracts. However, the Fifth Circuit reached this conclusion by modifying slightly the scope of Boyle 's three-part test as used by the Eleventh Circuit in Hudgens . There, the Eleventh Circuit appeared to consider the specifications for the entire contracted project in determining whether the government provided the contractor with reasonably precise specifications, one of the three factors considered in determining the applicability of the government contractor defense to the defendant contractor. The Fifth Circuit, in contrast, considered only the specifications pertaining to the particular design feature giving rise to the plaintiffs' claims, reasoning that "precise specifications for one aspect of a large project do not create an umbrella of protection for an entire project." Combatant Activities Exception Other courts have similarly relied on the Supreme Court's rationale in Boyle to extend immunity to contractors stemming from the combatant activities exception of the FTCA. The combatant activities exception, like the discretionary function that the Supreme Court relied upon in Boyle , is an example of the U.S. government retaining its sovereign immunity under certain circumstances. Pursuant to the combatant activities exception, the government is not liable for torts that arise from the combatant activities of the Army, Navy, Air Force, or Coast Guard during time of war. Relying on Boyle 's rationale , contractors facing tort liability frequently argue that the federal policies embodied in the combatant activities exception point toward the exception's preemption of state law tort suits against contractors in at least some instances. There has not been uniformity in court decisions that have dealt with such arguments. Some courts have declined to extend the exception to immunize contractors from tort liability. Other courts have extended the exception to contractors, but have done so differently based on the courts' accepted definitions of combatant activities and the federal policy the courts find embodied within the exception. Refusal to Extend the Combatant Activities Exception to Contractors Some courts have expressly declined to extend the combatant activities exception to contractors. For example, in McMahon v. Presidential Airways, Incorporated , the U.S. District Court for the Middle District of Florida rejected a contractor's argument of entitlement to immunity under the FTCA's combatant activities exception. The plaintiffs were survivors of three servicemembers who had perished in a plane crash in Afghanistan. The survivors brought state tort negligence claims against the contractor that was responsible for air transportation and operational support under a contract with the Department of Defense. In response, the contractor argued that Boyle 's rationale supports extending the combatant activities exception to contractors. However, the court found otherwise, determining that the only immunity that contractors enjoy against tort suit is the government contractor defense created by the Supreme Court in Boyle , and any extension of the combatant activities exception to contractors would require legislative authorization. With no such authorization to extend the combatant activities exception's protections to contractors, the court reasoned, any immunity for contractors based on the combatant activities exception must come from Congress rather than the judiciary. Definition of "Combatant Activities" Other courts have found that the combatant activities exception does extend to contractors, but some have differed over the proper definition of combatant activities. The FTCA does not define "combatant activities," and courts attempting to define the term have often turned to the FTCA's legislative history only to find that it is silent on the issue. Therefore, courts that are potentially willing to extend the combatant activities exception to federal contractors have had to construe the meaning of "combatant activities." In doing so, two different definitions have emerged: a fairly narrow definition crafted by the U.S. District Court for the Western District of Louisiana in 1947 in Skeels v. United States , and a broader definition crafted by the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) in 1948 in Johnson v. United States . Neither Skeels nor Johnson involved claims against contractors. Rather, both required the court to define combatant activities in the context of applying the combatant activities exception to the government's actions. However, as a general rule, modern cases involving contractors that invoke the combatant activities exception in defense to tort claims use either the Skeels or Johnson definition of combatant activities. In Skeels , a man who was fishing off the coast of Texas died when a pipe particle fell from a U.S.-owned airplane and hit him on the head, and the man's estate sued the government for negligence. The U.S. was involved in World War II at the time, and the military was using the airplane in question in combat training exercises. In its defense, the government argued that sovereign immunity protected it against the plaintiff's claims pursuant to the FTCA's combatant activities exception. Evaluating this defense required the Skeels court to determine whether the government's activity was "combatant" within the scope Congress intended for the FTCA. It did so by looking to the plain meaning of the word "combatant," as found in dictionary definitions. Based on these definitions, the court held that "combat activities" mean "the actual engaging in the exercise of physical force," rather than mere practice or training activities, even if those practice or training activities occur in time of war. Accordingly, the court rejected the government's defense. Johnson 's definition of combatant activities, in contrast, is more expansive than the definition adopted in Skeels . Like the court in Skeels , the Ninth Circuit in Johnson initially turned to the FTCA's legislative history to parse out a definition of "combatant activities" when evaluating the government's combatant activities exception defense to tort claims, and found it unhelpful. The Johnson court thus turned to the FTCA's wording, which it found clear, unambiguous, and leaving no doubt as to legislators' intended meaning for "combatant activities." According to the Ninth Circuit, "combat" denotes physical violence, and "combatant" means pertaining to actual hostilities. Therefore, the Ninth Circuit concluded, the definition of "combatant activities" encompasses both physical violence and the activities necessary to, and in direct connection with, actual hostilities. In recent years, courts charged with defining combatant activities in the context of tort suits against government contractors have generally used the Johnson definition rather than the Skeels definition, apparently believing that it more accurately captures the definition of combatant activities. However, at least one court has relied upon the Skeels definition in a recent decision. In 2009, the U.S. District Court for the Eastern District of Virginia applied the Skeels definition after recognizing that the combatant activities exception can extend to contractors in Al Shimari v. CACI International, Incorporated , finding Skeels more limited definition harmonious with the "common sense notion" that a government contractor providing services in support of a war effort does not necessarily mean that the contractor is conducting combatant activities. There, the defendant contractors had filed a motion to dismiss the plaintiff's claims on a number of grounds, including federal preemption under the combatant activities exception. In applying the Skeels definition of "combatant activities," the court concluded that it was too early in the litigation, and thus not enough evidence had yet been presented, to definitively conclude that the defendant contractors' actions constituted actual engagement in physical force. The court therefore rejected the defendants' motion to dismiss. The U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) later reversed, finding that the combatant activities exception did shield the defendant contractors from tort liability under the circumstances. In doing so, the Fourth Circuit did not opine on which of the Johnson or Skeels definition of combatant activities it believed to be correct. However, moving forward, courts in other jurisdictions could similarly find that the narrow combatant activities definition in Skeels is the proper definition in evaluating a contractor's combatant activities defense. Policy Underlying the Combatant Activities Exception Courts have found differing federal policies embodied in the combatant activities exception, and have thus created different tests for contractor immunity to preserve the purposes they believe the exception embodies. Early on, in its 1992 decision in Koohi v. Varian Associates, Inc orporated , the Ninth Circuit relied on Boyle and the combatant activities exception to craft a narrow immunity that applies only to claims against contractors by 'enemies' of the U.S. during time of war. In that case, the U.S. was engaged in hostilities with Iran, and a U.S. naval cruiser shot down an Iranian civilian aircraft over Iranian waters after mistaking it for a fighter jet. The plaintiffs were heirs of people who subsequently died, and they sued the contractor responsible for designing the naval cruiser's Aegis Air Defense System. The contractor argued that it was entitled to immunity against the plaintiffs' claims under the FTCA's combatant activities exception. In resolving the plaintiffs' claims, the Ninth Circuit followed the analytical framework that the Supreme Court had outlined in Boyle for determining the scope of federal law's displacement of state law, or the degree of contractor tort immunity necessary to protect the federal interest underlying, in this case, the combatant activities exception. First, it determined that one federal policy embodied in the combatant activities exception is that the U.S. owes no duty of reasonable care to its enemies, or those against whom U.S. military efforts are directed, during times of war. Next, the Ninth Circuit found that this policy conflicts with allowing U.S. enemies to impose tort liability on contractors because such liability would "create a duty of care where the combatant activities exception is intended to ensure that none exists." Thus, the Ninth Circuit narrowly extended the combatant activities exception to contractors by creating a rule immunizing federal contractors against tort suits for acts against U.S. enemies during wartime. Koohi was the earliest case to find tort claims against contractors preempted by the FTCA's combatant activities exception, and a number of courts subsequently followed Koohi 's lead. However, these courts have generally found that the combatant activities exception embodies broader policy rationales than merely eliminating a duty of care owed to the enemies of the U.S. during wartime, and have thus crafted rules that afford contractors broader immunity than the Koohi rule. Two distinct rules, in particular, appear to have developed after Koohi that differ in their scope. The first rule that flows from Koohi appeared in 1993 in Bentzlin , a case discussed earlier in this report in connection with the government contractor defense. As previously noted, in Bentzlin , a missile fired from a U.S. aircraft struck a vehicle and killed six Marines, leading the Marines' estates to bring state tort claims for manufacturing defects against the contractor that made the missile. The U.S. District Court for the Central District of California considered the defendant contractor's argument that, in addition to having immunity from liability under Boyle 's government contractor defense, the FTCA's combatant activities exception preempted all tort claims against it. In so doing, the court determined that the combatant activities exception embodies the premise that the three primary objectives of tort law (punishing tortfeasors, compensating innocent victims, and deterring risky behavior) are incongruent with the government's combat interests. In other words, the court reasoned that the government should not be punished for mistakes made during war, those who have suffered due to the government's negligence during war should not be compensated differently from those who were victims of the violence of war, and the government should not be deterred from taking "bold and imaginative measures" when necessary during war. Therefore, the government is immune from tort law stemming from its combat actions. The court then concluded that the same incongruity between tort law's objectives and the government's combat interests exists when tort law is applied to contractors: tort law is not required to punish contractors as the government is in the best position to monitor any wrongful activity by contractors, those who have suffered due to a contractor's negligence during war should not be compensated differently from those who are victims of the violence of war, and making contractors overly cautious during wartime could harm the government's military efforts. Accordingly, the court held that the plaintiffs' state tort claims against the defendant contractor were preempted by the combatant activities exception. The Bentzlin court did not, however, articulate a clear test for determining when the combatant activities exception preempts state tort claims against contractors. Rather, its decision could apparently be construed to mean that applying state tort law to a contractor for any harm arising out of combatant activities would frustrate the government's combat interests, which the combatant activities exception seeks to protect. Therefore, Bentzlin could potentially be said to have extended to contractors broad immunity against any tort claims arising out of combatant activities much like the government's own immunity under the combatant activities exception, and some courts have subsequently construed it as doing so. The second rule that derives from Koohi appeared in 2009 in Saleh v. Titan Corp oration . The two defendants in Saleh had contracts to provide interrogation and interpretation services to the U.S. military at the Abu Ghraib prison complex in Iraq. The plaintiffs were prisoners at Abu Ghraib who alleged torture and abuse at the hands of both defendants' employees (and U.S. soldiers). The plaintiffs brought a number of claims against the defendant contactors, including state tort claims, which the defendants argued were preempted by the FTCA's combatant activities exception. The U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit) in Saleh relied on the Supreme Court's rationale in Boyle to fashion a test that extends the combatant activities exception to contractors. First, the D.C. Circuit ascertained the federal interest furthered by the combatant activities exception, finding that Congress sought to eliminate duties of care from the battlefield through the exception. The D.C. Circuit reasoned that risk taking is necessary in wartime efforts, and thus that that the traditional rationales of tort law (deterring risky behavior, compensating victims, and punishing tortfeasors) are "singularly out of place in combat situations." The D.C. Circuit then held that the combatant activities exception's underlying policy of eliminating tort liability from the battlefield is "equally implicated" whether the allegedly tortious act occurred at the hands of a soldier or a contractor that was engaged in combatant activities under military orders and command. Next, in accordance with Boyle , the D.C. Circuit considered the scope of federal law's displacement of state tort law that was necessary to protect the federal policy embodied in the combatant activities exception. The D.C. Circuit created a rule extending the combatant activities exception's protections to contractors when, during wartime, they are integrated into combatant activities over which the military retains command authority, and the tort claim arises out of the contractor's participation in such combatant activities. The D.C. Circuit then found both defendant contractors immune from tort suit because their employees were fully integrated into military units and subject to the military chain of command, noting that they were essentially functioning as soldiers. The Saleh rule does not appear to provide the same broad protection to contractors for all tort liabilities arising out of combatant activities that the Bentzlin rule arguably provides, given that it requires contractors to be fully integrated into combatant activities, and the military to retain command authority over the contractors. However, the Saleh rule affords contractors greater protection than the Koohi rule in one sense by protecting contractors against all claims under specified circumstances, regardless of the status of the person bringing the claim (i.e., whether the person bringing the claim is an "enemy" of the U.S.). Courts that have recently resolved contractor defendants' combatant activities preemption claims generally appear to have followed the Saleh rule rather than the Koohi or Bentzlin rules, finding that it best fits the purpose of the combatant activities exception. The Political Question Doctrine Other arguments that contractors have advanced against tort liability are grounded in the political question doctrine. This doctrine derives from Article III of the Constitution, which provides that federal courts are courts of limited jurisdiction which can only hear "Cases" and "Controversies." This means federal courts can only entertain questions raised in adversarial proceedings that are capable of judicial resolution. In accordance with Supreme Court precedent, "no justiciable 'controversy' exists when parties seek adjudication of a political question," which is generally a question that courts should refrain from deciding because the Constitution has entrusted its resolution to the legislative or executive branches of government. The political question doctrine traces its origins to the Supreme Court's 1803 decision in Marbury v. Madison , which holds that courts cannot properly entertain questions that are political in nature because they are committed to the executive branch. The Supreme Court later annunciated standards for determining when a political question exists in its 1962 decision in Baker v. Carr . There, reversing a lower court's holding that a challenge by voters to a state's system for establishing political districts posed a nonjusticiable political question, the Court noted that a political question exists when a case shows on its surface 1. a textually demonstrable constitutional commitment of the issue to a coordinate political department; 2. a lack of judicially discoverable and manageable standards; 3. the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; 4. the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; 5. an unusual need for unquestioning adherence to a political decision already made; or 6. the potentiality of embarrassment from multifarious pronouncements by various departments on one question. Political questions arise with some frequency in cases involving the military and foreign affairs, including tort cases against military contractors, because the military and foreign affairs are areas that are generally committed to the executive and legislative branches of government. However, not every case that involves the military or foreign affairs necessarily presents a political question; at least one Baker factor must be present in a case for the political question doctrine to apply. Contractors often invoke the first two Baker factors when they raise the political question doctrine to seek dismissal of tort claims against them. Though these cases have diverged greatly in their outcomes, it would appear that courts are more likely to find the political question doctrine applicable when (1) the military largely controls the contractor's actions; (2) the plaintiff's claims are not seen as presenting an "ordinary tort suit"; (3) the record before the court is sufficiently developed; (4) the government intervenes on the contractor's behalf; or (5) the applicable state law recognizes the tort doctrine of contributory negligence, whereby plaintiffs may not recover in a negligence claim when their own negligence is a proximate cause of their injuries, and the plaintiff is a government employee. Courts appear more likely to find that the political question doctrine forecloses justiciability of a tort claim against a contractor when the military exercises a significant degree of control over the contractor's actions and behavior. For example, the differing conclusions in two factually similar cases, Carmichael v. Kellogg, Brown & Root Services (2009) and Lane v. Halliburton (2008), both of which arose from accidents that occurred during contractor-operated fuel convoys in Iraq during recent hostilities, illustrates this point. In Carmichael, the Eleventh Circuit affirmed a district court decision dismissing the case on political question grounds. The Eleventh Circuit, in considering the first Baker factor, largely rested its decision on the fact that the military regulations governing the defendant's contract gave the military plenary control over convoys, including the one at issue in the case. Given these regulations, the Eleventh Circuit reasoned that military decisions controlled nearly every aspect of the convoy in which the plaintiff was injured, and that it would thus be impossible for the court to evaluate the defendant contractor's alleged negligence without simultaneously examining military judgments and decisions. In contrast, in Lane , the Fifth Circuit reversed a district court decision dismissing the case on political question grounds. According to the Fifth Circuit, the first Baker factor (i.e., commitment of the issue to a coordinate branch) is concerned with improper judicial challenge of actions taken by the executive and legislative branches of government. The Fifth Circuit held that for a contractor to invoke Baker 's first factor in seeking dismissal of a tort claim, it must show two things: that the claim against it will require the Fifth Circuit to reexamine a military decision, and that the military decision at issue is insulated from judicial review. The Fifth Circuit noted that at least some of the allegations against the defendant contractor could draw the court into consideration of the military's decision as to what constituted adequate force protection for the convoys at issue. However, the Fifth Circuit determined that the plaintiffs had presented factual allegations sufficiently plausible to establish other claims against the defendant contractor that would not draw the court into questioning the Army's decisions as to force protection. For these other claims, the Fifth Circuit viewed the defendant contractor's "policies and actions" as separable from those of the military. A court appears more likely to hold that Baker 's second factor (i.e., judicially manageable standards) warrants dismissal of a plaintiff's tort claims against a federal contractor on political question grounds when the court cannot evaluate the claims using the ordinary tort standards that it uses in the civilian context. For example, in finding the political question doctrine applicable in Carmichael , the Eleventh Circuit noted that the question of the defendant contractor's negligence could not be resolved using readily available "ordinary" tort standards because of the large degree of military control over the convoy at issue. That is, evaluating the plaintiff's claims would require the Eleventh Circuit to develop and apply new standards. Conversely, in finding the political question doctrine inapplicable, the Fifth Circuit in Lane observed that the questions raised by the plaintiffs' claims could be answered through the use of traditional tort standards. Other factors also help account for the differing outcomes in cases wherein a contractor invoked the political question doctrine when facing civil tort liability. For instance, the timing of a defendant's motion to dismiss the claims against it can affect the motion's outcome. Before finding that the political question doctrine forecloses judicial disposition of a case, a court should conduct a "discriminating analysis" of the particular question posed. It should consider the history of its management by the political branches, whether the specific facts and circumstances of the case make it susceptible to judicial handling, and the implications of a judicial decision. A court generally will not find the political question doctrine appropriate when there is merely a chance that a political question may present itself; it must be certain that a political question will present itself. Thus, when a defendant files a motion to dismiss on political question grounds before the record has been adequately developed, a court does not have much material on which to base its "discriminating analysis." In such circumstances, courts appear less likely to find the political question doctrine applicable, but may still consider the doctrine's applicability at a later stage of the litigation. Additionally, courts seem less likely to find that the political question doctrine forecloses adjudication of a tort suit against a contractor if the government fails to intervene in the suit on the contractor's behalf. As the Eleventh Circuit noted in another case, McMahon v. Presidential Airways, Incorporated , the government's opinion is significant in a court's decision as to whether a political question exists. There, the Eleventh Circuit determined that the government's apparent lack of interest, as conveyed by its failure to intervene on behalf of the contractor, buttressed the court's conclusion that the case should not yet be dismissed under the political question doctrine. The U.S. Court of Appeals for the Third Circuit similarly found the government's failure to take a formal position on a claim's justiciability by intervening suggests that the claim is not committed to another branch of government, and thus that the political question doctrine does not apply. Finally, courts seem more likely to find the political question doctrine applicable if the relevant state tort law recognizes contributory negligence and plaintiffs are military or civilian government personnel. Contributory negligence is a defense that defendants may raise, which prevents plaintiffs from recovering in a negligence claim when their own negligence is a proximate cause of their injuries. When plaintiffs are military or civilian government personnel, their actions or inactions potentially result from executive branch policies. Thus, a contractor's contributory negligence defense increases the likelihood that the court may be called upon to evaluate executive policies, which it would view as beyond its purview. Accordingly, the availability of a contributory negligence defense increases the likelihood that a court would find the political question doctrine applicable. For example, in Taylor v. Kellogg, Brown, & Root Services , the Fourth Circuit held that the defendant's planned assertion of contributory negligence would require it to determine the reasonableness of a military decision, and thus implicate the political question doctrine. There, a group of Marines, including the plaintiff, had attempted to install a replacement generator in response to a main generator's malfunction. While the Marines were working on the replacement, technicians employed by the defendant arrived to perform repairs on the main generator. The technicians turned on the main generator, resulting in the plaintiff's electrocution and subsequent negligence suit against the defendant. The defendant advised the Fourth Circuit that it planned to argue the plaintiff's contributory negligence in defense, and filed a motion to dismiss based on the political question doctrine. The Fourth Circuit held that the political question doctrine foreclosed the plaintiff's claim because the defendant's contributory negligence defense would draw it into improper consideration of the reasonableness of the military's decision to install a secondary generator. Derivative Absolute Immunity Federal employees generally enjoy absolute immunity from tort suit under the Westfall Act, which Congress passed in 1988 in response to the Supreme Court's Westfall v. Erwin decision. In Westfall , the Court relied on federal employee immunity's "central purpose" of promoting effective government to hold that government employees are immune from suit when they perform discretionary (as opposed to ministerial) functions within the scope of their employment. Discretionary functions are those involving the government's policy-making activities. In fashioning this rule, the Court observed that Congress is best suited to decide what contexts warrant absolute immunity, and invited further congressional intervention by noting the prospective usefulness of legislated standards governing federal employees' immunity from tort suits. Congress responded by enacting the Westfall Act, which removed the requirement that federal employees' acts be discretionary for absolute immunity to apply. Thus, since 1988, federal employees have absolute immunity from tort suit when their tortious conduct occurs within the scope of their employment. In the wake of Westfall v. Erwin and the Westfall Act, some government contractors argued that they should have derivative absolute immunity, analogous to federal employees' absolute immunity, under certain circumstances. Some lower courts have recognized such derivative immunity, but have required, pursuant to Westfall v. Erwin , that the act giving rise to potential liability be a discretionary function that occurred within the scope of the contractor's employment or duties. For example, in Martin v. Halliburton , the Fifth Circuit noted that "non-governmental entities—such as [the defendant contractors]—that seek the protection afforded by the Westfall decision remain subject to the requirement that their acts be discretionary." Courts in the Fourth Circuit have also held that contractors have derivative absolute immunity against tort liability arising from their participation in official investigations under certain circumstances. The leading case on such immunity is Mangold v. Analytic Services, Incorporated , where the Fourth Circuit considered an Air Force Colonel's tort claims, including injury to reputation, against a contractor stemming from the contractor's participation in an internal Air Force investigation into the Colonel's alleged improper conduct in awarding a contract. Concluding that there is a public interest in identifying and preventing waste, fraud, and mismanagement in government, the Fourth Circuit held that a contractor cannot be liable for torts resulting from statements and information that it or its employees give in response to inquiries by government investigators during an official investigation. The Fourth Circuit based its holding on the same rationale of promoting effective government relied upon by the Supreme Court in Westfall , concluding that there is a public interest in identifying and preventing waste, fraud, and mismanagement in government. The Fourth Circuit also based its rule on the common law privilege to testify before courts, grand juries, and government investigators with absolute immunity. A district court in the Fourth Circuit later observed that, while Mangold purported to rely in part on Westfall 's federal official immunity, the defendant contractor in Mangold was not entitled to the federal official immunity recognized in Westfall because there was no judicial finding that the contractor acted within the scope of its employment or performed a discretionary function. It thus appears as though, in Mangold , the Fourth Circuit created a novel avenue through which contractors can possess derivative absolute immunity. While at least one court in a different circuit has entertained the application of Mangold 's test, no court outside of the Fourth Circuit appears to have applied it to extend derivative absolute immunity to contractors. Derivative Feres Immunity When faced with tort suits, some contractors have argued that they are entitled to an immunity that derives from the government's immunity established by the Supreme Court in Feres v. United States in 1950. There, the Court rejected the consolidated negligence claims of former servicemembers against the government, holding that servicemembers cannot sue the U.S. government for any injuries that arise from, or occur in the course of, activity incident to service, which lower courts subsequently interpreted broadly. The Court rested its decision on the distinctively federal relationship between the government and members of its armed forces and the existence of generous statutory compensation schemes for injured servicemembers. Initially, some lower courts held that the Feres doctrine proscribed only suits against the government in which a servicemember caused harm to another servicemember. However, the Supreme Court later broadened the doctrine to all claims by a servicemember against the government that arise out of, or are incidental to, service, regardless of whether a servicemember or civilian government employee commits the act causing harm. When servicemembers have sued contractors for negligence that occurred incidentally to service, contractors have occasionally argued that the Feres doctrine should be further broadened to shield them from liability under theories of derivative sovereign immunity. However, courts appear uniform in their rejection of these contractor arguments, with some expressly stating that the Feres doctrine applies only to the government and its employees. Indemnification Unlike the defenses discussed previously in this report, indemnification does not allow a contractor to avoid tort liability. Instead, through an indemnity agreement, one party agrees to compensate another for a loss that the other party incurs, often to a third party. In the context of tort suits against contractors, when the government has agreed to indemnify a contractor, the government may be obligated to compensate the contractor for certain damages paid to third parties. Because indemnification allows the contractor to forgo paying for the costs of harms it causes, indemnification is sometimes viewed as the practical equivalent of avoiding liability, although indemnification technically alters who pays for any liability. The use of indemnification agreements in government contracts is limited by the Anti-Deficiency Act, which prevents any government employee from entering a contract on the government's behalf or obligating the government to make a payment in excess or advance of an appropriation unless otherwise authorized by law. The act generally precludes the government from entering into any open-ended indemnification agreement, barring express statutory permission. However, three frequently cited statutes expressly permit, and thereby authorize, agencies to enter into open-ended indemnification agreements: P.L. 85-804, the Price-Anderson Act, and 10 U.S.C. §2354. First, P.L. 85-804 allows the President to authorize an agency that acts in connection with the national defense to enter, amend, modify, or make advance payments on contracts without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, including the Anti-Deficiency Act, whenever he believes that such agency action would facilitate the national defense. This language has been interpreted to allow the President to authorize certain agencies to indemnify government contractors against risks that are "unusually hazardous or nuclear," as those risks are defined in the relevant contract. P.L. 85-804's applicability to actions that facilitate the national defense has been liberally construed to encompass the actions of not only certain defense agencies, but also certain civilian agencies, including the Department of the Treasury, Department of the Interior, Department of Agriculture, Government Printing Office, Department of Commerce, General Services Administration, National Aeronautics and Space Administration, Government Printing Office, and Tennessee Valley Authority. P.L. 85-804's indemnification authority only applies when the contractor will not be compensated for its loss, whether by insurance or otherwise. Second, the Price-Anderson Act permits the Department of Energy (DOE) to enter into agreements with its nuclear contractors whereby DOE provides indemnification for liability arising from specified types of nuclear accidents. In part, Congress enacted the Price-Anderson Act to spur the development of the atomic energy industry. Commentators have noted that the act has proven essential to ensuring that contractors participate in DOE nuclear programs, as their participation exposes them to considerable risks that are uninsurable through private insurance. Third, 10 U.S.C. Section 2354 applies only to research and/or development contracts between a military department and a contractor. In such contracts, military departments can include indemnification clauses to protect contractors against losses that arise out of direct contract performance, but only to the extent that they are not compensated by insurance or otherwise. Under 10 U.S.C. Section 2354, indemnification can cover any claims by third parties against the contractor, including reasonable litigation and settlement expenses and any loss of the contractor's property. However, covered claims and losses must be caused by an "unusually hazardous" risk, as defined in the relevant contract. Payments made under a 10 U.S.C. Section 2354 indemnification agreement must come from funds not yet obligated that were made available for research and/or development, funds specifically obligated for the performance of the relevant contract, or funds appropriated for indemnification payments. Conclusion The government's increased reliance on contractors in recent years, particularly in the military arena, has led to an increased number of tort suits against contractors. The government will likely continue its widespread use of contractors well into the future, which will include the use of contractors in military operations. As such, tort litigation against contractors will likely continue. To date, there do not appear to have been any congressional attempts to address the defenses that contractors have relied upon, successfully and unsuccessfully, to defend against tort liability. There further do not appear to have been any attempts by Congress to otherwise clarify when contractors may escape liability for torts that occur during government contract performance.

Contractors have played a considerable role in U.S. military operations over the last decade, and some commentators anticipate they will continue to do so in the future. Due in part to their heavy involvement in military operations, contractors have faced numerous tort suits, or suits seeking remedy for civil wrongs, in recent years. Many of these tort suits have alleged that contractors' negligence, or failure to take due care, in performing contractual obligations has caused harms to third/private parties (as opposed to the contracting agency). Contractors have often responded to such suits by raising the Federal Tort Claims Act (FTCA), the political question doctrine, and derivative immunities in seeking to avoid liability. They may also, to the extent permitted by their contract, seek indemnification from the government if found liable. The Supremacy Clause of the U.S. Constitution provides that federal law is the "supreme law of the land" and preempts, or applies instead of, inconsistent provisions of state law. The FTCA is a federal law through which the government largely waives its inherent sovereign immunity from tort liability, although it retains sovereign immunity if one of the FTCA's exceptions applies (e.g., against any claim arising in a foreign country). Although the FTCA does not apply directly to federal contractors, they have long argued that the FTCA's exceptions can preempt state tort law claims against them in addition to federal agencies, and the Supreme Court agreed in its 1988 decision in Boyle v. United Technologies Corporation. There, the Court held that failure to find that one such FTCA exception, the discretionary function exception, preempts state law tort claims against contractors in narrowly prescribed circumstances would frustrate the exception's underlying purpose of shielding the government from liability caused by its discretionary decisions. The Court thus fashioned a rule immunizing contractors from tort liability caused by defects in some government-selected designs. Lower courts subsequently grappled with questions regarding the Boyle rule's scope (e.g., does it protect against manufacturing defect claims?), as well as whether the FTCA's combatant activities exception immunity may be extended to contractors under the Boyle Court's rationale. Based largely on the terms and performance of particular contracts, some courts extended the combatant activities exception to contractors, whereas others did not. Contractors have also asserted that the political question doctrine—which recognizes limitations on justiciability, or the appropriateness of a court hearing a claim—bars particular tort suits against them because determining whether they are liable would require the court to decide questions that the Constitution commits to the legislative or executive branches of government. Though the outcomes in such cases have varied, it would appear that courts may be more likely to find a political question when a case presents certain characteristics. In addition, contractors have argued for immunities deriving from federal employees' absolute immunity under the Westfall Act, pursuant to which they cannot be liable for any harms that occur within the scope of their employment. Contractors have also argued that the judicially created Feres doctrine, which provides that the government cannot be liable to servicemembers for torts arising in the course of, or incidental to, military service, should apply to them. Some courts have recognized a derivative absolute immunity for contractors, but have held that it applies only to harms caused by contractors' performance of discretionary, rather than ministerial, functions. Courts have generally rejected contractors' derivative Feres immunity arguments. In some cases, the government may also have agreed to indemnify a contractor, or promised to pay certain liabilities to third parties that the contractor may incur through contract performance.

Requirements for Gaming on "Indian Lands" The Indian Gaming Regulatory Act (IGRA) provides a framework for gaming on "Indian lands," according to which Indian tribes may conduct gaming that need not conform to state law. The three classes of gaming authorized by IGRA progress from class I social gaming, through class II bingo and non-banking card games, to class III casino gaming. One of the requirements for class II and class III gaming is that the gaming be "located in a State that permits such gaming for any purpose by any person, organization or entity." The federal courts have interpreted this to permit tribes to conduct types of gaming permitted in the state without state limits or conditions. For example, tribes in states that permit "Las Vegas" nights for charitable purposes may seek a tribal-state compact for class III casino gaming. On the other hand, the fact that state law permits some form of lottery or authorizes a state lottery is not, in itself, sufficient to permit a tribal-state compact allowing all forms of casino gaming. Geographic Extent of IGRA Gaming A key concept of IGRA is its territorial component. Gaming under IGRA may only take place on "Indian lands." That term has two meanings: (1) "all lands within the limits of any Indian reservation"; and (2) "any lands title to which is either held in trust by the United States for the benefit of any Indian tribe or individual or held by any Indian tribe or individual subject to restriction by the United States against alienation and over which an Indian tribe exercises governmental power." Under the first alternative, gaming under IGRA may take place on any land within an Indian reservation, whether or not the tribe or a tribal member owns the land and whether or not the land is held in trust. Determining the applicable boundaries of a reservation is a matter of congressional intent and may entail a detailed analysis of the language of statutes ceding tribal reservation land, and the circumstances surrounding their enactment as well the subsequent jurisdictional history of the land in question. The second alternative has two prongs: (a) the land must be in trust or restricted status, and (b) the tribe must exercise governmental authority over it. Determining trust or restricted status involves Department of the Interior (DOI or department) records. Determining whether a tribe exercises governmental authority may be a simple factual matter involving, for example, whether the tribe has a governmental organization that performs traditional governmental functions such as imposing taxes. On the other hand, it could be a matter requiring judicial construction of federal statutes. How Land Is Taken into Trust Congress has the power to determine whether to take tribal land into trust. There are many statutes that require DOI to take land into trust for a tribe or an individual Indian. An array of statutes grant the Secretary of the Interior (SOI) the discretion to acquire land in trust for individual Indian tribes; principal among them is the Wheeler-Howard, or Indian Reorganization Act of 1934 (IRA). Although the IRA has been held by the Supreme Court to apply only to tribes "under Federal jurisdiction" in 1934, a recent opinion of the Solicitor of the Department of the Interior provides guidance on how tribes may be able to satisfy that requirement. Procedures for land acquisition are specified in 25 C.F.R., Part 151. By this process, Indian owners of fee land, that is, land owned outright and unencumbered by liens that impair marketability, may apply to have their fee title conveyed to the SOI to be held in trust for their benefit. Among the effects of this process are the removal of the land from state and local tax rolls and the inability of the Indian owners to sell the land or have it taken from them by legal process to collect on a debt or for foreclosure of a mortgage. In determining whether to approve an application to take land into trust under this statute, the SOI is required to consider a number of factors and to inform "state and local governments having regulatory jurisdiction over the land to be acquired," giving them "30 days in which to provide written comments as to the acquisition's potential impacts on regulatory jurisdiction, real property taxes and special assessments." Challenges to Taking Land into Trust Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak: Six-Year Statute of Limitations Applies to Land-into-Trust Decisions Until the U.S. Supreme Court's June 2012 decision in Match-E-Be - Nash-She-Wish Band of Pottawatomi Indians v. Patchak , there was an assumption that U.S. sovereign immunity under the Quiet Title Act barred challenges to any decision of the Secretary to take land into trust once title has passed to the United States. The Quiet Title Act authorizes the federal courts "to adjudicate a disputed title to real property in which the United States claims an interest," but not with respect to "trust or restricted Indian lands." In State of South Dakota v. U.S. Department of the Interior , a federal circuit court made such an assumption, prompting DOI to issue a regulation requiring a 30-day waiting period between the date of the Secretary's final determination to take land into trust and the actual trust acquisition. In Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak , the U.S. Supreme Court ruled that the Quiet Title Act's preservation of sovereign immunity for quiet title actions involving Indian trust lands did not extend to suits in which the plaintiff is not seeking to claim title, that is, to take over the land. Moreover, the Court held that the Federal Administrative Procedure Act's judicial review provision permitted suits within its six-year statute of limitations period. The decision also includes a broad interpretation of who may maintain standing under the main statute under which land is taken into trust, 25 U.S.C. Section 465, refusing to accept the arguments of DOI and the Indian tribe that standing should be limited to those, such as state and local governments who might lose tax revenues or nearby Indian tribes who might have competing claims to the land, who would be directly affected by the land acquisition. Instead, the Court determined that a plaintiff who owns nearby property and asserts that the planned use of the land as a gaming casino will harm his enjoyment of his property satisfies the standing requirements, placing his interests "at least arguably ... 'within the zone ... protected or regulated by [25 U.S.C.§465].''' In response to the decision, the Bureau of Indian Affairs (BIA) of the Department of the Interior (DOI) revised its Land Acquisition regulations, 25 C.F.R., Part 151, to eliminate the 30-day waiting period and specify how parties seeking judicial review of land-into-trust decisions may discern when final agency action occurs for the two kinds of decisions possible for land-into-trust applications. Decisions by the SOI or the Assistant Secretary of the Interior for Indian Affairs (AS-IA) are final agency actions. When the SOI or the AS-IA issues a decision to take land into trust, the DOI must publish a notice of the decision "promptly" in the Federal Register and take the land into trust "[i]immediately." In contrast, land-into-trust decisions by Bureau of Indian Affairs officials (BIA-level decisions) are not final agency action and do not require Federal Register notice. They require notice in "a newspaper of general circulation serving the affected area of the decision" as well as notice to state and local officials with "regulatory jurisdiction over the land to be acquired" and to "interested parties who have made themselves known, in writing, to the official prior to the decision." Land may not be taken into trust pursuant to BIA-level decisions "until administrative remedies are exhausted ... or ... the time for filing a notice of appeal has expired and no administrative appeal has been filed." Once a BIA-level decision has become final, the land is to be acquired in trust "[i]mmediately." Big Lagoon Rancheria v. California: Challenge to Validity of Trust Acquisition for a Tribe Not Recognized in 1934 Is Not Subject to Collateral Attack Decades Later In a June 4, 2015, en banc decision, in Big Lagoon Rancheria v. California, the U.S. Court of Appeals for the Ninth Circuit held that a claim that land taken into trust for a tribe not recognized in 1934 may not be raised decades after the trust acquisition in a collateral attack on the trust acquisition. Instead, according to the decision, a challenge to the validity of a trust acquisition must be brought under the Administrative Procedure Act (APA) and is, therefore, subject to a six-year statute of limitations. The en banc court overturned an earlier opinion issued by a divided three-judge panel. The case involves a tract of land taken into trust in 1994 for the Big Lagoon Rancheria of California (Big Lagoon). Big Lagoon first appeared on the list of "Indian Tribal Entities That Have a Government-to-Government Relationship With the United States" in 1979. The dispute with California was precipitated by a breakdown in negotiations for a tribal-state gaming compact under IGRA when California objected to the site preferred by the Big Lagoon for its gaming operation. On the basis of the Supreme Court's Carcier i v. Salazar decision, the state claimed that the site had not been validly taken into trust because the tribe had not been under federal jurisdiction in 1934. It, therefore, asserted that the state was under no obligation to negotiate in good faith for tribal gaming on a tract of trust land that did not meet IGRA's definition of "Indian lands," and, thus, was not eligible for IGRA gaming. A majority of the Ninth Circuit three-judge panel agreed with California. It found that "[t]here was no family or other group on what is now the Big Lagoon Rancheria in 1934"; that Big Lagoon was not a tribe under federal jurisdiction in 1934; and, therefore, that the DOI had no authority under the IRA to take land into trust for Big Lagoon. According to the majority, Big Lagoon could not rely on the DOI's action in taking the particular land into trust to assert tribal jurisdiction over it for IGRA purposes. A dissenting opinion argued that the APA, which has a six-year statute of limitations, was the only avenue to challenge a land-into-trust decision. The majority, however, rejected this argument, and ruled that the APA covered only challenges involving procedural violations. Quoting from an earlier case, the court reasoned that "'[t]he government should not be permitted to avoid all challenges to its action, even if ultra vires , simply because the agency took the action long before anyone discovered the true state of affairs.'" It, therefore, held that the land was not "Indian lands" for IGRA purposes. According to the court, California could contest the validity of the trust acquisition as a defense to a claim that it was not negotiating in good faith because, with respect to "contests [of] the substance of an agency decision as exceeding constitutional or statutory authority," a "challenger may ... [raise such a challenge] later than six years following the decision by filing a complaint for review of the adverse application of the decision to the particular challenger." The en banc court rejected this approach. It quoted the statement by the Supreme Court in Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, that "a challenge to the BIA's 'decision to take land into trust' is 'a garden-variety APA claim.'" It contrasted the Big Lagoon fact situation—"a belated collateral attack"—from the timely challenge to a SOI decision to take land into trust that was at issue in Carcieri. Citing various Ninth Circuit precedents, the court stated that: [a]llowing California to attack collaterally the BIA's decision to take the eleven-acre parcel into trust outside the APA would constitute just the sort of end-run that we have previously refused to allow, and would cast a cloud of doubt over countless acres of land that have been taken into trust for tribes recognized by the Federal government. Secretarial Two-Part Determination Exception to IGRA's Prohibition of Gaming on Lands Acquired in Trust After Enactment of IGRA Lands acquired in trust after IGRA's enactment are generally not eligible for gaming if they are outside of and not contiguous to the boundaries of a tribe's reservation. There are exceptions to this policy, however, that allow gaming on certain "after acquired" or "newly acquired" land. One exception, sometimes referred to as a two-part determination, permits gaming on lands newly taken into trust with the consent of the governor of the state in which the land is located after the SOI (1) consults with state and local officials, including officials of other tribes; (2) determines "that a gaming establishment on the newly acquired lands would be in the best interest of the Indian tribe and its members"; and (3) determines that gaming "would not be detrimental to the surrounding community." Other Exceptions Other exceptions permit gaming on after-acquired land and do not require gubernatorial consent, consultation with local officials, or SOI determination as to tribal best interest and effect upon local community. They relate to any of five circumstances: 1. Any tribe without a reservation on October 17, 1988, is allowed to have gaming on newly acquired lands in Oklahoma that are either within the boundaries of the tribe's former reservation or contiguous to other land held in trust or restricted status by SOI for the tribe. 2. If a tribe had no reservation on October 17, 1988, and is "presently" located in a state other than Oklahoma, it may have gaming on newly acquired lands in that state that are "within the Indian tribe's last recognized reservation within the State." 3. A tribe may have gaming on lands taken into trust as a land claim settlement. 4. A tribe may have gaming on lands taken into trust as the initial reservation of a tribe newly recognized under the Bureau of Indian Affairs' process for recognizing groups as Indian tribes. 5. A tribe may have gaming on lands representing "the restoration of lands for an Indian tribe that is restored to Federal recognition." Final Rule for Gaming on Newly Acquired Trust Lands The Bureau of Indian Affairs (BIA) of the Department of the Interior (DOI) issued a final rule for gaming on newly acquired trust lands, 25 C.F.R., Part 292, on May 20, 2008. The rule applies to all requests under 25 U.S.C. Section 2719 on which there has not been final agency action prior to June 19, 2008, the effective date of the regulation. It contains an exception for opinions issued by the DOI or the National Indian Gaming Commission (NIGC) before that date that reserve "full discretion to qualify, withdraw or modify such opinions." In addition to specifying procedures for securing determinations as to whether land may qualify for one of IGRA's exceptions to its prohibition on gaming on newly acquired trust lands, the rule specifies factors that will be considered in making determinations under the statute. The rule covers both the two-part Secretarial Determination that gaming would benefit the tribe and not be detrimental to the surrounding community and the other exceptions to IGRA's ban on gaming on lands acquired after October 17, 1988: lands contiguous to the reservation boundaries; lands taken into trust on the basis of land claims settlements; initial reservations for newly acknowledged tribes; and lands restored to newly restored tribes. Requests for Secretarial Determinations must be directed to the SOI. Land-into-trust applications or applications requiring a determination of reservation status are to be directed to the BIA's Office of Indian Gaming; requests for opinions on whether a particular parcel meets one of the other exceptions may be directed either to the BIA's Office of Indian Gaming or the NIGC. Secretarial Determination The rule specifies both procedures and application requirements for Secretarial Determinations that gaming on newly acquired lands would be in the best interest of the tribe and not detrimental to the surrounding community. The information to be included in consultation letters sent to state and local governments is specified. The rule specifies that a tribal application for a Secretarial Determination may be submitted at the same time as the application to have the land taken into trust. The regulation includes (1) a definition of "surrounding community" that covers local governments and tribes within a 25-mile radius; (2) detailed requirements as to projections that must accompany the application respecting benefits to the tribe and local community, potential detrimental effects, and proposals to mitigate any detrimental impacts. In addition to projected benefits and detrimental impacts, the application for the Secretarial Determination must include (1) proof of present ownership and title status of the land; (2) any approved gaming ordinance, tribal organic documents, or gaming management contract; (3) distance of the land from any tribal reservation or trust lands and from the tribal governmental headquarters; and (4) the class III gaming compact, if one has been negotiated, otherwise, the proposed scope, including size, of the gaming operation. Among the detailed information that an application must contain on the projected benefits of the proposed gaming establishment are projections about income; tribal employment; benefits to the relationship with the non-Indian community; distance from the tribal government's location; and evidence of "significant historical connections, if any, to the land." The rule also specifies that the following types of information may be included to "provide a basis for a Secretarial Determination": consulting agreements, financial and loan agreements, and any other agreements relating to the gaming establishment or the land on which it will be located. For evaluating the potential detrimental impact on the surrounding community, the rule requires submission of information to satisfy requirements of the National Environmental Policy Act. It also details a variety of factors that must be addressed as aspects of the potential impact on the social and economic life of the surrounding community. For example, the application must address anticipated impacts on the community's character, land use patterns, economic development, and compulsive gambling within the community. Costs and potential sources of revenue to mitigate these effects must be identified. There is also a provision that requires an assessment of the impact on the "traditional cultural connection to the land" of any other tribe that has a significant historical connection to the land. Upon determining that gaming on the new lands would be in the best interest of the tribe and not detrimental to the local community, SOI must notify the state's governor. For the application to be approved, the governor must affirmatively concur in the determination within one year, with a possible one-time 180-day extension. If the governor does not affirmatively concur within the required time, the SOI will inform the applicant tribe that the application is no longer under consideration. Contiguous Lands IGRA exempts newly acquired trust lands "within and contiguous to the boundaries of the reservation of the Indian tribe on October 17, 1988." The rule defines "contiguous" to mean "two parcels of land having a common boundary notwithstanding the existence of non-navigable waters or a public road or right-of-way and includes parcels that touch at a point." Land Claim Settlement IGRA includes an exception to its prohibition of gaming on after-acquired lands for "land ... taken into trust as part of ... a settlement of a land claim." The rule elaborates on this by setting forth three methods by which land resulting from a land claim may qualify for this exception: (1) the land may have been the subject of land claim settlement legislation; (2) the land may have been acquired under the settlement of a land claim executed by the parties, including the United States, which returns some land to the tribe and "extinguishes or resolves with finality the claims regarding the land returned"; or (3) the land may have been acquired under the settlement of a land claim not executed by the United States but entered into as a final court order or "an enforceable agreement that in either case predates October 17, 1988 and resolves or extinguishes with finality the land claim at issue." Initial Reservation for a Newly Acknowledged Tribe IGRA provides an exception to its prohibition on gaming on after-acquired lands for "lands ... taken into trust as part of ... the initial reservation of an Indian tribe acknowledged by the Secretary under the Federal acknowledgment process." To satisfy this exception, the rule requires that (1) the tribe must have been acknowledged through the administrative acknowledgment process under 25 C.F.R., Part 83; (2) the tribe must have no gaming facility under the newly restored lands exception under IGRA; and (3) the land must be the first proclaimed reservation after acknowledgment. If the tribe has no proclaimed reservation, the tribe must demonstrate its governmental presence and tribal population in the state and its significant historical connections with the area within the state, as well as a modern connection. On July 29, 2016, a three-judge panel of the U.S Court of Appeals for the District of Columbia upheld the December 12, 2014, ruling of the U.S. District Court for the District of Columbia in The Confederate Tribes of the Grand Ronde Community of Oregon v. Jewell . The case involves a decision by the SOI to take land into trust for gaming as an initial reservation for the Cowlitz Indian Tribe. With respect to the issue of whether the trust acquisition met the requirements for gaming on "the initial reservation of an Indian tribe acknowledged by the Secretary under the Federal acknowledgement process," both courts upheld the SOI's determination. The district court found that the SOI's determination that the regulatory requirement, under 25 C.F.R. §292.6, that there be a "significant historical connection" between the tribe and any land to be considered an initial reservation was satisfied by the SOI's finding that the tribe seeking the acquisition had shown that it had used and occupied land in the vicinity of the land in question. According to the district court, the tribe need not show occupation and use of the actual land that it seeks to be considered as its initial reservation for purposes of the IGRA gaming exception. Restored Lands IGRA provides an exception to its prohibition of gaming on after-acquired lands for "lands ... taken into trust as part of ... the restoration of lands for an Indian tribe that is restored to Federal recognition." The rule generally specifies that the tribe must satisfy three requirements before the restored lands exception may be invoked: (1) the tribe must have been federally recognized at one time; (2) it must have lost its government-to-government relationship with the federal government; and (3) it must have been restored to federal recognition. The lands must meet certain criteria. Trust acquisition of the lands may have been mandated by restoration legislation. If trust acquisition is authorized but not mandated by restoration legislation and the legislation does not specify a particular geographic area, the rule requires that (1) the lands must be in the state where the tribe's government or population is located; (2) the tribe must demonstrate one or more modern connections to the land; (3) it must show significant historical connection to the land; and (4) there must be a temporal connection between the date of acquisition of the land and the date of the tribe's restoration. Similar requirements apply to tribes acknowledged under the administrative process, provided they have not had an initial reservation proclaimed after October 17, 1988. Tribes recognized by judicial determination or settlement agreement to which the United States is a party are also subject to similar requirements. Bureau of Indian Affairs (BIA) Rescinded Guidance On January 3, 2008, less than five months before promulgating the final rule applicable to gaming on newly acquired lands, DOI issued departmental "Guidance on taking off-reservation land into trust for gaming purposes" (Guidance), which it rescinded on June 13, 2011. Virtually simultaneously with issuing the Guidance and based on the criteria in the Guidance, the department sent letters to approximately 22 tribes either rejecting their applications to take off-reservation land into trust for Indian gaming or returning them as incomplete. The Obama Administration subjected the guidance to scrutiny and withdrew it on June 13, 2011, following government-to-government consultations with tribal leaders and a review of BIA's land acquisition regulations and those applicable to gaming on lands taken into trust after October 17, 1988. The rescinded Guidance was premised on an interpretation of the Indian Reorganization Act of 1934 (IRA), which often provides the statutory basis for BIA to take land into trust for an Indian tribe, as primarily intended to be a means for tribes to consolidate reservation lands that were lost through the earlier allotment policy, which the IRA repudiated. The 2008 Guidance, emphasized the criteria set forth in 25 C.F.R. Section 151.11(b) requiring BIA to scrutinize anticipated benefits from off-reservation acquisitions. A key element of the Guidance was an assessment of how much negative effect there would be on reservation life if proposed gaming facilities are located farther than "a commutable distance from the reservation," including (1) how the on-reserva tion unemployment rate will be affected; (2) the effect of any exodus of tribal members from the reservation on reservation life; (3) if tribal members leave the reservation, the impact on their descendants in terms of tribal membership and identification with the tribe; and (4) specific on-reservation benefits of the proposal, including whether jobs will be created. The Guidance presumed that state and local governments at a distance from a reservation would be unfamiliar with Indian trust land jurisdictional issues and that distance from the reservation will hamper the efficiency of tribal government operations. It virtually required intergovernmental cooperative agreements and compatibility with state and local zoning and land use requirements. DOI Review of the Standards for Taking Land into Trust for Gaming and Determination to Rescind the Guidance DOI conducted consultation sessions with tribal leaders throughout the United States focusing on the need for the Guidance; whether any of the provisions of the regulation on qualifying newly acquired land for gaming, 25 C.F.R., Part 292, Subparts A and C, as previously promulgated, should be revised; and whether compliance with the land acquisition regulation, 25 C.F.R., Part 151, should come prior to the two-part determination for taking off-reservation land into trust. The result of the review was a determination that both regulations were fully sufficient and that the Guidance should be withdrawn. The Guidance was found to be unnecessary for processing applications to qualify "off-reservation" land for gaming under 25 C.F.R., Part 292, and potentially confusing with respect to processing applications to take land into trust, under 25 C.F.R., Part 151, in situations where gaming was contemplated. There was no change recommended with respect to the question of whether the application for gaming should accompany the application for taking land into trust. The current rule permits this but does not require it. The review and consultation process was the result of a June 18, 2010, memorandum issued by Secretary of the Interior, Ken Salazar, directing the Assistant Secretary of the Interior for Indian Affairs to review DOI's decisionmaking guidance and regulatory standards with respect to handling applications to take land into trust for gaming. In the memorandum, the Secretary required DOI, in connection with this process, to "engage in government-to-government consultations … to obtain input from Indian tribes." The review covered both land-into-trust acquisitions on an off-reservation basis under the two-part determination and "reservation and equal footing exceptions." The latter category covers acquisitions on-reservation or under the exceptions for settlement of a land claim, part of an initial reservation, or restoration of lands. In ordering the consultation, the Secretary noted that, as of the date of the memorandum, there were nine applications requiring a two-part determination, and that consultation was likely to mean a delay in processing those application, but that "given the Department's discretion in this area, it is appropriate that we take the necessary time to identify and adopt principled and transparent criteria regarding such gaming determinations," and "deliberate government-to-government consultations will lead us to the implementation of a sound policy in this area." The Secretary noted that, since IGRA's enactment, only 36 applications have been approved as settlements of land claims, initial reservations, or restoration of lands; and that, at the time of the memorandum, 24 such applications were pending before the department. He also stated that decisions on these applications "largely depends upon a legal determination" and recommended that the DOI Solicitor's Office provide a determination on such applications. DOI conducted six government-to-government consultations and elicited the following input on the issue of whether the Guidance should be modified, rescinded, or become part of 25 C.F.R., Part 292: Many tribes recommended that the Department rescind the Guidance Memorandum because it was not subject to tribal consultation and because it was, in their view, inconsistent with broader Federal Indian policy. Other tribes contended that the Guidance Memorandum was unreasonable because it makes inappropriate judgments regarding what is in the 'best interests' of tribes, assumes that a tribe will experience a reduced benefit if its gaming facility is located at a certain distance from its reservation, and equates 'reduced benefit' with a harm to the tribe. Other tribes maintained that the Guidance Memorandum unfairly prejudices tribes with reservations located at great distances from population centers and ignores historical facts regarding the locations where the Federal Government created reservations. Some tribal leaders expressed support for the primary objective of the Guidance Memorandum, which is to limit off-reservation gaming to areas close to existing reservations. Assistant Secretary for Indian Affairs, Larry Echo Hawk, in a June 13, 2011, memorandum, set forth the statutory and regulatory requirements which tribes must satisfy in order to gain approval for a gaming facility on land acquired in trust after IGRA's enactment under the "off-reservation" exception. He noted that decisions on gaming involve particularized facts varying with each tribe, and that the January 2008 Guidance failed to fully provide a means for considering, on a case-by-case basis, the array of factors which should be considered in each decision. According to his analysis, the Guidance established a virtually inflexible approach that assumes that a distant casino will have a deleterious effect on tribal life. His final conclusion was that the existing regulation governing gaming on after-acquired lands provides "comprehensive and rigorous standards that set forth the Department's authority and duties when considering applications for off-reservation gaming.... [and] adequately provide standards for evaluating such acquisitions...." He characterized the regulation as offering "strict and transparent standards for evaluating tribal applications to conduct off-reservation gaming." With respect to the general land acquisition regulation under 25 C.F.R., Part 151, the conclusion was that the Guidance was unnecessary and that it might "unnecessarily constrain the Department's decision making process." Under the regulation, according to Assistant Secretary Echo Hawk's memorandum, the Secretary must weigh the impact of the trust acquisition on specified aspects of state and local jurisdiction in a manner that considers all the factors in the regulation, and, unlike the Guidance, the regulation does not mandate disapproval of an application on a single issue. Enacted and Proposed Legislation 111th Congress Several bills proposed in the 111 th Congress providing federal recognition or authorizing the placement of land into federal trust status contained provisions aimed at precluding gaming. Two of these bills were enacted: Section 2601(h)(4)(A) of P.L. 111-11 , 123 Stat. 991, 1115, transfers certain federal land to the SOI to be held in trust for the benefit of the Washoe Tribe and states that such land "shall not be eligible, or considered to have been taken into trust, for class II or class III gaming (as those terms are defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703))." P.L. 111-323 prohibits gaming on federal land transferred to the Hoh Tribe. 112th Congress Two bills enacted in the 112 th Congress contained gaming prohibitions in connection with land-into-trust acquisitions: P.L. 112-97 , relating to land to be taken into trust for the Quileute Indian Tribe in the state of Washington, and P.L. 112-212 , transferring certain federal land in trust for the Bridgeport Indian Colony. 113th Congress P.L. 113-179 , the Gun Lake Trust Land Reaffirmation Act, ratified the DOI's May 15, 2005, trust acquisition of the land at issue in Match-E-Be-Nash-She-Wish Band of-Pottawatomi Indians v. Patchak and required that any federal court action relating to that land should be dismissed. In addition, two bills enacted in the 113 th Congress contained gaming prohibitions in connection with land-into-trust acquisitions: P.L. 113-134 , providing for the trust acquisition of certain federal land for the Pascua Yaqui Tribe of Arizona; and P.L. 113-127 , taking certain Bureau of Land Management land into trust for the benefit of the Shingle Springs Band of Miwok Indians and prohibiting IGRA class II and class III gaming on that land. Proposed Bills Addressing the Process S. 477 , the Tribal Gaming Eligibility Act, would have required tribes to satisfy new standards before newly acquired lands could be found to be eligible for IGRA gaming. It would have applied to three of the exceptions to IGRA's general prohibition of gaming on lands acquired after IGRA's enactment: land claim settlement, initial reservation for a newly acknowledged tribe, or restoration of lands for a newly restored tribe. Under this bill, for a tribe to rely on one of these exceptions for gaming on newly acquired trust land, before the land is taken into trust, the tribe must have "received a written determination from the Secretary that the land is eligible for gaming" that included findings that the tribe has "a substantial, direct, modern connection to the land" and "a substantial, direct, aboriginal connection to the land." Under the bill, for a tribe with a reservation to establish a modern connection to the land, the tribe would be required to show both geographic and temporal connections to the land. The land would need to be within a 25-mile radius of either the tribal headquarters (for tribes with a reservation) or the residence of "a significant number" of tribal members (for tribes without a reservation). A tribe which has a reservation would have to show both modern and aboriginal connections to the land and wait five years after restoration or recognition to be eligible for one of these exceptions. A tribe without a reservation would need to show modern and aboriginal connections to the land, and (1) the land must be part of its first request for newly acquired land after being recognized or restored; (2) the application to take the land into trust would need to be received by the Secretary within five years of recognition or restoration; and (3) the tribe may not be conducting gaming on any other land. The modern connection to the land requirement means that any tribe seeking one of these exemptions would have to demonstrate "a temporal connection to, or routine presence on, the land" during the period from October 17, 1988, to the date of the Secretary's determination. To determine whether a tribe satisfies the requirement for an aboriginal connection to the land, the proposed legislation contains a list of factors which the Secretary may consider, including historical presence on the land; lineal descent or cultural affiliation of members based on 43 C.F.R. Section 10.14; whether the land is in an area where the tribe's language has been used; whether the land is near tribal "culturally significant sites"; whether the tribe was officially removed from the land; and other factors showing tribal presence on the land antedating the presence of "nonnative individuals, the Federal Government, or any other sovereign entity." Other Proposed Bills Other bills not enacted would have provided for federal recognition of tribal status or taking land into trust for a tribe along with explicit provisions relating to gaming. Among them were the following: S. 416 / H.R. 841 would have treated land acquired in trust for the Confederated Tribes of the Grand Ronde Community of Oregon as on-reservation lands for purposes of considering applications to take the land into trust and specifies that land taken into trust within a specific area after October 17, 1988 (the date of enactment of IGRA), would be part of the reservation. S. 1074 / H.R. 2190 , the Thomasina E. Jordan Indian Tribes of Virginia Recognition Act, would have provided federal recognition for six Virginia Indian Tribes: the Chickahominy Indian Tribe; the Chickahominy Indian Tribe-Eastern Division; the Upper Mattaponi Tribe; the Rappahannock Tribe, Inc.; the Monacan Indian Nation; and the Nansemond Indian Tribe. It included provisions prohibiting each of these tribes from "conducting gaming activities as a matter of claimed inherent authority or under the authority of any Federal law, including the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.) or under any regulations thereunder promulgated by the Secretary or the National Indian Gaming Commission." S. 1167 / H.R. 2455 , the Elko Motocross and Tribal Conveyance Act, included a provision transferring approximately 373 acres of Bureau of Land Management land to be held in trust for the Te-moak Tribe of Western Shoshone Indians of Nevada for certain specified purposes. The legislation would have provided that the land "shall not be eligible, or considered to have been taken into trust, for class II gaming or class III gaming (as those terms are defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703))." H.R. 323 , the Muscogee Nation of Florida Federal Recognition Act, would have recognized and authorized the SOI to take land into trust for the Muscogee Nation of Florida. It contains explicit authority for the SOI to take land into trust for the Muscogee Nation of Florida under 25 C.F.R., Part 151. S. 402 , an amendment to the Siletz Tribe Indian Restoration Act, would have authorized the Secretary to take land into trust for the Siletz Indian Tribe, subject to specified conditions, provided that the land is within the boundaries of the original 1855 Siletz Coast Reservation, and that the real property taken into trust is not to be "eligible, or used, for any gaming activity carried out under the Indian Gaming Regulatory Act.... " S. 1132 / H.R. 1803 , the Lumbee Recognition Act, would have provided for federal recognition of the Lumbee Tribe of North Carolina and authorized the Secretary to take land into trust for the Tribe. It includes a provision prohibiting the Tribe from conducting "gaming activities as a matter of claimed inherent authority or under the authority of any Federal law, including the Indian Gaming Regulatory Act … or under any regulations thereunder promulgated by the Secretary of the Interior or the National Indian Gaming Commission." H.R. 2442 would have provided federal recognition for the Duwamish Tribe and authorized the SOI to take land into trust within an area to be identified, within 10 years, by the SOI as the aboriginal homelands of the Duwamish Tribe. H.R. 1225 , the Samish Indian Nation Homelands Act of 2012, subject to certain conditions, would have required the Secretary to take certain land into trust for the Samish Indian Nation and prohibited IGRA gaming on the land. H.R. 2455 would have transferred certain Bureau of Land Management land to the Secretary in trust for the Te-Moak Tribe of Western Shoshone Indians of Nevada and prohibited IGRA gaming on the land. The bill would also have transferred land to be held in trust for each of the following tribes: Fort McDermott Paiute and Shoshone Tribe; the Shoshone Paiute Tribes of the Duck Valley Indian Reservation; the Summit Lake Paiute Tribe; the South Fork Band Council; the Reno-Sparks Indian Colony; and the Pyramid Lake Paiute Tribe. H.R. 3313 , the Santa Ynez Band of Chumash Mission Indians Land Transfer Act of 2013, would have authorized the Secretary to take certain land into trust for the Tribe and prohibited IGRA gaming on the land. H.R. 4018 , the Blackwater Trading Post Land Transfer Act, would have required the Secretary to take 50.3 acres in Pinal County, Arizona, into trust for the benefit of the Gila River Indian Community of the Gila River Indian Reservation, and prohibited gaming on the land under IGRA or inherent tribal authority. 114th Congress Two bills enacted in the 114 th Congress contained gaming prohibitions in connection with land-into-trust acquisitions: P.L. 114-69 , the Albuquerque Indian School Land Transfer Act, requiring the SOI to take certain land into trust for 19 Pueblos and specifying that "[n]o class I gaming, class II gaming, or class III gaming ... shall be carried out on the Federal land taken into trust" and P.L. 114-181 , transferring in trust "for nongaming purposes" certain Bureau of Land Management Land in California, for the benefit of the Susanville Rancheria and stating that "[c]lass II and class III gaming ... shall not be permitted at any time on the land." Other Proposed Bills S. 132 / H.R. 308 , the Oregon and California Land Grant Act of 2015, includes provisions that would transfer certain land to be held in trust for the benefit of the Cow Creek Bank of Umpqua Tribe of Indians and make such land ineligible for gaming under IGRA. S. 152 / H.R. 308 , the Keep the Promise Act of 2015, would prohibit, until January 1, 2027, all class II and class III IGRA gaming on land within the Phoenix, Arizona, metropolitan area, that has been acquired after April 9, 2013. S. 175 / H.R. 387 , the Economic Development Through Tribal Land Exchange act, would require the SOI "pursuant to all applicable State and local laws," to take certain land in the City of Banning into trust for the Morongo Band of Mission Indians. S. 414 , the California Desert Conservation and Recreation Act of 2015, contains provisions which would require the SOI to take certain land into trust as the Lone Pine Paiute Shoshone Reservation Addition and stating that that land is ineligible for IGRA gaming. S. 465 / H.R. 872 , the Thomasina E. Jordan Indian Tribes of Virginia Recognition Act. This legislation would provide federal recognition for six Virginia Indian Tribes: the Chickahominy Indian Tribe; the Chickahominy Indian Tribe-Eastern Division; the Upper Mattaponi Tribe; the Rappahannock Tribe, Inc.; the Monacan Indian Nation; and the Nansemond Indian Tribe. It includes provisions prohibiting each of these tribes from "conducting gaming activities as a matter of claimed inherent authority or under the authority of any Federal law, including the Indian Gaming Regulatory Act (25 U.S.C. 2701 et seq.) or under any regulations thereunder promulgated by the Secretary or the National Indian Gaming Commission." S. 814 / H.R. 1438 , the Oregon Coastal Lands Act, includes provisions which would transfer certain land to be held in trust for the benefit of the Confederated Tribes of Coos, Lower Umpqua, and Siuslaw Indians and make such land ineligible for gaming under IGRA. S. 815 / H.R. 1436 , the Cow Creek Umpqua Land Conveyance Act, includes provisions which would transfer certain land to be held in trust for the benefit of the Cow Creek Band of Umpqua Tribe of Indians and declare it ineligible for gaming under IGRA. S. 817 / H.R. 3211 would provide for the addition of certain real property to the reservation of the Siletz Tribe in Oregon and would state that the property is not eligible for gaming under IGRA. S. 472 / H.R. 925 , the Douglas County Conservation Act of 2015, would require transfer of 1,016 acres of federal land to the SOI to be placed in trust for the benefit of the Washoe Tribe of Nevada and California. Included is a provision stating that the land is not eligible for gaming under IGRA. S. 1436 / H.R. 2733 , the Nevada Native Nations Land Act, would require the SOI to convey approximately 71,055 acres from the Bureau of Land Management to five federally recognized tribes in Nevada (Fort McDermitt Paiute and Shoshone Tribe, Summit Lake Paiute Tribe, Reno-Sparks Indian Colony, Pyramid Lake Paiute Tribe, and the Duckwater Shoshone Tribe) and approximately 82 acres from the Forest Service to the Shoshone Paiute Tribes of the Duck Valley Indian Reservation to be held in trust for the benefit of those tribes. Included is a statement that the land "shall not be eligible, or considered to have been taken into trust, for class II gaming or class III gaming." S. 1761 / H.R. 2212 would take into trust approximately 301 acres of Bureau of Land Management Land for the benefit of the Susanville Indian Rancheria and state that "[c]lass II gaming and class III gaming ... shall not be allowed at any time on the land." S. 1822 / H.R. 3079 would place in trust certain U.S. Forest Service land in Tuolumne County, California, for the benefit of the Tuolumne Band of Me-Wuk Indians and state that "[c]lass II and class III gaming ... shall not be permitted at any time on the land."S. 1986 , the Moapa Band of Paiutes Land Conveyance Act, would mandate a transfer of certain Bureau of Land Management and Bureau of Reclamation land to the SOI to be held in trust for the Moapa Band of Paiutes and make the land ineligible for gaming under IGRA. S. 2285 , the Lumbee Recognition Act. This legislation would provide for federal recognition of the Lumbee Tribe of North Carolina and authorize the Secretary to take land located within Robeson County, North Carolina, into trust for the Tribe. It includes a provision stating that "[l]and taken into trust under this section shall be eligible, or considered to have been taken into trust, for class II gaming or class III gaming." H.R. 184 , the Lumbee Recognition Act, would provide for federal recognition of the Lumbee Tribe of North Carolina and authorize the Secretary to take land located within Robeson County, North Carolina, into trust for the Tribe. It includes a provision stating that "[t]he tribe may not conduct gaming activities as a matter of claimed inherent authority or under the authority of any Federal law, including the Indian Gaming Regulatory Act ... or under any regulations thereunder promulgated by the Secretary or the National Indian Gaming Commission." H.R. 496 , the Alabama Hills National Scenic Area Establishment Act, would require the SOI to take 132 acres into trust as part of the Lone Pine Paiute-Shoshone reservation and provide that gaming under IGRA would not allowed to be conducted on that land. H.R. 1157 , the Santa Ynez Band of Chumash Mission Indians Land Transfer Act, would require the SOI to take certain land into trust. It includes a statement that "[t]he Tribe may not conduct .... gaming activities [on the land] ... as a matter of claimed inherent authority ... or under any Federal law, including the Indian Gaming Regulatory Act ... and regulations promulgated by the Secretary of the Interior or the National Indian Gaming Commission under that Act." H.R. 1632 , the Samish Indian Nation Land Conveyance Act of 2015, would require the SOI to take certain land into trust for the benefit of the Samish Indian Tribe. It includes a statement that "[t]he Tribe may not conduct gaming activities on land taken into trust pursuant to this Act, either as a matter of claimed inherent authority, under any Federal law ..., or under regulations promulgated by the Secretary of the Interior or the National Indian Gaming Commission." H.R. 2009 , the Pascua Yaqui Tribe Land Conveyance Act, would declare that "subject to valid existing rights and payment to the United States of fair market value," certain federal lands are to be held in trust for the Pascua Yaqui Tribe. It includes a statement that "[t]he Tribe may not conduct .... gaming activities [on the land] ... as a matter of claimed inherent authority ... or under any Federal law, including the Indian Gaming Regulatory Act ... and regulations promulgated by the Secretary of the Interior or the National Indian Gaming Commission under that Act." H.R. 2538 , the Lytton Rancheria Homelands Act, states that certain lands owned by the Lytton Rancheria are "hereby taken into trust" and "shall be part of the Tribe's reservation. It includes a provision that the lands "shall not be eligible for gaming in the Indian Gaming Regulatory Act." There are also provisions stating that future trust acquisitions in Sonoma County for the Tribe will not be eligible for gaming until after March 15, 2036, and making certain lands in Sonoma County permanently ineligible for IGRA gaming. H.R. 4688 , the Douglas County Economic Development and Conservation Act of 2016, would require transfer of 1,016 acres of federal land to the SOI to be placed in trust for the benefit of the Washoe Tribe of Nevada and California and state that this land is not eligible for gaming under IGRA.

The Indian Gaming Regulatory Act (IGRA) ( P.L. 100-497 ) generally prohibits gaming on lands acquired for Indians in trust by the Secretary of the Interior (SOI or Secretary) after October 17, 1988. The exceptions, however, raise the possibility of Indian gaming proposals for locations presently unconnected with an Indian tribe. Among the exceptions are land (1) acquired after the SOI determines acquisition to be in the best interest of the tribe and not detrimental to the local community and the governor of the state concurs; (2) acquired for tribes that had no reservation on the date of enactment of IGRA; (3) acquired as part of a land claim settlement; (4) acquired as part of an initial reservation for a newly recognized tribe; and (5) acquired as part of the restoration of lands for a tribe restored to federal recognition. An implementing regulation was issued on May 20, 2009. It specifies the standards to be satisfied by tribes seeking to conduct gaming on lands acquired after October 17, 1988. The regulation includes limiting definitions of some of the statutory terms and considerable specificity in the documentation required for tribal applications. During the latter half of 2010, the Department of the Interior (DOI) conducted a series of consultation sessions with Indian tribes focusing on whether the implementing regulation should be revised. On June 13, 2011, DOI determined the regulation to be satisfactory and withdrew earlier departmental guidance, which had been issued before the regulation had become final. The guidance addressed how DOI handled tribal applications for off-reservation land acquisitions for gaming. It had elaborate requirements for a tribe to satisfy with respect to applications for gaming facilities not within commutable distances from the tribe's reservation. A June 2012 U.S. Supreme Court decision, Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak , appears to have increased the possibility for challenges to secretarial decisions to take land into trust by (1) ruling that individuals who are potentially harmed by the proposed use of land taken into trust have standing under the Federal Administrative Procedure Act to bring suit, and (2) holding that suits to challenge the legality of a DOI decision to take land into trust that do not claim title to the land are not precluded by the Quiet Title Act, which contains a waiver of sovereign immunity for quiet title actions against the United States, except for suits involving Indian title. Since the Patchak decision, there have been two noteworthy developments. First, the Bureau of Indian Affairs revised the land acquisition regulations to specify that, once there is final agency action, land is to be taken into trust immediately without a 30-day waiting period. Second, a June 4, 2015, en banc decision of a federal appellate court, Big Lagoon Rancheria v. California , 789 F. 3d 947 (9 th Cir. 2015), held that a challenge to the validity of a trust acquisition must be brought within the Administrative Procedure Act's six-year statute of limitations. Nine laws have been enacted in recent Congresses with gaming prohibitions in connection with specific lands being taken into trust: (1) P.L. 114-69 , the Albuquerque Indian School Land Transfer Act, which provides for trust acquisitions for 19 Pueblos and specifies that class I, class II, or class III gaming may not take place on the acquired trust land; (2) P.L. 114-181 , which transfers in trust "for non-gaming purposes" certain federal Bureau of Land Management land in California for the benefit of the Susanville Indian Ranchera; (3) P.L. 113-179 , the Gun Lake Trust Land Reaffirmation Act, which ratified the DOI's May 15, 2005, trust acquisition of the land at issue in Match-E-Be-Nash-She-Wish Band of-Pottawatomi Indians v. Patchak , and required that any federal court action relating to that land should be dismissed; (4) P.L. 113-134 , which provides for the trust acquisition of certain federal land for the Pascua Yaqui Tribe of Arizona; (5) P.L. 113-127 , which provides for taking certain Bureau of Land Management land into trust for the benefit of the Shingle Springs Band of Miwok Indians and prohibiting IGRA class II and class III gaming on the land; (6) P.L. 112-97 , which authorizes the acquisition of certain land for the Quileute Indian Tribe in the state of Washington; (7) P.L. 112-212 , which declares certain federal land to be held in trust for the Bridgeport Indian Colony; (8) Section 2601(h)(4)(A) of P.L. 111-11 , which prohibits class II and class III gaming on land that the provision transfers to be held in trust for the Washoe Tribe; and (9) P.L. 111-323 , which prohibits gaming on federal land transferred to the Hoh Tribe. Legislation proposed in the 114 h Congress includes two bills, S. 732 and H.R. 249 , which would amend the Indian Reorganization Act to make all federally recognized Indian tribes eligible for trust land acquisition. There are also a number of bills providing federal recognition of or land acquisitions for particular tribes with provisions restricting IGRA gaming for those tribes or on those lands.

Introduction Witnesses in a federal criminal case may find themselves arrested, held for bail, and in some cases imprisoned until they are called upon to testify, 18 U.S.C. 3144. The same is true in most if not all of the states. Although subject to intermittent criticism, it has been so at least from the beginning of the Republic. The Supreme Court has never squarely considered the constitutionality of section 3144 or any of its predecessors, but it has observed in passing that, "[t]he duty to disclose knowledge of crime . . . is so vital that one known to be innocent may be detained in the absence of bail, as a material witness," Stein v. New York , 346 U.S. 156, 184 (1953). Even more telling may be an earlier remark from the Court to the effect that, "[t]he constitutionality of this [federal material witness] statute apparently has never been doubted," Barry v. United States ex rel. Cunningham , 279 U.S. 597, 617 (1929). In spite of the concerns of some that the authority can be used as a means to jail a suspect while authorities seek to discover probable cause sufficient to support a criminal accusation or as a preventive detention measure, the lower courts have denied that the federal material witness statute can be used as a substitute for a criminal arrest warrant. Particularly in the early stages of an investigation, however, an individual's proximity to a crime may make him both a legitimate witness and a legitimate suspect. Moreover, the Supreme Court recently held in Ashcroft v. al-Kidd that "an objectively reasonable arrest and detention of a material witness pursuant to a validly obtained warrant cannot be challenged as unconstitutional on the basis of allegations that the arresting authority had an improper motive." The Ashcroft five Justice majority, however, included Justice Kennedy who observed that the "Court's holding is limited to the arguments presented by the parties and leaves unresolved whether the Government's use of the Material Witness Statute in this case was lawful." The three other Justices, who shared that view and who had declined to join the majority opinion, separately declared that "[w]hether the Fourth Amendment permits the pretextual use of a material witness warrant for preventive detention of an individual whom the Government has no intention of using at trial is, in my view, a closer question than the majority's opinion suggests." It is clear, nevertheless, that the federal material witness statute is used with regularity and most often in the prosecution of immigration offenses involving material witnesses who are foreign nationals. Critics, however, contend that since September 11, 2001, seventy individuals, mostly Muslims, have been arrested and detained in abuse of the statute's authority. Arrest The federal material witness statute provides that: If it appears from an affidavit filed by a party that the testimony of a person is material in a criminal proceeding, and if it is shown that it may become impracticable to secure the presence of the person by subpoena, a judicial officer may order the arrest of the person and treat the person in accordance with the provisions of section 3142 of this title [relating to bail]. No material witness may be detained because of inability to comply with any condition of release if the testimony of such witness can adequately be secured by deposition, and if further detention is not necessary to prevent a failure of justice. Release of a material witness may be delayed for a reasonable period of time until the deposition of the witness can be taken pursuant to the Federal Rules of Criminal Procedure. 18 U.S.C. 3144. An arrest warrant for a witness with evidence material to a federal criminal proceeding may be issued by federal or state judges or magistrates. The statute applies to potential grand jury witnesses as well as to potential trial witnesses. Section 3144 on its face authorizes arrest at the behest of any party to a criminal proceeding. In the case of a criminal trial, both the government and the defendants may call upon the benefits of section 3144. Availability is a bit less clear in the case of grand jury proceedings. In a literal sense, there are no parties to a grand jury investigation other than the grand jury. Moreover, it seems unlikely that a suspect, even the target of a grand jury investigation, would be considered a "party" to a grand jury proceeding. The purpose of section 3144 is the preservation of evidence for criminal proceedings. Potential defendants, even if they are the targets of a grand jury investigation, have no right to present evidence to the grand jury. On the other hand, a federal prosecutor ordinarily arranges for the presentation of witnesses to the grand jury. It is therefore not surprising that the courts seem to assume without deciding that the government may claim the benefits of section 3144 in the case of grand jury witnesses. Issuance of a section 3144 arrest warrant requires affidavits establishing probable cause to believe (1) that the witness can provide material evidence, and (2) that it will be "impracticable" to secure the witness' attendance at the proceeding simply by subpoenaing him. Neither the statute nor the case law directly address the question of what constitutes "material" evidence for purposes of section 3144, but in other contexts the term is understood to mean that which has a "natural tendency to influence, or is capable of influencing, the decision of the decisionmaking body to which it was addressed." At the grand jury level, the government may establish probable cause to believe a witness can provide material evidence through the affidavit of a federal prosecutor or a federal investigator gathering evidence with an eye to its presentation to the grand jury. This may not prove a particularly demanding standard in some instances given the sweeping nature of the grand jury's power of inquiry. As to the second required probable cause showing, a party seeking a material witness arrest warrant must establish probable cause to believe that it will be impractical to rely upon a subpoena to secure the witness' appearance. The case law on point is sketchy, but it seems to indicate that impracticality may be shown by evidence of possible flight, or of an expressed refusal to cooperate, or of difficulty experienced in serving a subpoena upon a trial witness, or presumably by evidence that the witness is a foreign national who will have returned or been returned home by the time his testimony is required. Evidence that investigators have experienced difficulties serving a particular grand jury witness may not be enough to justify the issuance of an arrest warrant in all cases. Bail With limited variations, federal bail laws apply to material witnesses arrested under section 3144. Arrested material witnesses are entitled to the assistance of counsel during bail proceedings and to the appointment of an attorney when they are unable to retain private counsel. The bail laws operate under an escalating system in which release is generally favored, then release with conditions or limitations is preferred, and finally as a last option detention is permitted. A defendant is released on his word (personal recognizance) or bond unless the court finds such assurances insufficient to guarantee his subsequent appearance or to ensure public or individual safety. A material witness need only satisfy the appearance standard. A material witness who is unable to do so is released under such conditions or limitations as the court finds adequate to ensure his later appearance to testify. If neither word nor bond nor conditions will suffice, the witness may be detained. The factors a court may consider in determining whether a material witness is likely to remain available include his deposition, character, health, and community ties. Depositions Section 3144 declares that "[n]o material witness may be detained because of inability to comply with any condition of release if the testimony of such witness can adequately be secured by deposition, and if further detention is not necessary to prevent a failure of justice." The corresponding federal deposition rule permits the witness, the government, or the defendant to request that a detained material witness' deposition be taken. A court enjoys only limited discretion to deny a detained witness' request. The Fifth Circuit has observed that, "Read together, Rule 15(a) and section 3144 provide a detained witness with a mechanism for securing his own release. He must file a written motion requesting that he be deposed. The motion must demonstrate that his testimony can adequately be secured by deposition, and that further detention is not necessary to prevent a failure of justice. Upon such showing, the district court must order his deposition and prompt release," Aguilar-Ayala v. Ruiz , 973 F.2d 411, 413 (5 th Cir. 1992). Other courts seem to agree. The "failure of justice" limitation comes into play when release of the witness following the taking of his deposition would ultimately deny a defendant the benefit of favorable material testimony in derogation of his right to compulsory process. It does not include the fact that a judicial officer will not be present at the taking of the deposition or that the witness is an illegal alien subject to prosecution. Unlike the request of a detained witness, a government or defendant's request that a witness' deposition be taken must show "exceptional circumstances" and that granting the request is "in the interest of justice," F.R.Crim.P. 15(a)(1). Nevertheless, the fact that a witness is being detained will often be weighed heavily regardless of who requests that depositions be taken. The Circuits appear to be divided over whether in compliance with a local standing order the court may authorize depositions to be taken sua sponte in order to release a detained material witness. In any event, whether any such depositions may be introduced in later criminal proceedings will depend upon whether the defendant's constitutional rights to confrontation and compulsory process have been accommodated. Related Matters The government must periodically report to the court on the continuing justification for holding an incarcerated material witness. While a material witness is being held in custody he is entitled to the daily witness fees authorized for attendance at judicial proceedings. Upon his release, the court may also order that he be provided with transportation and subsistence to enable him to return to his place of arrest or residence. Should he fail to appear after he has been released from custody he will be subject to prosecution, an offense which may be punished more severely if his failure involves interstate or foreign travel to avoid testifying in a felony case. Earlier Legislative Activity H.R. 3199 (109th Congress) Witnesses at Congressional oversight hearings charged that the authority under 18 U.S.C. 3144 had been misused following September 11, 2001: [The authority has been used] to secure the indefinite incarceration of those [prosecutors] wanted to investigate as possible terrorist suspects. This allowed the government to . . . avoid the constitutional protections guaranteed to suspects, including probable cause to believe the individual committed a crime and time-limited detention. . . Witnesses were typically held round the clock in solitary confinement, subjected to the harsh and degrading high security conditions typically reserved for the most dangerous inmates accused or convicted of the most serious crimes. . . they were interrogated without counsel about their own alleged wrongdoing. . . . [A] large number of witnesses were never brought before a grand jury or court to testify. More tellingly, in repeated cases the government has now apologized for arresting and incarcerating the "wrong guy." The material witnesses were victims of the federal investigators and attorneys who were to[o] quick to jump to the wrong conclusions, relying on false, unreliable and irrelevant information. By evading the probable cause requirement for arrests of suspects, the government made numerous mistakes. At the same hearings the Justice Department pointed out that the material witness statute is a long-standing and generally applicable law and not a creation of the USA PATRIOT Act; that it operates under the supervision of the courts; that witnesses are afforded the assistance of counsel (appointed where necessary); and that witnesses are ordinarily released following their testimony. When the Committee reported H.R. 3199 following the hearings, section 12 of the bill would have amended section 1001 of the USA PATRIOT Act by directing periodic review of the exercise of the authority under section 3144. In its original form section 1001 instructs the Justice Department Inspector General to designate an official who is (1) to receive and review complaints of alleged Justice Department civil rights and civil liberties violations, (2) to widely advertise his availability to receive such complaints, and (3) to report to the House and Senate Judiciary Committees twice a year on implementation of that requirement, P.L. 107-56 , 115 Stat. 381 (2001). Section 12 would have amended section 1001 to impose additional responsibilities upon the Inspector General's designee , i.e. , (1) to "review detentions of persons under section 3144 of title 18, United States Code, including their length, conditions of access to counsel, frequency of access to counsel, offense at issue, and frequency of appearances before a grand jury," (2) to advertise his availability to receive information concerning such activity, and (3) to report twice a year on implementation to the Judiciary Committees on implementation of this requirement. Perhaps due to Administration opposition, the provision was dropped from H.R. 3199 prior to House passage. No similar provision could be found in H.R. 3199 ( S. 1389 ) as approved in the Senate, in the conference bill, H.Rept. 109-333 (2005), or the legislation ultimately enacted. S. 1739 (109th Congress) S. 1739 , introduced by Senator Leahy, would have rewritten section 3144. In its recast form, section 3144 among other things would: establish a preference for postponing arrest until after a material witness has been served with a summons or subpoena and failed or refused to appear, unless the court finds by clear and convincing evidence that service is likely to result in flight or otherwise unlikely to secure the witness' attendance; make it clear that the provision applies to grand jury proceedings; explicitly permit arrest by officers who are not in physical possession of the warrant; require an initial judicial appearance without unnecessary delay in the district of the arrest or in an adjacent district if more expedient or if the warrant was issued there and the appearance occurs on the day of arrest; limit detention to 5 day increments for a maximum of 30 days (10 days in the case of grand jury witness); require the Attorney General to file an annual report to the Judiciary Committees on the number of material witness warrants sought, granted and denied within the year; the number of material witnesses arrested who were not deposed or did not appear before judicial proceedings; and the average number of days arrested material witnesses were detained. In lieu of the clear and convincing evidence standard in favor of release and the time limits on detention, the existing statute insists that "no material witness may be detained because of inability to comply with any condition of release if the testimony of such witness can adequately be secured by deposition, and if further detention is not necessary to prevent a failure of justice," 18 U.S.C. 3144. The proposed amendment had no comparable provision. In light of the 5-day limit on detention without further judicial approval, S. 1739 would have eliminated the reporting requirement now found in Rule 46(h)(2) of the Federal Rules of Criminal Procedure, i.e., "An attorney for the government must report biweekly to the court, listing each material witness held in custody for more than 10 days pending indictment, arraignment, or trial. For each material witness listed in the report, an attorney for the government must state why the witness should not be released with or without a deposition being taken under Rule 15(a)." The 109 th Congress adjourned without further action on these or any other legislative proposal to amend section 3144. No comparable proposals emerged in any subsequent Congress. Appendix A. 18 U.S.C. 3144 (text) If it appears from an affidavit filed by a party that the testimony of a person is material in a criminal proceeding, and if it is shown that it may become impracticable to secure the presence of the person by subpoena, a judicial officer may order the arrest of the person and treat the person in accordance with the provisions of section 3142 of this title. No material witness may be detained because of inability to comply with any condition of release if the testimony of such witness can adequately be secured by deposition, and if further detention is not necessary to prevent a failure of justice. Release of a material witness may be delayed for a reasonable period of time until the deposition of the witness can be taken pursuant to the Federal Rules of Criminal Procedure. Appendix B. Citations to State Material Witness Statutes

This is an overview of the law under the federal material witness statute which authorizes the arrest of material witnesses, permits their release under essentially the same bail laws that apply to federal criminal defendants, but favors their release after their depositions have been taken. Legislative efforts in the 109th Congress to amend the provisions never fully developed. Witnesses at Congressional oversight hearings did alleged that the authority to arrest and hold material witnesses until their appearance at federal criminal proceedings (including grand jury proceedings) had been abused following September 11, 2001. Section 12 of the USA PATRIOT Act and Terrorism Prevention Reauthorization Act (H.R. 3199) as reported by the House Judiciary Committee would have required periodic reviews and reports on the use of the material witness statute. In the face of Administration opposition, however, the provision was dropped from the bill prior to House consideration. No similar proposal could be found in the version of H.R. 3199 (S. 1389) approved in the Senate or in the conference bill sent to the President. S. 1739, as introduced, would have rewritten the federal statute, setting detention time limits and raising evidentiary standards for arrest and detention among other things. The 109th Congress adjourned without further action on the material witness proposals, and subsequent Congresses passed without renewed legislative interest. The Supreme Court resolved on other grounds a case which might have been used as a vehicle to address constitutional challenges to the statute or use, Ashcroft v. al-Kidd, 131 S.Ct. 2074 (2011). Concurring opinions there, however, suggest that several members of the Court consider the matter an open question. A list of citations to comparable state statutes is appended. The report appeared in an earlier version as CRS Report RL33077, Arrest and Detention of Material Witnesses: Federal Law In Brief, by [author name scrubbed].

Overview of the System The National Park System contains 412 units throughout the nation. They are administered by the National Park Service (NPS) in the Department of the Interior (DOI). The system encompasses 84.6 million acres of land—80.6 million acres federally owned and 4.0 million acres of private and other public land (e.g., state land) within NPS unit boundaries. Units range in size from less than one acre to millions of acres. Nearly two-thirds of the total acreage is in Alaska. In 1872, Congress designated Yellowstone as the world's first national park. Subsequently, the nation slowly developed a system of national parks. While some new areas were administered by DOI, others were managed by different agencies. A 1916 law created the NPS within DOI to protect existing and future parks, monuments, and other areas. It charged NPS with promoting and regulating the use of those areas both to conserve them and to provide for their enjoyment by the public. A 1933 executive order furthered the development of a national system by transferring dozens of sites to NPS from other agencies. The General Authorities Act of 1970 made explicit that all areas managed by NPS were part of a single system, and gave all units of the system equal standing with regard to resource protection. Statutes authorizing particular units sometimes provide additional management direction for those units. Units of the National Park System generally are managed to preserve resources in their natural or historical conditions for the benefit of future generations. Thus, hunting, mining, and other consumptive resource uses generally are not allowed. However, in the laws creating units, Congress sometimes has specified that some of those uses are allowed. Today, there are more than 20 different designations (i.e., titles) for units of the National Park System, reflecting the diversity of the areas. There is no statute that sets out and defines all the designations, and Congress has discretion in choosing the type of designation for a unit being established. While some designations are descriptive and possibly self-explanatory, such as "battlefield," others have been used in different ways. For instance, the designation "national monument" has been given to a variety of areas, including natural reservations, historic military forts, prehistoric ruins, fossil sites, and the Statue of Liberty. Some classifications (such as "national park") are unique to NPS, while others (such as "national recreation area") also are used by other land management agencies. Of the 412 units within the National Park System, 59 are national parks, the so-called crown jewels of the park system. Other commonly used titles include national historic sites (78), national monuments (83), national historical parks (50), national memorials (30), national recreation areas (18), and national preserves (19). Adding Units by Public Law and Presidential Proclamation National Park System units are created by acts of Congress, except that national monuments also may be added by presidential proclamation. The Antiquities Act of 1906 (54 U.S.C. §320301 et seq.) authorizes the President to create national monuments on land that is already federally owned or controlled, and that contains historic landmarks, historic and prehistoric structures, or other objects of historic or scientific interest. Presidents have designated 150 monuments since 1906. Congress has subsequently converted many of them, such as the Grand Canyon, to national parks. Most monuments are managed by NPS, with many newer monuments managed by the Bureau of Land Management or other agencies. An act of Congress creating a National Park System unit may explain the unit's purpose; set its boundaries; provide specific directions for land acquisition, planning, uses, and operations; and authorize appropriations for acquisition and development. Bills to create units generally are within the jurisdiction of the House Committee on Natural Resources and the Senate Committee on Energy and Natural Resources, with appropriations typically contained in Interior, Environment, and Related Agencies' appropriations acts. Congress sometimes has enacted free-standing legislation to add units to the National Park System. Congress also has authorized units as part of omnibus public land laws containing dozens of measures related to lands and recreation. Legislation creating a new unit is often preceded by legislation to authorize an NPS study of the area, as described below. Provisions of law govern Congress's consideration of measures to create units of the National Park System. In 1998, Congress amended existing law pertaining to creating units ( P.L. 105-391 ) to standardize procedures, improve the information about potential additions, prioritize areas, focus on outstanding areas, and ensure congressional support for area studies. Studying Units for Potential Addition to the System Current law does not appear to explicitly require an NPS area study before Congress adds a unit to the National Park System, but any such study requires "specific authorization of an Act of Congress" (54 U.S.C. §100507). Before 1998, studies were prepared at the initiative of NPS, individual Members of Congress, and other entities, as well as required by authorization and appropriations laws. The 1998 statutory change sought to eliminate these separate sources for initiating studies, on the grounds that in some years funding was insufficient to cover all studies, and ongoing studies sometimes were not completed because funds were earmarked for other studies. However, NPS has standing authority to take certain actions, provided that they cost less than $25,000. These actions include preliminary activities, such as resource assessments of areas, "reconnaissance surveys" of areas, and updates of previous studies. After funds are available, NPS must complete a study of an area within three fiscal years. In practice, studies have taken longer to prepare. This is due to the large number of studies authorized by Congress and the extent of available resources. The length of time for completing studies generally ranges from three to six years, depending on the complexity, such as the number of stakeholders and whether any environmental issues may be involved. The cost of preparing a study also depends on its complexity, with the average cost estimated at roughly $500,000. Studies must include public involvement, with at least one public meeting held in the local area, and reasonable efforts to notify affected state and local governments and landowners. Studies also must comply with the National Environmental Policy Act of 1969 (NEPA), which requires an assessment of the potential impact of the proposed action on the human environment. Criteria for Studies The NPS studies must consider certain factors established in P.L. 105-391 to promote the consistency and professionalism of the studies. The law directs NPS to assess whether an area contains natural or cultural resources that are nationally significant, whether it constitutes one of the most important examples of a type of resource, and whether it is a suitable and feasible addition to the system. The NPS has developed criteria for determining national significance, suitability, and feasibility. An area will be regarded as nationally significant if it is an outstanding example of a resource; exceptionally illustrates or interprets natural or cultural themes of our country's heritage; provides extraordinary opportunities for public enjoyment or scientific study; and contains a true, accurate, and relatively unspoiled resource. In evaluating national significance, the NPS considers natural and cultural areas, with cultural areas evaluated under the process for national historic landmarks (36 C.F.R. Part 65). Examples of nationally significant natural areas might include a refuge that is critical for the survival of a species, a rare landform, or an outstanding scenic area. Cultural areas might include districts, sites, structures, or objects of exceptional quality in interpreting our nation's heritage, such as those with distinctive architectural types. Cultural entities generally exclude cemeteries, birth places, graves, religious properties, relocated structures, reconstructed buildings, and properties of significance within the past 50 years. In the past, NPS also evaluated the national significance of recreational areas, but now recreational values are assessed in evaluating natural and cultural areas. NPS views an area as suitable if it portrays a natural or cultural resource insufficiently included in the system, unless a similar area is managed for public use by another agency. An area is feasible to add if it is large enough, configured so as to allow long-term protection and public use, and affordable to manage. Other important issues in assessing the feasibility of adding an area to the National Park System include ownership of the land and the cost of acquiring it, access, current and potential land uses, threats to resources, public support, and staff or development requirements. For instance, privately owned land that the owner is unwilling to sell, or that would be expensive to acquire, might not be viewed as feasible. NPS studies of potential new areas must also evaluate a variety of other factors, such as the rarity and integrity of the resources, the socioeconomic effects of addition, and the interpretive and educational uses of the site, among others. Studies also usually discuss boundary possibilities. NPS statistics show that since 2000, about one in three to one in four area studies has concluded that an area is eligible for inclusion. Other Management Options In studying an area, NPS must consider whether protection by means other than NPS management is appropriate. Options include administration by other federal agencies, state or local governments, Native American authorities, and the private sector. Consideration may be given to technical or financial assistance; other designations, including wilderness, national trail, or national historic landmark; and cooperative management between NPS and another agency. NPS generally will not recommend adding an area to the National Park System if another arrangement already provides, or could provide for, sufficient protection and public use. The study must identify the best alternative(s) for protecting resources and allowing public enjoyment. Each study sent to Congress must be accompanied by a letter from the Secretary that identifies the preferred management option for the area, to minimize uncertainty about NPS's position. Recommending Areas for Study P.L. 105-391 also requires the Secretary of the Interior to recommend annually to Congress a list of areas for study for potential inclusion in the National Park System. NPS must consider three issues in developing for Congress the list of areas recommended for study: (1) whether an area is nationally significant and would be a suitable and feasible addition to the National Park System; (2) whether an area represents or includes themes, sites, or resources "not already adequately" represented in the National Park System; and (3) requests for studies in the form of public petitions and congressional resolutions (the "popular demand" factor). The NPS also must submit to Congress a list of areas previously studied that contain primarily historical resources and a list of areas with natural resources. These previously studied areas are to be ranked in order of priority for addition to the park system and supported by current data. In the past, NPS has ranked areas that passed the initial screening and recommended the highest-priority areas to Congress for study. However, the George W. Bush Administration did not submit the annual lists, partially because that Administration generally did not support expanding the National Park System. Like the Bush Administration, the Obama Administration has in most years not submitted lists of areas for potential study or addition to the park system. The Obama Administration submitted the lists once, in August 2012. Issues The addition of units to the National Park System sometimes has been controversial. Some discourage adding units, asserting that the system is "mature" or "complete," while others assert that the system should evolve and grow to reflect current events, new information, and reinterpretations. A related issue is how to properly maintain existing and new units given limited fiscal and staffing resources. As noted, the George W. Bush Administration generally did not support the creation of new park units and the expansion of existing units, as it sought instead to focus funds on maintaining current units. The Bush Administration supported some expansions on the grounds that they could be accomplished for relatively little cost. Supporters of new units have charged that the older units are the most costly. Initially, the Obama Administration also expressed a need to focus attention and resources on the current system, including the maintenance backlog, "rather than continuing the rapid expansion of new NPS responsibilities." Subsequently, in a number of instances the Administration has testified in favor of creating new units of the National Park System, studying additional areas, and expanding existing units. Differences exist as to the relative importance of including areas reflecting U.S. natural, cultural, and social history. The adequacy of standards and procedures for assuring that the most outstanding areas are included in the system also has been debated. Critics contend that the system has been weakened by including inappropriate areas, especially where authoritative information was unavailable, incomplete, or disregarded in favor of political considerations. Others counter that there will always be disagreement over the worth of areas, and that recently added areas have been held to the same high standards as older units. Another issue has been whether particular resources are better protected outside the National Park System, and how to secure the best alternative protection. Alternatives to Inclusion in the National Park System It is generally regarded as difficult to meet the criteria and to secure congressional support and funding for expanding the National Park System. While there is often considerable interest in establishing new units, usually no more than a handful of units are created each Congress. Many areas are preserved outside the National Park System. Some of these are protected with recognition or assistance by the NPS. Certain areas that receive technical or financial aid from the NPS, but are neither federally owned nor directly administered by the NPS, have been classified by the NPS as affiliated areas. Affiliated areas are nationally significant but do not meet the other criteria for inclusion in the Park System. Under NPS policy, they are worthy of special NPS recognition or assistance beyond existing programs, are managed in accordance with standards applicable to park units, and are to receive sustained resource protection as detailed in an agreement between the NPS and the nonfederal manager of the area. In the past, the affiliated areas have included properties primarily recognized for cultural or commemorative worth. Affiliated areas have been created by act of Congress and by designation of the Secretary of the Interior. Currently, there are about two dozen affiliated areas. Congress has established national heritage areas containing land and properties that reflect the history of their people. Typically, heritage areas consist mainly of private properties and may include natural, scenic, historic, cultural, or recreation resources. Conservation, interpretation, and other activities are handled by partnerships among federal, state, and local governments and nonprofit organizations, and for each area Congress has recognized a "management entity" to coordinate efforts. The NPS supports these efforts through technical and financial assistance, and such support is not intended to be permanent. Supporters of heritage areas have asserted that they reduce pressure to add new, costly, and possibly inappropriate areas to the National Park System, while opponents have feared that they could be used to extend federal control over non-federal land. Differences also have existed over whether to create a comprehensive heritage program containing priorities and standards for establishing heritage areas. Some programs give places honorary recognition. Cultural resources may be listed by the NPS in the National Register of Historic Places, as meriting preservation and special consideration in planning for federal or federally assisted projects. The Secretary of the Interior may designate natural areas as national natural landmarks, and cultural areas as national historic landmarks. National parks, monuments, and other areas of international worth may, at the request of the United States, be recognized by the United Nations as world heritage sites or biosphere reserves. Congress or the Secretary of the Interior may designate rivers as components of the National Wild and Scenic Rivers System, and trails as part of the National Trails System. The NPS also supports local and state governments in protecting resources. The agency may provide grants for projects (including acquisition and development of recreational facilities) and technical assistance (for conserving rivers, trails, natural areas, and cultural resources). In addition to this range of NPS programs, resources are protected by the private sector, state and local governments, and other federal agencies.

The National Park System includes 412 diverse units administered by the National Park Service (NPS) in the Department of the Interior. Units generally are added to the National Park System by acts of Congress, although the President may proclaim national monuments for inclusion in the system on land that is federally managed. An act of Congress creating a National Park System unit may explain the unit's purpose; set its boundaries; provide specific directions for land acquisition, planning, uses, and operations; and authorize appropriations for acquisition and development. Today, there are more than 20 different designations (i.e., titles) for units of the National Park System, reflecting the diversity of the areas. Before enacting a law to add a unit, Congress often first enacts a law requiring the NPS to study an area, typically to assess its national significance, suitability and feasibility, and management options. When Congress directs the NPS to prepare a study, the agency must assess whether an area contains natural or cultural resources that are nationally significant, constitutes one of the most important examples of a type of resource, and is a suitable and feasible addition to the park system. The agency also is to consider certain other factors established in law (e.g., threats to resources). The Secretary of the Interior is required by law to recommend annually to Congress a list of areas for study for potential inclusion in the National Park System. The Secretary is also required to submit to Congress a list of areas previously studied that contain primarily historical resources and a list of areas with natural resources. Since 2000, the Secretary has submitted such recommendations once, in 2012. The addition of units to the National Park System sometimes has been controversial. Some discourage adding units, asserting that the system is "mature" or "complete," while others assert that the system should evolve and grow to reflect current events, reinterpretations, and a changing U.S. population. A related issue is how to properly maintain existing and new units given limited fiscal and staffing resources. Differences exist on the relative importance of including areas reflecting our natural, cultural, and social history. The adequacy of standards and procedures for ensuring that the most outstanding areas are included in the Park System also has been debated. It is generally regarded as difficult to meet the criteria and to secure congressional support and funding for expanding the National Park System. Thus, another issue has been whether particular resources are better protected outside the National Park System, and how to secure the best alternative protection. Certain areas that receive technical or financial aid from the NPS, but are neither federally owned nor directly administered by the NPS, include affiliated areas and national heritage areas. Some programs give places honorary recognition. The NPS also supports local and state governments in protecting resources through grants for projects and technical assistance.

Background The combined efforts of the food industry and government regulatory agencies often are credited with making the U.S. food supply among the safest in the world. However, critics view this system as lacking the organization, regulatory tools, and resources to adequately combat foodborne illness. The Centers for Disease Control and Prevention (CDC) reports that each year about one in six Americans—a total of 48 million people—become sick from contaminated food. Of these, an estimated 128,000 cases require hospitalization and 3,000 cases result in death. Estimates of the economic costs associated with foodborne illness vary. Researchers at FDA report that health costs associated with foodborne illness in the United States caused by known viruses, bacteria, parasites, allergens, and marine biotoxins, as well as unspecified agents total an estimated $36 billion annually. Researchers at USDA report individual cost estimates for 15 pathogens that account for most (95%) of the illnesses and deaths from foodborne illnesses in the United States for which a specific pathogen cause can be identified, which when combined total more than $15 billion annually. Most of these costs are attributable to estimated losses from five pathogens: nontyphoidal Salmonella enterica ($3.7 billion), Toxoplasma gondii ($3.3 billion), Listeria monocytogenes ($2.8 billion), Campylobacter spp. ($1.9 billion), and norovirus ($2.3 billion). The USDA estimates update previous studies that reported that foodborne illness from 14 pathogens caused an estimated $14.0 billion in cost of illness. Another study looking at the 31 pathogens for which CDC can identify a specific pathogen cause as well as unspecified agents estimates that together they cause a total economic burden of $77.7 billion from foodborne illness in the United States each year. Differences between the studies may be explained by the number of identified pathogens included; whether or not unidentified agents causing foodborne illness are included; and differences in analytical methods. Major food safety-related incidents have heightened public and media scrutiny of the U.S. food safety system and magnified congressional interest in the issue. Since 2007, the Government Accountability Office (GAO) has placed food safety on its biennially published list of high-risk areas, among other areas needing the concerted attention of Congress and the Administration. Both the Obama and Bush Administrations addressed food safety concerns. In 2007, then President Bush released the Food Protection Plan of 2007 and Action Plan for Import Safety to address changes in food sources, production, and consumption. In 2009, President Obama established a Food Safety Working Group (FSWG) of Cabinet Secretaries and senior officials to provide advice on how to upgrade U.S. food safety laws, foster coordination throughout government, and ensure that food safety laws are effective and enforced. In 2010, as part of the FSWG's annual progress report, the Administration announced that it had taken steps to reduce the prevalence of certain food risks and implemented new food safety standards, among other actions. The HHS released a draft of its plans regarding specific food safety goals, setting percentage reduction goals for major food contaminants as well as targeted reductions in the number of cases each year by 2020. Following Congress's passage of FSMA in December 2010, FDA has been actively engaged in developing new regulations to implement the law. Under FSMA, FDA is responsible for more than 50 regulations, guidelines, and studies; however, some major provisions under FSMA have been substantially delayed, and it is uncertain whether full implementation of some provisions in the law will meet their expected deadlines. Implementation of the law will depend on the availability of discretionary appropriations, and some have questioned whether additional funding should be made available in the current budgetary climate. Food Safety Incidents Each year, state health officials report data to CDC on hundreds of foodborne outbreaks. CDC reports that more than 1,000 foodborne outbreaks are investigated by local and state health departments each year. Overall, from available outbreak data, CDC reports that roughly one-half of all outbreaks involved meat, dairy, fish/seafood, and egg products, while another roughly one-third involved leafy greens, vine vegetables, and fruits and nuts ( Figure 1 ). In general, foods often associated with foodborne illnesses include raw foods of animal origin—meat, poultry, eggs, and seafood, and also unpasteurized (raw) milk—that can cause infections if undercooked, or through cross-contamination. Other foods associated with foodborne illness include shellfish eaten raw and also fresh produce, including unpasteurized juices. Some foodborne outbreaks affect multiple states, depending on how widely the food associated with the outbreak is distributed. CDC reports that 103 multi-state foodborne outbreaks occurred during the five-year period from 2008 to 2012, an increase from previous years ( Figure 2 ), thus continuing to raise questions about the adequacy of the U.S. food system's safeguards for ensuring the safety of both domestically produced foods and imported foods. Examples of foodborne outbreaks involving FDA-regulated foods include multi-state outbreaks in 2012 of Salmonella infections, involving peanut butter and cantaloupe, and E. coli infections linked to raw clover sprouts; multi-state outbreaks in 2011 of listeriosis linked to cantaloupe; the 2010-2011 multi-state recall of Salmonella -contaminated sprouts; and a 2010 nationwide recall of more than 500 million eggs associated with increased cases of Salmonella infection, among other outbreaks. A multi-state outbreak of Salmonella infections that occurred in 2008-2009 was linked to an institutional brand of peanut butter and other peanut-based ingredients from a single company, resulting in a series of expanded recalls in 2009 involving thousands of peanut-containing products from more than 200 food companies. Other widespread illness outbreaks have been linked to the consumption of bagged fresh spinach grown in California contaminated with E. coli and to Mexican produce contaminated with Salmonella . There also have been large recalls of FSIS-regulated meat and poultry products due to findings of E. coli , Listeria , and other problems. CDC regularly tracks national foodborne outbreak data from local and state public health departments and makes these data publically available online. CDC's Foodborne Outbreak Online Database (FOOD) provides access to limited descriptive summaries of national and state-level outbreak data by location of consumption and etiology (or cause of disease) in a web-based platform for searching the agency's Foodborne Disease Outbreak Surveillance System database. Foodborne Illness CDC estimates that nearly 48 million people become sick from contaminated food each year. These estimates are for two major groups of foodborne illnesses: known foodborne pathogens (31 pathogens, many of them tracked by public health systems that track diseases and outbreaks); and "unspecified agents," where insufficient data do not allow for the estimation of agent-specific burden. Foodborne illnesses from known pathogens account for about one-fifth of CDC's estimate of the total number of foodborne illnesses per year and about 40% of the estimated number of illnesses resulting in either hospitalizations or death ( Table 1 ). The remaining number of illnesses, hospitalizations, and deaths are attributable to foodborne illness from "unspecified agents." The top five pathogens contributing to foodborne illnesses annually are norovirus (58% of illnesses), Salmonella , nontyphoidal (11%), Clostridium perfringens (10%), Campylobacter spp. (9%), and Staphylococcus aureus (3%). The top five pathogens contributing to annual foodborne illnesses resulting in hospitalization are Salmonella , nontyphoidal (35% of illnesses), norovirus (26%), Campylobacter spp. (15%), Toxoplasma gondii (8%), and E. coli (STEC) O157 (4%). The top five pathogens contributing to annual foodborne illnesses resulting in death are Salmonella , nontyphoidal (28% of deaths), Toxoplasma gondii (24%), Listeria monocytogenes (19%), norovirus (11%), and Campylobacter spp. (6%). Other CDC reports indicate that there were 831 foodborne disease outbreaks in 2012. These outbreaks resulted in 14,972 illnesses, 794 hospitalizations, and 23 deaths. Norovirus was the most common disease, accounting for 41% of outbreaks and 45% of illnesses. Salmonella was the second-most common, accounting for 25% of outbreaks and 33% of illnesses. Beef, poultry, and finfish were the commodities associated with the largest number of foodborne outbreaks. Fish, vegetable row crops, and dairy were the most commonly implicated single food categories in outbreaks in which a single food category could be implicated. Trends in some foodborne illnesses show improvement for some pathogens, while infections caused by some pathogens have not declined or, in some cases, have increased (see Figure 3 ). CDC reports: "The incidence of laboratory-confirmed Salmonella infections was lower in 2013 than 2010-2012, whereas the incidence of Vibrio infections increased. No changes were observed for infection with Campylobacter, Listeria , STEC O157, or Yersinia , the other pathogens transmitted commonly through food." Existing Food Safety Legal and Regulatory Landscape Numerous federal, state, and local agencies share responsibilities for regulating the safety of the U.S. food supply. GAO has identified 15 federal agencies collectively administering at least 30 laws related to food safety. State and local food safety authorities collaborate with federal agencies for inspection and other food safety functions, and they regulate retail food establishments. This organizational complexity, coupled with trends in U.S. food markets—for example, increasing imports as a share of U.S. food consumption and increasing consumption of fresh, often unprocessed, foods—pose ongoing challenges to ensuring food safety. Although numerous federal agencies have some responsibility, primary responsibility for food safety rests with the FDA and the USDA. FDA at the U.S. Department of Health and Human Services (HHS) is responsible for ensuring that all domestic and imported food products—except for most meats and poultry—are safe, nutritious, wholesome, and accurately labeled. FDA also has oversight of all seafood, fish, and shellfish products. USDA's Food Safety and Inspection Service (FSIS) regulates most meat and poultry and some egg and fish products. The division of food safety responsibility between FDA and USDA is rooted in the early history of U.S. food regulation. For more background information, see CRS Report RS22600, The Federal Food Safety System: A Primer . In addition, the majority of both total federal funding and total staffing is with FSIS and FDA. FSIS's FY2015 budget is about $1.0 billion in appropriated funds plus another roughly $160 million in industry-paid user fees annually. In recent years, the balance of funding for food safety activities between FDA and USDA has started to shift. Congressional appropriations for FDA have increased, more than doubling from $435.5 million in FY2005 to $903.4 million in FY2015, with another roughly $17 million authorized user fees. Thus, FSIS receives a larger share of the two agencies' combined food safety budget, although FSIS is responsible for between 10% and 20% of the U.S. food supply, while FDA is responsible for the remainder. Staffing levels also vary among the two agencies: FSIS staff number around 9,400 full-time equivalents (FTEs), while FDA staff working on food-related activities number about 3,800 FTEs (FY2014 estimates). FDA Food Safety Modernization Act (P.L. 111-353) FSMA focused on FDA-regulated foods and amended FDA's existing structure and authorities, in particular the Federal Food, Drug, and Cosmetic Act (FFDCA, 21 U.S.C. §§301 et seq .). Among its many provisions, FSMA expanded FDA's authority to conduct a mandatory recall of contaminated food products; enhanced surveillance systems to investigate foodborne illness outbreaks; established new preventive controls and food safety plans at some food processing facilities and farms; enhanced FDA's traceability capacity within the nation's food distribution channels; increased inspection frequencies of high-risk food facilities (both domestic and foreign facilities); and expanded FDA's authority and oversight capabilities regarding foreign companies that supply food imports to the United States. FSMA does not directly address meat and poultry products under the jurisdiction of USDA. FDA has identified five key elements of FSMA: Preventive C ontrols —FSMA provides FDA with a legislative mandate to require comprehensive, prevention-based controls across the food supply. As examples, the act requires mandatory preventive controls for food facilities and mandatory produce safety standards, and also gives FDA the authority to prevent intentional contamination. Inspection and Compliance —FSMA provides FDA with the ability to conduct oversight and ensure compliance with new requirements and respond when problems emerge. Examples include establishing a mandated inspection frequency (based on risk); giving FDA access to industry records and food safety plans; and requiring certain testing be conducted by accredited labs. Response —FSMA provides FDA with the ability to respond to problems when they emerge. Examples include giving FDA mandatory recall authority for all food products; expanding FDA's authority to administratively detain products that are in violation of the law; giving FDA the authority to suspend a facility's registration, effectively prohibiting the company from selling any products within the United States; establishing pilot projects so FDA can enhance its product tracing capabilities; and requiring additional recordkeeping by facilities that "manufacture, process, pack or hold" foods designated as "high-risk." Imported Food Safety —FSMA provides FDA with the ability to help ensure that food imports meet U.S. food safety standards. Examples include requiring importers to verify that their foreign suppliers have adequate preventive controls; establishing a third-party verification system; requiring certification by a credible third party for high-risk foods as a condition for entry into the United States; establishing a voluntary qualified importer program for expedited review and entry from participating importers; and giving FDA the right to refuse entry into the United States of food from a foreign facility if FDA is denied access to the facility or the country where the facility is located. Enhanced Partnerships —FSMA provides FDA with the authority to improve training of state, local, territorial, and tribal food safety officials. Examples include requiring FDA to develop and implement strategies to enhance the food safety capacities of state and local agencies through multi-year grants, as well as strategies to enhance the capacities of foreign governments and their industries; and giving FDA the authority to rely on inspections of other federal, state, and local agencies in meeting its increased inspection mandate for domestic facilities. FSMA authorized additional appropriations and staff for FDA's future food safety activities. The Congressional Budget Office (CBO) estimated that implementing the newly enacted law could increase net federal spending subject to appropriations by $1.4 billion over a five-year period (FY2011-FY2015). FSMA also authorized an increase in FDA staff, reaching 5,000 in FY2014. For more detailed information, see CRS Report R40443, The FDA Food Safety Modernization Act (P.L. 111-353) . Key Issues for the 114th Congress The 114 th Congress will likely continue to provide oversight and scrutiny of food safety changes enacted under FSMA as they are developed, proposed, and implemented. In addition, the 114 th Congress also may continue to consider changes to other food safety laws and policies that continue to be actively debated in Congress. Among these are food safety initiatives covering meat, poultry, and seafood products; legislation intended to curtail the non-therapeutic use of antibiotics in animal feeds and to ban the use of certain plastic components commonly used in food containers; issues regarding food labeling; and the use of plant and animal biotechnology, as well as other issues. FSMA Oversight and Implementation FSMA is the largest expansion of FDA's food safety authorities since the 1930s, and includes provisions requiring the agency to establish and enforce new preventive controls and food safety plans at some food processing facilities and farms, among numerous other oversight capabilities of both domestic and foreign food and feed companies. Along with general oversight of FSMA's key provisions, many in Congress have actively followed FDA's implementation of certain other aspects of the law. For example, FSMA's risk-based approach requires FDA to identify "high-risk" facilities and designate high-risk foods as part of the law's directive for targeting food safety inspection resources (FSMA, §201 and §204). How FDA identifies and designates high-risk facilities and foods, and how the agency ultimately implements these provisions, could have other far-reaching implications for some food growers and producers. In addition, FSMA excluded certain businesses from regulation as a way to mitigate the economic effects on small, organic, direct-to-market, and sustainable farming operations. These provisions will exempt from federal regulation some small-sized farms and food processors that sell directly to consumers (FSMA, §103 and §105). These exemptions require additional rulemaking by FDA to determine what constitutes a "small" and "very small" business under the new law. Some public health groups may remain vigilant of how these exemptions are implemented, particularly for growers and processors of certain perceived "high-risk" foods (to be determined by the HHS Secretary), although these operations would be subject to oversight by state and local authorities and their exemption can be withdrawn by the FDA in the event of a foodborne illness. Some agribusiness groups also remain opposed to these exemptions because of broader industry concerns about the need to preserve consumer confidence in the safety of all marketed produce; another industry concern is whether small foreign producers might also be exempt, if small U.S. producers are exempt (given prevailing U.S. equivalency standards). Under FSMA, FDA is responsible for more than 50 regulations, guidelines, and studies. However, FDA action on some major FSMA provisions—including rules specifying the requirements and conditions for establishing preventive controls in food facilities, food safety standards for produce growers, and requirements for food importers, among other provisions—have yet to be finalized, and most rules have been delayed well beyond the implementation dates specified in the law. Regulations were to have been proposed or, in some cases, finalized within one to two years of enactment (roughly January 2012 and January 2013); other rules were to have been submitted within 18 months of enactment (mid-2012). (FSMA was signed into law on January 4, 2011.) Several factors appear to have contributed to the delay in implementing FSMA. Substantial delays in publication of several FSMA proposed rules were reportedly due to rules being held up, often for months, by the Office of Management and Budget's (OMB's) review process. Delays in the rulemaking process also resulted from FDA granting a number of extensions in the public comment and response period for many of the major FSMA proposed rules. These extensions were requested by a wide range of stakeholders, given the complexity of the regulations as well as FDA's delayed release of other related FSMA rules that some groups argued needed to be considered together as a full regulatory package. Implementation of some provisions has also required coordination with other federal agencies, including Department of Homeland Security, USDA, and EPA. Further implementation delays have resulted from FDA's decision to re-propose some key provisions of four major FSMA regulations, which many Members of Congress and some key industry stakeholders have broadly supported. Finally, resources and the availability of discretionary appropriations might also have affected FDA's rollout and implementation of FSMA. Given delays in the rulemaking process, the Center for Food Safety filed suit in federal court against FDA and OMB, citing the government's failure to implement several food safety regulations required by FSMA. FDA filed a motion to dismiss the complaint against the agency, which was denied by the court in April 2013. FDA also filed a motion to reconsider, asking the court to extend the implementation timeline for two FSMA-required rules, which was also denied. Under a February 2014 agreement between FDA and the Center for Food Safety, the agency must issue the regulations under a court-order schedule, as follows: preventative controls for both human food and animal food (FSMA §103(a) and (c)): August 30, 2015; imported food and foreign suppliers, including the Foreign Supplier Verification Program (FSMA §301(a)) and Accreditation of Third Party Auditors (FSMA §307): October 31, 2015; produce safety (FSMA §105(a)): October 31, 2015; sanitary transportation practices for food and feed (FSMA §111): March 31, 2016; intentional adulteration of food (FSMA §106(b)): May 31, 2016. This schedule further pushes back the implementation dates for final FSMA regulations beyond the dates originally mandated by Congress in the enacted law ( P.L. 111-353 ). Reportedly, an FDA official indicated in September 2014 that full implementation of FSMA would likely take another 10 years, the amount of time needed to "reasonably expect all the rules to be working." To date, FDA has not yet issued final rules and guidance for many of the regulations required under certain key sections of FSMA. For more detailed information on implementation of specific law provisions and FDA-reported actions taken to date, see CRS Report R43724, Implementation of the FDA Food Safety Modernization Act (FSMA, P.L. 111-353) . Funding FSMA Implementation Food safety issues and FDA's implementation of FSMA also continue to be an ongoing issue for both House and Senate appropriators within the annual Agriculture appropriations process, given current budgetary constraints. Such constraints have raised questions for Congress about how to fully fund and implement policies that will protect public health and ensure the safety of domestic and imported foods. Among the many provisions of FSMA is the expansion of FDA's authority to increase inspection of domestic and foreign food facilities, to increase surveillance of foodborne illness and outbreak response, to conduct mandatory recall of contaminated foods, and to enforce new requirements at food facilities and produce operations. FSMA states a "goal of not fewer than ... 5,000 staff members in fiscal year 2014" (FSMA, §401), an increase from estimated FDA field staff of about 3,400 FTEs (full-time equivalents) in 2011. CBO estimated that implementing the law could increase net federal spending subject to appropriation by about $1.4 billion over a five-year period (FY2011-FY2015); collections from possible revenue and direct spending increases from new criminal penalties would be "insignificant, yielding a negligible net impact in each year." Given the current budgetary climate, funding to undertake many federal activities in FSMA is uncertain. Although the law authorized appropriations when it enacted FSMA, it did not provide the actual funding needed for FDA to perform these activities. These funding decisions are guided by the House and Senate Appropriations Committees, which annually fund FDA's activities in the Agriculture appropriations bill. FDA officials have indicated funding remains a concern, and ongoing efforts to implement FSMA will likely need to rely on state regulators to help enforce some of the major rules under the law. In recent years, the Administration's budget requests have projected the need for additional funds for FDA, anticipating a total need of about $1.1 billion, consisting of approximately $0.9 billion in appropriations for FDA's food program and another more than $0.2 billion in requested new user fees for the year. Appropriated funding for FDA's food program in the FY2015 Consolidated Appropriations Act ( P.L. 113-235 ) totaled $903.4 million, along with another $17 million in FSMA-mandated user fees. Congressional appropriators have not approved the Administration's request to implement additional new user fees to fund FDA's food program, including a proposed new food establishment registration and inspection fee. Other proposed or expected fees in addition to appropriated funds in the Administration's budget request include food import, international courier, and food contact notification fees. FDA justified its requested increase based on the need to implement the various elements of FSMA. The Administration's proposed establishment fee is opposed by most food industry groups; other groups are also concerned that the Administration's proposal relies too heavily on fees. Some public health groups, however, note the potential for raising additional resources to fund food safety efforts through user fee programs. The need for new user fees to provide additional resources to support FDA's food safety mission has been raised by the Obama Administration in consecutive statements of administration policy (SAPs) regarding annual appropriations. Although Congress has added to FDA's budget for its Foods Program in the past few years, agency officials claim it will need an additional $400 million to $450 million more per year above its FY2012 base to fully implement FSMA. The discrepancy between the Administration's request and the current congressional appropriations proposals has raised questions about how FDA will be able to implement food safety reforms authorized under FSMA, and also questions about how FDA and USDA will be able to invest in preventive efforts intended to address existing and emerging food safety threats. Other budgetary concerns regarding FSMA implementation continue to be regularly noted by congressional appropriators, along with recommendations for FDA. Examples are provided in CRS Report R43669, Agriculture and Related Agencies: FY2015 Appropriations , and CRS Report R43110, Agriculture and Related Agencies: FY2014 and FY2013 (Post-Sequestration) Appropriations . Food Safety Regulations for Produce Growers Under FSMA, FDA must develop mandatory food safety and traceability requirements affecting farmers, packers, and processors of both domestically produced and imported products. At the farm production level, these requirements would mostly affect produce growers (FSMA §105(a)). Most other types of food producers—such as meat, poultry, and dairy farms; fisheries; and producers of raw, bulk grains—would not be subject to FSMA's farm-level requirements. In January 2013, FDA proposed its produce rule. Under FDA's proposed rule, covered activities include the "growing, harvesting, packing, or holding" of produce, where produce refers to "any fruit or vegetable (including specific mixes or categories of fruits and vegetables) grown for human consumption, and would include mushrooms, sprouts (irrespective of seed source), peanuts, tree nuts and herbs." Not covered by the proposed rule are foods that are rarely consumed raw, foods that go to commercial processing, and foods produced for personal consumption, as well as certain foods identified as low risk. Produce that undergoes certain commercial processing, such as bagged salads and leafy greens, would be covered by FDA's concurrently proposed rule on preventive controls for human foods covering food facilities. FDA's proposal covers microbial contamination of produce only and does not cover chemical, physical, or radiological contamination of produce. It proposes certain procedures, processes, and practices that FDA believes will minimize the risk of "serious adverse health consequences or death" and prevent the introduction of known or "reasonably foreseeable hazards" into produce. The rule addresses five identified routes of potential contamination: (1) agricultural water used for produce production; (2) biological soil amendments of animal origin, such as composted manure; (3) health and hygienic practices for farm personnel, including hand washing and maintaining adequate personal cleanliness; (4) domesticated and wild animal intrusions, which may introduce pathogens to produce production systems via animal feces; and (5) equipment and tools, buildings, and sanitation practices used for produce operations on farms. The rule proposes certain requirements for growing sprouts, including treating seed before sprouting and testing spent sprout irrigation water for pathogens, and monitoring the growing environment for Listeria. The proposal would require training for farm personnel who handle covered produce or food-contact surfaces and would require certain records to document that standards are being met. FDA estimates that the proposed rule would cover an estimated 40,496 domestic farms and also 14,927 foreign farms. FDA estimates that the costs of the proposed rule could total about $460 million annually for domestic farms and about $170 million annually for foreign farms covered by the rule. The estimated cost of the proposed produce rule is less than FDA's estimate of $1.04 billion in annual benefits under the rule. The proposed rule provided flexibility in various ways. As specified in FSMA, it exempts an estimated 75,716 domestic farms from the proposed requirements, with the exception of certain labeling requirements (estimated to cost $3.82 million annually). In addition, FDA would exempt another 34,433 farms with average annual sales of $25,000 or less. The proposal's requirements would be implemented on a staggered compliance timetable, depending on farm size, giving more time to smaller farms. Under some circumstances, the proposal would allow for the establishment and use of an alternative approach to the requirements established in proposal, as well as allow for a state or foreign country to request a variance from one or more requirements. Since the produce rule was proposed, FDA has extended the public comment period numerous times. FDA has also conducted outreach and public meetings and released web videos and written materials. In March 2013, FDA corrected technical errors to the proposed rule. In August 2013, FDA announced it would prepare an environmental impact statement (EIS) to evaluate the potential environmental effects of the proposed rule for produce safety. Also, in December 2013, FDA announced it would re-propose some key provisions of the produce rule, as well as the regulations regarding preventive controls affecting food facilities (FSMA §103). Provisions that FDA plans to change "include water quality standards and testing, standards for using raw manure and compost, certain provisions affecting mixed-use facilities, and procedures for withdrawing the qualified exemption for certain farms." FDA published its re-proposal in September 2014. In addition, FDA entered into a cooperative agreement with the National Association of State Departments of Agriculture (NASDA) to provide information to help plan and carry out implementation of FSMA's national produce safety rule, in partnership with state regulatory agencies. The court-ordered deadline for final regulations regarding produce safety (FSMA §105(c)) is October 31, 2015. Meat and Poultry Inspection52 FSMA focused on FDA-regulated foods and did not directly address foods under the jurisdiction of USDA. USDA's FSIS regulates most meat and poultry and egg products, excluding shell eggs. Some Members of Congress have long claimed that once FDA's food safety laws were amended and updated, it would be expected that Congress would next turn to amending laws and regulations governing USDA's meat and poultry products. Food safety incidents and concerns regarding USDA-regulated meat and poultry products are similarly well documented. In addition, a series of bills were introduced and debated in the 111 th and 112 th Congress regarding the safety of meat and poultry products, some of which were reintroduced in the 113 th Congress (including S. 1502 and H.R. 4966 ). Congress may consider reintroducing these bills in the 114 th Congress. In August 2014, USDA finalized its proposed rule to modernize the poultry inspection system, as part of the New Poultry Inspection System (NPIS). Under NPIS, poultry plant personnel will be responsible for carcass sorting, and federal inspectors will be stationed further down the line. FSIS inspectors will focus on pathogen reduction and offline food safety inspection activities. NPIS is voluntary, and implementation will be phased in. Poultry slaughter plants may opt to continue to operate under current inspection systems; however, all poultry plants are required to expand pathogen control and testing. The proposed rule allowed for increases in line speeds in poultry plants, but the final rule left speeds unchanged. Unchanged line speeds could potentially sway some poultry plants to stay with their current inspection system. Throughout the 113 th Congress, there has been debate about USDA's rule, with some Members of Congress and food safety advocates opposing USDA's proposed changes as compromising food safety. Other Members of Congress have supported USDA's push to modernize poultry inspection. On September 11, 2014, Food and Water Watch filed suit in federal court to stop USDA from implementing NPIS. Other food safety issues regarding meat and poultry products include the safety of the meat and poultry supplied to school feeding programs; FSIS protocols for handling food recalls and related enforcement issues; improved meat traceability capabilities; FSIS budgetary and staffing constraints; humane slaughter and animal welfare concerns; and the continued implementation of state meat inspection rules. In May 2013, USDA's Office of the Inspector General released a report critical of USDA's existing enforcement policies, including those under the HACCP-based Inspection Models Project (HIMP), the basis for NPIS. In August 2013, GAO released a study recommending that USDA collect and analyze information to determine if the agency's young hog pilot project is meeting its purpose, and to clearly disclose to the public limitations in the information used for the proposed rule to modernize poultry slaughter inspections. In November 2014, FSIS released its final evaluation of market hog HIMP plants. FSIS found that HIMP plants are performing as well as comparable large non-HIMP market hog establishments. Antibiotic Use in Animal Agriculture63 Public health experts have expressed concern about growing resistance of infectious diseases to antibiotics, and about patients whose infections were difficult or impossible to treat as a result. Antibiotic resistance has been linked to a number of causes, including the overuse of antibiotics by medical professionals, and the use of antibiotics for non-therapeutic purposes in food animals. Antibiotics are added to feed for some types of food-producing animals not only to treat and prevent diseases, but also to improve growth and efficient use of feed rations. Some public health advocates argue that non-medical uses in food animals should be limited to drugs that are not useful in human medicine. Others oppose this approach, arguing that animal production may not be commercially viable without the drugs' routine use, and that the linkage between such use and antimicrobial resistance in humans lacks a strong scientific basis. In the past several Congresses, bills have been introduced that would curtail the non-medical use of antibiotics in animal feeds, including the Preservation of Antibiotics for Medical Treatment Act (PAMTA) introduced in both the House and Senate. These bills were offered again in the 112 th Congress ( H.R. 965 ; S. 1211 ) and in the 113 th Congress ( H.R. 1150 ; S. 1256 ). Congress may consider reintroducing these bills in the 114 th Congress. In 2013, the Food and Drug Administration (FDA) issued guidance for industry that defines judicious use of antibiotics, asks animal drug companies voluntarily to stop labeling antibiotics for production uses within three years, and calls for more veterinary oversight. FDA claims a voluntary approach is the fastest and most efficient way to tighten control over the use of medically important antibiotics. Regulatory action may require FDA to conduct product-by-product evaluations that could require more time and resources. While some stakeholders remain skeptical of FDA's voluntary approach, the livestock and poultry industry have been supportive. In September 2014, the President's Council of Advisors on Science and Technology released a report on antibiotic resistance and the Administration created through executive order an Interagency Task Force for Combating Antibiotic-Resistant Bacteria. In a letter to the task force, some Members of Congress raised questions about how the Administration will address concerns that FDA does not have the authority or means to properly address antibiotic use in food producing animals through its voluntary guidance. Seafood and Fisheries Products67 Many food safety changes enacted in FSMA did not specifically address seafood and fisheries products. Prior to FSMA, domestic and imported fish and shellfish were already regulated under a system of risk prevention controls known as HACCP (for "Hazard Analysis and Critical Control Points"). However, FSMA did include some provisions affecting domestic and imported seafood products. These include interagency agreements to improve seafood safety by examining and testing seafood, coordinating inspections, standardizing data, modifying existing processes, sharing enforcement and compliance information, and conducting joint training and outreach (FSMA, §201); requirements for guidance related to post-harvest processing of raw oysters (FSMA, §114); and inspections of foreign processing facilities by the Secretary of Commerce to assess practices and processes used in connection with seafood production (FSMA, §306). In addition, a number of issues related to seafood continue to be debated in Congress. These include further strengthening of federal coordination among programs concerned with seafood safety, preventing seafood fraud, using third parties to certify the safety of imported seafood, and developing a system to trace domestic and imported seafood from producer to consumer. (For more information on efforts to address seafood fraud, see the following section, " Fraud Concerning Food and Food Ingredients .") Fraud Concerning Food and Food Ingredients Food fraud (also referred to as "economically motivated adulteration," or EMA) refers to the act of defrauding buyers of food and food ingredients for economic gain—whether they be consumers or food manufacturers, retailers, and importers—and has vexed the food industry throughout history. Foods and food ingredients commonly associated with food fraud include olive oil, fish and seafood, honey, milk and dairy products, meat products, grain-based foods, fruit juices, wine and alcoholic beverages, organic foods, spices, coffee, and tea, and some highly processed foods. Although the vast majority of food fraud incidents do not pose a public health risk, a few fraud cases have resulted in actual or potential public health risks. Perhaps the most widely cited, high-profile cases have involved the addition of melamine to high-protein feed and milk-based products to artificially inflate protein values in products that may have been diluted. For example, in 2007, evidence emerged that adulterated pet food ingredients from China had caused the deaths of a large number of dogs and cats in the United States. This was followed by reports that melamine-contaminated baby formula had sickened an estimated 300,000 Chinese children, killing a reported 6 infants. Other reports indicate that fish and seafood fraud may be widespread in some markets, consisting mostly of the mislabeling or substitution of a higher-valued species with something different from and inferior to the expected species, possibly with a fish species that could be associated with some types of food poisoning or exposure to certain allergens. Substitution of olive oil with other types of seed, legume, or nut oils could have unintended consequences if consumed by those with certain food allergies. Other fraud cases might not initially appear to involve intentional adulteration but may do so on closer examination. Charges of fraud were part of the federal criminal indictment charging former officials of the Peanut Corporation of America with numerous offenses in connection with the Salmonella outbreak in 2009—which killed 9 people and sickened 700—since company officials were found to have sold and distributed products known to be contaminated. FSMA does not directly address food fraud or EMA; however, some of its provisions may have application to EMA even though these provisions may have originated as part of an overall food defense strategy. These include provisions regarding "Protection Against Intentional Adulteration" (FSMA §106) and provisions regarding preventive controls (FSMA §103), among other provisions. FSMA Section 106 requires FDA to issue regulations to protect against the intentional adulteration of food, such as "specifying appropriate science-based mitigation strategies or measures to prepare and protect the food supply chain from intentional adulteration at specific vulnerable points." FDA's proposed regulations covering intentional adulteration (FSMA §106) were published in December 2013 and represent the first time FDA has proposed a regulatory approach for preventing intentional adulteration of food. Other changes were published in FDA's re-proposal of key regulations in September 2014. The court-ordered deadline for final regulations regarding the intentional adulteration (FSMA §106(b)) is May 31, 2016. Other ongoing efforts are intended to address fish and seafood fraud. In June 2014, the Obama Administration initiated a presidential task force on seafood fraud, calling for the establishment of a "comprehensive framework to combat illegal, unreported, and unregulated fishing [IUU] and seafood fraud," co-chaired by the Departments of State and Commerce. Other ongoing efforts exist at the National Marine Fisheries Service (NMFS) at the National Oceanic and Atmospheric Administration (NOAA) in the Department of Commerce. NMFS also administers a number of seafood and fisheries safety and sanitation programs. NMFS's voluntary seafood and fisheries safety inspection program focuses on marketing and product quality. Over the years, Congress has introduced a number of bills intended to address concerns about food fraud for a particular food or food ingredient. Such legislation has not addressed food fraud in a comprehensive manner. However, although no single federal agency or U.S. law directly addresses food fraud, a number of existing laws and statutes already provide the authority for various federal agencies to address fraud. Currently, food fraud is broadly addressed through various food safety, food defense, and food quality authorities as well as border protection and import authorities across a number of federal agencies. FDA and USDA are the principle agencies working to protect the food supply from food safety risks—both unintentionally and intentionally introduced contamination—in conjunction with border protection and enforcement activities by the U.S. Department of Homeland Security. Other agencies also play a role. For more background information, see CRS Report R43358, Food Fraud and "Economically Motivated Adulteration" of Food and Food Ingredients , and also CRS Report RL34124, Seafood Fraud . Omnibus Farm Bill Some food safety reforms enacted under FSMA included provisions that involve coordination with other federal agencies. Some provisions have implications for certain farm bill programs administered by USDA. For example, FSMA required FDA to coordinate with the extension activities of USDA's National Institute of Food and Agriculture (NIFA) in advising producers and small processors of food safety requirements through competitive training and technical assistance grants (FSMA, §209). FSMA also created the "National Food Safety Training, Education, Extension, Outreach and Technical Assistance Program," whereby the NIFA will award competitive grants to carry out the extension activities under the law, with authorized funds to be appropriated through FY2015 (FSMA, §209). The 2014 farm bill (Agriculture Act of 2014, P.L. 113-79 ) contained a number of provisions that address food safety. First, it required FDA, when publishing its final regulations establishing new produce standards (FSMA §105) to publish an analysis of the scientific information used to promulgate the final rule, as well as an economic impact analysis of the rule focusing on a variety of business sizes, and small and mid-sized value-added food processors. It also required the U.S. Comptroller General to submit a report to certain House and Senate congressional committees within one year after FDA promulgates the final produce rule, and further required an updated report to the committees within one year after that report. The 2014 farm bill also established training coordination for food and agriculture protection as a "high-priority" research and extension activity within USDA, and provided for competitive grants to establish a "Comprehensive Food Safety Training Network." Eligible recipients would include nonprofit institutions that provide food safety protection training, and training centers in institutions of higher education. It further authorized $20 million in appropriations annually (FY2014-FY2018) to remain available until expended. The 2014 farm bill also directed the Federal Crop Insurance Corporation (FCIC) to conduct a "food safety insurance" study (to be submitted to Congress within one year of enactment) to determine whether policies that provide coverage for specialty crops from food safety and contamination issues benefit producers. The study shall evaluate insurance policies and plans that provide protection for production or revenue impacted by "food safety concerns including, at a minimum, government, retail, or national consumer group announcements of a health advisory, removal, or recall related to a contamination concern." Finally, the 2014 farm bill required USDA to finalize regulations for food safety inspections of catfish no later than 60 days after the date of enactment of the law. FSIS has not yet implemented the catfish program. It also mandated that USDA and FDA enter into an agreement to improve interagency cooperation and prevent inspection duplication. This agreement was signed in April 2014. Imported Foods A steady increase in food imports, a result of globalization and consumer desire for a wider variety of foods year-round, has generated growing concerns about whether current federal programs sufficiently ensure the safety of these imports. Each year, FDA physically examines about 2% of the total number of food import lines imported during the year. In recent years, FDA has issued import alerts on a range of imported foods, including pet food ingredients, farmed seafood, and dairy products and ingredients, among other foods. FSMA included several provisions on food imports (Title III) placing tighter controls over imports, setting minimum requirements for entry, requiring certification of imported foods, and raising importer accountability. FSMA creates several new programs and requirements, including a program for expedited entry and capacity building in foreign countries. The requirements will place more responsibility on U.S. trading partners, and some claim that FSMA import requirements could influence food safety efforts worldwide once implemented. FDA has issued a series of proposed regulations to address FSMA's import provisions. In July 2013, FDA released two primary rules—namely, the Foreign Supplier Verification Program (§301) and a program establishing a certification system or verification systems involving so-called third parties (§307). FDA re-proposed aspects of the Foreign Supplier Verification Program in September 2014. FDA issued final regulations in May 2013 regarding prior notice of imported food shipments (§304). FDA has entered discussions with several foreign countries to facilitate inspection of foreign facilities (§306). Also, in early 2013, FDA released its plans for international food safety capacity-building and its report identifying programs and practices intended to promote the safety of the U.S. food supply. Some FSMA provisions have been largely addressed, including one for developing a strategy for addressing smuggled foods (§309) and another reporting on FDA foreign offices (§308). Other FSMA provisions have not yet been fully addressed, including FDA's plans for its "Voluntary Qualified Importer Program" (§302) and other FSMA import provisions authorize FDA to require food imports to be accompanied by certification (§303). The court-ordered deadline for final regulations regarding imported food and foreign suppliers is October 31, 2015. Other FSMA regulations also require that food importers address certain food safety requirements, including preventive controls for (human) food facilities (FSMA §103) and also requirements for produce growers (FSMA §105). Outside of FSMA, federal efforts and oversight have focused on changes to China's food safety laws made in 2013. Changes to China's legal and regulatory framework highlight ongoing efforts there to address food safety concerns and also to enhance enforcement efforts to punish violations. The 114 th Congress may monitor implementation of these changes as part of ongoing U.S. concerns about the safety of imported foods from China. Dietary Supplements88 FSMA provisions apply to most foods, including dietary supplements. FSMA also granted FDA the authority to enforce the adulteration and misbranding provisions of the FFDCA. Prior to FSMA, FDA could only issue voluntary recalls or request the responsible party to cease distribution of the violative product (food or dietary supplement). FSMA further granted FDA the authority to issue mandatory recalls if the responsible party does not cease distribution of the adulterated or misbranded article of food/dietary supplement. FDA must notify the Drug Enforcement Administration (DEA) if, when reviewing the safety of a new dietary ingredient, the agency determines the information to be inadequate because the ingredient contains an anabolic steroid or an analog of one. Following notification, DEA can take action on the dietary ingredient as a controlled substance. FSMA's mandatory recall authority also covers dietary supplements since it applies to all "article[s] of food" except infant formula. FSMA further required FDA to publish guidelines to clarify the information manufacturers must provide when notifying the agency of the use of a "new dietary ingredient" (NDI) in a supplement. The guidelines, published in July 2011, have generated controversy, with some manufacturers claiming them to be burdensome and not in keeping with the Dietary Supplement Health and Education Act (DSHEA). In late 2011, Senator Orrin Hatch and former Senator Tom Harkin asked FDA to withdraw its draft NDI guidance, but this request was rejected by FDA. An issue unrelated to FSMA involves concerns regarding energy drinks, which can be marketed as a beverage or as a dietary supplement. Senators Richard Durbin and Richard Blumenthal have asked FDA to review possible health concerns and reports of deaths linked to energy drinks. In December 2014, the offices of Senators Edward J. Markey, Richard J. Durbin, and Richard Blumenthal released a report with recommendations "to ensure that information about adverse events associated with the consumption of energy drinks is disclosed, to further improve transparency and representation of energy drink products in the marketplace, and ensure that children and teens are adequately protected from deceptive and potentially harmful advertising practices." The Institute of Medicine (IOM) published a summary report in January 2014 of a 2013 workshop on caffeine in food and dietary supplements, which was requested by FDA. The report presents recommendations and opinions of individual participants, but does not reflect the consensus of the IOM, nor is it intended to constitute a comprehensive review of the subject. Criminal Penalties and Enforcement FSMA did not substantially alter the criminal penalties provisions within existing FDA laws. However, such provisions were actively considered as part of the broader food safety debate. For example, the House-passed food safety bill ( H.R. 2749 , 111 th Congress) would have amended the penalties provisions of FFDCA to provide for fines and a maximum prison sentence, if any person knowingly engaged in certain prohibited acts with respect to food that is misbranded or adulterated. A similar provision was considered in the Senate, introduced by Senator Patrick Leahy (Food Safety Accountability Act of 2010, S. 3767 ), but was not included in its version of the food safety bill and not enacted as part of FSMA. Although these provisions were ultimately not adopted in the enacted law, some Members of Congress are concerned about the need to modify existing laws to institute stricter criminal fines and penalties as part of the U.S. food safety system. In the 112 th Congress, such legislation was reintroduced and passed in the Senate ( S. 216 ). During the farm bill debate in the 112 th Congress, Senator Leahy proposed an amendment that would have increased criminal penalties for those who knowingly violate food safety laws, but it was not included in Senate-passed farm bill ( S. 3240 ). Such provisions were not considered in the farm bill debated and ultimately enacted in the 113 th Congress. Bisphenol A (BPA)96 There continues to be controversy over whether the levels of bisphenol A (BPA) in food containers and packaging are "safe." BPA is a component of certain plastics that is commonly used in food containers, such as plastic bottles or metal can liners. FDA is authorized to regulate BPA as an indirect food additive when the chemical is used in food containers and packaging. Some scientific studies have suggested BPA exposure may lead to certain developmental effects in laboratory animals, but there still remains no definitive scientific consensus regarding the risk of BPA exposure to humans, in particular to children, from the leaching of the chemical from food containers and packaging. In June 2014, FDA issued its most recent safety assessment of BPA exposure from food packaging. The agency concluded that "BPA is safe at the current levels occurring in foods," and the "available information continues to support the safety of BPA for the currently approved uses in food containers and packaging." In 2012 and 2013, FDA granted two petitions to amend its food additive regulations to no longer allow certain uses of BPA after the petitioners showed that those uses were "abandoned." The two uses that had been abandoned were BPA-based polycarbonate resins in baby bottles and "sippy" cups, and BPA-based epoxy resins as coatings of infant formula packaging. FDA notes that the regulations were not amended based on a determination of safety. Although these petitions were granted, FDA had also denied a petition in 2012 to ban all uses of BPA in food containers and packaging, arguing that the petitioner had "failed to provide sufficient data and information to persuade FDA" to take the requested regulatory action. The 111 th Congress considered various proposals to reduce or eliminate the use of BPA in food containers as part of the FSMA debate, but the final bill did not include a provision to alter FDA's existing regulation of BPA. Congress has continued to introduce various proposals to reduce or eliminate the use of BPA in food containers and packaging. Several bills were introduced in the 113 th Congress to address risks of BPA exposure from food containers and packaging ( H.R. 2248 , H.R. 5033 , S. 1124 , and S. 2572 ). Additionally, several states and other countries have adopted or considered adopting measures to restrict certain uses of BPA. Pesticide Residues104 The Environmental Protection Agency (EPA) is responsible for regulating pesticide use on food and determining whether and under what conditions the proposed pesticide use would present an unreasonable risk to human health or the environment. Pesticides are used in agricultural food production to control unwanted pests—such as insects, rodents, weeds, bacteria, mold, and fungus—that may affect crop yields and food quality, but pesticide application may leave residues in or on foods that might present risks to the general public. When Congress enacted the Food Quality Protection Act of 1996 (FQPA), it established establish maximum allowable levels of pesticide residues (i.e., tolerances) for domestically produced and imported food that ensure with "reasonable certainty that no harm will result from aggregate exposure." EPA was directed to reassess all existing tolerances by 2006 to ensure that tolerances met this standard. Additionally, FQPA amended the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) to direct EPA to approve (i.e., register) pesticides for use in food production only if tolerances were set beforehand by the agency. Under FIFRA, EPA is authorized to regulate the labeling, sale, and use of pesticides to prevent unreasonable adverse effects on the environment, which includes human dietary risk from levels of pesticide residue that exceed the tolerance. There have been ongoing concerns regarding whether EPA has set tolerances for pesticide residues at a sufficiently protective level and whether foods are adequately being inspected or monitored to ensure that these tolerances are not exceeded. EPA completed its reassessment of existing tolerances in 2007 and continues to review tolerance decisions based on residue data the agency collects. FIFRA also directs EPA to review pesticide registrations periodically, which may involve reviewing tolerances if new information suggests the need for reexamination. Congress oversees EPA implementation of the FQPA and has raised concerns about the agency's implementation of the statute regarding restrictions (or lack thereof) for some pesticides. In 2012, Congress enacted the Pesticide Registration Improvement Extension Act of 2012 ( P.L. 112-177 ), amending FIFRA and FFDCA to reauthorize and revise, through FY2017, the collection and use of fees to enhance and accelerate EPA's pesticide registration activities. In addition, previous Congresses have introduced legislation to improve scrutiny of endocrine-disrupting chemicals, which are usually pesticides. Agricultural Biotechnology111 Opinions differ on whether or not agricultural biotechnology should be considered a food safety issue. Genetically engineered (GE, sometimes called genetically modified, or GM) crop varieties first became commercially available in the mid-1990s. In recent years, the introduction and proposed deregulation of several new GE crops (e.g., alfalfa, sugar beets), and subsequent legal challenges to that introduction and deregulation, have raised important issues regarding the effectiveness of the USDA's deregulatory review process, as well as the continuing effectiveness of the 1986 General Framework that underlies the U.S. biotechnology regulatory structure. Concern about increased herbicide-resistant weeds associated with the widespread use of genetically engineered crop varieties was the subject of hearings in recent years. Other concerns involve the possibility of cross-contamination by GE crops with other traditional and organically grown crops. FDA is also nearing completion of its review to approve a genetically engineered salmon, which could be the first GE animal approved for human consumption. Various product labeling options for the salmon have also been debated. In the 113 th Congress, proposed legislation would amend FFDCA to require labeling of GE fish ( H.R. 584 , S. 248 ). In addition, GE food "right-to-know" bills were proposed in the 113 th Congress ( H.R. 1699 , S. 809 ). Many of these bills were reintroduced from previous Congresses. Another bill, introduced in the 113 th Congress, would establish a federal labeling standard for foods with genetically modified ingredients, giving sole authority to FDA to require mandatory labeling if such foods are found to be unsafe or materially different from foods produced without GE ingredients ( H.R. 4432 ). Congress may consider re-introducing these bills in the 114 th Congress. In both the 113 th and 112 th Congresses, there were a series of attempts to alter U.S. policies regarding bioengineered crops, as part of the periodic farm bill debate. These included proposed provisions that would amend the Plant Protection Act (PPA, 7 U.S.C. §7701 et seq .) to change the way USDA reviews deregulation permits for bioengineered plants. These provisions were not part of the enacted 2014 farm bill ( P.L. 113-79 ). A provision debated as part of recent House Agriculture appropriations would have required USDA to grant temporary permits to producers to continue planting or cultivating a bioengineered crops while USDA reexamines possible petitions regarding "non-regulated status" or other deregulatory actions. This provision was not enacted. Single Food Agency Some in Congress may continue to advocate for additional reforms to the nation's food safety system, particularly with respect to coordination and organization among federal agencies. Efforts to establish a single federal food safety agency were introduced and debated in the 103 rd Congress. The organization of the U.S. food safety system has been debated ever since FDA was removed from USDA in 1940. Years later, the final report from a 1969 White House Conference on Food, Nutrition and Health report highlighted the divergence in food safety policy between USDA and the Department of Health, Education, and Welfare (HEW), where FDA resided at that time. In the years following the conference, there were a series of reports and hearings adding to the debate over a single food safety agency. Although the idea of a single food agency has the support of GAO, the National Research Council (NRC), and the Institute of Medicine (IOM), it also has its detractors. While some see consolidation as an opportunity for improvement in the efficiency and effectiveness of food safety regulation, others worry that it could unnecessarily compromise day-to-day food safety efforts. FSMA did not alter the existing food safety jurisdiction between FDA and USDA, yet the issue has remained of interest to Congress. Press reports had suggested that Representative Rosa DeLauro intended to reintroduce legislation to create a single food safety agency in the 113 th Congress, although such legislation was not reintroduced until the 114 th Congress. The Safe Food Act of 2015 ( H.R. 609 /DeLauro; S. 287 /Durbin) would create a single independent Food Safety Administration (FSA) by transferring and consolidating the food safety authorities at FDA and USDA as well as portions of the National Marine Fisheries Service at the National Oceanic and Atmospheric Administration. FSA would be responsible for regulating food safety and related labeling, inspection, enforcement, and research functions of both domestically produced and imported foods. According to the bill authors, the new independent FSA would provide a more integrated approach, eliminate duplication, and result in efficient use of available resources and overall cost savings. Among those supporting the H.R. 609 and S. 287 are the Consumer Federation of America and the Center for Science in the Public Interest. As part of the FY2016 budget request, the Obama Administration also proposed to establish a single food agency. According to the Administration, a single food safety agency would "provide focused, centralized leadership, a primary voice on food safety standards, and clear lines of responsibility and accountability that will enhance both prevention of and responses to outbreaks of foodborne illnesses." Unlike the legislative proposals, the Administration's proposal would not create a new independent agency but would instead transfer existing food safety functions into a new agency within the U.S. Department of Health and Human Services (HHS). Consumer advocate groups such as the Consumer Federation of America (CFA) and the Center for Science in the Public Interest have been supportive of the Durbin/DeLauro legislation as a means to address concerns about the U.S. food safety system. However, some public health groups who have traditionally favored the creation of a single food safety agency oppose the Administration's plan since it calls for consolidation of food safety operations within HHS. Some contend HHS does not have the necessary expertise or adequate resources to manage an expanded food safety function; others claim USDA has a better record regarding food safety inspection and enforcement and worry that transferring these functions to HHS will lower standards for meat and poultry inspection. CFA opposes the Administration's proposal because of concern that the new agency would reside in HHS and be overwhelmed by HHS's large areas of responsibility and priorities beyond food safety. Another advocacy group, Food and Water Watch, sees the Administration's budget proposal as a step backward in that the different inspection cultures between FSIS and FDA could end up weakening FSIS standards. The livestock industry has expressed opposition to a single food safety agency. The National Cattleman's Beef Association has an organization resolution opposing a single food agency. The National Milk Producers Federation notes that FDA is in the middle of implementing FSMA.

Congress passed comprehensive food safety legislation in December 2010 (FDA Food Safety Modernization Act [FSMA], P.L. 111-353), representing the largest expansion and overhaul of U.S. food safety authorities since the 1930s. FSMA greatly expanded food safety oversight authority at the Food and Drug Administration (FDA), within the U.S. Department of Health and Human Services (HHS), but did not alter oversight authorities within other federal agencies responsible for food safety, such as the U.S. Department of Agriculture (USDA). Given challenges facing FDA in implementing this law and also a continued prevalence of food safety incidents, Congress continues to actively address concerns of the U.S. food safety system. Numerous agencies share responsibility for regulating food safety; however, FSMA focused on FDA-regulated foods and amended FDA's existing structure and authorities, in particular the Federal Food, Drug, and Cosmetic Act (FFDCA; 21 U.S.C. §§301 et seq.). Among its many provisions, FSMA expanded FDA's authority to conduct a mandatory recall of contaminated food products, enhanced surveillance systems for foodborne illness outbreaks, established preventive controls at some food processing facilities and farms, enhanced FDA's traceability capacity within the nation's food distribution channels, increased the number of FDA inspections at domestic and foreign food facilities, and expanded FDA's authority and oversight of foreign companies that supply food imports to the United States. Since the law was signed in January 2011, FDA has been actively engaged in developing regulations to implement FSMA. Congress will likely continue to monitor FDA's implementation of the law and provide oversight over how some provisions are carried out and enforced, as well as FDA's coordination with other federal agencies, such as those in USDA and the Department of Homeland Security. Under FSMA, FDA is responsible for more than 50 regulations, guidelines, and studies; however, some FDA rules under FSMA have been substantially delayed, and it is uncertain whether full implementation of some provisions in the law will meet their expected deadlines. Regulations were to have been proposed or, in some cases, finalized within one to two years of enactment (roughly January 2012 and January 2013). Given delays in the rulemaking process, the Center for Food Safety filed suit in federal court against FDA and the Office of Management and Budget (OMB), citing the government's failure to implement several food safety regulations required by FSMA. By early 2014, FDA had proposed a majority of the regulations that constitute the food safety framework under FSMA, but there are continued delays in some rules, industry guidance, and reports as required under the law. FDA also re-proposed some aspects of four major proposed rules in September 2014. FDA has agreed to a new court-ordered schedule for issuing final FSMA regulations for many of the major rules between 2015 and 2016. Congress may also continue to consider changes to other food safety laws and policies that continue to be actively debated. Among these are food safety initiatives covering meat, poultry, and seafood products; legislation intended to curtail the non-medical use of antibiotics in animal feeds and to ban the use of certain plastic components commonly used in food containers; food labeling; stricter food safety enforcement mechanisms; and the use of plant and animal biotechnology. Several of these issues were actively debated leading up to the passage of FSMA. Several bills debated in previous Congresses were reintroduced in the 112th and 113th Congress. Some in Congress also might continue to advocate for additional policy reforms to existing FDA or USDA food safety laws to address other perceived concerns about the safety of the U.S. food supply. These include concerns about the adequacy of resources and regulatory tools to combat foodborne illness, and concerns about coordination and organization among federal agencies.

Introduction 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 those that outlaw interference with congressional activities. General Obstruction Prohibitions 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. All but §1503 apply to congressional activities. In addition to these, there are a host of other statutes that penalize obstruction by violence, corruption, destruction of evidence, or deceit. Witness Tampering (18 U.S.C. 1512) Section 1512 applies to the obstruction of federal proceedings—congressional, judicial, 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 free standing 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)). Obstruction by Violence (18 U.S.C. 1512(a)) 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 or producing evidence for an investigation and 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 establish a crime under the [disclosure to a] 'law enforcement officer' section of the Act, the government must prove that (1) the defendant killed or attempted to kill a person; (2) the defendant was motivated by a desire to prevent the communication between any person and law enforcement authorities concerning the commission or possible commission of an offense; (3) the offense was actually a federal offense; and (4) the defendant believed that the person in (2) above might communicate with the federal authorities." 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 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 or the disclosure of information to law enforcement authorities. By virtue of subsection 1512(g), the government need not prove that a §1512 offender knew of the federal status of the obstructed proceeding or investigation. Thus, for instance, to prove an information obstruction offense, it need show no more than that the offender intended to prevent the flow of information to law enforcement authorities concerning a federal crime ; it need not demonstrate that the offender intended to prevent the disclosures to federal authorities . 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. Auxiliary Offenses and Liability 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 section 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. 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 that 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, i.e., 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, e.g.: - 18 U.S.C. 25 (use of a child to commit a crime of violence), - 521 (criminal street gang), - 924(c)(carrying a firearm during and in relation to a crime of violence), - 929 (carrying a firearm with restricted ammunition during and in relation to a crime of violence), - 1028 (identity fraud in connection with a crime of violence). Obstruction by Intimidation, Threats, Persuasion, or Deception (18 U.S.C. 1512(b) 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) with the intent to prevent a witness's testimony or physical evidence from being truthfully presented at congressional or other official federal proceedings or 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 of no such nexus. A subsection 1512(b)(3) investigation obstruction offense prosecution, however, does require proof that "the offense in question was actually a federal offense and that the defendant believed that the witness—toward whom the defendant engaged in [intimidating, threatening, corruptly persuasive or] misleading conduct—might communicate with federal authorities." The defendant's belief that a witness might 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). Obstruction by Destruction of Evidence (18 U.S.C. 1512(c)) The obstruction by destruction of evidence offense found in subsection 1512(c) is the creation of the Sarbanes-Oxley Act, and proscribes obstruction of congressional proceedings, or of federal administrative or judicial 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. 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. As for the necessary nexus between the defendant's destructive conduct and the obstructed proceedings: "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.'" 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. Obstruction by Harassment (18 U.S.C. 1512(d)) The obstruction by harassment prohibition in subsection 1512(d) appeared in subsection 1512(c) until redesignated by Sarbanes-Oxley, and 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 of 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. Obstructing Congressional or Administrative Proceedings (18 U.S.C. 1505) 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 has 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. Retaliating Against Federal Witnesses (18 U.S.C. 1513) 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. 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. 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. Conspiracy to Obstruct (18 U.S.C. 371) 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. Conspiracy to Defraud 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 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. Conspiracy to Commit a Substantive Offense The elements of conspiracy to commit a substantive federal offense are: "(1) an agreement between two or more persons to commit a specified federal offense, (2) the defendant's knowing and willful joinder in that common agreement, and (3) some conspirator's commission of an overt act in furtherance of the agreement." 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. Contempt of Congress Statutory Contempt of Congress 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, apparently the courts have 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' 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 witness 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 sometime 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 the 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. Inherent Contempt of Congress Congress' 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 does not appear to have been invoked any time within the last half century. Contempt of Court at Congressional Behest 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. Obstruction of Justice by Violence or Threat 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 the use of threats or violence for the purpose of obstruct federal government activities. Violence and Threats Against Officials, Former Officials, and Their Families (18 U.S.C. 115) 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 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 officials 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 were at one point 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 has suggested that the Supreme Court may 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." (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. Violence and Threats Against Federal Officials on Account of the Performance of Their Duties 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 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. Obstruction of Justice by Bribery Section 1512(b) outlaws witness tampering by corrupt persuasion. Several other federal statutes outlaw bribery in one form or another. The main federal bribery statute is 18 U.S.C. 201 which prohibits bribing federal officials, employees, jurors and witnesses. 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. Bribery of Jurors, Public Officers, and Witnesses (18 U.S.C. 201) 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 cover federal and District of Columbia 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 apply with equal force to bribery and illegal gratuities under §201. Obstruction by Mail or Wire Fraud (18 U.S.C. 1341, 1343, 1346) 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 wire communications furthers the scheme, 18 U.S.C. 1343. Section 1346 defines "scheme to defraud" to include a scheme to deprive another of honest services. 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." 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 and 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 precipes 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. Obstruction by Extortion Under Color of Official Right (18 U.S.C. 1951) 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 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. 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. Obstruction of Investigations by Bribery (18 U.S.C. 1510(a)) 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, 18 U.S.C. 1510 (1976 ed.). 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, 18 U.S.C. 1510. 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. Obstruction of Justice by Destruction of Evidence Other than subsection 1512(c), three federal statutes expressly outlaw the destruction of evidence in order to obstruct justice, only one of which may apply to obstruction of Congress: 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 are 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. Obstruction of Investigations by Destruction of Evidence (18 U.S.C. 1519) 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. The question of whether §1519 applies to congressional and grand jury investigations may be a matter of some dispute. 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." There, the phrase "any department or agency of the United States" referred only 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. 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: 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. Beyond the bankruptcy matters to the 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 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 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. 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 prosecution 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"). Obstruction of Justice by Deception 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. Perjury Generally (18 U.S.C. 1621) When Congress enacted the judicial perjury provisions of §1623, it did not repeal or amend the general provisions of §1621, either explicitly or by implication. Where the two proscriptions overlap, the government is free to choose the provision under which it will prosecute. Since §1623 frees prosecutors from many of the common law requirements of §1621, it is perhaps not surprising that they ordinarily elect to prosecute under §1623 when possible. On the other hand, §1621 permits prosecution of perjury committed before Congress or administrative bodies when prosecution under §1623 is not possible. Separated into its elements, §1623 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 §1621. Moreover, §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 §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 §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 §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 §1623, recantation is no defense nor does it bar prosecution. Subornation of Perjury (18 U.S.C. 1622) 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 §1621 or §1623 will support a conviction for subornation under §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 §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 §1622 do not insist upon suborner success as a prerequisite to prosecution. False Statements (18 U.S.C. 1001) 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. In addition, §1001 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). Those limitations constitute elements of the offense in such cases. 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 a 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 subsection 1001(a) to the statements, omissions, or documentation presented to the court by a party in judicial proceedings. This includes statements of indigency 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, i.e., "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 §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 §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 §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. Obstruction of Justice as a Sentencing Factor (U.S.S.G. §3C1.1) 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 its 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 (A) 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 (B) the obstructive conduct related to (i) the defendant's offense of conviction and any relevant conduct; or (ii) 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, 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 girl friend; (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 conviction. 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 a victim, witness, or juror; submits false documentations; destroys evidence; flees (in some cases); or engages in any other conduct that constitute an obstruction of justice under criminal law provisions of title 18 of the United States Code.

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). All but Section 1503 cover congressional activities. 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. 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. A good number of these apply in a congressional context. 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 RS22784, Obstruction of Congress: An Abridged Overview of Federal Criminal Laws Relating to Interference with Congressional Activities. Both versions have been excerpted from CRS Report RL34303, Obstruction of Justice: an Overview of Some of the Federal Statutes that Prohibit Interference with Judicial, Executive, or Legislative Activities. Other excerpted portions are also available as the following: CRS Report RS22783, Obstruction of Justice: An Abridged Overview of Related Federal Criminal Laws; 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].

Introduction The Land and Water Conservation Fund (LWCF) Act of 1965 was enacted to help preserve, develop, and ensure access to outdoor recreation resources. A main goal of the law was to facilitate participation in recreation and strengthen the "health and vitality" of U.S. citizens. The law sought to accomplish this goal by "providing funds" for federal land acquisition and for federal assistance to states for outdoor recreation, including for recreation planning, acquisition of lands and waters, and development of recreation facilities. The law created the Land and Water Conservation Fund in the Treasury as a funding source to implement its outdoor recreation goals. Currently, the fund receives $900 million annually under the LWCF Act, but these credited monies cannot be spent unless appropriated by Congress. The level of annual appropriations has varied widely since the origin of the fund in 1965. This authority for the fund to accrue $900 million annually is scheduled to expire on September 30, 2018. While the LWCF Act initially did not specify the authorized level of funding, the law has been amended several times to specify and provide increasing levels of authorizations. The authorization was raised to $900 million for FY1978, and has remained at this level. The fund accrues revenues of $900 million annually from three specific sources, including the federal motorboat fuel tax and surplus property sales. The fund accumulates the majority of its revenues from oil and gas leases on the Outer Continental Shelf (OCS). The LWCF receives additional money (beyond the $900 million) under the Gulf of Mexico Energy Security Act of 2006 (GOMESA), and these appropriations are mandatory. The authority for the LWCF to accrue revenues under GOMESA does not have an expiration date. Under GOMESA, the fund accrues revenue from certain OCS leasing, and these monies can be used only for grants to states for outdoor recreation. These mandatory appropriations had been relatively small through FY2017, but are estimated to have increased substantially in FY2018 and to remain relatively high at least over the next decade. Of current debate is whether to reauthorize provisions of the LWCF Act beyond September 30, 2018, and alter the operation of the fund. Alterations under discussion include whether to permanently reauthorize the LWCF Act, make all or a portion of the appropriations under that law mandatory (rather than discretionary), direct monies to be used for particular purposes provided for in the LWCF Act, or amend the law to authorize the fund to be used for different purposes. These questions are being debated by authorizing committees and during consideration of the annual Interior appropriations legislation. Perennial congressional issues include (1) deciding the total appropriation for federal land acquisition, determining the level of acquisition funds for each of the four agencies, and identifying which lands should be acquired; (2) deciding the level of funding for the state grant program; and (3) determining what, if any, other purposes should be funded through LWCF and at what level. The primary context for debating these issues traditionally has been the annual Interior appropriations legislation. How the Fund Works The LWCF is not a true trust fund as is generally understood in the private sector. For instance, the fund is credited with revenues totaling $900 million annually under the LWCF Act, but these credited monies cannot be spent unless appropriated by Congress, as noted. Further, interest is not accrued on the accumulated unappropriated balance that has been credited to the LWCF. While some supporters assert that the LWCF was originally intended to be a revolving fund, whereby the money would be maintained in an account separate from the General Treasury that could accrue interest, this has not been the case. Although the LWCF Act has been amended, the fund's basic purpose has not been altered. Over time, notable amendments have raised the authorization ceiling and mandated that offshore oil and gas leasing revenues should make up any shortfall from other specified financing sources. From FY1965 through FY2018, about $40.0 billion has been credited to the LWCF under both the LWCF Act and GOMESA. Less than half that amount—$18.4 billion—has been appropriated, leaving an unappropriated balance of $21.6 billion in the fund. (See Figure 1 .) Purposes of LWCF Appropriations Appropriations from LWCF have been made for three general purposes: (1) federal acquisition of land and waters and interests therein; (2) the stateside grants for recreational planning; acquiring recreational lands, waters, or related interests; and developing outdoor recreational facilities; and (3) related purposes. Each year, Congress determines the total appropriations from the fund, and the amount provided for each of these three general purposes. Division Between Federal and State Purposes The LWCF Act currently states that not less than 40% of the appropriations from the fund are to be available for federal purposes. However, as enacted in 1964, the LWCF Act generally had provided for the appropriations from the LWCF to be 60% for state purposes and 40% for federal purposes. The 1964 law stated that "in the absence of a provision to the contrary in the Act making an appropriation from the fund," the appropriation from the fund was to be 60% for state purposes and 40% for federal purposes. It further specified that during the first five years in which appropriations were made from the fund, the President could vary these percentages by not more than 15 percentage points to meet the needs of states and the federal government. The current language, providing for not less than 40% of funding for federal purposes, resulted from a 1976 amendment enacted as P.L. 94-422 . In the conference report on the bill (S. 327), conferees expressed that "Generally, appropriations should continue to reflect the 60-40 allocation established by the Act." However, they noted the "inflexibility" of this division because "States may sometimes be unable to provide the amounts necessary to match their share of the appropriations from the fund," and thus might not be able to use their funding in a given year. In that case, additional funding should be provided to the federal agencies for acquisition in order "to preserve and protect" areas for future generations, according to the conferees. At the time of the 1976 amendment, funds were being appropriated for federal land acquisition and the stateside program. Funding for other purposes did not occur until FY1998. Federal Land Acquisition The LWCF is the principal source of funds for federal acquisition of lands. Most federal lands are acquired (and managed) by four agencies—the Forest Service (FS) in the Department of Agriculture, and the National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM) in DOI. These four agencies manage about 95% of all federally owned lands. Of these agencies, the FWS has another significant source of acquisition funding. Specifically, under the Migratory Bird Conservation Fund the FWS has a permanently appropriated source of funding for land acquisition. The BLM also has authority to keep the proceeds of certain land sales and use them for subsequent acquisitions and other purposes. The LWCF Act provides that "unless otherwise allotted in the appropriation Act making them available," appropriations from the fund for federal purposes are to be allotted by the President for certain purposes. These purposes include "capital costs" for recreation and fish and wildlife at water resources development projects; land acquisition in recreation areas administered by the Secretary of the Interior for recreational purposes; and land acquisition in national park, national forest, and national wildlife refuge system units. In practice, the appropriations acts typically specify the purposes for which the federal funds are to be used. In many respects, the process for appropriating funds for federal land acquisition is similar from year to year. The Administration's annual budget submission from each of the four major federal land management agencies generally identifies lands (or interests in lands) each agency seeks to acquire with LWCF funds. Each agency chooses among many potential options in making its annual request, through a three-level process involving identification and prioritization of acquisition projects by field, regional, and headquarters offices. However, the Administration sometimes does not seek funding for individual acquisition projects, as was the case initially in the FY2018 and FY2019 Trump Administration budget submissions to Congress. The Administration also might seek funding for certain types of acquisitions, such as those that would facilitate access to federal lands for recreation and sportsmen. Congress reviews agency requests, determines the total acquisition funding for each agency, and decides on the portion of funding (if any) for requested types of acquisition (e.g., access for recreation and sportsmen). Congress also typically identifies (in report language) the level of funding for each acquisition project sought by the Administration. The LWCF Act restricts appropriations to those acquisitions that have been previously authorized by law. However, it allows LWCF appropriations to be used for pre-acquisition work where "authorization is imminent and where substantial monetary savings could be realized." Appropriations laws typically provide that LWCF funds for land acquisition remain available until expended, meaning the funds can be carried over from fiscal year to fiscal year. Often an appropriation is not used in the fiscal year provided, because the process for completing a land acquisition has many components and often takes more than one year. These components generally include an appraisal of the value of the parcels, evaluations of the resources contained within the parcels, and title research. The Administration typically seeks, and appropriations laws have typically provided, a portion of each agency's acquisition funding for one or more related activities. For instance, funds have been provided for acquisition management, costs of land exchanges, and acquisition of lands within the boundaries of federal land units ("inholdings") that may become available throughout the year. Further, in some cases funds have been appropriated for "emergencies" or "hardships," for acquisition of lands from an owner who must sell quickly and where the agency determines there is a need to purchase the lands quickly. Stateside Program Another portion of the LWCF consists of grants to states (including the District of Columbia and U.S. territories) for outdoor recreation purposes. There are two types of grants: traditional and competitive. Both programs are administered by the NPS. Under the traditional grant program, both discretionary and mandatory appropriations are divided among states by the Secretary of the Interior (acting through the NPS). Under the competitive grant program, begun in FY2014, the NPS awards discretionary grants to urbanized areas meeting certain criteria. Under both grant programs, states may "sub-award" grants to state agencies, local units of government, and federally recognized Indian tribes. Traditional State Grants The traditional grant program provides matching grants to states for outdoor recreation planning, acquisition of lands and waters, and facility development. Grants are provided for outdoor recreation purposes only, rather than for indoor facilities such as community centers. More than 42,000 grants have been provided throughout the history of the program (since FY1965), with a majority used for developing new recreation facilities or redeveloping older facilities. Acquisitions funded through LWCF state grants must remain in recreation use in perpetuity, unless the Secretary of the Interior approves of the conversion of the land to another use and acceptable replacement lands are substituted. Conversions occur due to changing state or local needs, such as to use park lands to build schools, widen roads, and develop civic facilities. The NPS approves roughly 50-75 conversions yearly nationwide, typically involving a portion of the area funded with an LWCF state grant. The Secretary of the Interior apportions the appropriation for state grants in accordance with a formula set out in the LWCF Act. The formula calls for a portion of the appropriation to be divided equally among the states. The remaining appropriation is to be apportioned based on need, as determined by the Secretary. Under law, the determination of need is to include the population of the state relative to the population of the United States, the use of outdoor recreation resources within a state by people outside the state, and the federal resources and programs within states. In current practice, population is the biggest factor in determining state need. No state can receive more than 10% of the total appropriation. Discretionary appropriations for traditional state grants typically are included in the annual Interior appropriations law, without earmarks or other directions to the NPS to guide how these funds should be distributed or spent. States have up to three years to use the discretionary appropriations—the federal fiscal year in which the apportionment is made and the next two fiscal years. It is rare for a state not to use the money during this time, according to the NPS. Under law, the Secretary is to reapportion any amount that is not paid or obligated during the three-year period. In addition, mandatory appropriations are provided for the traditional state grants only. Specifically, under GOMESA, 12.5% of the revenues from certain OCS leasing in the Gulf of Mexico is directed to the stateside program to be used in accordance with the terms of the LWCF Act. States generally can receive up to $125.0 million in annual stateside appropriations through FY2056, except that the maximum is $162.5 million for each of FY2021 and FY2022. The money is to be in addition to any discretionary amounts appropriated by Congress for the LWCF. Further, these funds are available to the states until expended, unlike the three-year duration of the discretionary funds appropriated annually for the stateside program. To be eligible for a grant, a state must prepare and update a statewide outdoor recreation plan. This plan must address the needs and opportunities for recreation and include a program for reaching recreational goals. It generally does not include specific projects. Under law, the plan is required to be approved by the Secretary; this responsibility has been delegated to the NPS. The states award their grant money through a competitive, open project selection process based on their recreation plans and their own priorities and selection criteria. They can use the money for state projects or for pass-through to localities or tribes. States send their ranked projects to the NPS for formal approval and obligation of grant money. Under law, payments to states generally are limited to 50% or less of a project's total costs. The remaining cost is borne by the state project sponsor. Competitive State Grants In FY2014, Congress first appropriated a portion of the LWCF (discretionary) stateside funds for a new nationally competitive outdoor recreation grant program to be developed by the NPS. Congress has continued to fund a competitive program each year, with funding increasing from $3.0 million in FY2014 to $20.0 million in FY2018. Currently, the NPS's "Outdoor Recreation Legacy Partnership Program" provides grants to states for land acquisition and development for outdoor recreation projects that are in or serve densely settled areas with populations of 50,000 or more. Priority is given to communities that are underserved in terms of outdoor recreation opportunities and that have sizable populations who are economically disadvantaged. Under the 2018 grant announcement, other factors for project selection include the extent to which the projects directly connect people to the outdoors; create jobs; engage community members; involve public-private partnerships; and require coordination among the public, government, and private sector. In 2018, the NPS expects to issue between 25 and 35 grants totaling $13.3 million, with individual grants ranging from $250,000 to $750,000. In addition to meeting the requirements in the grant announcement, projects are required to comply with the LWCF Act and other program requirements that apply to the traditional state grants. Such requirements include a nonfederal funding match (generally of at least 50% of project costs), and land use for outdoor recreation in perpetuity except with the approval of the Secretary of the Interior, as discussed above. Other Purposes As noted above, the LWCF Act lists the federal purposes to which the President is to allot LWCF funds "unless otherwise allotted in the appropriation Act making them available." A portion of the LWCF appropriation has been provided for other federal purposes (i.e., other than land acquisition) in FY1998 and each year since FY2000. Because there is no set of "other purposes" specified to be funded from LWCF, Presidents have sought funds for a variety of purposes and Congress has chosen which, if any, other purposes to fund from LWCF. For instance, for FY2008, President George W. Bush sought LWCF funds for 11 programs within the FWS, FS, and other agencies, and Congress provided funding for two of these programs. Since FY1998, the LWCF has been used for an array of other purposes related to lands and resources, such as maintenance of agency facilities (including deferred maintenance), the Historic Preservation Fund, the Payments in Lieu of Taxes program, the FS Forest Legacy program, FWS State and Tribal Wildlife grants, and FWS Cooperative Endangered Species grants. Since FY2008, however, funds have been appropriated annually for grants under two programs: Forest Legacy, and the Cooperative Endangered Species Conservation Fund. Funding History Overview of Total Appropriations, FY1965-FY2018 Nearly all of the $18.4 billion appropriated throughout the history of the LWCF was discretionary funding. Specifically, $75.0 million (0.4%) of the total was mandatory funding under GOMESA. The $18.4 billion appropriated through FY2018 has been unevenly allocated among federal land acquisition, the stateside program, and other purposes, as shown in Figure 2 . The largest portion of the total—$11.2 billion (61%)—has been appropriated for federal land acquisition. The four federal land management agencies have received differing portions of this $11.2 billion. Specifically, the NPS has received $4.6 billion (41%); the FS, $3.1 billion (27%); the FWS, $2.4 billion (22%); and the BLM, $1.0 billion (9%). The stateside program has received the second-largest portion of LWCF appropriations—$4.7 billion (25% of the total). In the early years, more funds generally went to the stateside program than to land acquisition of the four federal agencies combined. For instance, stateside appropriations exceeded federal land acquisition appropriations during 12 of the 16 years from FY1965 to FY1980. After the mid-1980s, the stateside program declined as a portion of total LWCF appropriations, and received no appropriations (except for program administration) from FY1996 through FY1999. Since that time, the program has received less than 20% of each year's total LWCF appropriations, except in FY2002 and FY2005 and during the most recent three years (FY2016-FY2018). Of these years, the largest percentage of funds for the stateside program was 38% for FY2018, in part due to the relatively large mandatory appropriation in that year. Over the last 10 years (FY2009-FY2018), stateside funding has averaged 19% of total LWCF appropriations. Other purposes have received the remaining portion of total LWCF appropriations—$2.6 billion (14%). No funds were provided for other purposes until FY1998. By contrast, 28% of total LWCF appropriations from FY1998 through FY2018 have been for other purposes. The FWS and FS have received the largest shares: about $1.4 billion and $1.0 billion, respectively, of the $2.6 billion appropriated for other purposes since FY1998. Overview of Mandatory Appropriations, FY2009-FY2018 Mandatory appropriations totaling $75.0 million were provided to the LWCF stateside program during a 10-year period—FY2009-FY2018. Of this total, $8.4 million was first appropriated to the stateside program in FY2009, from proceeds from OCS leasing collected in FY2008. Thereafter, disbursements to the stateside program decreased, exceeding $1 million in only one other year through FY2017. The appropriation for FY2018 increased significantly—to $62.6 million—as a result of additional revenue from expansion of the qualified program areas in the Gulf of Mexico. (See Table 1 and Figure 3 .) DOI anticipates that mandatory appropriations will remain relatively high in the coming years. For instance, the NPS estimated appropriations to the stateside program at between $85 million and $104 million for each year from FY2019 through FY2029. However, these estimates are subject to change. Overview of Discretionary Appropriations, FY1965-FY2018 Annual discretionary appropriations from the LWCF have fluctuated widely since the origin of the program more than 50 years ago. (See Figure 4 and Table 2 .) From the origin of the LWCF in FY1965 until FY1998, the discretionary total seldom reached $400 million, surpassing this level only in four years. Specifically, from FY1977 to FY1980, funding varied between $509 million (in FY1980) and $805 million (in FY1978), and averaged $647 million annually. By contrast, annual discretionary appropriations reached or exceeded $400 million in 11 of the 21 most recent years—FY1998 through FY2018. In FY1998, LWCF discretionary appropriations spiked dramatically—to $969 million—from the FY1997 level of $159 million. FY1998 was the first year that LWCF appropriations exceeded the level the fund was authorized to accumulate in a given year ($900 million). The total included $270 million in the usual funding titles for land acquisition by the four federal land management agencies; an additional $627 million in a separate title, funding both the acquisition of the Headwaters Forest in California and New World Mine outside Yellowstone National Park; and $72 million for other purposes. Another spike occurred in FY2001, when discretionary appropriations again exceeded the authorized level and totaled nearly $1 billion. This record level of funding was provided partly in response to President Clinton's Lands Legacy Initiative, which sought $1.4 billion for 21 resource protection programs including the LWCF. It also was provided in response to some congressional interest in securing increased and more certain funding for the LWCF. The 106 th Congress considered legislation to fully fund the LWCF and to make it operate like a private-sector trust fund. Such proposals sought to divert offshore oil and gas revenues to a Conservation and Reinvestment Act (CARA) Fund and to permanently appropriate receipts credited to the LWCF, among other related purposes. When it became clear that CARA legislation would not be enacted, Congress included aspects of the legislation in the FY2001 Interior and Related Agencies Appropriations law ( P.L. 106-291 ). Over the last 10 years, FY2009 to FY2018, LWCF discretionary appropriations ranged from a low of $275.3 million in FY2009 to a high of $450.4 million in FY2010. (See Table 3 for annual discretionary appropriations, and the portions for acquisition of each agency, the stateside program, and other purposes, over the last 10 years.) The FY2010 high was about half the authorized level, and the $425.0 million appropriated for FY2018, the most recent fiscal year, was nearly half the authorized level. In the three most recent fiscal years (FY2016-FY2018) as well as in FY2010, the total appropriation was at least $400.0 million, and the portion dedicated to land acquisition for all agencies was at least $200.0 million. The land acquisition total ranged from $152.2 million in FY2009 to $277.9 million in FY2010, and it most recently was $220.3 million in FY2018. During this 10-year period, appropriations for the stateside program fluctuated between $19.0 million for FY2009 and $124.0 million for FY2018. The appropriation for each of the last three fiscal years was at least $110.0 million, and was more than double the level of any prior year during the period. The appropriations for other purposes were at a low of $74.2 million in FY2013 and a high of $132.5 million in FY2010. They exceeded $100.0 million only in each of the first two years of the period (FY2009-FY2010), with $80.7 million in FY2018. Both the dollar amount and percentage of LWCF appropriations provided to other purposes have varied widely since FY1998, as shown in Table 4 . The dollar value of the appropriations for other purposes was much higher in FY2001 than any other year, when these appropriations were used to fund programs in the Clinton Administration's Lands Legacy Initiative. The highest percentage of funds provided for other purposes occurred in FY2006 and FY2007, in response to President George W. Bush's request for funding for an array of other programs. In some years, Congress has appropriated significantly less for other purposes than the Administration has requested. For instance, for FY2008 the Bush Administration sought $313.1 million for other purposes of a total request of $378.7 million. Congress appropriated $101.3 million for other purposes of a total appropriation of $255.1 million. Current Issues Through authorizing and appropriations legislation, hearings, and other debates, Congress is considering an array of issues related to the LWCF. Several of these issues are summarized below. Level of Funding There are differing opinions as to the optimal level of LWCF appropriations. The LWCF has broad support from resource protection advocates, many of whom seek stable and predictable funding through consistent levels of appropriations. Most of these advocates seek higher appropriations in general. For instance, for several years the Obama Administration proposed appropriations of $900 million for LWCF. Some advocates have specific priorities, such as higher acquisition funding for one of the four federal agencies, the state grant program, or a particular site or area. Advocates of higher federal land acquisition funding promote a strong federal role in acquiring and managing sensitive areas and natural resources. In contrast, there is broad opposition to the LWCF based on varied concerns, with opponents generally seeking reduced levels of funds for LWCF. Some opponents seek to reduce the size of the federal estate and minimize further federal acquisition of land either generally or at specific sites, especially in the West, where federal ownership is already concentrated. Other concerns involve preferences for private land ownership or state and local ownership and management of resources, potential impacts of federal land ownership on uses of private lands, and reduced local tax revenues that result from public ownership. For instance, the House Committee on the Budget has supported reducing the federal estate and giving state and local governments more control of resources within their boundaries. Others have sought LWCF reductions as part of a broader focus on reducing the federal deficit. Reauthorization of LWCF Act Provisions Under the LWCF Act, the authority for the LWCF to receive $900 million in revenues annually is scheduled to expire on September 30, 2018. Congress is debating whether to extend this authority, and if so whether to authorize a short, long, or permanent extension. Many LWCF advocates favor relatively long or permanent extension, on the assertion that the program has been successful across the nation for more than 50 years in protecting valuable lands and resources and providing lands and infrastructure needed for public health, recreation, and tourism. They contend that continuity and stability of the land protection and recreational opportunities that LWCF supports are important national goals, and ones that will help communities to attract businesses, new residents, and tourists. They note the sufficiency of LWCF's dedicated funding stream for supporting the program. Some proponents of a short-term extension or of expiration assert that the LWCF currently has sufficient funds to meet the nation's land acquisition and recreation needs for many years to come. They point to the relatively large balance of unappropriated monies in the LWCF that Congress could appropriate, as well as to the substantial levels of mandatory funding that are anticipated under GOMESA for the stateside program. For others, structural reforms of the program would be needed before a long-term extension might be viable, such as to direct funding away from federal land acquisition and to other activities, such as maintenance of federal lands and facilities or programs that support states. Others favor depositing the OCS revenues in the General Fund of the Treasury (rather than in the LWCF) to support federal activities generally or specific priority programs. Mandatory vs. Discretionary Appropriations Some advocates of higher LWCF funding seek partial or full permanent appropriations of monies under the LWCF Act. For instance, the Obama Administration proposed $900 million for LWCF for FY2017 through a combination of discretionary ($475.0 million) and mandatory ($425.0 million) appropriations. Further, the Obama Administration proposed amending current law to appropriate mandatory funding of $900 million annually beginning in FY2018. As attributes of the mandatory approach, advocates cite the certainty and predictability of program funding generally and in particular in fostering the ability of agencies to undertake multiyear, large-scale, and collaborative acquisitions. They also note the existence of a dedicated funding stream for LWCF at the authorized level of $900 million and the original intent of Congress that revenues to the fund be used for the LWCF Act's purposes. Questions include how to offset any new permanent appropriations and how to allocate permanent appropriations among different LWCF programs and purposes. Proponents of discretionary appropriations support retaining Congress's authority to determine annually the level of funding needed for LWCF overall and for the various program components. They note that through the discretionary process, the need for LWCF appropriations can be assessed in comparison with other natural resource programs and broader governmental needs. This approach also has been valued as providing recurring opportunities for program oversight. For instance, the House Committee on the Budget has supported keeping land acquisition funding as discretionary to allow for regular oversight. Maintenance vs. Acquisition There are differing opinions as to how LWCF funds should be used. Some Members and others have asserted that maintaining (and rehabilitating) the land and facilities that federal agencies already own should take priority over further acquisitions. For instance, in an opening statement, the chair of the Senate Committee on Energy and Natural Resources expressed interest in shifting "the federal focus away from land acquisition, particularly in Western states, toward maintaining and enhancing the accessibility and quality of the resources that we have." Some cite the deferred maintenance needs of the agencies as a higher priority than acquisition, and one that requires funding through additional sources, including LWCF. As an example, the Trump Administration did not initially seek funding for individual acquisitions by agencies in FY2019, asserting that at a time when DOI has "billions of dollars in deferred maintenance, land acquisitions are lower priority activities than maintaining ongoing operations and maintenance." Supporters of retaining a strong LWCF role in acquisition cite a continued need to preserve iconic resources and provide additional opportunities for public recreation and other land uses. They assert economic benefits of federal land ownership and improvements of federal land management through consolidation of ownership. In addition, since federal agencies cannot use LWCF funds for maintenance, some supporters of this priority favor more funding to other accounts that can be used for maintenance while retaining the LWCF for acquisitions. Such accounts are within the land management agency budgets as well as within the Department of Transportation (for roads). Access for Recreation While the public has access to most federal lands, some areas have limited access or are unavailable to the public. This is sometimes the case because private or state lands, or geographical features such as mountains or rivers, limit or block public access. Proponents of enhanced recreational access have sought to amend the LWCF Act to set aside a portion of funding for federal acquisitions for access purposes. The focus has been on acquisition of lands and interests (e.g., easements and rights of way) that support recreational access for hunting and fishing, among other recreational pursuits. Proponents cite insufficient opportunity for recreating in some areas and broader health, economic, and other values of recreating on public lands. Opposition to such a set-aside could relate to concerns about the extent of federal land ownership, preferences for prioritizing LWCF for other purposes, or satisfaction that the agencies are sufficiently prioritizing recreational access. According to BLM, for instance, "nearly 100 percent of LWCF funding over the past several years has been used for projects that enhance public access for recreation." For the Forest Service, 39 of the 40 acquisitions completed in FY2014 with LWCF funding provided improved access or legal access where none existed, according to the agency. However, the extent to which agencies prioritize acquisition funding for recreational access might vary among all agencies and from year to year. Stateside Program One area of congressional focus has been the level of funds for the stateside program. In some years, Congress and/or the Administration have not supported funds, or have supported relatively low levels of funds, for new stateside grants. Cited reasons have included that state and local governments have alternative sources of funding for parkland acquisition and development, the current program could not adequately measure performance or demonstrate results, the federal government supports states through other natural resource programs, and large federal deficits require a focus on core federal responsibilities. Stateside supporters contend that the program contributes significantly to statewide recreation planning, state leadership in protection and development of recreation resources, and long-term outdoor recreation in areas that are readily accessible to communities. They see the program as a way to help fiscally constrained local governments and leverage state and local funds for recreation. Further, advocates assert that investments in recreation save money in other areas; for instance, they say that these investments promote healthier lifestyles and thus save health care expenditures. Some prefer state acquisition (and development) of lands with LWCF funds over federal acquisition of lands. Whether to amend the LWCF Act to specify a percentage or dollar amount of the appropriations for the stateside program, and if so, the optimal level, are under debate. The level of discretionary funding for the stateside program is likely to be of continued interest in part due to the substantial increase in mandatory funds for the program under GOMESA, beginning in FY2018. Another issue under consideration is whether to change the way that funds are apportioned to the states. Under the traditional state grant program, a portion of the appropriation is to be distributed equally among the states, with the percentage varying depending on the total amount of appropriations. Further, the Secretary of the Interior has discretion to apportion the balance based on need, and population has been the biggest factor in determining need. Since FY2014, Congress has approved a portion of the state grant funds for a competitive grant program. The extent to which the state grant program should be competitive, and the criteria that should be used in any competitive program, are of ongoing interest. Other Programs Another focus has been which, if any, purposes other than federal land acquisition and stateside grants should be funded through the LWCF. As discussed above, whether to use the fund for maintenance has been under examination. Some seek to channel LWCF funding to an array of land protection purposes. For instance, the George W. Bush Administration sought LWCF funds for cooperative conservation programs through which federal land managers partner with other landowners to protect natural resources and improve recreation on lands under diverse ownership. The Obama Administration also supported the use of LWCF funds for other purposes, although generally fewer than the Bush Administration. Some proposals seek to enhance funding for programs that benefit states, with a shift of resources from federal lands to state grant programs. Still other proposals would provide LWCF funding to a more diverse programs and activities. A factor in the debate has been the unappropriated balance in the fund, and whether to allow these funds to be used for broader purposes beyond those currently authorized. Traditional fund beneficiaries and others have expressed concern about expanding the uses of appropriations, particularly if that expansion is accompanied by reductions in the amount available for federal land acquisition or state grants.

The Land and Water Conservation Fund (LWCF) Act of 1965 was enacted to help preserve, develop, and ensure access to outdoor recreation facilities to strengthen the health of U.S. citizens. The law created the Land and Water Conservation Fund in the U.S. Treasury as a funding source to implement its outdoor recreation goals. The LWCF has been used for three general purposes. First, it has been the principal source of monies for land acquisition for outdoor recreation by four federal agencies—the National Park Service, Bureau of Land Management, Fish and Wildlife Service, and Forest Service. Second, the LWCF also funds a matching grant program to assist states in recreational planning, acquiring recreational lands and waters, and developing outdoor recreational facilities. There are two aspects to this "stateside" program: the traditional state grants and the more recent competitive state grants. Under the traditional state grant program, a portion of the appropriation is divided equally among the states, with the remainder apportioned based on need. Each state awards its grant money based on its own outdoor recreation plan and priorities. The competitive state grant program, begun in FY2014, funds recreation projects in urbanized areas meeting certain criteria. Third, beginning in FY1998, LWCF has been used to fund other federal programs with related purposes, such as the Forest Legacy program of the Forest Service and grants under the Cooperative Endangered Species Conservation Fund of the Fish and Wildlife Service. Under the LWCF Act, the fund is authorized through September 30, 2018, to accrue $900 million annually from multiple sources. However, nearly all of the revenue is derived from oil and gas leasing in the Outer Continental Shelf (OCS). The LWCF receives additional money under more recent legislation (P.L. 109-432, "GOMESA"). Throughout the history of the LWCF, $40.0 billion in revenues have accrued under both the LWCF Act and GOMESA. Congress determines the level of funding for the three LWCF purposes through the annual appropriations process. These discretionary appropriations have fluctuated widely since the origin of the program. In addition, any funds deposited under GOMESA are mandatory appropriations for the state grant program. Mandatory appropriations were relatively small from FY2009-FY2017. They increased substantially in FY2018, and are expected to remain relatively high at least over the next decade, due to additional revenues from leasing in the Gulf of Mexico. Less than half of the $40.0 billion in total revenues that have accrued in the LWCF have been appropriated ($18.4 billion). FY2001 marked the highest funding ever, with appropriations exceeding the authorized level by reaching nearly $1 billion. For FY2018, the most recent fiscal year, the total appropriation was $487.6 million (with $425.0 million in discretionary funds and $62.6 million in mandatory funds). The $18.4 billion appropriated through the history of the program has been allocated unevenly among federal land acquisition (61%), the state grant program (25%), and other purposes (14%). Similarly, federal land acquisition funds have been allocated unevenly among the four agencies. A variety of issues pertaining to the LWCF are the subject of legislation, hearings, and other debate. Some of them are being considered as part of deliberations over whether to reauthorize the LWCF beyond September 30, 2018. Issues include the optimal level of funding for LWCF overall and its individual components, whether to reauthorize provisions of the LWCF, and whether to retain discretionary appropriations or provide additional mandatory appropriations. Other issues involve whether LWCF funds should be used for additional purposes, such as maintenance, or set aside for particular priorities, such as securing additional access to federal lands for recreation. The priority of the state grant program vis-à-vis federal acquisition is being debated, as is the extent to which the fund should be used for other programs benefitting states.

Introduction Benefits for retired employees are of particular interest to policymakers, who often are concerned with the income security of retirees, a large and fast-growing population. One aspect of this congressional concern is what happens when bankrupt employers are unable to provide promised pension and health benefits to their retired employees. This report explores the protections of benefits awarded retirees and future retirees of bankrupt private-sector employers under current law. Although there are many types of employee benefits, active employees, retirees, and the employers themselves are often especially concerned with postretirement pensions and health insurance benefits, usually the two largest components of these so-called legacy costs . This analysis provides examples from two industries of interest to Congress where competitive pressures resulted in changes in each sector's business outlook: automobiles and coal. Automotive Industry . The bankruptcy of the General Motors Corporation (Old GM) in 2009 was the fourth-largest bankruptcy in U.S. history, and it was accompanied by a period of federal aid to the automotive industry. Two distinctive features of the Old GM bankruptcy were that federal financing was important to the ultimate outcome (and subsequent retiree benefits) and that the outcome was associated with a particularly strong labor union—the United Auto Workers (UAW). The report also focuses on the Delphi Corporation, an automobile parts supplier whose salaried retirees attempted to receive the benefits that hourly UAW retirees received. Hourly UAW hourly employees at Delphi had received contractual promises regarding their benefits from Old GM in the pre-bankruptcy period. Salaried workers at Delphi had received no such contractual promises. To facilitate increasing their benefits, salaried retirees formed their own labor association, the Delphi Salaried Workers Association (DSRA). Coal Industry . The United Mine Workers of America (UMWA) represents more than 73,000 coal miners. Congress has periodically passed legislation covering retiree benefits for coal miners since at least the 1940s. In October 1992, passage of the Coal Act protected health benefits for some retired coal miners. In 2006, trust funds covering health insurance for retired miners received federal assistance. Various proposals dealing with pensions and health benefits provided by bankrupt coal employers have been advanced over the last several years. These proposals were influenced by the July 2012 bankruptcy of the Patriot Coal Corporation, an employer with coal mines in West Virginia. These three case studies are not necessarily representative of all chapter 11 bankruptcy proceedings of large, unionized firms. Indeed, as case studies, they are not necessarily representative of all bankruptcy proceedings of large, unionized firms in industries in which Congress has become involved. Nevertheless, they do provide some evidence of how the federal government deals with retiree benefits in industries in which competitive pressures have changed. This report begins with a discussion of whether bankrupt firms can invalidate previous commitments covering retiree pensions and health insurance. It next discusses the specific protections accorded to retiree pensions and health insurance benefits. Certain types of pensions are guaranteed by a quasi-public agency, but no such guarantee exists for retiree health insurance. The report concludes with brief case studies of the bankruptcies of Old GM, Delphi, and Patriot. Protections for Retirees: Background Factors Whether retirees and future retirees receive their promised pensions and health insurance benefits depends on many factors. Four are discussed in this section: (1) the type of bankruptcy (e.g., chapter 7 or chapter 11) and the relevant provisions of the Bankruptcy Code; (2) the type of labor organization (e.g., union, association, or not organized); (3) the type of employee (e.g., active employee or retired employee); and (4) the legal relationship between the bankrupt employer, any subsidiaries, and any parent company. Bankruptcy Employers generally file one of two forms of bankruptcy: chapter 7 (liquidation) or chapter 11 (reorganization). The bankruptcies filed by companies in the automotive and coal industries generally have been filed under chapter 11; therefore, this report will focus on chapter 11 bankruptcies after providing background information on both types. Chapter 7 Chapter 7 of the Bankruptcy Code is designed for liquidation. For businesses, this generally involves complete cessation of the business and disposition of all assets. An employer files for chapter 7 bankruptcy when it believes that no amount of reorganization (including restructuring and financial modifications) would make its business profitable. Under chapter 7, a trustee is appointed to preside over the consolidation and ultimate distribution of the employer's assets. The assets either would be sold or would be transferred to the employer's creditors. In either case, the value of the assets would be used to reimburse claimholders in a prescribed manner. Those with secured claims would be paid first. Remaining assets then would be used to pay select unsecured claims. If the assets were sufficient to pay all the priority claims in full, the remaining assets would be used to pay the unsecured, non-priority claims on a proportional basis. Any claim for retiree health or pension benefits would be both unsecured and non-priority. In short, employers in chapter 7 bankruptcy usually are unable to fund any retiree health benefits and are able to pay pension benefits only if their pension trust fund has sufficient assets. Chapter 11 Chapter 11 bankruptcy proceedings generally involve a plan to restructure a business so that it may become viable. In other words, a debtor (often the employer) filing under chapter 11 generally expects its obligations to be reorganized so that the business can continue to exist. Under chapter 11, the debtor generally remains in possession of the assets and continues to operate. The debtor here is known as the debtor in possession . The debtor in possession operates the business. In some cases, a buyer may be found for some or all of the assets. However, no assets may be sold outside of the normal course of business without the approval of the bankruptcy court. Retiree benefits do not automatically end when a company files under chapter 11. Two sections of the Bankruptcy Code govern the law determining retiree benefits before the debtor sells assets under chapter 11. Section 1113 covers the rejection of a collective bargaining agreement (CBA) for unionized firms, and Section 1114 covers the payment of retiree health insurance in both unionized and nonunionized firms. 11 U.S.C. Section 1113: Rejection of Collective Bargaining Agreements Section 1113 covers the conditions under which a debtor in possession may reject a CBA by either modifying or terminating it. Although the employees (through their union) can be expected to argue that the negotiated benefits should continue to be awarded, the bankruptcy court may allow the debtor in possession to alter or terminate the CBA using the following procedure. The debtor in possession must first supply the authorized representative of the employees (usually a union officer) information justifying the need for modifying the employees' benefits and protections. The employees (through the union negotiator) and employer then engage in good-faith negotiations with respect to proposals for alteration or termination of the CBA. If the parties cannot negotiate an agreement, the debtor in possession requests that the court alter or terminate the CBA. The court may take this step upon finding that the following conditions have been met: 1. The debtor in possession provided the authorized representatives of the employees with the necessary information, 2. The authorized representative has refused to accept the proposal without good cause, and 3. On balance, fairness favors voiding the CBA. This section of the Bankruptcy Code applies only to unionized workplaces because nonunion workplaces will not have a CBA. Employees who have formed an association are nonunion employees. 11 U.S.C. Section 1114: Payment of Insurance Benefits to Retired Employees Section 1114 covers the conditions under which the debtor in possession may terminate or modify retiree health benefits, whether or not the employees are operating under a CBA. Section 1114 is modeled after Section 1113 and requires similar findings by the court to allow the debtor in possession to terminate or modify retiree health insurance benefits. The debtor in possession must first negotiate proposed modifications in benefits with an authorized representative of the retirees. If they cannot agree on changes, the court may permit modification if it finds that the proposed modification is necessary to permit the reorganization of the employer. In addition, all creditors, the employer, and all other affected parties must be treated fairly and equitably and the authorized representative must have refused to accept the proposal without good cause. Type of Labor Organization Whether or not an employer is in bankruptcy, the benefits promised to current retirees and future retirees (i.e., active employees), and the risks assumed by the current retirees and future retirees, may depend on the type of labor union (or association) involved. The National Labor Relations Act (NLRA; P.L. 74-198, as amended) recognizes the right of employees to engage in collective bargaining through representatives of their own choosing. The NLRA, however, does not recognize a right of retirees to form a union or to engage in collective bargaining. The relationship between labor and management in bankruptcies involving collective negotiations depends on whether the union is a single-employer union (such as the UAW), a multiemployer union (such as the UMWA), or an association (such as the DSRA). A union's membership generally coalesces around a type of work done by that group of employees. Union workers in U.S. firms are more likely to be paid by the hour than are many nonunion workers, who often are paid an annual salary. Most unions are single- employer unions in which representatives of one employer's management and the union (on behalf of the employer's employees) bargain over the terms and conditions of employment. These terms and conditions generally include wages, hours of work, sick days, vacation days, health insurance, retiree benefits, and many other aspects of work. The bargaining results in a contract, which is known as a collective bargaining agreement (CBA). Any employee who could be a member of the union, based on his or her occupation and perhaps other factors, is subject to the terms of the CBA even if the employee chooses not to join the union. Multiemployer unions represent employees of more than one employer in a single industry and frequently negotiate the same employee benefit plan for all eligible employees of many employers. These plans are referred to as Taft-Hartley plans and are relatively more likely to be found in industries in which employees frequently move among different employers. CBAs with Taft-Hartley plans ensure that union members can keep their pensions, health insurance, and all other benefits as they move from one employer to the next, because the union members are covered by the same CBA at their various places of employment. Unions in the trucking and construction industries often offer Taft-Hartley benefit plans. Finally, some groups of active employees and/or retirees, sometimes known as associations , partly behave like unions even though they are not officially certified as unions. In the current context, groups of retirees can form associations to facilitate the negotiations required by the Bankruptcy Code. The term association , however, is not legally defined, and there is nothing to prevent a union from calling itself an association. For example, the National Education Association is a union. In addition, some representatives of the employers call themselves an association, such as the coal industry's Bituminous Coal Operators Association. Type of Employee When bargaining over the terms and conditions of employment, either two or three categories of workers typically are considered. Single-employer unions may bargain on behalf of active employees and retired employees. (These categories are related because active employees may someday become retired employees.) Both active and retired employees may face the loss of at least some of their retiree benefits should the single employer become insolvent or otherwise be unable to fund the promised benefits. Multiemployer unions, however, also are associated with a third type of employee: the orphan retiree. An orphan retiree is a retiree who is covered by a multiemployer CBA entitling him or her to benefits from an employer that is no longer solvent. However, other employer signatories to the contract are solvent. In other words, the multiemployer CBA may specify that an employer is obligated to pay for the retiree's benefits, but the employer is unable or unwilling to do so for a variety of reasons; it may be entirely out of business, in bankruptcy proceedings, otherwise lacking funds, or refusing to pay the benefits. This retiree then becomes an orphan retiree. Other employers who are signatories to the CBA are expected to pay benefits for the orphan retirees. In this case, a solvent employer may find itself funding retiree benefits for individuals who were never employed by the employer. Employer Agreements with Its Former Subsidiaries Some employers entering chapter 11 bankruptcy, such as Old GM, have a long history as independent firms. Other employers, however, were recently part of a larger entity. For example, Delphi was once a division of Old GM, and Patriot was once a part of Peabody Energy. The process by which Delphi and Patriot became independent employers is known as a spin-off , and Old GM and Peabody were the parent employers. The protections for retirees in bankrupt companies that were once a part of larger enterprises depend on the spin-off arrangements negotiated between the union and the parent company. In some cases, the parent company assumes responsibility for the pensions and/or retiree health benefits of the employees transferred to the new spin-off company. The next three sections of this report discuss protections for employee pensions, protections for retiree health insurance, and other health insurance protections available for retirees. Protections for Retirees' Pensions: The Pension Benefit Guaranty Corporation Background The Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ) protects the interests of participants in certain employee benefit plans. ERISA requires that benefit plans be operated solely in the interest of the participants and their beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries. It protects employees' pensions by establishing vesting requirements (how long an employee has to work to be entitled to benefits); funding requirements (how much the employer must set aside to pay for current and future benefit obligations); and pension insurance (which will pay retiree benefits in case of the plan sponsor's bankruptcy). Pension obligations must be prefunded by the employer, and the present value of the plan's assets must be large enough to cover the present value of the plan's liabilities. ERISA pension insurance covers private-sector defined benefit (DB) pension plans. A DB plan typically pays a set monthly amount after the employee's retirement. The specific amount paid is often based on a combination of the employee's salary and years of service. Some DB plans, however, offer the benefit as a fixed lump-sum payment. Under ERISA, participants in DB plans do not own the pension plan assets but have a claim on the amount of their vested benefits. Pension plan sponsors generally may not reduce workers' vested pension benefits. In addition, employee pension trust funds are not part of the bankruptcy estate available to satisfy creditor claims. ERISA established the Pension Benefit Guaranty Corporation (PBGC) to insure the pension benefits of workers in private-sector DB plans. The PBGC says it has "protect[ed] more than 42 million workers and retirees in private defined benefit pension plans ... by encouraging companies to keep their plans, and by paying benefits when they cannot." To fund its benefit obligations, the PBGC collects insurance premiums from employers that sponsor insured pension plans, receives funds from the pension plans it takes over, and earns money from investments. The insurance premiums are set by Congress. The benefits to retirees paid by the PBGC do not come from taxpayer funding, and the benefit obligations of the PBGC are not obligations of the United States. Pensions disbursed by the PBGC to any retiree may not exceed a statutorily guaranteed limit. The PBGC has a stated goal of avoiding the termination of plans in cases of bankrupt companies: Even after a company enters bankruptcy, we work to try and preserve its plans. We take an active role in bankruptcies to prevent unnecessary plan terminations, and to pursue claims on behalf of the plan participants, and the pension insurance program. The PBGC maintains two separate insurance programs: one for single-employer pension plans and one for multiemployer pension plans. A single-employer pension plan is maintained by one employer for its eligible employees. A multiemployer plan is maintained under a CBA by more than one employer for all of their eligible employees. In 2014, the PBGC single-employer plan had a deficit of $19.3 billion and the multiemployer plan had a deficit of $42.4 billion. Single-Employer Plans The PBGC protects the pension benefits of about 31 million active and retired employees in about 22,000 single-employer pension plans. The PBGC categorizes single-employer pension plan terminations into three categories. A standard termination occurs when the employer's plan has sufficient funding to cover future benefits and distribute all plan benefits as insurance company annuities or lump-sum payments. In this case, the PBGC's role is solely to ensure compliance with the plan termination rules of ERISA. A distress termination occurs when the employer's plan does not have sufficient assets to pay all the promised benefits. The PBGC determines whether the employer meets at least one of four financial distress tests. In this case, the PBGC becomes the plan's trustee and uses its own assets to insure that retirees and future retirees receive the benefits to which they are entitled, up to the guaranteed limit. An involuntary termination occurs when the PBGC chooses to terminate a pension plan, even if the employer has not started termination proceedings of its own accord. Involuntary plan termination occurs when the PBGC believes that the plan owners can no longer fulfill their responsibility to pay the current and future retirees their pension benefits as they become due. The PBGC maximum guarantee for a pension plan terminated in 2015 is just over $6,000 per month for retirees who begin receiving pensions at the age of 65. If a participant in a terminated pension plan had been promised a pension greater than that amount per month from the employer, he or she would receive a lower monthly pension from the PBGC than had been promised by the employer. Multiemployer Plans The PBGC insures the pensions of about 10 million active and retired employees in about 1,400 multiemployer pension plans. Benefit contributions for multiemployer plans are usually based on employer contributions in proportion to their current (covered) employment. The employer contributions also may be tied to some measure of employer output such as the number of items produced, tons of coal mined, or gross sales. Most multiemployer plans are governed by a board of trustees, with equal representation from employers and employees. Contributions are held in a trust fund, and assets in the plan never revert back to contributing employers. There are various categories to describe a multiemployer plan's funded status. A plan is in critical status if at least one of five conditions holds. A plan is in endangered status if (1) the plan is less than 80% funded or (2) the plan is underfunded in the current year or is projected to be underfunded in one of the next six years. A plan is in seriously endangered status if the plan meets both criteria for endangered status. Multiemployer plans in endangered status must adopt a funding improvement plan that will reduce the plan's underfunding by 33% during a 10-year funding improvement period. Multiemployer plans in seriously endangered status must adopt a funding improvement plan that will reduce the plan's underfunding by 20% during a 15-year funding improvement period. Plans in endangered status or seriously endangered status may not increase pension benefits during the funding improvement period. An employer may leave a multiemployer pension plan for a variety of reasons, including when the employer goes out of business, negotiates a new CBA, or moves the business out of the pension plan coverage areas. An employer that withdraws from a pension plan may be assessed withdrawal liabilities. Some part of these legacy liabilities may cover pension benefits for the employer's former employees. Multiemployer pension plans may become insolvent when the plan is unable to pay its benefit obligations. Unlike single-employer plans, multiemployer plans cannot be terminated as part of any employer's bankruptcy proceedings. When a multiemployer plan becomes insolvent, the PBGC provides a loan to the trustees of the pension plan and the pension plan uses the loan to pay benefits. The PBGC never becomes the trustee of a multiemployer plan. Because many multiemployer pension plans face financial difficulties, the PBGC calls itself "flexible when plans propose new rules governing employer liability." Among other innovations, the PBGC has attracted new employers by limiting their legacy liabilities. The PBGC maximum guarantee for an insolvent multiemployer pension in 2013 was $1,073 per month ($12,870 per year) for those who retired with 30 years of work at age 65. This maximum benefit level from the PBGC may have been less than the retiree would have received under the original CBA. The overall financial health of the PBGC multiemployer pension trust is in some doubt. For example, the multiemployer trust reported a net loss of $34.2 billion in FY2014, up from a net loss of $3.0 billion in FY2013. In addition, the PBGC's projections indicate that there is a 50% chance that the multiemployer insurance program will be insolvent by the end of FY2022 and a 90% chance of insolvency by the end of FY2025. Two multiemployer pension plans are thought to be a particular threat to the multiemployer trust's overall solvency. Because of the increasing threat of PBGC insolvency, the recent Multiemployer Pension Reform Act of 2014 (the Consolidated and Further Continuing Appropriations Act of 2014; P.L. 113-235 ) permits a reduction of benefits for members of pension plans under some conditions. Namely, the pension plan must be in "critical and declining" status. As discussed above, a plan is in critical status if at least one of five conditions holds. A plan is in declining status if the plan actuary forecasts plan insolvency over the next 14 years or over the next 19 years, depending on other conditions. Nevertheless, participants in most plans may vote to reject the benefit reduction. Plans deemed to be systematically important , however, are able to reduce participants' benefits without a vote. A systematically important plan is one in which the PBGC would pay at least $1 billion in benefits if benefit reductions were not implemented. In the event of a benefit reduction, participants could not have their benefits cut below 110% of the PBGC multiemployer maximum level. Some individuals could not have their benefits cut at all, including disabled individuals and retirees aged 80 and above. The act also specified additional rules for benefit reductions. A plan partition may be an additional way to reduce the PBGC's potential loan liability associated with a multiemployer plan facing insolvency. The PBGC may partition, or divide, the original multiemployer plan into two plans. The liabilities of the financially distressed employer(s) are moved from the original pension plan to their own pension plan. In this way, the original plan is restored to economic health because the liabilities from the employers that cannot pay them are removed. The original pension plan must meet five conditions to be eligible for partitioning: 1. the plan must be in critical and declining status; 2. the plan sponsor must have taken all reasonable measures to avoid insolvency; 3. the PBGC must reasonably expect that the partition will reduce its expected long-term loss from the plan and that the partition is necessary for the plan to remain solvent; 4. the partition must not impair the PBGC's ability to meet existing financial assistance obligations; and 5. the cost of the partition must come from the PBGC's multiemployer fund. Protections for Retirees' Health Insurance: VEBAs ERISA does not require retiree health insurance benefits to be prefunded. In practical terms, even if a retiree was contractually promised $400 a month in health insurance benefits, the employer is not required to have $400 a month available. In addition, retiree health insurance claims are neither a secured nor a priority claim in bankruptcy. Therefore, retirees have no guarantee that they actually will receive any of the benefits they were promised in a CBA. One way to guarantee at least some funding for health insurance benefits is for the (active and/or retired) employees to form a Voluntary Employees' Beneficiary Association (VEBA). VEBAs are tax-advantaged trust funds, first created by the Revenue Act of 1928 (P.L. 70-562). VEBAs can finance many types of employee benefits, including retiree health insurance benefits (but not pensions). VEBAs historically were owned by a single employer. However, some VEBAs now are structured as a trust independent of the employer. These trusts sometimes are termed independent VEBAs, new VEBAs, or stand-alone VEBAs. An independent VEBA must be controlled by its membership, by independent trustees, or by other fiduciaries designated by the membership. Trustees chosen by a CBA are considered designated by the membership. VEBAs have been created or modified both as part of bankruptcy proceedings and as part of the normal course of business in healthier entities. In all cases, the trust acts in the fiduciary interest of the employees. Nevertheless, the creation of a VEBA cannot be characterized across-the-board as a victory for either the employer or the employees; each individual VEBA differs with respect to funding levels and other terms, and the funding levels and other terms themselves depend on the relative bargaining power of the employer and employees. Advantages Associated with VEBAs VEBAs, as tax-exempt instruments, provide the employer with incentives to prefund health benefits. More specifically, contributions to some VEBAs are tax deductible, and the investment income sometimes grows tax free. In addition to these tax advantages, VEBAs can improve an employer's financial position. Employers are required by the Financial Accounting Standards Board, which establishes financial and reporting standards for private-sector U.S. firms, to use accrual-basis accounting when calculating liabilities for retiree health benefits. In other words, the employer's liability increases as the number of employees eligible for benefits, along with the expected amount of these benefits, increases. This liability must be reported on the firm's balance sheet, where a particularly large liability value can depress the firm's market value. Removing the firm's liability for current and future benefits by transferring the benefits to a VEBA (independent of the employer) sometimes can increase the market value of the employer. This increase in market value is a primary advantage of a VEBA for the employer. For the employee, a primary advantage of a VEBA is a reduction in the risk associated with actually receiving promised retiree benefits. If the employer already has deposited funds into a dedicated retiree health VEBA, these funds must go to their intended recipients. They may never revert to the employer. In many instances, without a VEBA, the employees have no recourse if an employer lacks the funds to pay for promised retiree health benefits. If an employer falls short, or simply decides to place its money elsewhere, no law or regulation compels the firm to honor past promises. Risks Associated with VEBAs The presence of a VEBA does not automatically remove all the risk to the employee, because the VEBA itself must have assets and income. For current and future retirees to receive promised benefits there must be sufficient funds in the VEBA to cover the cost of benefits. A VEBA that contains sufficient funds to cover the expected costs of the benefits over the life of the VEBA is known as a fully funded VEBA. Several scenarios can prevent VEBAs from being fully funded. First, the calculations of the funding needed for the VEBA to cover the expected costs of the retiree benefits may have been incorrect. Second, the employer may not have contributed the amount necessary to fully fund the VEBA. In any case, federal law does not require that VEBAs be fully funded. Funding VEBAs The amount of money necessary to fully fund the VEBA cannot be calculated easily. For illustrative purposes, consider a firm that wants to cover retiree health insurance for the 10,000 employees who were actively working on December 31, 2014, plus their surviving spouses and dependents. The calculation of the level of funding needed to meet such a guarantee typically involves forecasting the following variables: the expected date of retirement for each employee working on December 31, 2014; each employee's (and his or her covered family's) life expectancy; each employee's (and his or her covered family's) health care utilization over time; the rate of medical inflation over time; the return on the VEBA trust's assets over time; and changes in the tax code affecting the value of the VEBA. If any of these forecasts prove to be incorrect, then the amount of money needed to fully fund the VEBA over the course of its lifetime would be calculated incorrectly. The calculation becomes more complicated if future employees (i.e., those who are not yet hired) are eligible for retiree health benefits funded from the VEBA. The number of such employees, together with the years in which they will start work and ultimately retire, must also be estimated. Calculating the fully funded level for an employer that has terminated the availability of benefits for new hires is therefore easier than calculating the fully funded level for a financially healthy employer that intends to continue offering retiree health benefits to new hires. Some VEBAs are created as part of the course of doing business, and others are created during chapter 11 bankruptcy proceedings. A VEBA also may be negotiated as part of a standard CBA and then modified during bankruptcy proceedings. Financial negotiations can be contentious. A percentage of the amount needed to fully fund the VEBA is negotiated. As would be expected, the employees prefer to receive as close to 100% of the fully funded amount as possible, whereas the employer prefers that the percentage be as small as possible. Additionally, the composition of the funding must be agreed upon. The employer can transfer any number of assets to the VEBA, including cash and notes. If the union accepts stock in the company as a VEBA funding source, the resulting situation becomes unusual in that a trust fund acting on behalf of the employees becomes a partial owner of the company. Protections for Retirees: Other Federal Programs Apart from the PBGC, no federal programs provide pension benefits to retirees whose former employer cannot meet its pension obligations. However, retirees may have a number of additional health insurance options available to them. Retirees who no longer have access to health insurance through their former employer(s) may be able to obtain coverage through Medicare or Medicaid, receive federal subsidies to purchase coverage in the private health insurance market, or, in the case of some chapter 11 bankruptcies, obtain coverage through Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA; P.L. 99-272 ). Retired individuals who have end-stage renal disease as well as those who are disabled or aged 65 or older generally are eligible for Medicare. Some lower-income individuals may be eligible for Medicaid. Additionally, individuals can purchase private nongroup (individual) coverage. Nongroup coverage can be purchased through health insurance exchanges, as established by the Patient Protection and Affordable Care Act of 2010 (ACA; P.L. 111-148 , as amended by P.L. 111-152 ) or in the private market outside of exchanges. Individuals who purchase nongroup coverage through the exchanges may be eligible for premium tax credits and cost-sharing subsidies. Under COBRA, employers are required to permit employees and family members to continue their group health insurance coverage at their own expense if they lose coverage because of designated work- or family-related events. These individuals must pay the full cost of coverage, including 100% of the premium plus an administrative fee. Among the qualifying events that trigger COBRA's continuation coverage is an employer's filing a case under the Bankruptcy Code. The retired employee is eligible for COBRA continuation coverage for life, and his or her spouse and dependents are eligible for continuation coverage for 36 months. This continuation coverage, however, is contingent upon the employer maintaining a health insurance plan for active employees. Two additional congressionally authorized programs have provided retiree funding in the past few years but have expired. First, Section 1102 of the ACA authorized $5 billion in funding for the Early Retiree Reinsurance Program (ERRP). The ERRP reimburses employers for especially high health insurance claims incurred by early retirees. The early retirees themselves do not receive any reimbursements from this program. Rather, the reimbursements are used to fund various cost-savings and other improvements to the employer's provision of health insurance. The ERRP began accepting for reimbursement claims incurred on or after June 1, 2010, and was closed to new enrollees as of May 6, 2011, because expenditure projections indicated that the $5 billion would be exhausted by the employers already enrolled. The authorization for the ERRP ended on January 1, 2014. Second, the Health Coverage Tax Credit (HCTC), a federal income tax credit, has subsidized 72.5% of the cost (premiums) of qualified health insurance for eligible taxpayers and their family members. Eligibility for the HCTC is limited to three groups of taxpayers, two of which are individuals eligible for the Trade Adjustment Assistance (TAA) program. The third group consists of individuals whose pension plans were taken over by the PBGC. This credit expired on January 1, 2014, and new enrollees must have registered before October 1, 2013. The remainder of this report provides three examples of bankruptcy proceedings in unionized entities where the retirees' pensions and health insurance benefits received substantial federal attention. The first example is Old General Motors and the United Auto Workers, the second example is Delphi and the Delphi Salaried Retirees Association, and the final example is Patriot and the United Mine Workers of America. Case Study 1: General Motors and the United Auto Workers Background On June 1, 2009, the General Motors Corporation filed a chapter 11 bankruptcy petition. On July 5, 2009, the bankruptcy court approved the sale of the company's "good" assets in a "section 363 sale." The sale closed on July 10, 2009. The buyer was a newly formed corporation that, after the sale was completed, changed its name to General Motors Company. In this report, Old GM is used to refer to General Motors Corporation , and New GM is used to refer to General Motors Company . Funding supplied by the Troubled Asset Relief Program (TARP) was instrumental in the restructuring of Old GM. TARP was a part of the Emergency Economic Stabilization Act of 2008 (EESA; P.L. 110-343 ). EESA originally was intended to purchase assets and equity from financial institutions, but President George W. Bush extended it to the automobile industry in 2008. In 2009, President Barack Obama granted further financial assistance. In total, Old GM and New GM together received $50.2 billion in financial support from the Department of the Treasury. Pensions Old GM maintained separate pension trusts for hourly and salaried workers. Unionized employees hired prior to October 15, 2007, are eligible for DB pensions. The amount of the pension was negotiated and depends on the number of years of service, with a supplemental amount for early retirees with at least 30 years of service. Taken together (that is, including New GM employees represented by any of its unions plus nonunionized employees) New GM pensions were underfunded by $17.1 billion at the end 2009. Despite this underfunding, pensions were not a central bargaining issue in the late 2000s. There was virtually no debate over UAW pensions during the bankruptcy process, and no changes were made to the pension plans. Pension controversies did emerge after the bankruptcy. Concerned about possible large increases in their required pension contributions, New GM offered some salaried workers a buy-out in 2012; these workers could accept a lump-sum payment in exchange for giving up all rights to any other kind of pension support. About 30% of 44,000 eligible, salaried workers accepted this offer. Additionally, New GM has spoken of giving the UAW workers the option of trading their promised DB pensions for a lump-sum payment. Retiree Health Insurance Old GM historically has provided generous health insurance coverage. In 2005, the then-chairman and chief executive officer of Delphi, originally a part of Old GM, remarked, "Some have said GM is actually a giant HMO that happens to make cars!" Over time, however, the cost of providing this insurance proved to be high. For example, it was reported that health care costs were the single largest component of the growing disparity in labor costs between the domestic and foreign automakers. A 2007 memorandum of understanding covering postretirement medical care states that UAW and Old GM have "discussed that the current cost of providing postretirement medical care is one of the most critical issues facing the Company's ability to compete in the North American marketplace." During the 2007 contract negotiations, Old GM agreed to contribute a percentage of its projected retiree health liabilities to an independent VEBA intended to fund retiree health benefits for 80 years. Following their initial VEBA contributions in 2007, Old GM also would make additional contributions to the VEBA beginning in 2008. According to one analyst, Old GM contributions were projected to fund about 68% of future retiree health obligations over the life of the VEBA (in present-value terms). The 2007 contract stipulated that GM was responsible for funding retiree health until January 1, 2010. On that date, the VEBA (officially known as the UAW Retiree Medical Benefits Trust ) took over all funding responsibilities for retiree health insurance from GM. Only those retirees (and their eligible spouses, surviving spouses, and dependents) eligible for retiree medical benefits from Old GM as of October 15, 2007, can participate in the VEBA. The VEBA is one trust with three separate accounts, one each for New GM, Ford, and Chrysler. The assets in each account are separate, and one automaker's account cannot be used to fund benefits for another automaker. Nevertheless, the VEBA files a single tax return. The VEBA is managed by an independent board of 11 trustees appointed by the UAW and the bankruptcy court as part of the bankruptcy settlement agreements with New GM and Chrysler. Because Old GM had a large debt load and no cash flow when it entered bankruptcy, the UAW accepted a contribution of stock in New GM. The restructuring agreement made the UAW a partial owner of New GM. Such an ownership structure is not typical of bankruptcy decisions. When the VEBA became the source for retiree health benefits on January 1, 2010, the VEBA held $14.5 billion in investment assets, 17.5% of New GM's common stock, New GM's preferred stock with a face value of $6.5 billion, and a note with a face value of $2.5 billion. Because New GM's common stock was not publicly traded at that time, there was great uncertainty associated with the ultimate value of owning 17.5% of the common stock. The VEBA ownership in New GM fell from 17.5% in 2009 to 9.2% in 2014 as the VEBA sold stock. It is difficult to evaluate the performance of a trust fund designed to last 80 years after the passage of only five years. Nevertheless, the VEBA officers have emphasized the investment risks when communicating with the membership. In particular, they have mentioned the "market meltdown" of 2008 and early 2009, and the uncertainty associated with projections of future medical costs. In fact, the 2011 contract negotiations covered the possibility of diverting up to 10% of profit sharing to the VEBA. The most recent legislation concerning the Old GM bankruptcy was introduced in the 111 th Congress and concerned the use of TARP funding in the bankruptcy proceedings. The bills were H.R. 4118 , H.R. 6046 , and S. 3526 . Case Study 2: Delphi and the Delphi Salaried Retirees Association Background The Delphi Corporation supplies parts and components directly to vehicle manufacturers. Delphi originally was a part of Old GM. It was spun off into its own public company in 1999 and continues to have New GM as its primary customer. As part of the spin-off agreement, Old GM and the UAW negotiated the benefits of union employees who were being moved from Old GM employment to Delphi employment. Old GM agreed to cover the pension benefits for Delphi employees (former Old GM employees) who retired prior to October 1, 2000. The pension benefits of employees who retired on or after October 1, 2000, became the obligations of the various Delphi pension plans. In addition, Old GM entered into a benefit guarantee agreement with the UAW covering employees whose pensions might be taken over by the PBGC in the future. In the event of a termination of the Delphi pension plans for hourly workers, the guarantee agreement obligated GM to supplement the benefits for workers who received the statutory maximum benefit from the PBGC. In other words, GM agreed to a "top-up" for each covered UAW retiree. A top-up is a payment of the difference between the benefit received from the PBGC and the benefit that would have been received had the plan not been terminated. Salaried employees were not UAW members and were not covered by this top-up guarantee. In October 2005, Delphi entered chapter 11 bankruptcy. Delphi emerged from bankruptcy in October 2009 after a group of Delphi's lenders purchased most of Delphi's assets; New GM also assumed some of the Delphi assets. The PBGC assumed responsibility for Delphi's DB pension plans in July 2009. In total, the pension plans had almost 70,000 participants and were underfunded by about $7.2 billion, according to the PBGC. This case study focuses on a group of Delphi salaried retirees who did not have the protections of a CBA. These retirees did not receive the same pension and retiree health benefits as the unionized retirees. On one hand, the salaried workers never had contractual rights to the benefits that the union workers had. On the other hand, the salaried workers argued that it was only fair that they receive the same benefits as their unionized coworkers. To pursue this matter, many Delphi salaried workers formed the Delphi Salaried Retirees Association (DSRA). The DSRA was recognized as an authorized representative of the retired employees by the bankruptcy court. Pensions Both Old GM and New GM might have been able to invalidate the top-up agreement with Delphi during the bankruptcy proceedings. Nevertheless, New GM said that it honored its top-up agreement with the UAW for commercial reasons. One reason cited was that these union members needed to give their consent to finalize the sale of assets in Delphi's bankruptcy and the top-up would speed bankruptcy proceedings. In addition, New GM topped-up pensions for members of two other unions that comprised large shares of its workforce: the International Union of Electricians-Communication Workers of America (IUE-CWA); and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union (USW). New GM maintained that it was not contractually obligated to give retired members of these two unions top-ups. Once the PBGC assumed responsibility for the remaining Delphi pensions, some Delphi salaried retirees (who were not union members) saw their pension benefits reduced because their monthly benefit (as previously promised by Delphi) was larger than the statutory maximum benefit. New GM did not top-up these salaried workers' pensions. New GM argued that it had no contractual obligation to do so. When the Delphi plans were terminated in 2009, the maximum benefit from the PBGC was $54,000 per year for an individual who retired at the age of 65 with no survivor benefit. As of June 2011, the PBGC estimated that 18% of the total number of salaried retirees would see their pension benefits reduced to this amount, while 1% of the total number of hourly workers would see their total pension benefits reduced to this amount. The DSRA argued that all parties, including the federal government, were treating salaried workers less well than hourly workers. In particular, the DSRA argued that the top-up funding came from TARP as part of the Old GM restructuring. On September 14, 2009, the DSRA filed a lawsuit against the PBGC, the U.S. Treasury Department, and the Presidential Task Force on the Auto Industry. One of the DSRA's claims was that the agreement between New GM and the unions representing hourly employees to top-up the hourly employees' pensions was a violation of the Equal Protection Clause of the Fifth Amendment to the U.S. Constitution. The DSRA argued that New GM, acting as a government agent because of TARP's role in the Old GM bankruptcy, unfairly discriminated against the salaried employees "solely on the basis of their choice not to associate with a union." The DSRA argued that Old GM's bankruptcy in June 2009 voided the 1999 top-up agreements and that New GM renegotiated and provided the top-up to the unions' pension plans for political reasons. On September 9, 2011, the U.S. district court dismissed the claims against the U.S. Department of the Treasury. The PBGC remains a defendant in the case. The DSRA submitted an affidavit from a pension actuary stating that the PBGC miscalculated the benefit obligations of the Delphi pension plans and that the pension plan for salaried employees was 86.5% funded at termination. It also said that it was rare for pension plans with this amount of funding to require termination. According to PBGC estimates, at the time of termination the plans for the Delphi salaried employees had $2.4 billion in assets and $5.0 billion in liabilities; the plan was therefore only 48% funded. The PBGC indicated that it expected to be responsible for about $2.2 billion of the plan's estimated $2.6 billion in underfunding. The Delphi court case remains ongoing; recently, a U.S. district judge ordered the U.S. Department of the Treasury to turn over documents related to President Barack Obama's Auto Task Force's role in the termination of the salaried pension plan. There is some difference of opinion concerning Old GM's contractual obligation to honor previous top-up commitments to the UAW Delphi hourly workers. Both the Government Accountability Office (GAO) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) argue that the UAW was treated with special care because it could influence the bankruptcy proceedings and/or call a strike. However, the GAO writes that the "Treasury did not explicitly approve or disapprove of GM's agreement to honor previously negotiated top-up agreements." On the other hand, SIGTARP quotes a Treasury official that "it is my understanding that as the buyer, we got to determine which liabilities [we would take on]." Although no top-up commitment was ever given to the Delphi salaried workers, the DSRA argues that the salaried workers should enjoy the same benefits as the hourly workers. This position rested on a notion of "fairness" without regard to contractual obligations. Nevertheless, the DSRA did not have current employees at New GM, and, therefore, could not slow down bankruptcy proceedings. Retiree Health Insurance The process of establishing health benefits for Delphi's current and future retirees took less time than the still-ongoing pension process. The DSRA created a VEBA committee, and the bankruptcy court accepted this committee as the Section 1114 committee. The negotiations between Delphi and the Section 1114 committee proceeded according to the rules of the Bankruptcy Code. Delphi eventually agreed to provide $8.75 million in up front funding for the VEBA. The funding was in cash; the VEBA did not receive any Delphi stock. When the bankruptcy court accepted the agreement, only salaried workers who were retired or eligible to retire on or before April 1, 2009, were eligible to receive health insurance benefits from the VEBA. Nevertheless, the trust agreement was amended by its own trustees such that it could provide its benefit plans to hourly retirees of Delphi and their dependents and survivors. As a result, if the hourly retirees preferred the health insurance plans offered by the DSRA VEBA, they could enroll in these plans at their own expense instead of the plans offered by Delphi. The hourly retirees, however, could receive no funds from the VEBA. The DSRA VEBA, which is formally known as the Delphi Salaried Retirees Association Benefit Trust , opened with the $8.75 million Delphi contribution in 2009. Delphi has provided no additional contributions since that time. To date, the largest source of additional VEBA funding has been the Early Retiree Reinsurance Program. Most recently, the DSRA was advocating for an extension of the now-expired Health Coverage Tax Credit (HCTC), for which they are eligible because their pensions were taken over by the PBGC. Several bills introduced in the 113 th Congress would have extended the HCTC for varying lengths of time. These bills were H.R. 2783 , S. 1446 , and S. 1859 . In the 114 th Congress, S. 505 , a bill to amend the Internal Revenue Code of 1986 to extend the Health Coverage Tax Credit, would extend the HCTC until January 1, 2020. Case Study 3: Patriot Coal and the United Mine Workers of America Background Federal involvement in retiree pensions and health insurance in the coal industry has a long history in the United States. Following World War II, the United Mine Workers of America (UMWA) demanded health and retirement benefits from coal employers. When these benefits were not forthcoming, the miners staged a walkout. To avoid a shutdown of American coal production, President Harry Truman signed an executive order seizing all of the nation's bituminous coal mines. The Secretary of the Interior, Julius Krug, was ordered to negotiate an agreement with the UMWA President John L. Lewis. The Krug-Lewis Agreement, signed on May 29, 1946, established the UMWA Health and Retirement Funds. Congress has been involved in the retiree benefits of coal miners ever since. The current structure of pension and retiree health benefits in the coal industry is spelled out in the most recent National Bituminous Coal Wage Agreement (NBCWA), a CBA between the UMWA (a multiemployer union) and the Bituminous Coal Operators Association (BCOA), whose members represent the owners of the coal mines. The most recent NBCWA was negotiated in 2011 and extends through 2016. It includes, among other terms and conditions of employment, details covering the pension plan and three retiree health funds used by signatory employers. All plans contain an "evergreen clause" or "continuing contributions clause" to provide for the long-term financing of pensions and health benefits for retired employees and orphan retirees. Thus, all employers who are (or ever were) members of the pension plan or any health plan must contribute, including employers who are not current members of the BCOA. In other words, employers who were once signatory employers to any NBCWA must continue to contribute to all pension and health insurance trust funds until the CBA is changed. Employers are therefore responsible for maintaining benefits for miners who may never have been their employees. Patriot filed for chapter 11 bankruptcy protection in July 2012 and emerged from bankruptcy in December 2013. Patriot was formed in 2007 as a spin-off company from Peabody Energy. The following year, Patriot purchased Magnum Coal, itself a spin-off of Arch Coal. Consequently, Patriot entered bankruptcy with about three times as many retirees, inherited from Arch and Peabody, compared to active employees. The two parent employers had an improved financial picture following the spin-off; for example, the present value of Peabody's retiree health obligations was reduced by $637.6 million. Patriot, however, was left with an estimated present value of over $1.6 billion in retiree health obligations, an amount the bankruptcy court called "astronomical." In addition, Patriot had been receiving funding from the Early Retiree Reinsurance Program, but additional funding from this source is no longer available. Pensions The 1974 Pension Trust (the Trust) was established by collective bargaining and covers all employees whose employer was a signatory employer to the NBCWA one or more times. The Trust documents detail the required contributions of the employers and the benefits received by the eligible retirees under a wide variety of conditions. This Trust pre-dates the Coal Act. Patriot is now the Trust's second-largest contributor. At the time of the Patriot bankruptcy filing, the Trust was less than 73% funded and had a status of seriously endangered. The trust is now in critical status. The Patriot bankruptcy negotiations ended with Patriot remaining a participant in the 1974 Pension Trust. Patriot covers current retirees, surviving spouses, and dependents under the existing terms. In addition, active employees hired before January 1, 2012, are covered. Employees hired on or after January 1, 2012, are not eligible for the 1974 (defined benefit) Pension Trust but have a (defined contribution) 401(k) retirement plan. Retiree Health Insurance As with the automotive industry, the coal industry provides generous health benefits. The UMWA says that it sacrifices wage increases for employees in exchange for better health insurance because miners face many occupational health challenges. Coal employers usually maintain their own retiree health plans. However, some employees, especially those whose former employers are no longer mining coal or are bankrupt, have access to one of three UMWA retiree health care funds. Each fund has its own trustees, and the trustees are responsible for paying premiums and benefits and for investing the assets of their respective trust fund. The Combined Benefit Fund (CBF) is a trust fund created by the Coal Act. It provides retiree health benefits for UMWA employees (and their surviving spouses and dependents) who retired on or before July 20, 1992, and did not have another source of retiree health benefits because they were orphan retirees. The currently proposed legislation (discussed below) does not affect the CBF. The 1992 Benefit Trust is a trust fund created by the Coal Act. It provides retiree health benefits to those employees (and their surviving spouses and dependents) who retired from the coal industry after July 20, 1992, but before September 30, 1994, and do not have another source of retiree health benefits. The major difference between the 1992 Benefit Trust and the CBF is that under the 1992 Benefit Trust, the premiums paid by each signatory coal company are adjusted each year to meet the expected health care costs of the beneficiaries. The 1992 Trust is therefore better able to keep pace with increases in health care costs than the CBF. The 1993 Benefit Trust covers employees who retired on or after October 1994. In addition, new, inexperienced miners hired after January 1, 2007, cannot receive benefits from this Trust unless they are disabled as a result of a mine accident. The 1993 Benefit Trust is therefore almost entirely closed to new enrollees. The 1993 Benefit Trust was created through negotiation between the UMWA and the BCOA as part of the NBCWA of 1993. Retired miners are eligible for the 1993 Benefit Plan if their past employers either went out of business or defaulted in providing retiree health benefits. The NBCWA specifies the required contributions of the BCOA members for active employees, retired employees, and orphan employees. Note that the bargained level of funding need not correspond with the funding level required to maintain the contractual level of health care benefits for its members. At the start of the chapter 11 bankruptcy proceedings, Patriot spoke of eliminating retiree health insurance benefits entirely. The UMWA's Section 1114 committee started negotiations, but the bankruptcy court ruled in favor of Patriot's Section 1113 and Section 1114 motions. Therefore Patriot no longer had to honor the existing NBCWA, and no longer had to honor previous commitments to provide retiree health insurance to UMWA retirees (or any other current or future retirees). The court's ruling was viewed unfavorably by the UMWA, and the union threatened to strike. Patriot and the UMWA then began negotiations that included contributions to a new VEBA. These negotiations became irrelevant when the United States Bankruptcy Appellate Panel for the 8 th Circuit reversed an earlier bankruptcy court decision. The original bankruptcy court would have allowed Peabody Energy to stop paying the health care benefits for certain retirees that it had agreed to at the time of the Patriot spin-off. The appellate decision requires Peabody to take responsibility for paying the health care benefits for these retirees. After another round of negotiations, the Peabody case was settled with Peabody contributing $90 million to the VEBA in 2014, $75 million in 2015, $75 million in 2016, and $70 million in 2017, in addition to other requirements. Recent Legislation As of the cover date of this report, no bills explicitly covering retiree health benefits have been introduced in the 114 th Congress. Several bills introduced in the 113 th Congress would have changed the benefits awarded to current and future retirees in the coal industry. H.R. 980 and S. 468 (113 th Congress), Coal Accountability and Retired Employee (CARE) Act of 2013, would have transferred part of the interest earned on a coal mine land reclamation fund to the 1974 UMWA Pension Trust to be used to pay pension benefits required under this plan without regard to whether Pension Trust participation is limited to individuals who retired in or after 1976. The act would have made those who were eligible to receive benefits from the 1974 UMWA Pension Trust following an insolvency proceeding relating to a coal operator eligible for the 1992 trust. H.R. 2627 (113 th Congress), the Caring for Coal Miners Act, would have made retired miners who were not receiving benefits they were otherwise entitled to because of a bankruptcy commencing in 2012 eligible for the 1993 Benefit Trust. Benefits made available by this act would have been reduced by the amount actually paid by the VEBA on behalf of a covered beneficiary, so that no beneficiary would receive a greater benefit than would have been payable before the establishment of the VEBA. H.R. 2918 (113 th Congress), the Coal Healthcare and Pensions Protection Act of 2013, would have made retired miners who were not receiving benefits they were otherwise entitled to because of a bankruptcy commencing in 2012 eligible for the 1993 Benefit Trust. Benefits made available by this act would have been reduced by the amount actually paid by the VEBA on behalf of a covered beneficiary. Any additional monies (except the amount needed to cover administrative costs) would have been transferred from the VEBA to the 1993 Trust. Any remaining excess monies would have been transferred to the 1974 UMWA Pension Trust. All four bills introduced in the 113 th Congress would have increased the health benefits available to Patriot retirees. The CARE Act of 2013 would have allowed Patriot retirees to join the 1992 Benefit Trust and thus to receive the most generous benefits available to any orphan retiree. The Caring for Coal Miners Act would have allowed those who became orphan retirees as a result of a bankruptcy proceeding commencing in 2012 to join the 1993 Benefit Trust. However, the 1993 Benefit Fund would have been prohibited from covering expenses on behalf of a beneficiary that was already covered by the VEBA. The Coal Healthcare and Pensions Protection Act of 2013 would have allowed those who became orphan retirees as a result of a bankruptcy proceeding commencing in 2012 to join the 1993 Benefit Trust and would have transferred all monies from the VEBA to this trust. Any extra funding after health care obligations had been fully met would have been transferred to the 1974 UMWA Pension Trust. Of the four bills introduced in the 113 th Congress, only two definitely would have increased the funding available to the 1974 Pension Trust. The CARE Act of 2013 would have moved some of the interest earned on a coal mine land reclamation fund to the 1974 Pension Trust. This move, however, would have reduced the funds available to two health benefit trust funds. The Coal Healthcare and Pensions Protection Act of 2013 would have transferred any extra funding after health care obligations had been fully met to the 1974 UMWA Pension Trust. The President's FY2016 Budget The President's FY2016 budget would make those retirees whose health benefits were denied or reduced as a result of a bituminous coal industry bankruptcy commencing in 2012 eligible for the 1993 UMWA Health Plan. The budget also would transfer funds through the PBGC to the trustees of the 1974 UMWA Pension Plan to "ensure the Plan's long-term solvency."

Benefits for retired employees are of particular interest to policymakers, who often are concerned with the income security of retirees, a large and fast-growing population. One aspect of this congressional concern is what happens when bankrupt employers are unable to provide promised pension and health benefits to their retired employees. In chapter 11 bankruptcy reorganization, the employer receives protections against its financial commitments in the hope that it may once again become profitable. This protection could include not having to honor obligations concerning pensions and retiree health insurance. Its employees may therefore be at risk of not receiving some of their promised benefits. Unionized and nonunionized employees may be treated differently under the law because unionized workers have a legal contract governing their terms and conditions of employment. The costs to employers for the pension, health insurance, and other benefits promised to retired employees are known as legacy costs, and different costs are subject to different federal laws. Although employers are required to prefund their defined benefit pension trusts, the level of required funding may not be present as the employer enters bankruptcy. The Pension Benefit Guaranty Corporation (PBGC), a quasi-public agency, monitors the finances of pension plans. The PBGC becomes the trustee of and pays benefits to participants in terminated, underfunded single-employer pension plans. PBGC benefits are subject to a statutory maximum that may be less than the retiree was promised by his or her employer. The PBGC has been running deficits for several years, and the deficit for one of its two programs is at an all-time record high. PBGC funding comes from employer premiums set by Congress, the assets of the plans it takes over, and investment returns. There is no taxpayer funding. Some retirees receive health benefits from their former employer. Retiree health benefits, however, are not insured by any public agency, and employers are not required to prefund health benefits. However, health benefits (for active and retired employees) can be funded through a tax-preferred trust fund known as a Voluntary Employees' Beneficiary Association (VEBA). When an employer and union agree to form a VEBA, and it is approved by a bankruptcy court, the employer generally contributes a collectively bargained level of funding to the VEBA. Providing this contribution usually fulfills the employer's total responsibility for retiree health care. All subsequent retiree health benefit decisions are transferred to the trustees of the VEBA. (VEBAs often are created outside of bankruptcy and are not restricted to unionized work places. In addition, VEBAs may be funded by employers only, by employees only, or jointly by both employers and employees.) After a discussion of these issues, this report provides three examples of bankruptcy proceedings in which the retirees' pensions and health insurance benefits received substantial federal attention: the General Motors Corporation, the Delphi Corporation, and the Patriot Coal Corporation. During bankruptcy proceedings for the General Motors Corporation (commonly known as Old GM or pre-bankruptcy GM), retiree health benefits were central and pensions, although underfunded, were not a major issue. Old GM's main union, the United Auto Workers (UAW), accepted stock in the General Motors Company (commonly known as New GM or post-bankruptcy GM) as a partial funding source for its retiree health care VEBA, which has covered retiree health benefits since 2010. The VEBA was intended to cover retiree health benefits for 80 years, but it is unclear how long its funding will last. Pensions were a central source of controversy during the Delphi Corporation's bankruptcy. Some (union and nonunion) employees had been promised a pension greater than the PBGC maximum. When the various Delphi pension plans were terminated by the PBGC, most unionized employees did not see their pensions fall because of supplemental pension coverage originally negotiated by Old GM and the UAW. The salaried Delphi workers, however, had no union, and some found themselves receiving lower pension benefits than had been promised by Delphi. Salaried workers formed a labor association, the Delphi Salaried Retirees Association (DSRA), with hopes of strengthening their position. The DSRA has been unsuccessful in its efforts to have its members' pensions increased, and a subsequent court case has not yet been settled. Both pension and retiree health benefits were central to the complicated and contentious negotiations during the bankruptcy of the Patriot Coal Corporation. The relevant union, the United Mine Workers of America (UMWA), is a multiemployer union in which the collectively bargained contracts cover the employees of many employers. The UMWA Pension Trust was underfunded before the Patriot bankruptcy, and it remains underfunded today. In fact, some consider the potential insolvency of the coal employers' pension plan a threat to the overall solvency of PBGC's program on multiemployer pension plans. Because many Patriot retirees were employees of another employer, Peabody Energy, when they were actively working, the bankruptcy court ruled that Peabody, and not Patriot, was responsible for funding the VEBA created to cover health benefits.

Introduction On May 31, 2006, the U.S. Department of Homeland Security (DHS) announced FY2006 allocations of federal homeland security assistance to states and urban areas. That assistance was made available through the following three programs: the State Homeland Security Grant Program (SHSGP), which is designed to fund state homeland security strategy activities to build first responder and emergency management capabilities to prevent, protect against, respond to, and recover from acts of terrorism and catastrophic events; the Law Enforcement Terrorism Prevention Program (LETPP), which focuses on law enforcement and public safety activities to prevent terrorist attacks through such activities as intelligence gathering, information sharing, and target hardening; and the Urban Area Security Initiative (UASI), which is designed to fund designated high-threat, high-risk urban-area activities to prevent, protect against, and respond to terrorist attacks and catastrophic events. The programs provided funds to address planning, operations, equipment, training, and exercise needs of states and high-threat, high-density urban areas. The purpose of the set of programs was to help recipients build and sustain first responder and emergency management capabilities to prevent, protect against, respond to, and recover from terrorist attacks and catastrophic events. The USA PATRIOT Act guarantees each state an amount of 0.75% of total SHSGP and LETPP appropriations. The remaining appropriation and the appropriation for UASI grants were allocated at the discretion of the Department of Homeland Security. This CRS report explains the FY2003 through FY2006 administrative guidance that governed the three homeland security assistance programs, discusses the changes to DHS requirements for grant applications and subsequent reporting by recipients, describes the DHS grant allocation methods, and identifies pertinent oversight questions that may be of interest to Congress. Almost immediately after DHS announced the FY2006 allocations, some states and urban areas, and their congressional delegations pointed out reductions in grants as compared to FY2005. Some Members of Congress raised questions about the suitability of the methods DHS used to allocate the grants, and they pursued those questions in congressional oversight hearings. The DHS method for allocating the discretionary SHSGP and LETPP amounts has evolved since the department's inception in March 2003. Before FY2006, the department allocated the SHSGP and LETPP remainders in direct proportion to state population. It allocated UASI grants, however, using the following indicators of risk: credible threat, presence of critical infrastructure, vulnerability, population, population density, law enforcement investigative and enforcement activity, and the existence of formal mutual aid agreements among jurisdictions. Beginning in FY2006, however, DHS allocated the discretionary amounts available through all three programs based on departmental assessments of risk and the effectiveness of the recipients' proposed solutions to their identified homeland security needs. (See Appendix for time lines for each of the three programs.) Administration Guidance7 The three programs that provide homeland security assistance to states and urban areas are governed by law and by an evolving framework of administrative documents. The administrative guidance is embodied in Homeland Security Presidential Directives 5 (February 28, 2003), 7 (December 17, 2003), and 8 (December 17, 2003); the National Strategy for Homeland Security; the National Preparedness Goal; Capabilities-Based Planning Tools (December 17, 2004); National Preparedness Guidance (December 2005); and annual Homeland Security Grant Program Guidance and Application Kits (November 2002; November 2003; December 2004; December 2005), which detail federal, state, local, and non-federal entities' responsibilities to prevent, protect against, respond to, and recover from terrorist attacks and catastrophic events. The annual program guidance requires applicant states and urban areas to describe their homeland security objectives, goals, first responder and emergency management capabilities, and need for federal homeland security assistance. The most immediately pertinent guidance is discussed below. National Preparedness Goal Homeland Security Presidential Directive 8 (HSPD-8) requires the DHS Secretary to develop a National Preparedness Goal (NPG) to improve the nation's capabilities and practices to ensure that adequate resources exist to respond to a catastrophe. The directive sets forth the following specific task: The national preparedness goal will establish measurable readiness priorities and targets that appropriately balance the potential threat and magnitude of terrorist attacks, major disasters, and other emergencies with the resources required to prevent, respond to, and recover from them. It will also include readiness metrics and elements that support the national preparedness goal including standards for preparedness assessments and strategies, and a system for assessing the nation's overall preparedness to respond to major events, especially those involving acts of terrorism. DHS has issued several versions of draft preparedness goals in accordance with the statutory mandate in the FY2005 and FY2006 DHS appropriations acts, as well as HSPD-8. The most recent, issued in December 2005, supersedes its predecessors. The National Preparedness Goal : aims at engaging federal, non-federal, non-governmental entities, and the public in efforts to enhance their capability for preventing, responding to, and recovering from attacks, disasters, and emergencies; uses and supports the National Response Plan and the National Incident Management System (NIMS) and the National Infrastructure Protection Plan ; incorporates an all-hazards, risk-based approach that encourages officials to strengthen capabilities, and establishes national priorities in emergency preparedness; and seeks to clarify the roles and responsibilities of federal and non-federal entities. The document emphasized that preparedness is a shared responsibility of all units of government, it declared the Administration's intent to publish additional guidelines in 2005, and it presented seven national preparedness priorities: Implement the National Incident Management System and the National Response Plan ; Expand regional collaboration; Implement the National Infrastructure Protection Plan ; Strengthen information sharing and collaboration capabilities; Strengthen interoperable communications capability; Strengthen Chemical, Biological, Radiological, Nuclear, and Explosives (CBRNE) detection capabilities; and Strengthen medical surge capabilities. Possible Oversight Issu es. The NPG is to "guide the nation in achieving its vision for preparedness." Arguably, the NPG is one of the more important DHS documents issued to create an effective system that integrates federal, state, and local preparedness efforts. In FY2006, state and urban areas were required to submit Homeland Security Strategies , Program and Capability Enhancement Plans , and Investment Justifications (discussed elsewhere in this report) to be eligible for federal homeland security assistance. Some critics assert that states and urban areas have prepared these documents without necessary federal guidance. For example, a study released by the Government Accountability Office (GAO) concluded that the lack of preparedness standards presented a "challenge," and that "efforts by state and local jurisdictions to prioritize expenditures to enhance first responder preparedness have been hindered by the lack of clear guidance in defining the appropriate level of preparedness and setting priorities to achieve it." Issue: What role have state and local officials played in the NPG development process? Were they given the opportunity to provide feedback on the NPG while it was in development? Issue: How were state and local homeland security priorities taken into account in the NPG development? How were federal, and state and local priorities reconciled? Issue: Will state and local homeland security concerns be given lower priority if states and localities are to focus their preparedness efforts on meeting NPG standards to receive federal assistance? National Preparedness Guidance The National Preparedness Guidance, issued as a companion document to the National Preparedness Goal, provides instructions and guidance on how to implement the goal. The National Preparedness Guidance is to evolve and be reissued as needed to reflect (1) changes in the National Priorities and (2) further development of the Capabilities-Based Planning Process and associated tools. The Guidance introduces the National Planning Scenarios, Universal Task List (UTL), and Target Capabilities List (TCL), and reviews assessment standards for preparedness efforts. Use of the Guidance , particularly through the use of the assessment metrics, is intended to ensure that preparedness resources are used effectively and that a better understanding is developed of the emergency preparedness capabilities at all levels of government. The assessment process set forth in the Guidance comprises the following four elements: Compliance assessment—a checklist of whether federal and non-federal entities have accomplished specified requirements; Capability assessment—initially based on a sampling of states and sub-state regions; Needs assessment—the identification of resource needs based on capability assessments; and Performance assessment—measured through after-action reports and documentation of performance in exercises and emergencies. Possible Oversight Issues . As the Guidance continues to evolve based on capabilities review at the federal and state levels, first responder and emergency management entities are to respond by adapting their plans accordingly. Issue: To what extent have state and local officials been part of the Guidance development process? Issue: As DHS continues to conduct capability reviews and develop the Guidance , to what extent will states and urban areas have opportunities to provide input before they are expected to adjust their plans following changes in the Guidance ? Planning Scenarios DHS developed 15 scenarios to assess the emergency response and preparedness capabilities of state, local, and tribal governments. The scenarios were not developed to identify events that may occur. Instead, they are intended to facilitate efforts by all government agencies to assess the full range of needs that might be manifested were similar events actually to occur. Some of the scenarios include nuclear detonation, biological attack, chemical attack, natural disaster, radiological attack, explosive attack, or cyber attack. Each scenario is accompanied by descriptions of impacts and consequences. Also, eight mission areas are discussed for each scenario in order to outline the types of responses that might be expected. According to NPG, "catastrophic WMD scenarios predominate since they present the gravest threat to our national interests and generally require capabilities for which the nation is currently the least prepared." The scenarios depict events that might require federal involvement and coordination; such events are referred to as Incidents of National Significance. Possible Oversight Issues . Some have questioned whether the emphasis by DHS on terrorist attacks indicates that the NPG, the Guidance , and Planning Scenarios are disproportionately oriented toward terrorist attacks and away from the more frequently occurring catastrophes, natural disasters. Some might argue that the terrorism focus of the DHS preparedness guidance and its associated grant programs constitute a shift from the "all-hazards" approach. Issue: Is there a conflict between terrorism-focused preparedness guidance and grants with all-hazards planning? Is "all-hazards" planning dominated by terrorism concerns? Issue: Should federal preparedness guidance and assistance programs be refocused to place greater emphasis on an all-hazards approach? Issue: If a state or an urban area focuses its HSGP application on all-hazards, will it receive less funding, even if the state or urban area has a greater terrorism risk than other states or urban areas? Universal Task List State and local governments must be deemed able to implement certain tasks involving the delivery of services, needs assessments, organizational requirements, and other requirements in order to receive federal homeland security assistance in FY2006. The Universal Task List (UTL) identifies the operations and tasks expected to be performed were events similar to those set out in the planning scenarios to occur. Five categories organize the tasks in the UTL—National Strategic Tasks; Planning; Coordination and Support; Incident Management; and Incident Prevention and Response. Possible Oversight Issues . Not all jurisdictions are expected to accomplish every UTL task. Terrorist attacks and catastrophic events require coordinated intergovernmental and interjurisdictional responses. The UTL identifies the range of tasks that responding agencies and entities, in mutual aid agreements, are expected to accomplish. Training and exercise programs (funded through SHSGP, LETPP, and UASI) are expected to be based upon the UTL and related mission requirements. Issue: If DHS does not expect individual jurisdictions to accomplish all of the tasks and if they do not have to meet every UTL standard, how are those jurisdictions and states to be judged "capable"? Will the inability to meet every UTL standard affect their grant allocations? Issue: Will DHS or states have primary responsibility for identifying the UTL task areas that require priority in training efforts? Will DHS prioritize funding, from its homeland security assistance programs, to states that are determined to be in need of the training? Target Capabilities List The Target Capabilities List (TCL) identifies and describes the "critical" capabilities that must be performed during Incidents of National Significance in order to reduce losses and successfully respond to a disaster, regardless of cause. Like the UTL, the TCL is based upon the 15 planning scenarios; but the capabilities are expected to be used for all catastrophes, not just those identified in the scenarios. The TCL identifies 36 target capabilities, each of which is associated with the tasks set out in the UTL. Among the capabilities identified in the TCL are all hazards planning, criminal investigation and intervention, critical infrastructure protection and risk management, and emergency response communications. Possible Oversight Issues . The TCL establishes expected qualifications to be possessed by state and local governments. It also notes that the "UTL and TCL will be enhanced, revised, and strengthened with periodic input from all levels of government...." This might indicate that the expected levels of TCL proficiency may shift and be subject to negotiation. The TCL also states that a "detailed training analysis for the target capabilities" will be conducted. Issue: To what extent will jurisdictions be expected to be competent in specific capabilities, considering that a state or an urban area's grant application is partially scored on its effectiveness to enhance targeted capabilities? Issue: If expected TCL proficiency may shift, how is a state or urban area to show TCL effectiveness in its grant application? State and Urban Area Reporting and Application Requirements When DHS was established and its initial assistance programs for state and urban area governments were created, only two documents were required to support assistance applications—a State Homeland Security Strategy and a follow-up Categorical Assistance Progress Report . Criteria for the Strategy were established by the new department, but the progress report was carried over from the Department of Justice (DOJ) along with programs that were transferred from DOJ into the new Department of Homeland Security. In FY2003, DHS required states and urban areas to submit an equipment budget worksheet with their grant applications. The worksheet was to list the equipment to be purchased, the number of items, the estimated total cost, and the first responder entity that would receive the equipment. In FY2004, however, DHS stopped requiring the equipment budget worksheet. In the DHS appropriations act of FY2006, approved on October 18, 2005, Congress gave the DHS Secretary the discretion to require additional reports from assistance recipients. Pursuant to that discretionary authority, DHS currently requires the following documents from states and urban areas: a State Homeland Security Strategy ; a Program and Capability Enhancement Plan ; an Investment Justification ; and a Categorical Assistance Progress Report . The required contents of each of these four documents are shown in Table 1 , and they are discussed below. State and Urban Area Homeland Security Strategies The homeland security strategies required for homeland security grant applications from states and urban areas are roadmaps that identify state and urban area homeland security goals and objectives for the fiscal year. The goals and objectives are based on the applicants' self-assessments of their homeland security risks, threats, and needs. Within the strategy, states and urban areas are to provide information on how they plan to use federal assistance to meet their goals and objectives. The strategy is not required to include a list of specific equipment, training, plans, and exercises the applicant proposes. The strategy matches federal assistance with a state or urban area homeland security goal or objective. As a condition for FY2006 funding, DHS required states and urban areas to update the homeland security strategies they prepared for previous grant applications. Program and Capability Enhancement Plan The Enhancement plan is to outline how states and urban areas intend to achieve or enhance their first responder and emergency management capabilities identified on the Target Capabilities List (TCL). The TCL, which is part of the National Preparedness Guidance, is a list of activities and abilities that state and urban area first responder and emergency management entities need to be able to perform in the event of a terrorist attack or disaster. Among the needed TCL capabilities are community preparedness, risk management, law enforcement operations, information sharing, critical infrastructure protection, and emergency operations center management. The plan must be provided to DHS prior to the department's determination of the applicant's federal assistance allocation. The plan does not list specific equipment, training, plans, or exercises. The plan identifies TCL capabilities that states and urban areas intend to achieve or enhance with federal homeland security assistance. Investment Justification Another document DHS requires prior to allocating state and urban area federal assistance is the Investment Justification . The justification lists state and urban area homeland security needs that are identified during the development of the Program and Capability Enhancement Plan . The justification outlines implementation plans that will assist states and urban areas to enhance and develop their homeland security capabilities. As with the Strategy and Enhancement plan, the justification is not required to include specific information on state and urban area expenditures, but identifies need for federal assistance, and how assistance will be used to meet homeland security goals, objectives, and capabilities. These three documents—the State Homeland Security Strategy , the Program and Capability Enhancement Plan , and Investment Justification —are part of the assistance application and are considered by DHS when determining funding allocations. Categorical Assistance Progress Report Following allocation of federal assistance, DHS requires states and urban areas to report twice a year on how they used their federal assistance allocations to meet their homeland security goals and objectives, as identified in each one's Strategy . The reports are to present information on the state's or urban area's progress in achieving its homeland security goals and objectives, but it is are not required to list specific homeland security expenditures. Possible Oversight Issues . During the early years of federal homeland security assistance, DHS required recipients to report expenditures for homeland security equipment, plans, training, or exercises. Those expenditure reports are no longer required. Some critics could argue that this absence of information on state and urban area expenditures might result in DHS being incompletely apprised of state and local homeland security activities, and such a lack of information would impede the department's determination of whether the nation's homeland security needs were being met effectively and efficiently. For example, GAO's Director of Homeland Security and Justice Issues, William O. Jenkins, Jr., made the following statement before California's Little Hoover Commission: In the last several years, the federal government has awarded some $11 billion in grants to federal, state, and local authorities to improve emergency preparedness, response, and recovery capabilities. What is remarkable about the whole area of emergency preparedness and homeland security is how little we know about how states and localities (1) finance their efforts in this area, (2) have used their federal funds, and (3) are assessing the effectiveness with which they spend those funds. On the other hand, one could argue that with all the other information that it requires, DHS does not need to know specific state and urban area expenditures. Issue: Do the present state and urban area reporting and application requirements provide sufficiently comprehensive information to ensure that federal homeland security assistance is used in a manner that contributes to homeland security? Issue: What are the advantages and disadvantages of requiring states and urban areas to submit a detailed list of homeland security expenditures? Allocation Methods In FY2006, DHS allocated the discretionary portions of SHSGP and LETPP grants and all UASI grants on the basis of two factors: risk and effectiveness. Risk DHS defines risk as a function of three variables: Threat—"the likelihood of a type of attack that might be attempted"; Vulnerability—"the likelihood that a terrorist would succeed with a particular type of attack"; and Consequence—"the potential impact of a particular attack." DHS calculates two kinds of risk: asset-based risk , which uses threat values derived from the U.S. intelligence community's assessment of threats to specific critical infrastructure, and geographic-based risk , which uses values based on inherent risks associated with geographic areas, taking into account such factors as international borders, terrorism reports and investigations, and population density. DHS describes its approach to asset-based risk as follows: The asset-based approach uses strategic threat estimates from the Intelligence Community of an adversary's intent and capability to attack different types of assets (such as chemical plants, stadiums, and commercial airports) using different attack methods. DHS analyzes the vulnerability of each asset type relative to each attack method to determine the form of attack most likely to be successful. Additionally, DHS estimates the consequences that successful attacks would have on each asset type, including human health, economic, strategic mission, and psychological impacts. This analysis yields a relative risk estimate for each asset type, which DHS applies to a given geographic area, based on the number of each asset type present within that area. The department explains its complementary "geographic-based risk calculations" as follows: The geographic-based approach allows DHS to consider general characteristics of a geographic area mostly independent of the assets that exist within that area. First, DHS evaluates reported threats, law enforcement activity (using Federal Bureau of Investigation and Immigration and Customs Enforcement terrorism case data), and suspicious incidents reported during the evaluation period. Next, DHS considers vulnerability factors for each geographic area, such as the area's proximity to international borders. Lastly, DHS estimates the potential consequences of an attack on that area, including human health (e.g., population, population density, transient populations), economy (e.g., percentage of Gross Domestic Product, total agriculture sales, international cargo value), strategic mission (e.g., defense industrial base), and psychological impacts." Table 2 below, presents state and urban area assets that DHS considered in the risk model for its grant allocation method. As can clearly be seen in Table 2 , all but two asset types—road interstate bridges and road interstate tunnels—apply both to states and to urban areas. Table 3 , below, presents what DHS calls the "geographic attributes" that the department uses in its geographically based risk analysis. In December 2003, President Bush issued HSPD-7, a directive on Critical Infrastructure Identification, Prioritization, and Protection which established a national policy for federal departments and agencies to identify and prioritize U.S. critical infrastructure and key resources and to protect them from terrorist attacks. DHS is responsible for establishing a risk management framework to coordinate the federal effort. The framework is supported by a comprehensive, national asset inventory—the National Asset Database (NADB). DHS's Office for Infrastructure Protection (IP) is responsible for assessing the risk to the nation's critical infrastructure and key resources. In July 2004, IP requested states to submit critical infrastructure and key resources information. Between July 2004 and July 2005, states identified and provided IP with data for 48,701 assets. DHS used the NADB in its FY2006 grant allocation methods' asset- and geographic-based risk assessments; however the NADB was not the only list of assets that DHS used in its assessments. Effectiveness State and urban area investment justifications (as part of their HSGP grant applications) were evaluated on five effectiveness criteria: Relevance—the relationship of the federal investment to the working principles of the National Preparedness Goal . It is also evaluated through the investment relationship to the National Priorities, TCL, state and urban area homeland security goals and objectives, and Program and Capability Enhancement Plan initiatives. Regionalization—the investment's ability to communicate, plan, and collaborate across first responder and emergency management disciplines and jurisdictions to use limited resources for regional homeland security solutions. The investment encourages states and urban areas to coordinate preparedness activities within and across jurisdictional boundaries by sharing costs, pooling resources, sharing risk, and increasing the value of their preparedness investments through collaborative efforts. Sustainability—the investment's ability to sustain a target capability once the goal of the investment is achieved through the identification of funding sources beyond the current grant cycle. Implementation Approach—the investment's demonstration of the appropriate in-place combination of personnel, resources, and tools to manage the investment. It addresses priorities and delivers desirable results through appropriate expenditure of any requested funding. Impact—the investment's effect on risk, threat, vulnerability, and consequences of catastrophic events the applicants might face. DHS used a peer review process to determine state and urban area Investment Justification effectiveness. The department states: In FY06, more than 100 peer reviewers read the Investment Justifications and worked independently to determine a preliminary effectiveness score before convening in panels to discuss the findings of their review, develop final scores, and provide comments on each submission. The reviewers evaluated submissions based on specific criteria, including relevance, regionalization, sustainability, implementation approach, and impact. Each submission was reviewed and scored in two different ways, resulting in an average score for the Individual Investments and an overall score for the submission. DHS combined the average score of the individual Investments with the overall submission score, as determined by the peer review panel, to determine the final effectiveness score. Combining of Risk and Effectiveness . In order to allocate federal homeland security assistance based upon relative risk and anticipated effectiveness scores, DHS grouped applicants into four categories: higher risk—higher effectiveness; higher risk—lower effectiveness; lower risk—higher effectiveness; and lower risk—lower effectiveness. DHS states that it targeted federal assistance to applicants with the greatest risk, while still funding "significant efforts undertaken by applicants in presenting effective solutions." Each state's and urban area's final funding allocation was determined by combining its risk and effectiveness scores, with two-thirds weight applied to risk, and one-third weight applied to effectiveness. Possible Oversight Issues . Since DHS's inception, Congress has given the department complete discretion in determining the risk and effectiveness factors used in allocating UASI funds. Additionally, Congress has given DHS discretion in determining the factors used to allocate the remaining SHSGP and LETPP total appropriations following the allocation of the guaranteed amount of 0.75% of total appropriations. Oversight of DHS' risk-based methodology and risk-based distribution formulas may address the weights given to risk and effectiveness factors, specific threats to key assets and critical infrastructure, and plausible consequences to identified threats. Issue: Who should identify the risk and effectiveness factors to be considered? DHS has adopted allocation methodologies as explained above, and they may be the most appropriate. DHS has opted to use two categories for risk factors, asset types and geographic attributes (see Tables 2 and 3 ). There are other approaches and factors. Examples of risk factors could include threats, homeland security capabilities, population, critical infrastructure assets, and transportation assets. In order to accurately assess the risk factors, one would need to evaluate the threats to the population, critical infrastructure, transportation, and the like, and determine the consequences of threats. Additionally, effectiveness factors such as the homeland security capabilities to prevent, respond to, and recover from terrorist attacks, and natural and technical disasters would need to be assessed. The methods of threat and vulnerability assessment suggest a variety of factors that might be used in devising risk-based funding approaches for allocating homeland security assistance to states and urban areas. The DHS Inspector General's report on the NADB states that IP's data request to states generated an "abundance of unusual, or out-of-place, assets" whose criticality is not readily apparent. Examples of "out-of-place" assets cited include a psychiatry behavioral clinic, an ice cream parlor, a Sears Auto center, and an apple and pork festival. Additionally, the report identifies inconsistencies when comparing state-by-state asset totals. The DHS Inspector General states: Several of DHS' protection programs utilize information from the NADB to help allocate resources. However, in light of the variation in reporting between various sectors and states as well as the lack of detailed information on sites, we are not confident that the NADB can yet support effective grant decision-making. Issue: What risk and effectiveness factors are most appropriate? Issue: How did DHS determine what asset types and geographic attributes to use, and how are these weighted in a state's or an urban area's risk assessment? Issue: What weight did DHS give to NADB assets, and what other sources did DHS use in determining asset risks? In considering risk and effectiveness factors, a question arises of what criteria to use when assessing potential risk-based formula variables. Risk factors include threats, the entity threatened, and the consequences of the threat to the specified entity. The agreement of potential risk and need factors is usually considered against the following criteria: Validity—Do the factors serve as measures or indicators of threats, the vulnerability of the potential target, or potential consequence if catastrophe strikes the target? For example, does higher population density indicate greater vulnerability to an attack involving a weapon of mass destruction? What attributes associated with densely populated areas (e.g., numbers of law enforcement personnel on duty, the presence of sensors, cameras, and other technology) could reduce the validity of the factor? Relevance—What is the relationship between the factors and the identified items or characteristics? Is the relationship straightforward, or is it murky? For example, the total number of vehicles traveling through a mid-city tunnel would probably not be pertinent to a consideration of the risk of a hazardous material accident. The number of commercial trucks carrying hazardous material, however, would be more relevant. Reliability—The quality of the source of the information used in a risk assessment process is relevant. For example, population data from the U.S. Census Bureau are generally regarded as reliable and are used in a variety of formulas for allocating aid grants. Timeliness—The currency of the data affects the quality of the discussion on potential risks. For example, daily intelligence reports that provide information on current terrorist threats would be considered more timely than monthly or quarterly reports. Availability—If the validity of a risk factor is to be widely accepted, data used in a formula as a variable may need to be readily and publicly available. Intelligence information that has been classified by the federal government and not shared with state and local officials would fail to satisfy this criterion. Additionally, DHS requires states and urban areas to identify first responder and emergency management capability enhancement and sustainment needs in the Program and Capability Enhancement Plan . The plan is part of their HSGP applications. As noted earlier, states and urban areas are required to submit Investment Justifications that detail how federal assistance would address identified homeland security needs and how the assistance would address state and urban area counter-terrorism-related capabilities. The Investment Justifications are then evaluated through a peer review process (administered by Booz Allen Hamilton). The peer review process, the justifications, and the identified effectiveness are not publically available. Additionally, the effectiveness factors are not identified by DHS; instead states and urban areas are required to determine their individual needs and display how federal assistance would meet the needs. DHS also has to rely on information from other agencies such as the Federal Bureau of Investigation (FBI) and may not be able validate or confirm the information used in their state and urban area risk assessments. Issue: How should the risk and effectiveness factors be evaluated? Issue: Is DHS able to validate and confirm the reliability of asset types and geographic attributes it receives from other federal entities? DHS has elected not to use a 100% risk-based formula for allocating the remainder of SHSGP and LETPP total appropriations, and not to use a 100% risk-based allocation for UASI. Instead, DHS has developed a two-part approach to determining state and urban area allocations. This approach consists of a DHS risk assessment and the state's and urban area's justification of need for funding. Critics may argue that by not allocating strictly on risk and by including a needs portion to the distribution method, DHS has not addressed criticisms, as from the 9/11 Commission, in its 2004 report, which advocate a purely risk-based allocation of homeland security funding. In this viewpoint, by coupling effectiveness with risk, DHS may be providing funding to states and urban areas that do not have a high risk of terrorism. Conversely, by allocating funding based on both risk and effectiveness, proponents could argue that DHS is addressing not only terrorism risks, but also a state's and an urban area's capability to address those terrorism risks. The issue of risk- and effectiveness-based funding is being raised in oversight of FY2006 state allocations. Issue: Has DHS compared a 100% risk-based methodology against a risk and effectiveness methodology? If, so how does it change state and urban area allocations? In the FY2006 DHS appropriations act ( P.L. 109-90 ), Congress mandated that GAO conduct an analysis of the threat and risk factors DHS used to allocate SHSGP, LETPP, and UASI grant funds, and report on the findings by November 17, 2005, which was prior to DHS's completion of its FY2006 HSGP guidance. GAO, using data and information available at the time, reviewed DHS allocation methodologies to determine (1) how DHS measured risk, (2) what risk factors were included in the methodologies and why, (3) how the risk factors were used for assessing risks for the purposes of allocating FY2006 HSGP funds, and (4) how DHS determined which risk factors had the greatest weight in the risk analysis portion of the methodologies. GAO determined that DHS's risk analysis focused on terrorism, and briefed congressional committees on the results of its analysis. GAO did not issue a public report, however, due to security classification of the data used in the analysis. GAO was not required to validate the methodologies, but to analyze them and report to Congress on its findings. In December 2004, the Office of Management and Budget (OMB) issued a "Final Information Quality Bulletin for Peer Review." The bulletin is applicable to all federal departments and agencies and establishes government-wide guidance on enhancing the practice of peer-review of government scientific information. OMB states that peer review can increase the quality and credibility of the scientific information developed by the federal government. "Peer review" is characterized as ...one of the most important procedures used to ensure that the quality of published information meets the standards of scientific and technical community. It is a form of deliberation involving an exchange of judgements about the appropriateness of methods and the strength of the author's inferences. Peer review involves the review of a draft product for quality by specialists in the field who were not involved in producing the draft. The bulletin defines "scientific information" as factual inputs, data, models, analyses, technical information, or scientific assessments. OMB requires each federal agency to subject scientific information to peer review prior to dissemination. The bulletin provides broad discretion in determining what type of peer review is appropriate and what procedures should be employed to select appropriate reviewers. If DHS's FY2006 HSGP allocation methodologies were defined "scientific assessments" of terrorism risks, GAO's review of the methodologies could be considered an independent peer review. Conversely, GAO's review may not have been complete if GAO was not given access to all the information used in DHS's allocation methodology or if DHS had not completed the assessment methods. Issue: Should DHS arrange an independent peer review of its allocation methodologies prior to disseminating the grant application guidance and determining state and urban area allocations? Appendix. FY2003-FY2006 DHS Grant Allocation Methodologies

On May 31, 2006, the U.S. Department of Homeland Security (DHS) announced FY2006 allocations of federal homeland security assistance to states and urban areas. That assistance is made available through the following three programs: the State Homeland Security Grant Program (SHSGP), which is designed to fund state homeland security strategy activities to build first responder and emergency management capabilities to prevent, protect against, respond to, and recover from acts of terrorism and catastrophic events; the Law Enforcement Terrorism Prevention Program (LETPP), which focuses on law enforcement and public safety activities to prevent terrorist attacks through such activities as intelligence gathering, information sharing, and target hardening; and the Urban Area Security Initiative (UASI), which is designed to fund designated high-threat, high-risk urban-area activities to prevent, protect against, and respond to terrorist attacks and catastrophic events. The programs provide funds to address planning, operations, equipment, training, and exercise needs of states and high-threat, high-density urban areas. The purpose of the set of programs is to help recipients build and sustain first responder and emergency management capabilities to prevent, protect against, respond to, and recover from terrorist attacks and catastrophic events. The USA PATRIOT Act guarantees each state an amount of 0.75% of total SHSGP and LETPP appropriations. The remaining appropriation and the appropriation for UASI grants are allocated at the discretion of the Department of Homeland Security. This CRS report explains the FY2003 through FY2006 administrative guidance that governed the three homeland security assistance programs, discusses the changes in DHS requirements for grant applications and subsequent reporting by recipients, describes the DHS grant allocation methods, and identifies pertinent oversight questions that may be of interest to Congress. For information on FY2007 homeland security grant guidance, see CRS Report RL33859, Fiscal Year 2007 Homeland Security Grant Program, H.R. 1, and S. 4: Description and Analysis , by [author name scrubbed] and [author name scrubbed].

Introduction Facing significant pressure to reduce the federal budget deficit, some in the 112 th Congress viewed international affairs spending, particularly for foreign aid programs, as expenditures of limited benefit to U.S. taxpayers and eligible for cuts. Others favored a more robust foreign affairs budget for various reasons. In particular, some Members of Congress in both political parties, as well as the previous and current Secretaries of Defense, viewed a solid foreign affairs budget as essential to assisting the Defense Department in promoting U.S. national security and foreign policy interests, perhaps even saving long-term spending by preventing the much costlier use of troops overseas. To address budget costs, Congress considered the FY2013 Department of State, Foreign Operations, and Related Agencies appropriations in the context of the Budget Control Act of 2011. (See text box below.) Congress delayed passing most appropriations bills, including State-Foreign Operations, until after the start of the new fiscal year and the fall elections. It passed a continuing resolution (CR) that provided government funding until March 27, 2013. With that resolution soon to expire, the House passed legislation ( H.R. 933 ) on March 6, 2013, that would fund federal programs for the remainder of FY2013. The Senate approved an expanded version of the bill on March 20, 2013, and the House adopted the Senate version the next day. The legislation was signed into law on March 26, 2013 ( P.L. 113-6 ). The State-Foreign Operations appropriation, typically representing about 1.5% of the total federal budget in recent years, supports most programs and activities within the international affairs budget account, known as Function 150, including foreign economic and security assistance, contributions to international organizations and multilateral financial institutions, State Department and U.S. Agency for International Development (USAID) operations, public diplomacy, and international broadcasting programs. The bill does not align perfectly with the international affairs budget, however. Food aid, which is appropriated through the Agriculture appropriations bill, and the International Trade Commission and Foreign Claims Settlement Commission, both funded through the Commerce-Science-Justice appropriation, are international affairs (Function 150) programs not funded through the State-Foreign Operations appropriations bill. Furthermore, a number of international commissions that are not part of Function 150, such as the International Boundary and Water Commission, are funded through the State-Foreign Operations bill. A chart illustrating the organizational structure of the State-Foreign Operations appropriations bill is provided in Appendix A . Abbreviations of terms used throughout this report are in Appendix B . The report focuses on the accounts funded through the State-Foreign Operations appropriations bill (see Appendix C for data), and it also provides appropriations figures for the entire international affairs (Function 150) budget in Appendix D . Most Recent Developments and Legislative Status In order of the most recent events, congressional activity related to the State-Foreign Operations appropriations includes the following as summarized in Table 1 below: On March 26, 2013, President Obama signed the FY2013 Defense and Military Construction/VA, Full Year Continuing Resolution, P.L. 113-6 (see text box above), which funds most State-Foreign operations accounts for the remainder of FY2013 at the FY2012-enacted level, not including sequestration. Appendix C has been updated to show enacted FY2013 funding by account, but does not reflect estimated budget sequestration reductions. On September 28, 2012, President Obama signed the Continuing Appropriations Resolution, 2013, H.J.Res. 117 into law ( P.L. 112-175 ), funding the government until March 27, 2013. On September 22, 2012, the Senate passed H.J.Res. 117 . On September 13, 2012, the House passed H.J.Res. 117 , a continuing resolution that would fund the federal government through March 27, 2013. H.J.Res. 117 would provide 0.612% more than FY2012 levels for State and Foreign Operations non-OCO funded activities. OCO-designated activities would be funded at the FY2012-enacted level. According to the Congressional Budget Office, the annualized State-Foreign Operations funding rate under the CR was estimated to be $53.52 billion. On May 24, 2012, the Senate Appropriations Committee approved by a vote of 29-1 its FY2013 State-Foreign Operations appropriations bill ( S. 3241 / S.Rept. 112-172 ). The bill provided a total of $52.3 billion, including $2.3 billion in Overseas Contingency Operations (OCO) funds. This was 5% below the $54.9 billion requested and 2% below the FY2012 estimated level. For the State Department and Related Agencies, the Senate sets FY2013 funding at $16.3 billion, including $1.6 billion for OCO. It funded Foreign Operations at $36.0 billion, including $709.8 million in OCO funds. On May 17, 2012, the House Appropriations Committee approved by voice vote its FY2013 State-Foreign Operations appropriations bill ( H.R. 5857 / H.Rept. 112-494 ) totaling $40.3 billion for regular funding and $8.2 billion for OCO. In total, the bill's $48.5 billion was 12% less than requested and 9% below the FY2012 estimated levels. Within the total, the bill provided $15.8 billion for the Department of State and Related Agencies accounts, including $2.9 billion in OCO funding and $32.9 billion for Foreign Operations accounts, including $5.4 billion in OCO funding On April 25, using the caps in the March 29, 2012, House-passed budget resolution ( H.Con.Res. 112 ) for guidance, the House Appropriations Committee approved its initial subcommittee allocations. The House allocation for the State-Foreign Operations subcommittee was $48.38 billion, including $8.2 billion in OCO funds, or almost 12% below the Administration's request and nearly 9% below the Senate allocation. On April 19, using the FY2013 budget authority caps in the Budget Control Act of 2011 ( P.L. 112-25 ) as guidance, the Senate Appropriations Committee adopted its initial FY2013 subcommittee allocations. The Senate allocated $53.02 billion for the State-Foreign Operations subcommittee, or 3% less than the Administration's request. This included $3.2 billion in OCO funds. On February 13, 2012, the Obama Administration submitted its FY2013 budget request to Congress, seeking an increase of 2.6% above the estimated FY2012 level for the Department of State-Foreign Operations and Related Agencies. The FY2013 Request and Congressional Action On February 13, 2012, the Obama Administration submitted its FY2013 budget proposal. The Administration's priorities on foreign affairs funding for FY2013 did not differ significantly from the congressional priorities indicated by the enacted FY2012 funding levels. The FY2013 request totaled $54.9 billion for the State-Foreign Operations appropriations, including a core budget proposal of $46.6 billion plus $8.2 billion for extraordinary and temporary war-related Overseas Contingency Operations (OCO) in frontline states. The total request represented an increase of 2.6% over the estimated FY2012 funding level for State-Foreign Operations, including a 4.5% increase in State Department and Related Agencies accounts and a 0.1% increase in Foreign Operations accounts. Within the budget, the Administration requested authority and $770 million in funds for a new bilateral economic aid account—the Middle East and North Africa Incentive Fund (MENA IF)—to provide flexible and transparent support for Arab Spring countries in transition toward democracy. Within the security aid category, the Administration sought $800 million for the Pakistan Counterinsurgency Capability Fund (PCCF), even though most past PCCF funding has not been disbursed and many lawmakers have voiced concerns about U.S.-Pakistan relations, in general, and aid to Pakistan, specifically. Figure 1 provides a breakout of the FY2013 request by funding category. The FY2013 request reflected a slight increase of State Department Administration of Foreign Affairs funding as a share of the total request, from 25% in FY2012 to 26% requested for FY2013, a slight decrease from 40% in FY2012 to 39% requested for FY2013 for bilateral economic aid, and a small increase from 19% in FY2012 to 19.5% in the FY2013 request for security assistance funding. These three categories make up more than 85% of the total State-Foreign Operations funding requested. For a full listing of funds requested for State, Foreign Operations and Related Agency accounts, by account, see Appendix C . (For a description of all the accounts, see CRS Report R40482, State, Foreign Operations Appropriations: A Guide to Component Accounts , by [author name scrubbed] and [author name scrubbed].) State Department FY2013 Budget Request―Key Issues The State Department and Related Agencies portion of the international affairs budget request included funding for State Department operations, International Organizations (including U.S. assessed dues to the U.N. system) and International Peacekeeping activities, International Broadcasting, and entities such as the National Endowment for Democracy (NED) and the U.S. Institute of Peace (USIP). The State Department and Related Agencies accounts would have seen, under the Administration request, a 4.5% boost in FY2013 to a total of $18.8 billion. This amount included $14.1 billion for Administration of Foreign Affairs, which provided for the personnel, operations, and programs of the department as well as the construction and maintenance of its facilities around the world. The FY2013 request focused on supporting several key efforts, including the unprecedented military-to-civilian transition in Iraq and ongoing State Department-led efforts in the other "frontline states" of Afghanistan and Pakistan; internal reorganizations under the Quadrennial Diplomacy and Development Review (QDDR); and ongoing efforts addressing personnel issues. These issues are highlighted below. Note that the synopses of legislative action in the following sections reflect the initial proposals considered by each chamber, not the part-year or full-year FY2013 continuing resolutions. Iraq Operations: From "Transition" to Normalized Relations In what U.S. officials have called the largest military-to-civilian transition since the Marshall Plan, the Department of State has become the lead agency for all U.S. programs in Iraq, after the departure of U.S. military forces in late 2011. The State Department is pursuing a wide-ranging policy agenda while also seeking to execute the unprecedented scope of responsibilities it took over from the U.S. military forces that were withdrawn, ranging from air transport, to environmental cleanup, to medical support. For FY2013, the first post-transition fiscal year, the Administration requested 23% less funding than the estimated FY2012 level for State Operations in Iraq: $2.7 billion, including $2.3 billion in OCO. Officials suggested that this lower funding level reflects the Administration's intent to "normalize" the U.S. presence in Iraq. Its original plans in the FY2012 request for $3.7 billion included funds for an embassy branch office in Diyala that was not included in the FY2013 request, as well as funding for another office in Mosul that has been postponed. Factors cited by the State Department as cost-saving included a planned 25% reduction in the State Department presence in Iraq by the fall of 2012, reductions in security and sustainment contracts, and anticipated completion of construction that was funded in FY2012. The House appropriations bill included a total of $2.8 billion for State Department operations in the three frontline states (Iraq, Afghanistan, and Pakistan); funding for increased security for staff in these states was provided, but funding for increased staff was not. The Senate Appropriations Committee bill stated that new funding, in addition to carryover balances, provided a total of $2.1 billion for Department of State operations in Iraq in FY2013, a level it deemed adequate under State's revised operational assumptions. QDDR Implementation The FY2013 budget request was the first to reflect reforms outlined in the QDDR. The QDDR, completed in the fall of 2010 and modeled on the Defense Department's Quadrennial Defense Reviews, identified several reforms intended to shift diplomatic resources towards the highest priority countries and programs. Among the reforms spelled out in the QDDR were the establishment of a new Bureau of Energy Resources and elevation of the Office of the Coordinator for Counterterrorism to a Bureau. Both occurred in 2011 without any specific authorization or additional funding from Congress. Additionally, activities of the Office of the Coordinator for Reconstruction and Stabilization were subsumed in the renamed Bureau of Conflict and Stabilization Operations. Funding for the State Department's operations in support of the Counterterrorism mission has increased from $3.2 million in FY2011, when the Office of Counterterrorism was an element of the Office of the Secretary of State, to $19 million for the new Bureau of Counterterrorism in the FY2013 request (an increase of $2.4 million over the FY2012 levels). The Administration requested funds for an additional 12 new positions within the Bureau, in addition to the 70 U.S. direct-hires and 30 contract staff already in place. Neither the House nor Senate bill mentioned the Bureau of Counterterrorism, but could still provide funding for new hires within the Diplomatic and Consular Programs (D&CP) account. Bureau of Energy Resources The Bureau of Energy Resources (ENR) similarly sought 22 additional direct-hire positions in the FY2013 budget request, at a cost of $5.4 million (out of a total $16.9 million budget request for ENR). The Bureau, announced in late 2011, requested the additional funding to grow its capacity "to strengthen market incentives to transform the future of energy supplies, deepening the Department's human resource expertise on energy matters, and institutionalizing improved capabilities to engage more broadly and deeply on U.S. global energy priorities." The Administration's funding request also included plans for the Bureau to establish four regional hubs in Istanbul, Singapore, Johannesburg, and Rio de Janeiro, to engage regional partners and promote energy-issue involvement at posts and in State's regional bureaus. The House Appropriations Committee recommendation did not include the additional $5.4 million and 22 new positions specifically for the Bureau of Energy Resources. The Senate Appropriations Committee report did not mention this Bureau. Funding within the D&CP could support these new hires, however. Bureau of Conflict and Stabilization Operations The Administration's FY2013 request for the Bureau of Conflict and Stabilization Operations (CSO) totaled $56.5 million, an 86% increase over FY2012 levels. Staffing levels would drop by 64 positions as part of a restructuring to make the Bureau more agile and expeditionary, with a greater emphasis on creating a flexible response capacity with a smaller staff. The proposed change was intended to produce greater deployment capacity, but with significantly less overhead. In addition, the Civilian Response Corps (CRC) model was modified from a standing group of experts deployed less than half the time, to a structure that funds experts only when they are deployed; as part of this reorganization, the FY2012 high of 144 CRC members would be reduced by 76 members. The House Appropriations Committee's FY2013 proposal replicated its FY2012 action for Conflict and Stabilization Operations, continuing to provide authority for the Secretary of State to transfer up to $35 million of the funds appropriated under the D&CP heading to CSO. It also provided $8.5 million in OCO funding, as it did in FY2012. The Senate Appropriations Committee proposal included no funding for Conflict and Stabilization Operations, but did authorize up to $56.5 million (the amount requested) to be transferred from Diplomatic & Consular Program funding to this account, as well as an additional $10 million from the Complex Crisis Fund, as requested by the Administration. Human Resource Issues The Administration's FY2013 request for additional human resources D&CP was a total of $2.5 billion, or $71.2 million above its FY2012 request. Of the FY2013 request, $24.9 million was requested to bolster State's staffing by 121 new positions (including those mentioned in the above sections) in a continuation of State's multi-year hiring efforts to fill human resources gaps and bolster new programs and organizations under the "Diplomacy 3.0" initiative. Secretary Clinton originally sought to increase the number of Foreign Service Officers (FSO) by 25% from 2008 to 2014. With the proposed FY2013 funding, State would have reached 18% growth since 2008, through the hiring of an additional 82 FSOs. The proposed funding also would have permitted State to hire an additional 39 civil servants. In the context of constrained budgeting, the department postponed its goal of 25% growth in the Foreign Service to future years beyond 2014. The Administration also requested $81.4 million for the third and final phase of implementing its Overseas Comparability Pay (OCP) for FSOs. According to the Department of State, prior to 2009 Foreign Service employees transferring abroad experienced a 23.1% cut in basic pay from what they had been receiving as locality pay for serving in Washington, DC. This situation was compounded by lowered employer contributions by the department to the Federal Thrift Savings Plan. Entry and mid-level Foreign Service employees were particularly affected, according to State officials, who suggested that this issue could affect diplomatic readiness by increased attrition and recruitment challenges, and is "critical for the Department's Foreign Service competitiveness in the workplace." Congress approved two prior OCP adjustments since 2009, reducing the pay differential by nearly 70%. The FY2013 request would have provided for a third and final tranche of funds to bring the comparability pay level to the Washington, DC, locality pay rate. On the above human resources issues, the House Appropriations Committee recommendation included no funding for hiring above attrition in FY2013. The committee also rejected the department's requested extension of authority for overseas comparability pay, stating that "the authority to grant overseas comparability pay is a matter within the jurisdiction of the authorization committee and should be considered in the context of legislation addressing the authorities and compensation rules governing the Foreign Service." The Senate Appropriations Committee also did not include the overseas comparability pay authority or funding in its FY2013 proposal. Palestinian Statehood and the United Nations In October 2011, the United Nations Educational, Scientific and Cultural Organization (UNESCO) voted to admit Palestine as a full member, prolonging a U.S. policy debate that is being played out, in part, in the State-Foreign Operations appropriations process. The United States has long opposed any path to Palestinian statehood outside of a negotiated agreement with Israel, and U.S. law prohibits American funding, which is assessed at 22% of the UNESCO budget, to any U.N. agency that accepts the Palestinians as a full member. U.S. assessed contributions to UNESCO within the State Department's Contributions to International Organizations (CIO) account have been withheld since the vote. The Administration, which supports U.S. participation in UNESCO, sought almost $80 million for UNESCO to pay U.S. assessed contributions for calendar year 2012, explaining that it would work with Congress to seek authority to waive the restriction. The House committee report stated that the House specifically would withhold U.S. contributions to UNESCO within the CIO account. The report also included language prohibiting the disbursement of Economic Support Funds (ESF) assistance to the Palestinian Authority if, after enactment of the legislation, the Palestinians gain full membership in the United Nations or any U.N. entity outside of a negotiated Israeli-Palestinian agreement. The Senate legislation did not recommend funding for UNESCO within the CIO account, which it said is prohibited by law, and also included the same ESF restriction, as well as an explicit prohibition on U.S. funding to UNESCO and other U.N. entities that grant full membership status to the Palestinian Authority. Both proposals included less funding than requested for the International Organizations and Programs (IO&P) account through which a small ($880,000) amount was requested for U.S. voluntary contributions to UNESCO for International Contributions for Scientific, Educational, and Cultural Activities (UNESCO/ICSECA) for FY22013. Foreign Operations FY2013 Budget Request―Key Issues The Foreign Operations budget comprises the majority of both bilateral and multilateral U.S. foreign assistance programs. The main exception is food assistance, which is appropriated through the Agriculture Appropriations bill. Foreign Operations accounts are managed primarily by USAID and the State Department, together with several smaller independent foreign assistance agencies such as the Millennium Challenge Corporation and the Peace Corps, as well as the Inter-American and African Development Foundations, the Overseas Private Investment Corporation (OPIC), and the Trade and Development Agency (TDA). The Foreign Operations budget also encompasses U.S. contributions to major multilateral financial institutions, such as the World Bank and U.N. entities, and includes funds for the Export-Import Bank, whose activities are regarded more as trade promotion than foreign aid. On occasion, the budget replenishes U.S. financial commitments to international financial institutions, such as the World Bank and the International Monetary Fund. The Foreign Operations budget request for FY2013 totaled $36.07 billion, representing a 0.1% increase from the enacted FY2012 level of $36.03 billion. The request continued to emphasize the Administration's ongoing foreign assistance initiatives—the Global Health Initiative, Food Security Initiative, and the Global Climate Change Initiative—as well as funding for the "front line" war-related states of Iraq, Afghanistan, and Pakistan. In addition, the request called for a new regional funding account to respond to political transitions in the Middle East and North Africa. House and Senate committee action indicated that these priorities may not be shared by all in Congress. In addition to funding levels, policy issues such as restrictions on funding for international family planning programs and conditions on aid to certain countries and entities continued to be a focus of the congressional foreign aid funding debate. These key issues are highlighted below. Note that the synopses of legislative action in the following sections reflect the initial proposals considered by each chamber, not the part-year or full-year FY2013 continuing resolutions. Middle East and North Africa Incentive Fund With recent popular uprisings leading to the fall of some governments in the Middle East and North Africa, the use of foreign assistance as a democracy promotion tool has received significant scrutiny. In particular, the fall of the Mubarak regime in Egypt, long a top U.S. aid recipient, and the U.S. role in ousting Muammar Gaddafi in Libya, have raised a number of policy questions about the appropriate U.S. role in foreign political transitions. Members of the 112 th Congress had expressed interest in supporting popular uprisings against undemocratic regimes, yet were concerned about accountability and potential unintended consequences of providing assistance to entities that may pursue actions counter to U.S. policy interests. To support effective U.S. engagement in the evolving situation in the Middle East, the Administration proposed in its FY2013 budget request the creation of a $770 million Middle East and North Africa Incentive Fund (MENA IF) . Of the requested funds, some would have supported existing programs: $65 million would be base funding for the Middle East Partnership Initiative (MEPI) and $5 million would be for the Office of Middle East Programs (OMEP) regional activities. These programs are currently funded through regional Economic Support Funds. The remaining $700 million would have been unallocated funds intended to provide incentives for beneficiary countries to move toward democracy, while allowing for State Department flexibility and transparency in supporting Arab Spring countries in transition, eliminating the need to transfer funds from other programs and accounts to meet evolving circumstances. The Administration stated that the funds would have been allocated in close consultation with Congress, but suggested that the funds could have been used for humanitarian relief, contributions to U.N. peacekeeping activities, or bilateral loan forgiveness, among other possibilities, depending on the circumstances. Some Members of Congress expressed concerns about the proposed MENA IF, which some believe would have given the Administration too much discretion and Congress too little opportunity for oversight. The House committee bill provided no funding for a new account, but would have allocated $175 million within the Economic Support Fund (ESF) account and $25 million in the Foreign Military Finance account for "Middle East Response," including the funding of MEPI and OMEP and no less than $50 million for Jordan, leaving $75 million unallocated and "flexible." In sharp contrast, the Senate committee report included $1 billion for MENA IF—about 30% more than the $770 million requested. The bill would have increased MEPI funding to $70.0 million. Frontline States As a result of their strategic significance in the so-called Global War on Terror, Afghanistan, Iraq, and Pakistan, referred to by the Administration as the "frontline states," consistently have been top U.S. aid recipients over the past decade. For FY2013, the Administration requested $6.8 billion (including OCO), or about 19% of the foreign operations budget, for aid to these three countries. Iraq For FY2013, the Administration sought $2.1 billion in foreign operations funds for Iraq, of which the great majority, $1.8 billion, was designated as OCO. This was 22% more than the FY2012 enacted level. The department's FY2013 request for Iraq included $1 billion for the Police Development Program (PDP), the State Department's largest single program in Iraq. The Administration stated that the funding reflected the transition to full State Department authority of the PDP, which was described in State's budget justification as the cornerstone of U.S. security engagement and assistance in Iraq. In the spring of 2012, the PDP came under scrutiny when news reports suggested that the program was being reduced significantly and might be abandoned altogether. The U.S. Embassy in Baghdad forcefully rejected this notion in a statement calling the program a "vital part of the U.S.-Iraqi relationship and an effective means of standing by our Iraqi friends." Still, doubts remain among some foreign policy observers regarding the program's ultimate efficacy in the face of numerous obstacles including security challenges and Iraqi indifference. The House legislation did not provide specific funds for Iraq, but expressed support for the PDP while requiring the Administration to report on revised personnel, scope, and costs of the program to reflect a review conducted earlier this year. The House report ( H.Rept. 112-494 ) stated that appropriations provided within the International Narcotics Control and Law Enforcement (INCLE) program would continue funding the PDP program. The Senate Appropriations Committee provided $635 million in foreign operations funds for Iraq, but did not include funding for the PDP, citing its largely unsuccessful implementation due to Iraqi disinterest and inadequate planning by the Department of State. Afghanistan For FY2013, the Administration requested $2.5 billion in foreign operations funds for Afghanistan, of which almost half, or $1.2 billion, was designated as OCO. This was 7.6% more than the FY2012 enacted level. According to the Administration, the increase reflected a surge in infrastructure programs and other investments in economic growth, as well as the ramping up of justice sector programs in anticipation of the transition of these programs from the Department of Defense to civilian management. The House legislation did not specify total funding for Afghanistan and specified that assistance to Afghanistan would be withheld until certification that adequate security is in place for civilian aid workers. The Senate bill included $1.8 billion in foreign operations funds for Afghanistan, asserting that less funding than requested would be needed as the Afghan government is taking control of more programs. Pakistan The Administration's FY2013 budget requested $2.2 billion in foreign operations funds for Pakistan, including $800 million for the Pakistan Counterinsurgency Capability Fund (PCCF) designated as OCO. This was about 6% more than the FY2012 enacted level. According to the Administration, the request reflected a modest increase in civilian assistance focused on energy, economic growth, stabilization, education, and health, but remained well below the levels authorized in the Enhance Partnership with Pakistan Act of 2009. The House legislation did not specify an aid level for Pakistan, and prohibited all economic and security assistance if Pakistan is uncooperative in anti-terrorism and other efforts. The Senate bill included $842.3 million in foreign operations funds for Pakistan, including $50 million for the PCCF (reflecting the significant unobligated funds still in the pipeline, rather than lack of support for the activities funded) and continued existing aid restrictions. The Senate bill also included new conditions on aid to Pakistan, including withholding $33 million in Foreign Military Financing (FMF) to Pakistan until the Secretary of State certifies that Dr. Shakil Afridi is released from prison and cleared of all charges related to providing assistance to the United States in locating Osama bin Laden. Administration Initiatives Global Health Initiative The budget request included roughly $7.9 billion for the Administration's Global Health Initiative (GHI) through State-Foreign Operations appropriations, compared to the FY2012 enacted level of $8.2 billion. The proposed cut of approximately $300.0 million was the largest foreign operations account reduction requested, in dollar terms, and would have represented the end of a decade-long growth trend in global health funding. Compared to the FY2012-enacted amount, the request included decreases for each global health activity area, except for a 1.2% increase in funding for international family planning and reproductive health and a 57% increase in funding ($1.7 billion) for the Global Fund to Fight HIV, Tuberculosis and Malaria (Global Fund). The most significant proposed reductions were for bilateral HIV/AIDS activities. The Administration asserted that current goals could be attained at the lower funding level as a result of program efficiencies and reduced drug costs. Both House and Senate would have provided more than the request. The House legislation provided $8 billion for global health, slightly more than the request, which included $1.3 billion for a U.S. contribution to the Global Fund. The Senate proposed $8.5 billion for the GHI, 8% more than was requested, including $1.7 billion for the Global Fund, and 4% more than the FY2012 level. Food Security Feed the Future (FtF), the Obama Administration's food security initiative announced in 2010, continues to be a priority for the Administration. The FY2013 request was for $1.1 billion in Foreign Operations funds for related programs. FtF is the outgrowth of a pledge made by the President at a G-8 summit in 2009 to provide at least $3.5 billion over three years (FY2010-FY2012) to address root causes of global hunger. The initiative also emphasizes the benefits of working multilaterally and in partnership with other stakeholders to leverage resources. The FY2013 request included $134 million for the multi-donor Global Agriculture and Food Security Program (GAFSP), managed by the World Bank. The House proposal for FY2013 included language supporting the goals of FtF, but did not specify a funding level, with the exception of $99.8 million allocated for GAFSP. The Senate proposal recommended that $1.2 billion in assistance from all accounts in the act be made available for agricultural and food security, including $200 million specifically appropriated for GAFSP. Climate Change The FY2013 request for programs supporting the Global Climate Change Initiative (GCCI) was $770 million, a 1% increase from the $760.9 million enacted estimate for FY2012. Funds for GCCI activities flow through a number of appropriations accounts, including ESF, DA, IO&P, and several multilateral funds. The initiative supports activities relating to climate change with an emphasis on adaptation, deployment of clean energy technologies, and reduction of greenhouse gas emissions through sustainable landscapes. A significant portion of this climate change funding would be channeled through World Bank Trust Funds, which the Administration promotes as a cost effective approach, claiming that every dollar of U.S. contribution to these funds leverages four to five dollars from other donor countries and 6 to 10 times that amount from other sources. The House and Senate took notably different positions on GCCI in their FY2013 proposals. The House legislation did not mention the GCCI and recommended zero funding for the Clean Technology Fund and Strategic Climate Fund, while providing just half of the requested funds for the Global Environment Facility (GEF). The Senate committee chose not to provide a minimum funding level for climate change programs as a whole, but recommended that $111 million be spent on Sustainable Landscapes, a pillar of the GCCI. The Senate also indicated strong support for the multilateral climate change funds, providing $139.4 million for the GEF, $100.0 million for the Strategic Climate Fund, and $300.0 million for the Clean Technology Fund—exceeding the Administration's request for each account. International Family Planning and Abortion-Related Issues21 The Administration requested $643 million for family planning and reproductive health activities in FY2013. These activities have generated contentious debate in Congress for over three decades, primarily over policy rather than funding concerns, resulting in frequent clarification and modification of family planning laws and policies. Recent congressional debate centers around two key issues: (1) implementation of the "Mexico City policy" and (2) U.S. funding of the U.N. Population Fund (UNFPA). The Mexico City policy, issued by President Reagan in 1984, required foreign NGOs 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 undertaken with non-U.S. funds. The policy has been rescinded and reissued by past and current Administrations. It was most recently rescinded by President Obama in January 2009. The proposed FY2013 House legislation included language that would codify the Mexico City Policy. The Senate bill did not include such language. Previous Administrations have also suspended grants to UNFPA due to evidence of coercive family planning practices in China, citing violations of the "Kemp-Kasten" amendment, which bans U.S. assistance to organizations that support or participate in the management of coercive family planning programs. Past and current Administrations have disagreed as to whether UNFPA engages in such activities. The George W. Bush Administration suspended U.S. contributions to UNFPA from FY2002 to FY2008 following a State Department investigation of family planning programs in China. President Obama resumed U.S. contributions to the organization in 2009, and requested $39 million for UNFPA for FY2013. The proposed FY2013 House legislation included $461 million for family planning and reproductive health activities and prohibited funding for UNFPA, while the Senate legislation included $700 million for family planning and reproductive health, including $44.5 million for UNFPA. Both the House and Senate bills included the Kemp-Kasten amendment. Assistance for Europe, Eurasia and Central Asia (AEECA) The Administration proposed that the AEECA account, a remnant of the Support for Eastern European Democracy (SEED) Act of 1989 and the Freedom Support Act of 1992, be dissolved in FY2013 to reflect the end of an era of special focus on former Soviet and Eastern bloc states transitioning to democracy and free market economies. While the request included $420.9 million in funding for programs currently funded through AEECA, an 18% cut from FY2012 funding of $513.9 million, funding for the programs that had been under AEECA would have come from ESF, GHP, and INCLE accounts in FY2013 and beyond. The House legislation adopted this approach, merging AEECA funds with ESF, GHP, and INCLE, while stating that the change is not intended to signal diminished support for the region or for the role of the Coordinator of U.S. Assistance to Europe and Eurasia. The Senate proposal also included a provision that funds from ESF and other accounts may be used to provide assistance to countries that are eligible for AEECA assistance. Neither House nor Senate proposals provide a minimum funding level for AEECA-eligible countries. State-Foreign Operations Background and Trends U.S. national security, trade promotion, and humanitarian interests are rationales for most international affairs activities. During the Cold War, foreign aid and diplomatic programs had a primarily anti-communist focus, while concurrently pursuing other U.S. policy interests, such as promoting economic development, advancing U.S. trade, expanding access to basic education and health care, promoting human rights, and protecting the environment. After the early 1990s, with the Cold War ended, distinct policy objectives—including stopping nuclear weapons proliferation, curbing the production and trafficking of illegal drugs, expanding peace efforts in the Middle East, achieving regional stability, protecting religious freedom, and countering trafficking in persons—replaced the Cold War-influenced foreign policy objectives. A defining change in focus came following the 9/11 terrorist attacks in the United States. Since then, many U.S. foreign aid and diplomatic programs have emphasized national security objectives, frequently cast in terms of contributing to efforts to counter terrorism. In 2002, President Bush released a National Security Strategy that for the first time established global development as the third pillar of U.S. national security, along with defense and diplomacy. Development was again underscored in the Administration's 2006 and 2010 National Security Strategy. Also in 2002, foreign assistance budget justifications began to highlight the war on terrorism as the top foreign aid priority, emphasizing U.S. assistance to 28 "front-line" states—countries that cooperated with the United States in the war on terrorism or faced terrorist threats themselves. Large reconstruction programs in Afghanistan and Iraq began to dominate the foreign aid budget and exemplified the emphasis on using foreign aid as a tool of national security. State Department efforts focused extensively on diplomatic security and finding more effective ways of presenting American views and culture through public diplomacy, particularly in Muslim communities. At the same time, the Bush Administration vastly increased aid to combat HIV/AIDS globally, with the creation of the President's Emergency Plan for AIDS Relief (PEPFAR), and explored a new approach to development assistance with creation of the Millennium Challenge Corporation (MCC), which supports the development strategies of countries that have demonstrated good governance. The Obama Administration has carried forward many Bush foreign aid initiatives, including the MCC, massive global health funding (though the Obama Administration's Global Health Initiative is broader in scope than PEPFAR), and robust assistance to the frontline states of Iraq, Afghanistan, and Pakistan. Funding for these, rather than being in supplemental appropriations requests, however, has been requested within Overseas Contingency Operations (OCO) in regular appropriations bills. The Obama Administration completed the first ever Quadrennial Diplomacy and Development Review (QDDR) in the fall of 2010. Within that context, the U.S. Agency for International Development (USAID) was named the leading government agency for development assistance. The QDDR also identified several reforms for the Department of State that have been implemented, including establishment of the Bureau of Energy and elevating the Office of the Coordinator for Stabilization and Reconstruction to the Bureau of Conflict and Stabilization Operations. Overseas Contingency Operations In its FY2012 budget proposals, the Department of State proposed a significant change in how funding for the "front line states" of Iraq, Afghanistan, and Pakistan is viewed in budgetary terms. It requested that the use of OCO funds, through which war-related Defense appropriations had flowed for years, be extended to include "extraordinary, but temporary, costs of the Department of State and USAID in the front line states of Iraq, Afghanistan and Pakistan." Congress not only adopted the OCO designation in the FY2012 State-Foreign Operations appropriations legislation, but expanded it to include funding for additional accounts and countries. The OCO designation gained increased significance in August 2011 with enactment of the Budget Control Act of 2011 (BCA), as previously discussed, specifying that funds designated as OCO do not count toward the budget caps established by the act. OCO designation makes it possible to keep war-related funding from crowding out core international affairs activities within the budget allocation. The Office of Management and Budget (OMB) recently determined, however, that OCO funds are not exempt from the BCA automatic across-the-board reductions that are to occur January 2, 2013. The OCO approach is reminiscent of the use of supplemental international affairs appropriations for much of the past decade. Significant emergency supplemental funds for foreign operations were appropriated in FY2002-FY2010 for activities in Iraq, Afghanistan, and elsewhere, and were not counted toward subcommittee budget allocations. (See Figure 2 below.) The Obama Administration criticized this practice, asserting that after several years such activities should no longer be considered emergencies, and pledged to request funds for these activities through the regular budget process starting in FY2010. This resulted in a sharp increase in base funding in FY2010, yet supplemental international affairs funds were still requested and enacted for that year, largely in response to the earthquake in Haiti, but also for activities in Afghanistan, Iraq, and Pakistan. The FY2011 funding cycle was the only one in the last decade in which all international affairs funding was appropriated as part of the base budget, before the OCO approach was adopted for FY2012. Unlike supplementals that often have been submitted to Congress separate from regular funding requests, OCO allows all the funding to be considered simultaneously in the regular appropriations process. For FY2013, the Administration again used this approach, requesting that $8.24 billion, or about 15% of the international affairs request, be designated as OCO. This amount was 5% less than was requested for OCO in FY2012, and about 26% less than the $11.2 billion that Congress enacted for that year. The House legislation designated $8.3 billion as OCO, similar to the Administration request, but designated proportionately more of the funds within foreign operations accounts and less within State operations accounts. The Senate bill designated $2.3 billion as OCO, or 72% less than requested, largely because it provided no funding for the Iraq Police Development program, as mentioned above, and would fund disaster assistance and migration and refugee assistance accounts entirely through the base budget. 10-Year Funding Trends Over the past decade, State Department-Foreign Operations funding generally trended upward until 2011, with the exception of a spike in FY2004 that reflected large reconstruction funds for Iraq and Afghanistan. This changed in FY2011 when Congress significantly reduced foreign affairs spending to help meet deficit reduction goals. The FY2012 estimate and FY2013 request in current dollars leveled off largely due to congressional efforts to reduce deficit spending, and after adjusting for inflation, both in constant dollars were below the FY2009 overall funding level. Table 2 and Figure 3 below show State-Foreign Operations appropriations for the past decade in both current and constant dollars. Table 3 and Figure 4 show appropriations for the State Department and related agencies over the past decade in both current and constant dollars. Note that while there was a spike in foreign aid in 2004, there was only a slight increase in State Department funding that year as diplomacy funding lagged. In recent years, however, the State Department and related agencies funding trends upward at a steeper rate than the overall foreign affairs spending, reflecting an interest by both the George W. Bush and Obama Administrations to increase human resource capacity at the Department of State. Table 4 and Figure 5 show appropriations for the Foreign Operations (foreign aid) portion of the foreign affairs budget over the past decade in both current and constant dollars. Because Foreign Operations typically makes up about two-thirds of the State-Foreign Operations appropriations, it shows a similar trend as the overall State-Foreign Operations budget. Unlike the State Department trend line, which continues upward in FY2012 and FY2013, foreign aid funding levels off in those years. Top 10 U.S. Foreign Aid Recipient Countries Prior to 9/11 and the wars in Afghanistan and Iraq, Israel and Egypt typically received the largest amounts of U.S. foreign aid every year since the Camp David Peace Accords in 1978. The reconstruction efforts in Iraq and Afghanistan moved those countries into the top five, though assistance to Iraq has declined significantly in recent years with the completion of many reconstruction activities. Meanwhile, a combination of security assistance and economic aid designed to limit the appeal of extremist organizations has moved Pakistan up the list in recent years. Funding for Iraq, Afghanistan, and Pakistan includes temporary OCO appropriations. The top five recipient countries in the FY2013 request were the same as the top five aid recipients of the allocated FY2012 funds. Israel topped the list at $3,100 million in Foreign Military Financing (FMF), and Afghanistan ranked second, with $2,505 million requested, of which $1,237.9 million was designated as OCO funds. Nearly three-quarters of aid requested for Afghanistan was within ESF. Pakistan ranked third at $2,228 million, including $800 million for PCCF and $928 million within ESF. Iraq moved up from sixth in FY2010 to fourth in FY2012 and in the FY2013 request. Of the $2,045 million for Iraq, $1,750 million was OCO money. (See Table 5 above.) Regional Distribution As shown in Figure 6 , under the FY2013 budget request, aid to Africa would have declined by 10% from the current level to $6.4 billion; U.S. aid to the Near East would have increased by 12% to $9.0 billion, largely due to support for the Arab Spring; and aid to South Central Asia would have increased by 6% to $5.3 billion. Aid to Africa primarily supports HIV/AIDS and other health-related programs while 88% of the aid to South Central Asia was requested, largely for war-related costs, in Afghanistan and Pakistan. The Near East region request continued to be dominated by assistance to Israel ($3.1 billion), Iraq ($2.0 billion), Egypt ($1.6 billion), and Jordan ($0.7 billion). The Western Hemisphere's projected relative decline in FY2013 was attributable to a reduction in funding of ESF and INCLE for Colombia. Europe and Eurasia's 14% decline was largely due to progress made by many countries in the region and other more pressing global priorities. Aid to East Asia and Pacific remained relatively low and consistent with past years' levels. Sector Distribution Over the years, Congress has expressed interest in various discrete aid sectors, such as education, building trade capacity, maternal and child health, and biodiversity, that are funded across multiple accounts and/or agencies. Administrations have begun presenting their respective budget requests with a section showing what portion of the request would address some of these "key interest areas." The Administration did not provide allocation data, limiting comparisons to year-to-year requested funds rather than comparing requested funds to previous enacted levels. Comparing past and present requested levels do provide an indication of the Administration's interests and priorities, but not those of congressional appropriators. Table 6 compares the FY2012 and FY2013 budget requests for key interest areas identified by the Administration. Out of 23 sectors listed, the Administration's FY2013 request was less than the FY2012 request for all except five. Perhaps surprisingly, two of the Administration's major initiatives—Food Security and Global Climate Change―showed declines in the FY2013 request . Other sectors with reduced funding requests included Sustainable Landscapes (helping manage forests and ecosystems to reduce greenhouse effects), Neglected Tropical Diseases, Nutrition, Maternal and Child Health, Higher Education, Clean Energy, and Basic Education. The Administration emphasized increased funding for two focus areas that were new in FY2012: Gender Funding (up by 330% over last year's request) and Science, Technology, and Innovation (up 85% over last year's request). Appendix A. Structure of State-Foreign Operations Appropriations Appendix B. Abbreviations Appendix C. State Department, Foreign Operations and Related Agencies Appropriations Appendix D. International Affairs (150) Budget Account

International affairs expenditures typically amount to about 1.5% of the total federal budget. While some foreign policy and defense experts view that share as a small price to pay for a robust foreign affairs budget that they believe is essential to meeting national security and foreign policy objectives, others see international affairs spending, particularly foreign aid, as an attractive target for significant spending cuts in order to reduce deficit spending. On February 13, 2012, the Obama Administration submitted its FY2013 budget proposal. The FY2013 request totaled $54.87 billion for the State-Foreign Operations appropriations, including a core budget proposal of $46.63 billion plus $8.24 billion for extraordinary and temporary war-related Overseas Contingency Operations (OCO) in frontline states. The total request represented an increase of 2.6% over the estimated FY2012 funding level for the foreign affairs accounts, including $18.8 billion (a 4.5% increase) for State Department and Related Agencies and $36.1 billion (a 0.1% increase) for Foreign Operations. Within the regular budget process, the Administration requested authority in addition to appropriations ($770 million) for a new account—the Middle East and North Africa Incentive Fund (MENA IF)—to provide flexible and transparent support for Arab Spring countries in transition toward democracy. The foreign affairs request included $8.2 billion for the frontline states of Iraq, Afghanistan, and Pakistan. For other key accounts, the Administration sought $7.9 billion for the Global Health Programs (GHP) account, $770 million for global climate change activities, and $643 million for family planning and reproductive health activities, including $39 million for the controversial U.N. Population Fund (UNFPA). Early action by the House and Senate appropriators demonstrated differing priorities and funding levels. The House Appropriations Committee-approved State-Foreign Operations FY2013 funding bill (H.R. 5857/H.Rept. 112-494) would have provided a total of $48.5 billion (including $8.3 billion in OCO and $160 million in rescissions), while the Senate committee bill (S. 3241/S.Rept. 112-172) would have provided a total of $52.3 billion (including $2.3 billion in OCO). Both House and Senate committees provided more than requested for GHP, but differed significantly on funding MENA IF—the House committee provided no funding for it, and the Senate committee recommended $1 billion. The House bill provided $461 million for international family planning and reproductive health activities, prohibited funding for UNFPA, and included a "Mexico City Policy" provision prohibiting funding for organizations that perform or promote abortions. In contrast, the Senate bill included $700 million for international family planning, including $44.5 million for UNFPA, and did not include "Mexico City Policy" language. The State Department, Foreign Operations, and Related Agencies appropriations legislation, in addition to funding U.S. diplomatic and foreign aid activities, has been the primary legislative vehicle through which Congress reviews the U.S. international affairs budget and influences executive branch foreign policy making in recent years. (Congress has not addressed foreign policy issues through a complete authorization process for State Department diplomatic activities since 2003 and since 1985 for foreign aid programs.) After a period of reductions in the late 1980s and 1990s, funding for State Department operations, international broadcasting, and foreign aid rose steadily from FY2002 to FY2010, largely because of ongoing assistance to Iraq and Afghanistan, new global health programs, and increasing assistance to Pakistan. Funding declined by 11.6% in FY2011 when Congress passed a continuing resolution (P.L. 112-10) significantly reducing U.S. government-wide expenditures, including foreign affairs. The FY2012 funding represented a 2.3% increase from the previous year, largely reflecting OCO support for frontline states. Congress delayed floor consideration of FY2013 appropriations bills until after the start of the new fiscal year and the November 2012 elections, instead enacting a six-month stopgap funding measure that expired in March 2013 (P.L. 112-175). Before that measure expired, Congress approved new legislation on March 21, signed by the President on March 26, 2013 (P.L. 113-6), to fund federal programs through the end of FY2013. Under P.L. 113-6, State-Foreign Operations accounts are funded through a continuing resolution at the same level as in FY2012, though several anomalies were specified in the legislation. For example, funding for Embassy Security, Construction and Maintenance was increased significantly and offset largely by a rescission in unobligated Diplomatic and Consular Programs funds, while the International Disaster and Famine Assistance account received OCO funding, which was not in the FY2012 appropriation. While this report lists FY2013-enacted account level estimates in Appendix C, these funds are subject to the budget sequestration process that is currently in effect, which may significantly reduce the actual funding levels that are made available to agencies.

Introduction Article III of the Constitution defines the proper scope of the federal courts' jurisdiction as limited to adjudicating "Cases" and "Controversies." The Supreme Court has articulated several legal doctrines emanating from Article III that restrict when federal courts will adjudicate disputes, such as standing, ripeness, mootness, and the prohibition against issuing advisory opinions. These "justiciability" doctrines are rooted in both constitutional and prudential considerations and evince respect for the separation of powers, including the "proper—and properly limited—role of the courts in a democratic society." One justiciability concept is the "political question" doctrine—according to which federal courts will not adjudicate certain controversies because their resolution is more proper within the political branches. Because the doctrine implicates the separation of powers, application of the political question doctrine has sparked controversy. For example, the doctrine has regularly been invoked in federal courts in cases concerning foreign policy. Federal courts have declined to adjudicate a recent challenge to the operation of the United States' "kill list," certain claims alleging presidential violation of the war powers clause of the Constitution and the War Powers Resolution, and claims whose adjudication might harm the country's foreign policy interests. Some commentators have identified such cases as reflecting judicial deference to actions of the executive branch in the area of national security; deference, it may be argued, that occurs at the expense of Congress, because courts invoking the doctrine sometimes effectively decline to enforce a congressional statute. As a preliminary matter, it is important to distinguish the political question doctrine from cases presenting political issues. Courts adjudicate controversies with political ramifications on a regular basis. For example, the Supreme Court has held that certain electoral processes deny citizens the right to vote based on their skin color, and has upheld a subpoena directed against the President of the United States. Both decisions necessarily had political consequences. Instead, the political question doctrine applies to issues that courts determine are best resolved within the politically accountable branches of government—Congress or the executive branch. Understanding exactly when the doctrine applies, however, can be difficult. The "precise contours of the doctrine are murky and unsettled," without a clear consensus among the members of the Supreme Court or academia. The Supreme Court itself has noted that the political question doctrine has caused "[m]uch confusion"; and determining if it applies to a given case requires "a delicate exercise in constitutional interpretation." In order to illuminate the circumstances in which courts find cases to present nonjusticiable political questions, this report will examine the origins of the political question doctrine and modern Supreme Court case law on the matter. In addition, it will explore a few significant applications of the doctrine in the lower federal courts. Finally, this report will unpack a recent Supreme Court case rejecting application of the doctrine that may have significant implications for the political question doctrine in the future. Origins of the Political Question Doctrine The origins of the political question doctrine can be traced back to Chief Justice Marshall's opinion in Marbury v. Madison . Chief Justice Marshall, in addressing whether the judiciary could issue a writ of mandamus against an executive branch official, distinguished between individual rights dependent on executive branch legal duties on the one hand, and political matters left to presidential discretion on the other. While the former are justiciable, the latter might not be. Justice Marshall explained that the Constitution entrusted a scope of discretion in some areas to the "executive departments alone"; but "whether the legality of an act of the head of a department be examinable in a court of justice or not, must always depend on the nature of that act." "[T]he President is invested with certain important political powers," in which he—and those officers he appoints to carry out his will—are not accountable to the judicial branch. These political powers "respect the nation, not individual rights, and being entrusted to the executive, the decision of the executive is conclusive." Accordingly, The conclusion from this reasoning is, that where the heads of departments are the political or confidential agents of the executive, merely to execute the will of the President, or rather to act in cases in which the executive possesses a constitutional or legal discretion, nothing can be more perfectly clear than that their acts are only politically examinable. But where a specific duty is assigned by law, and individual rights depend upon the performance of that duty, it seems equally clear that the individual who considers himself injured, has a right to resort to the laws of his country for a remedy. The definition of a political question given by Chief Justice Marshall appears to include only those matters where the President is entrusted by the Constitution with unrestricted discretion, such as choosing who to nominate to the Senate for confirmation as executive branch officers, but not matters that implicate individual rights. Nonetheless, the scope of what constitutes a political question appears to have broadened since Marbury v. Madison . Courts have found political questions in areas not solely committed to the President's discretion, including when individual rights are implicated. The beginning of this shift can be seen in the Supreme Court's next "classic representation of the early political question doctrine." In Luther v. Borden , the Court declined to adjudicate a challenge to the Rhode Island charter government under the republican form of government clause in Article IV, Section 4 of the U.S. Constitution. At the time of the Dorr Rebellion in the 1840s, Rhode Island had not adopted a state constitution. Instead, it operated under a charter established by King Charles II in 1663. The charter government was challenged as violating the Guarantee Clause, which provides that the "United States shall guarantee to every State in this Union a Republican form of government." The Court held that the challenge was a political question, explaining that under the Guarantee Clause, it rests with Congress to decide what government is the established one in a State. For as the United States guarantee to each State a republican government, Congress must necessarily decide what government is established in the State before it can determine whether it is republican or not.... And its decision is binding on every other department of the government, and could not be questioned in a judicial tribunal. Because the determination of which entity was the lawful state government was committed to another branch of government—Congress—the Court refused to provide its own interpretation. As noted above, while Marbury v. Madison identified some matters entrusted to the executive branch as political questions, at least by the time Luther v. Borden was decided, certain matters committed to the discretion of Congress could also pose political questions. In addition, the Court in Luther v. Borden also noted certain prudential considerations that weighed against judicial resolution of the case, such as the chaos that would ensue if the Court invalidated a state's government. The Court has subsequently characterized the case as resting in part on the "lack of criteria by which a court" could make the determination; and these prudential concerns were later repeated by the Court in a subsequent challenge to a state law under the Guarantee Clause. Modern Application of the Doctrine Baker Factors Following Luther v. Borden , the Court dismissed challenges to state or congressional action under the Guarantee Clause on a number of occasions, including challenges to state congressional districting. Nevertheless, in the Court's "oft-quoted" modern encapsulation of the political question doctrine, Baker v. Carr , the Court explained that challenges to election districts could be brought under the Equal Protection Clause. In that case, a challenge was brought to a state's legislative apportionment of election districts, which, the plaintiffs claimed, resulted in an "impairment of their votes" through a "classification [that] disfavors the voters in the counties in which they reside, placing them in a position of constitutionally unjustifiable inequality vis-a-vis voters in irrationally favored counties." The Court distinguished claims brought under the Guarantee Clause from claims under the Equal Protection Clause. Cases presenting political questions—including the Guarantee Clause cases—implicated the relationship between the "judiciary and the coordinate branches of the Federal Government, and not the judiciary's relationship to the states." In addition, while the Guarantee Clause did not contain "judicially manageable standards which a court could utilize independently in order to identify a State's lawful government," standards "under the Equal Protection Clause are well developed and familiar." The Court thus ruled that the Equal Protection claim was justiciable, and outlined six matters that could present political questions in other circumstances: [1] a textually demonstrable constitutional commitment of the issue to a coordinate political department; or [2] a lack of judicially discoverable and manageable standards for resolving it; or [3] the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or [4] the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or [5] an unusual need for unquestioning adherence to a political decision already made; or [6] the potentiality of embarrassment from multifarious pronouncements by various departments on one question. The Court did not, however, explain precisely how these factors were to be applied in future cases, nor did it describe the relative weight of each factor; although in a later case applying the doctrine, a plurality of the Court explained that they "are probably listed in descending order of both importance and clarity." In addition, the Court in Baker noted that cases implicating foreign policy could frequently pose political questions, and explained that in such cases the Court engages in a "a discriminating analysis of the particular question posed, in terms of the history of its management by the political branches, of its susceptibility to judicial handling in the light of its nature and posture in the specific case, and of the possible consequences of judicial action." Foundation of the Political Question Doctrine While the Court in Baker delineated what factors were relevant in determining whether a case posed a political question, the Court did not explicitly identify the doctrine's foundation. It characterized the political question doctrine as "essentially a function of the separation of powers"; but the factors it listed nonetheless appear to include both constitutional and prudential considerations. It is thus unclear whether the basis for the political question doctrine emanates solely from the Constitution, or if it also finds a foundation in prudential considerations about the proper role of the judiciary. Commentators have disagreed on this question, reflecting a divergence in how the doctrine is conceived and the situations where it is thought to be applicable. At least two major theories about the proper role of courts vis-a-vis the other branches of government can be discerned in the doctrine. According to one such theory, in what has been called the "classical" version of the doctrine, political questions emanate from the Constitution itself. Courts have a duty to adjudicate cases properly presented before them, which includes interpreting the Constitution when appropriate, and may not sidestep this role for prudential reasons. Instead, a political question only arises when the Constitution itself clearly commits the resolution of a question to another branch of government. In determining whether the Constitution does so, the theory goes, the judiciary does not abdicate its duty to interpret the Constitution, but interprets it as assigning discretion over an issue to another branch. The judiciary thus grounds its decisions on principle, rather than on an ad hoc measuring of the expediency of deciding a particular case one way or the other. In contrast, another theory, famously explained by Alexander Bickel in his enunciation of the "passive virtues" of the judiciary, understands the political question doctrine to permit courts to decline to adjudicate a case for prudential reasons as well. Writing in the aftermath of Brown v. Board of Education and the significant pushback that decision engendered in the South, Bickel sought to preserve the legitimacy of an unelected judicial branch. On the one hand, when courts declare legislation or executive branch actions to be unconstitutional, Bickel argued, they frustrate the will of the people. This "countermajoritarian difficulty" posed a significant problem because the judiciary's power arises from its perceived legitimacy in adjudicating cases, rather than from passing or enforcing laws. At some point, continued judicial invalidation of public will risks losing that legitimacy. But at the same time, judicial rulings upholding the constitutionality of legislation also risk legitimating unprincipled or harmful policies. Bickel noted that "[t]he Court's prestige, the spell it casts as a symbol, enable it to entrench and solidify measures.... The Court, regardless of what it intends, can generate consent and may impart permanence." Upholding a statute or government practice as constitutional, while usually not intended to function as an endorsement on policy grounds, could nevertheless be perceived as such by the public. Accordingly, rather than risk losing legitimacy by invalidating a law or entrenching a poorly conceived policy choice by upholding it, a court may exercise the passive virtues by refraining from adjudicating the case at all. And when it does so, Bickel noted, the judiciary often sparks and participates in a dialogue with the other branches of government and the public which helps develop the issue further. One method Bickel identified of practicing the passive virtues is by invoking the political question doctrine to decline to adjudicate a case. Bickel argued that the political question doctrine was founded on the Court's sense of lack of capacity, compounded in unequal parts of (a) the strangeness of the issue and its intractability to principled resolution; (b) the sheer momentousness of it, which tends to unbalance judicial judgment; (c) the anxiety, not so much that the judicial judgment will be ignored, as that perhaps it should but will not be; (d) finally ('in a mature democracy'), the inner vulnerability, the self-doubt of an institution which is electorally irresponsible and has no earth to draw strength from. Rather than issuing rulings that outstripped the mood and temper of the country, a court could invoke the passive virtues, like the political question doctrine, to restrict itself to "declar[ing] as law only such principles as will—in time, but in a rather immediate foreseeable future—gain ... widespread acceptance." By "stay[ing] its hand" and declining to adjudicate certain issues, the judiciary could thus allow the political branches to hash out issues over time—"elicit[ing] the correct answers to certain prudential questions that ... lie in the path of ultimate issues of principle." It bears mentioning that the line between these two theories may not be precise. For example, the prudential considerations have been described by the Ninth Circuit Court of Appeals as examinations of the "consequences of a court asserting its jurisdiction," which, due to the "broad strokes" of the "Constitution's grants of authority," can "assist [courts] in the difficult task of discerning which cases the Constitution forbids them from hearing." According to this understanding of the doctrine, Baker 's prudential factors work to elucidate what the Constitution in fact requires, a conception arguably distinct from preserving the judiciary's legitimacy. In addition, courts applying the doctrine sometimes mention both prudential and constitutional factors without clear lines of differentiation, with the "analyses often collapsing into one another." As seen below, the Supreme Court has sometimes invoked both constitutional and prudential factors in finding a case to be a political question, without clearly stating which factors are dispositive. The Court has also noted the interdependence of the Baker factors, explaining that whether an issue is textually committed to another branch of government "is not completely separate" from whether there exist judicially manageable standards to adjudicate the issue; a lack of standards can "strengthen the conclusion that there is a textually demonstrable commitment to a coordinate branch." Modern Supreme Court Case Law Since the articulation of the Baker factors, a majority of the Supreme Court has ruled that cases were nonjusticiable under the political question doctrine on two occasions. In two others, a plurality of the Court determined that a case should be dismissed on this basis, and the Court has hinted at its applicability in others. As the Court in Baker described however, the "attributes" of the political question doctrine "in various settings, diverge, combine, appear, and disappear in seeming disorderliness," and the Baker factors themselves can overlap. Cases posing a political question cannot be identified by "semantic cataloguing," or by identifying a comprehensive rule. Instead, whether a case raises a political question must be determined on a "case-by-case" basis. Accordingly, this report will examine the Supreme Court's application of the doctrine in particular cases since the elucidation of the Baker factors. These cases have addressed areas ranging from foreign policy matters to the impeachment process. Foreign Policy and Military Affairs Prior to Baker v. Carr , the Court had found that, inter alia , the determination of when hostilities begin, when a state of war concludes, the recognition of Indian tribes, and the recognition of foreign governments are questions vested in the political branches. After Baker 's articulation of the factors relevant to the political question doctrine, in Goldwater v. Carter , a plurality of the Court held that a challenge brought by Members of Congress against President Carter's rescission of a treaty presented a nonjusticiable political question. The Court first analogized to Coleman v. Miller , decided in 1939, where the Court found that the "efficacy of ratifications by state legislatures" was a political question. In that case, state legislators challenged the ratification of the Child Labor Amendment by the state senate on the grounds that it had earlier been rejected. The Court noted in Coleman that Article V of the Constitution spoke only to ratification, but was silent concerning rejection. Accordingly, Congress—not the courts—"has the final determination of the question whether by lapse of time its proposal of the amendment had lost its vitality prior to the required ratifications." Applying this reasoning to the case at hand, the plurality in Goldwater found that while the Constitution explains the Senate's role in ratifying treaties, it is silent as to a treaty's "abrogation." As in Coleman , the plurality explained, the "absence of any constitutional provision governing the termination of a treaty" indicated that the question was not for the courts to decide. The Court continued by distinguishing the matter from the Steel Seizure case, where the Court had invalidated presidential action. The Court noted two important differences. First, whereas the plaintiffs in the Steel Seizure case were private litigants, here the Court was "asked to settle a dispute between two coequal branches of our Government, each of which has resources available to protect and assert its interests" outside of the courts. Second, while the actions challenged in the Steel Seizure case had direct domestic effect, the "effect of this action ... is entirely external to the United States, and [falls] within the category of foreign affairs." Accordingly, the Court dismissed the case as presenting a nonjusticiable political question. In a concurring opinion, however, Justice Powell found the case to be justiciable, but not ripe for judicial review because Congress had not directly "confront[ed] the President." He noted that the Senate had considered, but did not pass, a resolution declaring the necessity of Senate approval for the termination of a treaty. The Court has also indicated that judicial relief may be barred in certain cases where the executive branch determines that adjudication of the matter would harm U.S. foreign policy interests. In Sosa v. Alvarez-Machain , the Court noted that "the availability of relief in federal court for violations of customary international law" under the Alien Tort Statute might be limited by a "policy of case-specific deference to the political branches." The Court pointed to several class actions in the lower courts seeking damages from corporations that allegedly aided the former apartheid regime of South Africa. The United States had entered a Statement of Interest urging dismissal of those cases on foreign policy grounds. Without ruling on the issue, the Court noted that "[i]n such cases, there is a strong argument that federal courts should give serious weight to the Executive Branch's view of the case's impact on foreign policy." The Court has also recognized the possibility of similar concerns with regard to specific claims brought under the Foreign Sovereign Immunities Act. Lower courts have sometimes cited these cases to find a political question when claims are brought whose adjudication might harm U.S. foreign policy interests. However, the Court's mention of "deference" to the political branches does not necessarily imply that a political question is present; courts can grant deference in the interpretation of a statute to the executive branch without declining to adjudicate a case at all. Similarly, the political question doctrine has also been invoked by the Court in a challenge to military training procedures. In Gilligan v. Morgan , students of Kent State University who were present when the National Guard was called to campus to quell civil disorder—resulting in the deaths of several students—brought a claim for injunctive relief to restrain the officers of the National Guard from future violation of their constitutional rights. The plaintiffs sought for the district court to "establish standards for the training, kind of weapons and scope and kind of orders to control the actions of the National Guard," as well as continuing judicial supervision to ensure compliance with the court's order. In finding the matter to be a nonjusticiable political question, the Supreme Court emphasized the important separation of powers concerns at issue. It noted that Article I of the Constitution vests Congress with authority over the militia (with specific powers reserved for the states). Requiring judicial review of the National Guard's training procedures, and exercising judicial supervision thereafter, would "embrace critical areas of responsibility vested by the Constitution in the Legislative and Executive Branches of Government." Judicial intrusion into "substantive political judgments entrusted expressly to the coordinate branches of government," the Court reasoned, was inappropriate. The Court explained that [i]t would be difficult to think of a clearer example of the type of governmental action that was intended by the Constitution to be left to the political branches directly responsible—as the Judicial Branch is not—to the electoral process. Moreover, it is difficult to conceive of an area of governmental activity in which the courts have less competence. The complex subtle, and professional decisions as to the composition, training, equipping, and control of a military force are essentially professional military judgments, subject always to civilian control of the Legislative and Executive Branches. The ultimate responsibility for these decisions is appropriately vested in branches of the government which are periodically subject to electoral accountability. It is this power of oversight and control of military force by elected representatives and officials which underlies our entire constitutional system. As discussed more fully below, lower federal courts have often dismissed claims implicating foreign policy as presenting nonjusticiable political questions. However, the Supreme Court has cautioned that a case does not present a political question simply because it touches upon foreign affairs. In Japan Whaling Association v. American Cetacean Society , the Court examined whether specific legislation required the Secretary of Commerce to certify to the President that the whaling practices of Japan "diminish the effectiveness" of the International Convention for the Regulation of Whaling. The Court ruled that the case did not raise a political question, explaining that the interpretation of treaties, executive agreements, and legislation was a proper judicial function. Determining whether the Secretary was required to make a certification under the statute was a "purely legal question of statutory interpretation." The Court noted the "premier role which both Congress and the Executive play" in foreign affairs, but concluded that "under the Constitution, one of the Judiciary's characteristic roles is to interpret statutes, and we cannot shirk this responsibility merely because our decision may have significant political overtones." Elections Challenges to partisan gerrymandering may also pose a nonjusticiable political question. In Vieth v. Jubelirer , the plaintiffs brought a challenge to the electoral map drawn by a state assembly, alleging that the map "constitutes a political gerrymander." A plurality of the Court ruled that claims alleging political gerrymandering were nonjusticiable political questions because there were no "judicially discernable and manageable standards" to adjudicate them. In doing so, the Court overruled its decision 18 years earlier in Davis v. Bandemer , in which the Court had ruled that such claims were justiciable. Bandemer , the plurality found, failed to articulate a "judicially discernable standard[]" to decide a political gerrymandering case, and since then the lower courts that applied Bandemer had been unable to as well. The plurality examined the various alternative standards proposed by the plaintiffs and the dissenting Justices, but found them all to be lacking. One problem, the Court explained, was that "[p]olitical affiliation is not an immutable characteristic," which means it is "impossible to assess the effects of partisan gerrymandering, to fashion a standard for evaluating a violation, and finally to craft a remedy." Another was "ascertaining whether an entire statewide plan is motivated by political or neutral justifications." Justice Kennedy, on the other hand, wrote a concurring opinion which agreed that this case should be dismissed, but expressly left open the question whether judicial standards could be developed in the future that would permit such a case to be adjudicated. Disputes concerning the operations of political parties may also present a political question. In O'Brien v. Brown , the Court stayed an appellate court's decision which found that the actions of the Credentials Committee of the Democratic National Convention of 1972 violated the Constitution. The Credentials Committee recommended that certain delegates to the Convention be unseated, and the Court reviewed the appellate court's order three days before the seating of delegates was to be determined. The Court did not expressly invoke the political question doctrine, but cited Luther v. Borden and noted that no federal court had ever "interject[ed] itself" into the inner workings of political conventions due to the "relationships of great delicacy that are essentially political in nature." Impeachment The Court has also declined to review the impeachment process. In Nixon v. United States , a former federal judge had been convicted on two counts of making false statements before a grand jury and was sent to prison. He refused, however, to resign and continued to receive his salary as a judge while in prison. The House of Representatives adopted articles of impeachment against the judge and presented the Senate with the articles. The Senate invoked Impeachment Rule XI, a Senate procedural rule which permits a committee to take evidence and testimony. After the committee completed its proceedings, it presented the full Senate with a transcript and report. Both sides then presented briefs to the full Senate and delivered arguments, and the Senate then voted to convict and remove him from office. The judge thereafter brought a suit arguing that the use of a committee to take evidence violated the Constitution's provision that the Senate "try" all impeachments. The Court noted that the Constitution grants "the sole Power" to try impeachments "in the Senate and nowhere else"; and the word "try" "lacks sufficient precision to afford any judicially manageable standard of review of the Senate's actions." This constitutional grant of sole authority, the Court reasoned, meant that the "Senate alone shall have authority to determine whether an individual should be acquitted or convicted." In addition, because impeachment functions as the " only check on the Judicial Branch by the Legislature," the Court noted the important separation of powers concerns that would be implicated if the "final reviewing authority with respect to impeachments [was placed] in the hands of the same body that the impeachment process is meant to regulate." Further, the Court explained that two of Baker 's prudential considerations, "the lack of finality and the difficulty of fashioning relief counsel[ed] against justiciability." Judicial review of impeachments could create considerable political uncertainty, if, for example, an impeached President sued for judicial review. The Court was careful to distinguish the situation from Powell v. McMormack , a case also involving congressional procedure where the Court declined to apply the political question doctrine. That case involved a challenge brought by a member-elect of the House of Representatives who had been excluded from his seat pursuant to a House Resolution. The precise issue in Powell was whether the judiciary could review a congressional decision that the plaintiff was "unqualified" to take his seat. That determination had turned, the Court explained, "on whether the Constitution committed authority to the House to judge its Members' qualifications, and if so, the extent of that commitment." The Court noted that while Article I, Section 5 does provide that Congress shall determine the qualifications of its members, Article I, Section 2 delineates the three requirements for House membership—a Representative must be at least 15, have been a U.S. citizen for at least seven years, and inhabit the state he represents. Therefore, the Powell Court concluded, the House's claim that it possessed unreviewable authority to determine the qualifications of its members "was defeated by this separate provision specifying the only qualifications which might be imposed for House membership." In other words, finding that the House had unreviewable authority to decide its members' qualifications would violate another provision of the Constitution. The Court therefore concluded in Powell that whether the three requirements in the Constitution were satisfied was textually committed to the House, "but the decision as to what these qualifications consisted of was not." Applying the logic of Powell to the case at hand, the Nixon Court noted that here, in contrast, leaving the interpretation of the word "try" with the Senate did not violate any "separate provision" of the Constitution. Lower Courts' Application Foreign Policy Decisions In Baker v. Carr , the Court specifically noted that cases addressing foreign policy decisions could present a political question. Lower federal courts have dismissed cases on this basis on a number of occasions. Generally speaking, lower courts have sometimes dismissed suits seeking judicial review of discretionary military or foreign policy decisions by the executive branch as raising nonjusticiable political questions. In addition, certain claims have been dismissed under the doctrine because their adjudication would harm the foreign policy interests of the United States. However, the precise circumstances where the doctrine applies are unclear; courts have invoked constitutional and prudential considerations (and sometimes both) in order to dismiss cases implicating foreign policy as political questions. Some lower courts have determined that discretionary military decisions are textually committed to the political branches and the judiciary lacks manageable standards to review them. For example, a district court in the D.C. Circuit dismissed a suit challenging the operation of the United States' "kill lists" as raising a political question. In that case, the father of Anwar Al-Aulaqi—who was allegedly on the government's "kill list"—sought a judicial declaration of when the United States may "select individuals for targeted killing" and an injunction preventing the United States from doing so to Anwar Al-Aulaqi unless it meets that standard. The court ruled that there were no judicially manageable standards by which to adjudicate the case. Evaluating "the merits of the President's (alleged) decision to launch an attack on a foreign target," the court noted, would "require this court to elucidate the ... standards that are to guide a President when he evaluates the veracity of military intelligence." However, "there are no judicially manageable standards" for courts to employ in reviewing the President's "interpretation of military intelligence," his decision to use military force on the basis of that intelligence, or the "nature and magnitude of the national security threat posed by a particular individual." The court noted that the D.C. Court of Appeals had previously held that whether a "particular organization's alleged terrorist activity threatens national security" raised a political question; likewise, it was "axiomatic that courts must also decline to assess whether a particular individual's alleged terrorist activities threaten national security." Accordingly, the court could not determine whether the United States was justified in using force against Al-Aulaqi. In addition, the court noted that Bakers ' first, fourth, and sixth factors also weighed against justiciability because decisions of when to use military force were "textually committed to the political branches," and any ex post judicial review of the matter "would reveal a 'lack of respect due coordinate branches of government' and create 'the potentiality of embarrassment of multifarious pronouncements by various departments on one question.'" Similarly, in El-Shifa v. United States . , the D.C. Court of Appeals held that a suit seeking review of "the President's decision to launch an attack on a foreign target" presented a nonjusticiable political question. In response to the 1998 terrorist bombing of United States embassies in Kenya and Tanzania, President Clinton ordered airstrikes against two targets, including a factory in Sudan believed to be associated with the terrorists and producing materials for chemical weapons. Owners of the plant brought suit against the United States alleging that the destruction of their plant violated the law of nations, as well as a claim seeking a declaration that the statements made by government officials about them were defamatory. The court explained that, at least in cases concerning national security and foreign relations, "the presence of a political question ... turns not on the nature of the government conduct under review but more precisely on the question the plaintiff raises about the challenged action." In this vein, the court distinguished between "claims requiring us to decide whether taking military action was 'wise,' and suits concerning "'purely legal issues' such as whether the government had legal authority to act." The former, the court explained, was a determination committed to the political branches, and the "courts are not a forum for reconsidering the wisdom of discretionary decisions made by the political branches in the realm of foreign policy or national security." Such "strategic choices" were "constitutionally committed to the political branches." This constitutional commitment "reflects the institutional limitations of the judiciary and the lack of manageable standards to channel any judicial inquiry into these matters." The plaintiffs' claim under the law of nations would require judicial analysis into whether the airstrikes were "mistaken and not justified," and the claim for defamation would require a judicial determination of the "factual validity of the government's stated reasons for the strike." The court concluded that the political question doctrine barred courts from "assessing[ing] the merits of the President's decision to launch an attack on a foreign target." However, two separate concurrences questioned the panel's reasoning, arguing that the proper basis for dismissal was on statutory grounds—the plaintiffs did not allege a "cognizable cause of action"—rather than because the case posed a political question. Judge Ginsberg criticized the court for expanding the political question doctrine to the point where "even a straightforward statutory case, presenting a purely legal question, is non-justiciable if deciding it could merely reflect adversely upon a decision constitutionally committed to the President." This "new political question doctrine" permitted the court to decline to adjudicate a case "regardless whether the court would actually have to decide a political question in order to resolve it." Likewise, Judge Kavanaugh's concurring opinion argued that the court's opinion improperly invoked the political question doctrine. While the doctrine was applicable to "cases alleging violations of the Constitution," it did not apply to cases that concerned "alleged statutory violations." Here, the plaintiffs' claim was not that the "Executive Branch violated the Constitution," but that "the Executive Branch violated congressionally enacted statutes that purportedly constrain the Executive." The proper question for the court when confronting a statutory claim then was "whether the statute as applied infringes on the President's exclusive, preclusive authority under Article II of the Constitution." Judge Kavanaugh explained that application of the political question doctrine in statutory cases does "not reflect benign deference to the political branches," but "systematically favor[s] the Executive Branch over the Legislative Branch." This serves to bar Congress from restricting the executive branch "in the challenged sphere of action," and essentially holds that the President's power is "exclusive and preclusive." He thus concluded that "whether a statute intrudes" on the President's Article II authority "must be confronted directly through careful analysis of Article II—not answered by backdoor use of the political question doctrine, which may sub silentio expand executive power in an indirect, haphazard, and unprincipled manner." Nonetheless, Judge Kavanaugh concurred in the judgment because there was no cause of action for either of the plaintiffs' claims. Lower courts have also dismissed claims as nonjusticiable political questions because adjudication would show a lack of respect for a coordinate branch of government— Baker 's fourth factor. This reasoning appears to be buttressed by courts' conclusion that foreign policy decisions are committed to the political branches. In In re Nazi Era Cases Against German Defendants Litigation , for example, a Holocaust survivor brought claims against German corporations who allegedly cooperated with the Nazi regime. The executive branch, however, had negotiated with the government of Germany to establish a foundation for making payments to victims, and entered an executive agreement that recognized the foundation as the sole forum for such claims. The Third Circuit Court of Appeals affirmed dismissal of the case as presenting a nonjusticiable political question because adjudication "would express a lack of respect for the Executive Branch because of the Executive Branch's longstanding foreign policy interest that issues relating to World War II and Nazi-era claims be resolved through intergovernmental negotiation." Similarly, the D.C. Circuit Court of Appeals has refused to substitute its own judgment as to which nation is sovereign over Taiwan when the executive branch avoided doing so. In Lin v. United States , residents of Taiwan sought a judicial declaration they were U.S. nationals and were entitled to U.S. passports. They based their claim on the San Francisco Peace Treaty with Japan —which established the United States as Taiwan's "principal occupying power"—arguing that this gave the United States "temporary de jure sovereignty." The court noted that it " could resolve this case through treaty analysis and statutory construction," but declined to do so because resolution of the issue posed a political question. The court reasoned that the executive has discretion to determine who exercises sovereignty over a country, and the U.S. had strategically avoided doing so with regard to Taiwan; therefore, "judicial modesty as well as doctrine caution[ed]" against a court inserting its own judgment. The court concluded that the judiciary does "not dictate to the Executive what governments serve as the supreme authorities of foreign lands, [a] rule [that] applies a fortiori to determinations of U.S. sovereignty." Similarly, in line with the Supreme Court's caution expressed in Sosa v. Alvarez-Machain , the D.C. Circuit dismissed as a nonjusticiable political question claims under the Alien Tort Statute seeking damages from Japan and alleging violations of international law. Adjudication of the case would have required determining whether the claims of various plaintiffs were extinguished when their governments signed treaties with Japan. The executive branch filed a Statement of Interest with the court urging that resolution of the case would damage the United States' foreign policy interests. The court reasoned that the Constitution committed the issue to the political branches—primarily the President —and "defer[red] to the judgment of the Executive Branch ... that judicial intrusion into the relations between Japan and other foreign governments would impinge upon the ability of the President to conduct the foreign relations of the United States." Executive Discretion On a more limited basis, some lower courts have dismissed challenges to the executive branch's law enforcement discretion as nonjusticiable political questions. For example, the Tenth Circuit Court of Appeals dismissed a suit seeking to compel the executive branch to "maintain market conditions favorable to small farmers" as a nonjusticiable political question. In particular, the plaintiffs sought, inter alia , a "moratorium on farm foreclosures" and judicial "oversight of the Justice Department's enforcement of antitrust laws against agribusinesses." Finding Baker 's first category applicable to these claims, the court dismissed them as nonjusticiable political questions. The court noted that the Constitution vests the executive power in the President and instructs him to "take care that the Laws be faithfully executed." Therefore, the court explained, "there is a textual commitment to the Executive Branch to enforce banking laws and to exercise prosecutorial discretion in bringing antitrust suits." Similarly, the Ninth Circuit Court of Appeals has ruled that a discretionary decision of the Secretary of Commerce was a nonjusticiable political question. In that case, the defendants were indicted for violation of the Export Administration Act of 1979 (EAA), which allows the Secretary of Commerce to impose and enforce export controls via licensing requirements for certain commodities. Commodities requiring export licenses are placed on the Commodities Control List (CCL). The defendants moved to discover all relevant documents for the purpose of examining "'whether the government followed the legislative mandate ... in placing the items listed on the indictment' on the CCL." The court noted that the Secretary's decision to place an item on the CCL involved national security and foreign relations concerns—"matters of policy entrusted by the Constitution to the Congress and the President, for which there are no meaningful standards of review." The court thus ruled that the decision by the Secretary to place a commodity on the CCL was a nonjusticiable political question. Nevertheless, given that the court's decision included national security concerns, one might argue that this case is distinguishable from the Tenth Circuit Court of Appeal's refusal to adjudicate a suit seeking to compel the executive branch to take specific enforcement actions. Narrowing the Scope of the Doctrine Zivotofsky v. Clinton Recently, in Zivotofsky v. Clinton , the Court rejected application of the political question doctrine to a plaintiff's statutory claim, and harnessed an interpretive approach that may have narrowed the doctrine's scope. At issue in the case was a congressional statute providing that, upon their request, the Secretary of State should list the place of birth as Israel on passports for United States citizens born in the city of Jerusalem. Zivotofsky, an American citizen born in Jerusalem, sought to have his passport read "Jerusalem, Israel" as the place of birth; but the State Department refused consistent with department policy to "not write Israel or Jordan" as the birthplace of someone born in Jerusalem. Zivotofsky then brought suit in federal court, seeking a declaratory judgment and a permanent injunction directing the Secretary of State to list "Jerusalem, Israel" as his place of birth. The D.C. Court of Appeals found the case to present a nonjusticiable political question and affirmed dismissal of the case. The court reasoned that "[o]nly the Executive—not Congress and not the courts—has the power to define U.S. policy regarding Israel's sovereignty over Jerusalem and decide how best to implement that policy." The Supreme Court reversed, holding that the political question doctrine did not bar adjudication of the claim. Central to the Court's reasoning was its understanding of the precise legal question at issue. The Court explained that, contrary to the framing of the question given by the lower courts, it was "not being asked to supplant a foreign policy decision of the political branches with the courts' own unmoored determination of what United States policy toward Jerusalem should be. Instead, Zivotofsky requests that the courts enforce a specific statutory right"; which required the Court to determine if the plaintiff interpreted the statute correctly, and whether the statute was constitutional. This framing of the question ruled out application of the political question doctrine. In its analysis, the Court described political questions as controversies involving the first two Baker factors—"a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it." While the government argued that there was a "'textually demonstrable constitutional commitment' to the President of the sole power ... to determine whether an American born in Jerusalem may choose to have Israel listed as his place of birth on his passport[;]" the Court noted that there was no "exclusive commitment to the Executive of the power to determine the constitutionality of a statute." Likewise, the Court reasoned, there might be "'a lack of judicially discoverable and manageable standards for resolving' ... whether the Judiciary may decide the political status of Jerusalem." But such "concerns ... dissipate when the issue is recognized to be the more focused one of the constitutionality of" the statute in question. Justice Sotomayor, joined in part by Justice Breyer, issued a concurring opinion. In contrast to the majority, which mentioned only the first two Baker factors, Justice Sotomayor's opinion listed all six, and explained that they represented "three distinct justifications for withholding judgment on the merits of a dispute." In the first—when a case is textually committed to another branch—"the Constitution itself requires that another branch resolve the question presented." The second and third factors—a lack of judicial standards and the impossibility of rendering a decision without making a nonjudicial policy decision—"reflect circumstances in which a dispute calls for decisionmaking beyond courts' competence." The remaining factors "address circumstances in which prudence may counsel against a court's resolution of an issue presented." Justice Sotomayor explained that "[c]ourts should be particularly cautious before forgoing adjudication of a dispute" under these last three factors, but noted that certain cases can present situations "unfit for judicial disposition." Justice Sotomayor also argued that, while this case did not present a political question, it was not the case that no statute could ever do so. She pointed to a past Supreme Court decision refusing to adjudicate a challenge to a state statute under the Guarantee Clause, and noted that it was possible for a statute to raise nonjusticiable issues. For example, if a statute bestowed financial relief on people "improperly 'tried' of impeachment offenses," then a court hearing claims under the statute would be forced to adjudicate matters found nonjusticiable in Nixon v. United States . Finally, Justice Sotomayor disagreed with the majority's finding that because "the parties' arguments rely on textual, structural, and historical evidence of the kind that courts routinely consider," the case did not present an issue lacking judicial standards. She explained: it is not whether the evidence upon which litigants rely is common to judicial consideration that determines whether a case lacks judicially discoverable and manageable standards. Rather, it is whether that evidence in fact provides a court a basis to adjudicate meaningfully the issue with which it is presented. The answer will almost always be yes, but if the parties' textual, structural, and historical evidence is inapposite or wholly unilluminating, rendering judicial decision no more than guesswork, a case relying on the ordinary kinds of arguments offered to courts might well still present justiciability concerns. What's Left of the Political Question Doctrine? The majority opinion in Zivotofsky appears to have limited the scope of cases that may pose a political question; but the remaining contours of the doctrine are unclear. The Court did not overrule any of its past decisions that had found political questions, so those cases appear to remain good law; and it mentioned the first two Baker factors as relevant in finding a political question, which would appear to leave those factors intact for lower courts to apply. However, as mentioned above, many lower federal courts have dismissed cases involving statutes that concern foreign affairs on political question grounds. A fair reading of Zivotofsky indicates much less room to do so in the future. Commentators addressing this question have disagreed on how broadly to read the Court's opinion. At a minimum, the Court's framing of the underlying issues in the case—whether the statute granting the plaintiff a right was constitutional, rather than whether a court may adjudicate Jerusalem's political status—could caution lower courts from finding political questions in cases involving statutory claims. In other words, the proper analysis under Zivotofsky in cases where a plaintiff seeks to vindicate a statutory right begins with whether the statute is constitutional and may be enforced against the executive, not whether resolution of the issue would pose a political question. This interpretative sequence when courts are faced with statutory claims requires adjudication on the merits in at least some cases that would otherwise be dismissed as posing political questions. In fact, one reading of the majority opinion might be that no case presenting a potential question of statutory interpretation (i.e., when a court must interpret an ambiguous statute or determine whether a statute is constitutional) can ever pose a political question. Reflecting perhaps a robust conception of judicial supremacy, the majority emphasized that when a statute is "alleged to conflict with the Constitution," it is the duty of the courts to "say what the law is." Nevertheless, the majority did not expressly hold that no political question could ever arise in a case involving statutory interpretation, it simply stated that because the plaintiff sought to vindicate a statutory right, the proper analysis was whether the statute was constitutional. And the majority also did not address Justice Sotomayor's concurrence that envisioned hypothetical statutes that might do so. Put another way, the Court ruled that the proper analysis when a plaintiff seeks to vindicate a statutory right is to examine the constitutionality of the statute; but did not expressly hold that the political question doctrine is always inapplicable to cases involving statutes. The majority's analytic framework might also indicate that some cases involving statutory interpretation could still pose a political question. The majority did not fully explain why its interpretative approach was the proper one. Instead, it simply reasoned that because the plaintiff sought to vindicate a statutory right, a court should interpret the statute at issue, and the political question doctrine was inapplicable. The Court did not clearly indicate whether this was the correct approach in all cases presenting a matter of statutory interpretation. Without such an interpretative anchor for lower courts to follow, there may remain some room for courts to construe a case involving statutory interpretation in a manner that avoids falling under Zivotofsky 's requirements. For example, a court might conclude that a statute fails to provide a court with meaningful standards to apply and find a political question on that basis. And tort claims brought against the federal government might sometimes pose a political question if they would require a court to review military discretionary decisions. Likewise, a broad reading of Zivotofsky might also eliminate judicial consideration of the prudential aspects of the political question doctrine or severely limit the application of Baker 's second factor—a lack of judicial standards. In the first place, the majority opinion only mentioned the first two Baker factors in its analysis, declining to even mention the remaining four. The Court also rejected the argument that resolution of the claim was inappropriate because of a lack of judicially manageable standards. The majority noted that while adjudicating the constitutionality of the statute in question would be difficult, requiring a "careful examination of textual, structural, and historical evidence," this is exactly "what courts do. In fact, the Court reasoned that while there may not be adequate judicial standards to determine the "political status of Jerusalem," that concern "dissipate[s]" when the question is the constitutionality of a statute. One might even read this assertion as discouraging courts from consequentialist concerns when determining the applicability of the political question doctrine. Nonetheless, the Court did not expressly disclaim reliance on prudential factors to find that a case presented a political question; it simply omitted them in its analysis. It also failed to address Justice Sotomayor's concurrence, which argued for the continuing vitality of prudential factors. In addition, while the majority rejected the argument that there were no judicial standards in the case because the parties relied on evidence routinely considered by courts, Justice Sotomayor's concurrence pointed out that similar evidence was available in Nixon , a case that did pose a political question. The proper question for the Court, she argued, was not "whether the evidence upon which litigants rely is common to judicial consideration," but instead "whether that evidence in fact provides a court a basis to adjudicate meaningfully the issue with which it is presented." Again, because the majority did not expressly hold that the availability of such evidence precluded a finding that there were no judicial standards to apply, combined with the failure of the majority to address Sotomayor's concurrence, the political question doctrine's prudential factors may have survived. Implications on the Separation of Powers A reduction in situations where courts may decline to adjudicate a case on political question grounds may have important implications for the separation of powers, at least as between Congress and the executive branch. Finding a political question in a case where no disagreement exists between the political branches can be understood as an exercise of judicial minimalism without important consequences for the relationship between Congress and the executive branch. In contrast, finding a political question in a case where a core issue presented is whether the executive branch is bound by a statute obviously can impact the separation of powers. Such judicial reluctance to enforce a statute, one might argue, leaves resolution of such questions to the political branches, and allows some constitutional questions to be resolved via a struggle between the political branches, rather than by the courts. Others have argued, however, that the practice actually favors the executive branch at the expense of Congress. Instead of determining a statute's constitutionality, the argument goes, courts effectively decline to force the executive branch to comply with congressional will—essentially expanding executive branch power. Whether the practice functioned to allow the political branches to determine separations of powers disputes between themselves, or effectively sanctioned executive branch practices, Zivotofsky can be read to restrict lower courts' discretion to apply the doctrine in the future. If so, this may entail more judicial resolution of separation of powers disputes, ultimately affirming the judiciary's role to "say what the law is," and possibly reducing the constitutional interpretative power of the political branches.

Article III of the Constitution restricts the jurisdiction of federal courts to deciding actual "Cases" and "Controversies." The Supreme Court has articulated several "justiciability" doctrines emanating from Article III that restrict when federal courts will adjudicate disputes. One justiciability concept is the political question doctrine, according to which federal courts will not adjudicate certain controversies because their resolution is more proper within the political branches. Because of the potential implications for the separation of powers when courts decline to adjudicate certain issues, application of the political question doctrine has sparked controversy. Because there is no precise test for when a court should find a political question, however, understanding exactly when the doctrine applies can be difficult. The doctrine's origins can be traced to Chief Justice Marshall's opinion in Marbury v. Madison; but its modern application stems from Baker v. Carr, which provides six independent factors that can present political questions. These factors encompass both constitutional and prudential considerations, but the Court has not clearly explained how they are to be applied. Further, commentators have disagreed about the doctrine's foundation: some see political questions as limited to constitutional grants of authority to a coordinate branch of government, while others see the doctrine as a tool for courts to avoid adjudicating an issue best resolved outside of the judicial branch. Supreme Court case law after Baker fails to resolve the matter. The Court has historically applied the doctrine in a small but disparate number of cases, without applying clear rules for lower courts to follow. Possibly as a result of the murky nature of the doctrine, it has regularly been invoked in lower federal courts in cases concerning foreign policy. However, a recent Supreme Court case, Zivotofsky v. Clinton, appears to have narrowed the scope of the political question doctrine. In a suit seeking the vindication of a statutory right in the foreign affairs context, the Court reversed a lower court's finding that the case posed a political question. The Court explained that the proper analysis in such a situation begins not by asking whether adjudicating the case would require review of the foreign policy decisions of the political branches, but instead examining whether the plaintiff correctly interpreted the statute, followed by determining whether the statute was constitutional. The Court's opinion appears to restrict the types of claims that can pose political questions, and seems to encourage courts to decide more statutory claims on the merits. In turn, the decision could lead to increased judicial resolution of controversies concerning the separation of powers, rather than resolutions between the political branches themselves.

Introduction The American Recovery and Reinvestment Act of 2009 (ARRA; H.R. 1 ), which the President signed into law on February 17, 2009 ( P.L. 111-5 ), incorporated the Health Information Technology for Economic and Clinical Health (HITECH) Act. The HITECH Act, based on legislation introduced in the 110 th Congress, is intended to promote the widespread adoption of health information technology (HIT) for the electronic sharing of clinical data among hospitals, physicians, and other health care stakeholders. HIT, which generally refers to the use of computer applications in medical practice, is widely viewed as a necessary and vital component of health care reform. It encompasses interoperable electronic health records (EHRs)—including computerized systems to order tests and medications, and support systems to aid clinical decision making—and the development of a national health information network to permit the secure exchange of electronic health information among providers. The promise of HIT comes not from automating existing practices, but rather as a tool to help overhaul the delivery of care. HIT enables providers to render care more efficiently, for example, by eliminating the use of paper-based records and reducing the duplication of diagnostic tests. It can also improve the quality of care by identifying harmful drug interactions and helping physicians manage patients with multiple conditions. Moreover, the widespread use of HIT would provide large amounts of clinical data for comparative effectiveness research, performance measurement, and other activities aimed at improving health care quality. Relatively few health care providers have adopted HIT. The most recent estimate suggests that only about 5% of physicians have a fully functional EHR that incorporates all or most of the recommended capabilities, including electronic documentation of physicians' notes, electronic viewing of lab test results and radiological images, electronic prescribing, clinical decision support, and interoperability with other systems. The most important barriers to HIT adoption include the high implementation and maintenance costs, the limited financial incentives for using HIT, and the lack of interoperability. The HITECH Act includes three sets of provisions to promote HIT adoption. First, it codifies the Office of the National Coordinator for Health Information Technology (ONCHIT) within the Department of Health and Human Services (HHS). Created by Executive Order in 2004, ONCHIT was charged with developing and implementing a strategic plan to guide the nationwide implementation of HIT in the public and private health care sectors. ONCHIT has focused its activities in the following areas: (1) developing vocabulary, messaging, and functional standards necessary to achieve interoperability among varying HIT applications; (2) establishing criteria for certifying that HIT products meet those standards; (3) ensuring the privacy and security of electronic health information; and (4) helping facilitate the creation of prototype health information networks. The goal is to develop a national capability to exchange standards-based health care data in a secure computer environment. Second, the HITECH Act through a number of mechanisms provides financial incentives for HIT use among health care practitioners. It establishes several grant programs to provide funding for investing in HIT infrastructure, purchasing certified EHRs, training, and the dissemination of best practices. It also authorizes grants to states for low-interest loans to help providers finance HIT. Beginning in 2011, the legislation provides Medicare incentive payments to encourage doctors and hospitals to adopt and use certified EHRs. Those incentive payments are phased out over time and replaced by financial penalties for physicians and hospitals that are not using certified EHRs. In addition to the Medicare incentives, the legislation authorizes a 100% federal match for payments to certain qualifying Medicaid providers for the acquisition and use of certified EHR technology. Finally, the HITECH Act includes a series of privacy and security provisions that amend and expand the current HIPAA requirements. Among other things, the legislation strengthens enforcement of the HIPAA privacy rule and creates a right to be notified in the event of a breach of identifiable health information. The Congressional Budget Office (CBO) estimates that the HITECH Act payment incentives (and penalties) will increase spending for the Medicare and Medicaid programs by a total of $32.7 billion over the 2009-2019 period. CBO anticipates, however, that widespread adoption of interoperable EHRs will reduce total spending on health care by decreasing the number of duplicate and inappropriate tests and procedures, reducing paperwork and administrative overhead, and eliminating medical errors. Over the 2009-2019 period, it estimates that the HITECH Act will save the Medicare and Medicaid programs a total of $12.5 billion. When savings to the Federal Employees Health Benefits program and CMS's administrative costs are factored in, CBO estimates overall that the HITECT Act will increase direct federal spending by $20.8 billion. Under current law, CBO predicts that about 45% of hospitals and 65% of physicians will have adopted HIT by 2019. CBO estimates that the incentive mechanisms in the HITECH Act will boost those adoption rates to about 70% for hospitals and about 90% for physicians. This report provides a summary and explanation of the provisions in the HITECH Act. In order to provide some context for that discussion, the report first gives an overview of prior actions taken by Congress and the Administrations to promote HIT, and briefly describes efforts by the 109 th and 110 th Congresses to enact comprehensive HIT legislation. The report will continue to be updated to reflect administrative actions related to the implementation of the HITECH Act. Federal Efforts to Promote HIT HIPAA Administrative Simplification: Electronic Transactions, Security & Privacy Standards Congress took an important first step towards promoting HIT when it enacted the Health Insurance Portability and Accountability Act of 1996 (HIPAA; P.L. 104-191 ). HIPAA imposed new federal requirements on health insurance plans offered by public and private employers, guaranteeing the availability and renewability of health insurance coverage for certain employees and individuals, and limited the use of preexisting condition restrictions. But while HIPAA was primarily concerned with giving consumers greater access to health insurance, the legislation also contained a section, subtitled Administrative Simplification, that included provisions to promote more standardization and efficiency in the health care industry and safeguard personal health information. Under HIPAA Administrative Simplification, the HHS Secretary was required to develop standards to support the growth of electronic record keeping and claims processing in the health care system and to safeguard the privacy of patient records. The standards apply to health care providers (who transmit any health information in electronic form in connection with a HIPAA-specified transaction), heath plans, and health care clearinghouses. Electronic Transactions and Code Sets HIPAA instructed the Secretary to issue electronic format and data standards for nine routine administrative and financial transactions between health care providers and health plan/payers. Those transactions include claims and encounter information, payment and remittance advice, and claims status inquiry and response. The electronic transactions standards include several Accredited Standards Committee X12 (ASC X12) standards, as well as a number of code sets (e.g., International Classification of Diseases, 9 th Edition, Clinical Modification, or ICD-9CM) used to identify specific diagnoses and clinical procedures that pertain to a patient encounter. HIPAA does not mandate that providers submit transactions electronically, though health plans/payers increasingly require it. However, if a health care provider chooses to submit one or more of the HIPAA-specified transactions electronically, then he or she must comply with the standard for that transaction. In 2001, Congress enacted the Administrative Simplification Compliance ( P.L. 107-105 ), which, among other things, requires Medicare providers to submit claims electronically. Unique Health Identifiers HIPAA further required the Secretary to issue national identification numbers for health care providers, health plans, employers, and individuals (i.e., patients) for use in standard transactions. Unique identifiers for providers and employers have been adopted, while the health plan identifier is still under review. The requirement that HHS develop a unique patient identifier has proven too controversial because of privacy concerns and is on hold. Beginning in FY1999, Congress each year has included language in the annual appropriations bill for the Departments of Labor, HHS, and Education prohibiting the use of funds for the development of a unique individual identifier. Health Information Security HIPAA's Administrative Simplification provisions also instructed the Secretary to issue security standards to safeguard individually identifiable health information in electronic form against unauthorized access, use, and disclosure. The security rule (45 CFR Parts 160, 164) specifies a series of administrative, technical, and physical security procedures for providers and plans to use to ensure the confidentiality of electronic health information. Administrative safeguards include such functions as assigning or delegating security responsibilities to employees, as well as security training requirements. Physical safeguards are intended to protect electronic systems and data from threats, environmental hazards, and unauthorized access. They include restricting access to computers and off-site backups. Technical safeguards are primarily IT functions used to protect and control access to data. They include using authentication and password controls, and encrypting data for storage and transmission. The HIPAA security standards are flexible and scalable, allowing covered entities (i.e., health plans, health care providers, and health care clearinghouses) to take into account their size, capabilities, and the costs of specific security measures. The standards are also technology neutral. They do not prescribe the use of specific technologies, so that covered entities will not be bound by particular systems and/or software. Health Information Privacy Finally, HIPAA set a three-year deadline for Congress to enact health information privacy legislation. If, as turned out to be the case, lawmakers were unable to pass such legislation before the deadline, the HHS Secretary was instructed to promulgate regulations containing standards to protect the privacy of individually identifiable health information. The HIPAA privacy rule (45 CFR Parts 160, 164) established several individual privacy rights with respect to such protected health information (PHI). First, it established a right of access. Individuals have the right to see and obtain a copy of their own PHI in the form or format they request, provided the information is readily producible in such form or format. If not, then the information must be provided in hard copy or such form or format as agreed to by the covered entity and the individual. The covered entity can impose reasonable, cost-based fees for providing the information. Second, the privacy rule gives individuals the right to amend or supplement their own PHI. Third, individuals have the right to request that a covered entity restrict the use and disclosure of their PHI for the purposes of treatment, payment, or other routine health care operations. However, the covered entity is not required to agree to such a restriction unless it has entered into an agreement to restrict, in which case it must abide by the agreement. Finally, individuals have the right to an accounting of disclosures of their PHI by a covered entity during the previous six years, with certain exceptions. For example, a covered entity is not required to provide an accounting of disclosures that have been made to carry out treatment, payment, and health care operations. In addition to patient privacy rights, the HIPAA privacy rule placed certain limitations on when and how covered entities may use and disclose PHI. Generally, health plans and health care providers may use and disclose health information for the purpose of treatment, payment, and health care operations without the individual's authorization and with few restrictions. In certain other circumstances (e.g., disclosures to family members and friends), the rule requires plans and providers to give the individual the opportunity to object to the disclosure. The rule also permits the use and disclosure of health information without the individual's permission for various specified activities (e.g., public health oversight, law enforcement) that are not directly connected to the treatment of the individual. For all uses and disclosures of health information that are not otherwise required or permitted by the rule, plans and providers must obtain a patient's written authorization. The privacy rule incorporates a minimum necessary standard. Whenever a covered entity uses or discloses PHI or requests such information from another covered entity, it must make reasonable efforts to limit the information to the minimum necessary to accomplish the intended purpose of the use or disclosure. There are a number of circumstances in which the minimum necessary standard does not apply; for example, disclosures to or requests by a health care provider for treatment purposes. The rule also permits the disclosure of a "limited data set" for certain specified purposes (e.g., research), pursuant to a data use agreement with the recipient. A limited data set, while not meeting the rule's definition of de-identified information (to which the privacy protections do not apply), has most direct identifiers removed and is considered by HHS to pose a low privacy risk. Under the HIPAA privacy and security standards, health plans and health care providers may share PHI with their business associates who provide a wide variety of functions for them, including legal, actuarial, accounting, data aggregation, management, administrative, accreditation, and financial services. A covered entity is permitted to disclose health information to a business associate or to allow a business associate to create or receive health information on its behalf, provided the covered entity receives satisfactory assurance in the form of a written contract that the business associate will not use or disclose the information other than as permitted or required by the contract or as required by law, and that the business associate will implement appropriate administrative, technical, and physical safeguards to prevent unauthorized uses and disclosures. Covered entities are not liable for, or required to monitor, the actions of their business associates. If a covered entity finds out about a material breach or violation of the contract by a business associate, it must take reasonable steps to remedy the situation, and, if unsuccessful, terminate the contract. If termination is not feasible, the covered entity must notify HHS. HIPAA authorized the Secretary to impose civil monetary penalties on any person failing to comply with the privacy and security standards. The maximum civil penalty is $100 per violation and up to $25,000 for all violations of an identical requirement or prohibition during a calendar year. The HHS Office of Civil Rights (OCR) is responsible for enforcing the privacy rule. For certain wrongful disclosures of PHI, OCR may refer the case to the Department of Justice for criminal prosecution. HIPAA's criminal penalties include fines of up to $250,000 and up to 10 years in prison for disclosing or obtaining health information with the intent to sell, transfer or use it for commercial advantage, personal gain, or malicious harm. Together, the HIPAA privacy and security standards have helped lay the groundwork for the development of a National Health Information Network and the widespread adoption of interoperable EHRs. Information on the HIPAA privacy rule and links to information on the other HIPAA Administrative Simplification standards is at [ http://www.hhs.gov/ocr/hipaa ]. Medicare Part D: E-Prescribing Besides HIPAA, the other significant legislative action taken by Congress to promote HIT was the inclusion of electronic prescribing provisions in the Medicare Modernization Act of 2003 (MMA; P.L. 108-173 ), which created the Part D prescription drug benefit. The MMA established a timetable for the Centers for Medicare and Medicaid Services (CMS) to develop e-prescribing standards, which provide for the transmittal of such information as eligibility and benefits (including formulary drugs), information on the drug being prescribed and other drugs listed in the patient's medication history (including drug-drug interactions), and information on the availability of lower-cost, therapeutically appropriate alternative drugs. CMS issued a set of foundation standards in 2005, then piloted and tested additional standards in 2006. The final Medicare e-prescribing standards, which become effective on April 1, 2009, apply to all Part D sponsors, as well as to prescribers and dispensers that electronically transmit prescriptions and prescription-related information about Part D drugs prescribed for Part D eligible individuals. The MMA did not require Part D drug prescribers and dispensers to e-prescribe. Under its provisions, only those who choose to e-prescribe must comply with the new standards. However, the recently enacted Medicare Improvement for Patients and Providers Act of 2008 (MIPPA; P.L. 110-275 ) includes an e-prescribing mandate and authorizes incentive bonus payment for e-prescribers between 2009 and 2013. Beginning in 2012, payments would be reduced for those who fail to e-prescribe. Information on the CMS e-prescribing standards is at [ http://www.cms.hhs.gov/EPrescribing ]. Anti-Kickback Statute, Stark Law The MMA also instructed the Secretary to establish a safe harbor from penalties under the anti-kickback statute (42 U.S.C. 1320a-7b) and an exception to the Medicare physician self-referral (Stark) law (42 U.S.C. 1395nn) for the provision of HIT and training services used in e-prescribing. The anti-kickback statute prohibits an individual or entity from knowingly or willfully offering or accepting remuneration of any kind to induce a patient referral for, or purchase of, an item or service covered by any federal health care program. The Stark law prohibits physicians from referring patients to any entity for certain health services if the physician (or an immediate family member) has a financial relationship with the entity, and prohibits entities from billing for any services resulting from such referrals, unless an exception applies. Both statutes, which are intended to fight fraud and abuse, are seen as impediments to the dissemination of HIT among health care entities. In 2006, the Secretary announced final regulations creating new safe harbors and Stark exceptions for certain arrangements involving the donation of electronic prescribing and EHR technologies and training services. That would allow, for example, a hospital to provide such technologies and services to its medical staff, and Medicare Advantage plans to provide such technologies and services to pharmacies and prescribing health care providers. CMS Grants, Demonstrations and Pay-for-Performance CMS is administering a number of additional programs to promote HIT adoption. The MMA mandated a three-year pay-for-performance demonstration in four states to encourage physicians to adopt and use HIT to improve the treatment of chronically ill Medicare patients. Physicians participating in the Medicare Care Management Performance (MCMP) demonstration receive bonus payments for reporting clinical quality data and meeting clinical performance standards for treating patients with certain chronic conditions. They are eligible for an additional incentive payment for using a certified EHR and reporting the clinical performance data electronically. CMS has developed a second demonstration to promote EHR adoption using its Medicare waiver authority. The five-year Medicare EHR demonstration is intended to build on the foundation created by the MCMP program. It will provide financial incentives to as many as 1,200 small- to medium-sized physician practices in 12 communities across the country for using certified EHRs to improve quality, as measured by their performance on specific clinical quality measures. Additional bonus payments will be made based on the number of EHR functionalities a physician group has incorporated into its practice. The Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ) established a voluntary physician quality reporting system, including an incentive payment for Medicare providers who report data on quality measures. The Medicare Physician Quality Reporting Initiative (PQRI) was expanded by the Medicare, Medicaid, and SCHIP Extension Act of 2007 ( P.L. 110-173 ) and by MIPPA, which authorized the program indefinitely and increased the incentive that eligible physicians can receive for satisfactorily reporting quality measures. In 2009, eligible physicians may earn a bonus payment equivalent to 2.0 percent of their total allowed charges for covered Medicare physician fee schedule services. The PQRI quality measures include a structural measure that conveys whether a physician has and uses an EHR. The Deficit Reduction Act of 2005 ( P.L. 109-171 ) authorized Medicaid Transformation Grants to states totaling $150 million over two years. The purpose of the grants is to support adoption of innovative methods to improve effectiveness and efficiency in providing medical assistance under Medicaid. In 2007, CMS awarded Medicaid Transformation Grants to 33 states, the District of Columbia, and Puerto Rico. Most of the funds are being used for HIT-related initiatives. Office of the National Coordinator for Health Information Technology On April 27, 2004, President Bush announced a commitment to the promotion of HIT by calling for the widespread adoption of interoperable EHRs within 10 years. That same day he signed Executive Order 13335 creating ONCHIT to develop, maintain, and direct a strategic plan to guide the nationwide implementation of HIT in the public and private health care sectors. Within three months, ONCHIT published a strategic framework in which it outlined four major goals for HIT: (1) informing clinical practice by accelerating the use of EHRs; (2) interconnecting clinicians allowing them to exchange health information in a secure environment; (3) personalizing health care by enabling consumers to participate more actively in their own care; and (4) improving population health through improved public health surveillance and by accelerating research and its translation into clinical practice. In fall 2004, ONCHIT solicited public input on a series of questions on whether and how a National Health Information Network should be developed. The questions addressed such topics as organization and business framework, legal and regulatory issues, management and operational considerations, interoperability standards, and privacy and security. Based on the detailed and coordinated responses that it received from a broad array of stakeholders in the health care sector, ONCHIT has undertaken a series of activities to address several important challenges to the nationwide implementation of a HIT infrastructure. In 2005, the Secretary created the American Health Information Community (AHIC), a public-private advisory body, to make recommendations to the Secretary on how to accelerate the development and adoption of interoperable HIT using a market-driven approach. AHIC and its workgroups have proven to be extremely important in creating a forum to seek input and guidance from a broad range of stakeholders on key HIT issues and policy implications. The AHIC charter required it to provide the Secretary with recommendations to create a successor entity based in the private sector. AHIC Successor, Inc. was established in July 2008 to transition AHIC's accomplishments into a new public-private partnership. That partnership, the National eHealth Collaborative (NeHC), was launched on January 8, 2009. Developing standards and a process to certify HIT products and services as meeting those standards is a key priority. ONCHIT awarded a contract to the American National Standards Institute (ANSI) to establish a public-private collaborative, known as the Healthcare Information Technology Standards Panel (HITSP), to harmonize existing HIT standards and identify and establish standards to fill gaps. To date, the Secretary has recognized over 100 harmonized standards, including many that need to be used for interoperable EHRs. To ensure that these standards are incorporated into products, a second contract was awarded to the Certification Commission for Healthcare Information Technology (CCHIT), a private, nonprofit organization created by HIT industry associations, which establishes criteria for certifying products that use recognized standards. CCHIT has certified over 150 ambulatory and inpatient EHR products. In August 2006, the President issued Executive Order 13410 committing federal agencies that purchase and deliver health care to require the use of HIT that is based on interoperability standards recognized by the Secretary. The National Health Information Network (NHIN) is envisioned as a "network of networks"; that is, a nationwide, Internet-based architecture that interconnects state and regional health information exchanges (and other networks). It will be built on a secure platform using a shared set of standards and policies to permit interoperable health information exchange among providers, consumers, and others involved in supporting health care. To facilitate the development of the NHIN, ONCHIT awarded several contracts to develop models of how nationwide electronic health information might work. Each contractor was asked to develop a prototype architecture for the NHIN and to interconnect three communities as a demonstration of the architecture. The initial phase of the project has since been expanded and now involves health information exchanges across the country working cooperatively to identify and implement best practices for health information exchange. Ensuring the privacy and security of electronic health information is critical to the success of the NHIN and the widespread adoption of interoperable EHRs. ONCHIT has undertaken the development of a national privacy and security framework, using HIPAA as its foundation, to incorporate the needs of health care consumers and build public trust in the new e-health environment. To this end it has awarded a contract to RTI International, which in turn has subcontracted with 33 states and one territory that make up the Health Information Security and Privacy Collaboration (HISPC). HISPC is leveraging input from a broad range of public and private stakeholders in health information exchange to assess the variations in current privacy and security practices and policies. The goal is to identify both best practices and challenges, and develop consensus-based solutions for interoperable electronic health information exchange that protect the privacy and security of health information. Information on ONCHIT's activities and programs is at [ http://www.hhs.gov/healthit ]. Agency for Healthcare Research and Quality Within HHS, the Agency for Healthcare Research and Quality (AHRQ) is the principal source of federal HIT grant money. Since 2004, AHRQ has awarded $260 million to support and stimulate investment in HIT. This translates into almost 200 projects in 48 states. AHRQ-funded projects, many of which are focused on rural and underserved populations, cover a broad range of HIT tools and systems, including EHRs, personal health records (PHRs), e-prescribing, privacy and security, quality measurement, and Medicaid technical assistance. In addition, AHRQ created the online National Resource Center for Health IT to disseminate research findings and best practices, facilitate expert and peer-to-peer collaboration, and foster the growth of online communities who are planning to implement HIT. Information on AHRQ's HIT activities and programs is at [ http://healthit.ahrq.gov ]. Other Federal Agencies Other federal agencies that purchase health care are also involved in efforts to further the development and broad adoption of HIT. The Department of Defense (DOD), the Department of Veterans Affairs (VA), and the Office of Personnel Management (OPM) have worked with HHS to adopt health information standards for use by all federal health agencies. As part of the Consolidated Health Informatics Initiative, more than 20 federal agencies have agreed to endorse standards that enable information to be shared among agencies and that can serve as a model for the private sector. Over the past few years, OPM has encouraged Federal Employees Health Benefits (FEHB) health benefits plans to increase their use of HIT. The VA and DOD are both extensive users of HIT. For several years, the VA has used an EHR—the Veterans Health Information Systems and Technology Architecture, or VistA—in providing care to U.S. military veterans. According to the VA, VistA has improved the efficiency of its health care delivery and the quality of the care it provides. DOD has developed and is in the process of implementing an EHR—known as AHLTA (Armed Forces Health Longitudinal Technology Application)—for its health care system. DOD is also working with the VA to develop a way by which health information can be transmitted seamlessly and instantaneously between the two agencies. HIT Legislation in the 109th and 110th Congresses 109th Congress The 109 th Congress was the first to consider comprehensive HIT legislation. On November 18, 2005, the Senate, by unanimous consent, passed the bipartisan Wired for Health Care Quality Act ( S. 1418 , S.Rept. 109-111 ). On July 27, 2006, the House passed the Health Information Technology Promotion Act ( H.R. 4157 , H.Rept. 109-603 ) on a vote of 270-148. The bills, which contained several important differences, were not conferenced. Both bills included comparable provisions establishing ONCHIT, but contained competing language addressing the responsibilities and composition of AHIC and its role in the adoption of interoperability standards. Only the Senate bill addressed certification. S. 1418 also would have authorized grants for health care providers, grants for implementing regional HIT plans, and a state loan program to facilitate HIT adoption. H.R. 4157 included a single HIT grant program for integrated health care systems. Both measures would have authorized a demonstration program, but for different purposes. The House measure also included provisions that would have established an anti-kickback safe harbor and Stark exception for the donation of HIT and related support or training services, as well as provisions to expedite updating and modifying the HIPAA electronic transactions and codes standards. The Senate version contained no such provisions. 110th Congress The Wired for Health Care Quality Act ( S. 1693 ) was reintroduced on June 26, 2007, and ordered reported (as amended) by the Committee on Health, Education, Labor, and Pensions (HELP) on August 1, 2007 ( S.Rept. 110-187 ). In the House, H.R. 6357 , the PRO(TECH)T Act of 2008, was introduced by Representatives Dingell and Barton on June 24, 2008, and ordered reported (as amended) by the Committee on Energy and Commerce on September 11, 2008 ( H.Rept. 110-837 ). No further legislative action was taken on either measure. Like the Senate bill, H.R. 6357 would have codified ONCHIT and authorized grants and loans to promote the adoption of EHRs and the development of health information exchange networks. Unlike S. 1693 , however, the House measure also included extensive privacy and security provisions to strengthen the HIPAA rules. A second House bill, H.R. 6898 , the Health-e Information Technology Act of 2008, was introduced by Representative Stark on September 15, 2008, and referred to the Committees on Energy and Commerce, Science and Technology, and Ways and Means. Broadly similar to the PRO(TECH)T Act, H.R. 6898 also included Medicare incentive payments to encourage EHR use by hospitals and physicians, as well as financial penalties for providers that failed to adopt HIT. HITECH Act: Explanation of Provisions Lawmakers incorporated the HITECH Act in the American Recovery and Reinvestment Act of 2009 (ARRA; H.R. 1 , H.Rept. 111-16), the economic stimulus bill that the President signed into law on February 17, 2009 ( P.L. 111-5 ). The HITECH Act is an amalgam of the two House bills from the 110 th Congress. It contains three sets of provisions that are expected to boost HIT adoption among health care providers in the coming years. First, it codifies ONCHIT and establishes a process for the development of interoperability standards that support the nationwide electronic exchange of health information among doctors, hospitals, patients, health plans, the federal government, and other health care stakeholders. It also establishes a voluntary certification process for HIT products. The National Institute of Standards and Technology (NIST) is to provide for the testing of such products to determine if they meet national standards that allow for secure electronic information exchange. After the adoption of an initial set of standards by the end of 2009, the National Coordinator must make an EHR available at a nominal fee, unless it is determined that the needs and demands of providers are being adequately met by the marketplace. Second, the HITECH Act authorizes funding for several grant programs to support HIT infrastructure, EHR adoption, training, dissemination of best practices, telemedicine, and inclusion of HIT in clinical education. Funds also are provided to states for low-interest loans to help health care practitioners finance HIT. In addition, the legislation provides financial incentives through the Medicare and Medicaid programs to encourage doctors, hospitals, health clinics, and other entities to adopt and use certified EHRs. Medicare incentive payments are phased out over time and replaced with financial penalties for providers that are not using EHRs. Finally, the HITECH Act expands the HIPAA privacy and security standards. Among other things, it establishes a breach notification requirement for health information that is not encrypted, strengthens enforcement of the HIPAA standards by increasing penalties for violations and provides greater resources for enforcement and oversight activities, places new restrictions on marketing activities by health plans and providers, and creates transparency by allowing patients to request an audit trail showing all disclosures of their electronic health information. The HITECH Act appears in two separate ARRA titles, each of which is described in the tables below. Table 1 provides a summary of the HITECH Act provisions in Division A, Title XIII of the economic stimulus bill. Those provisions include ONCHIT and the development and adoption of standards, the grant and loan programs, and the privacy and security requirements. Table 2 summarizes the HITECH Act's Medicare and Medicaid provisions, which are in Division B, Title IV of the stimulus bill. For each provision, as appropriate, the tables include additional information on existing federal requirements and other relevant administrative activities. Each mention of the Secretary in the tables refers to the Secretary of Health and Human Services. Note: Table 2 does not include two miscellaneous Medicare provisions added to the HITECH Act, which are unrelated to HIT. HIT Appropriations in ARRA In addition to the mandatory funding that would become available to health care providers under the HITECH Act's Medicare and Medicaid provisions, the emergency appropriations provisions in ARRA Division A include $2 billion in discretionary funds for ONCHIT to invest in HIT architecture; provide grants to hospitals, physicians, and other health care providers; and support training programs. In addition, $85 million is appropriated to the Indian Health Service (IHS) for HIT and telehealth, to be allocated at the discretion of the IHS Director.

Lawmakers incorporated the Health Information Technology for Economic and Clinical Health (HITECH) Act as part of the American Recovery and Reinvestment Act of 2009 (H.R. 1), the economic stimulus bill that the President signed into law on February 17, 2009 (P.L. 111-5). The HITECH Act is intended to promote the widespread adoption of health information technology (HIT) to support the electronic sharing of clinical data among hospitals, physicians, and other health care stakeholders. HIT is widely viewed as a necessary and vital component of health care reform. It encompasses interoperable electronic health records (EHRs)—including computerized systems to order tests and medications, and support systems to aid clinical decision making—and the development of a national health information network to permit the secure exchange of electronic health information among providers. The HITECH Act builds on existing federal efforts to encourage HIT adoption and use. It codifies the Office of the National Coordinator for Health Information Technology (ONCHIT) within the Department of Health and Human Services. ONCHIT was created by Executive Order in 2004 and charged with developing and implementing a strategic plan to guide the nationwide implementation of health information technology (HIT) in the public and private health care sectors. ONCHIT has focused on developing standards necessary to achieve interoperability among varying HIT applications; establishing criteria for certifying that HIT products meet those standards; ensuring the privacy and security of electronic health information; and helping facilitate the creation of prototype health information networks. The HITECH Act provides financial incentives for HIT use among health care practitioners. It establishes several grant programs to provide funding for investing in HIT infrastructure, purchasing certified EHRs, training, and the dissemination of best practices. It also authorizes grants to states for low-interest loans to help providers finance HIT. Beginning in 2011, the legislation authorizes Medicare incentive payments to encourage doctors and hospitals to adopt and use certified EHRs. Those incentive payments are phased out over time and replaced by financial penalties for physicians and hospitals that are not using certified EHRs. The legislation further authorizes a 100% federal match for payments to certain qualifying Medicaid providers who acquire and use certified EHR technology. Finally, the HITECH Act includes a series of privacy and security provisions that expand the current requirements under the Health Insurance Portability and Accountability Act (HIPAA). Among other things, the legislation strengthens enforcement of the HIPAA privacy rule and creates a right to be notified in the event of a breach of identifiable health information. The Congressional Budget Office (CBO) estimates that Medicare and Medicaid spending under the HITECH Act will total $32.7 billion over the 2009-2019 period. CBO anticipates, however, that widespread HIT adoption will reduce total spending on health care. Through 2019, CBO estimates that the HITECH Act will save the Medicare and Medicaid programs a total of about $12.5 billion. Under current law, CBO predicts that about 45% of hospitals and 65% of physicians will have adopted HIT by 2019. CBO estimates that the incentive mechanisms in the HITECH Act will boost those adoption rates to about 70% for hospitals and about 90% for physicians.

Introduction In April 2009, then Secretary of Defense Robert Gates announced he intended to significantly restructure the Army's Future Combat System (FCS) program. The FCS was a multiyear, multibillion dollar program that had been underway since 2000 and was at the heart of the Army's transformation efforts. It was to be the Army's major research, development, and acquisition program, consisting of 18 manned and unmanned systems tied together by an extensive communications and information network. Among other things, Secretary Gates recommended cancelling the manned ground vehicle (MGV) component of the FCS program, which was intended to field eight separate tracked combat vehicle variants built on a common chassis that would eventually replace combat vehicles such as the M-1 Abrams tank, the M-2 Bradley infantry fighting vehicle, and the M-109 Paladin self-propelled artillery system. As part of this restructuring, the Army was directed to develop a ground combat vehicle (GCV) that would be relevant across the entire spectrum of Army operations and would incorporate combat lessons learned in Iraq and Afghanistan. Congressional interest in this program has been significant, as the GCV is intended to equip the Army's armored brigade combat teams (ABCT). The GCV also represents the only "new start" for a ground weapon systems program and, because of the Army's history of failed weapon systems programs, current and future budget constraints, the program has been subject to a great deal of scrutiny. GCV Program Background: Secretary of Defense Gates's April 2009 FCS Restructuring Decision On April 6, 2009, then Secretary of Defense Gates announced he intended to significantly restructure the FCS program. The Department of Defense (DOD) planned to accelerate the spin out of selected FCS technologies to BCTs, but recommended cancelling the MGV component of the program. Secretary Gates was concerned there were significant unanswered questions in the FCS vehicle design strategy and, despite some adjustments to the MGVs, it did not adequately reflect the lessons of counterinsurgency and close quarters combat in Iraq and Afghanistan. After reevaluating requirements, technology, and approach, DOD would then re-launch the Army's vehicle modernization program, including a competitive bidding process. In addition, the acquisition decision memorandum reaffirmed the establishment of a new ground combat vehicle acquisition program in 2010. The GCV Concept3 The Army's 2009 Modernization Strategy focused on quickly developing a new GCV in a technologically versatile approach. This approach, termed the Incremental Development Approach, featured a modular design intended to accommodate vehicle growth in size, weight, power, and cooling requirements so that as technologies matured, they could be incorporated into new versions of the GCV with little or no modification to the basic vehicle. The original GCV concept, in short, was to field the GCV by 2015-2017; design the platform with sufficient margin for future capabilities; incorporate only mature technologies for vehicle integration; maintain a continuous armor development; and design the vehicle to accept current and future network capabilities (for example, radios, sensors, and jammers). Army leadership had indicated the GCV could be either a tracked or wheeled vehicle. The Army had also suggested it saw "a lot of value in common chassis in terms of logistics support," and that it might pursue a common chassis for GCV variants. Other possible GCV features discussed by the Army included a V-shaped hull and side armor to protect against improvised explosive devices (IEDs). The Army also suggested the GCV would be fuel efficient. The air transportability of the GCV has been discussed as a key design consideration, and the Army had said the GCV must be able to fit on C-17 transports. In order for the GCV to be a "full spectrum" combat vehicle, the Army reportedly had required non-lethal weapon systems be incorporated into vehicle design. While the GCV is to have some military equipment directed by the Army, such as radios and chemical protection systems, Army officials are leaving most of the specific solutions to industry recommendations. The Initial GCV Request for Proposal (RFP)10 On February 25, 2010, the Army released the RFP for the GCV as described in the following DOD press release: Army Ground Combat Vehicle Request for Proposal Released The Army released last Thursday a RFP for the technology development phase of the Infantry Fighting Vehicle being developed under the GCV effort. The Army has worked extensively with the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics to develop this program. The GCV acquisition program will follow DOD best acquisition practices and be a competitive program with up to three contract awards. The GCV development effort will consist of three phases: technology development, engineering and manufacturing design and low rate initial production. The Army anticipates awarding the first contracts for the technology development phase in the fourth-quarter of fiscal 2010. The technology development phase involves risk reduction, identification of technology demonstrations, competitive prototyping activities, and planned technical reviews. Industry will have 60 days to submit proposals to the Army for this development effort.  The Ground Combat Vehicle effort is part of a holistic Army plan to modernize its combat vehicle fleet. This includes incorporating Mine-Resistant Ambush Protected (MRAP) vehicles into the fleet while modernizing current vehicle fleets including Stryker. The first GCV will be an Infantry Fighting Vehicle offering a highly-survivable platform for delivering a nine-man infantry squad to the battlefield. The GCV is the first vehicle that will be designed from the ground up to operate in an IED environment. It is envisioned to have greater lethality and ballistic protection than a Bradley, greater IED and mine protection than an MRAP, and the cross country mobility of an Abrams tank. The GCV will be highly survivable, mobile and versatile, but the Army has not set specific requirements such as weight, instead allowing industry to propose the best solution to meet the requirements. Prior to the release of the RFP, the Army engaged with industry through a series of industry days to inform them of the government's intent for GCV development and gain their feedback from potential contractors about GCV requirements and emerging performance specifications. In response to these initiatives the Army received significant feedback and insights on requirements, growth, training, test and the program at large thereby informing the requirements process and indicating the potential for a competitive contracting environment. Selected Program Activities Potential GCV Vendors13 In response to the Army's February 2010 RFP, three industry teams submitted technology development proposals to the Army. The first team included BAE Systems and Northrop Grumman; the second consisted of General Dynamics, Lockheed Martin, Raytheon, and MTU Detroit Diesel; and the third team, SAIC, Boeing, and the German firms of Krauss-Maffei Wegmann (KMW) and Rheinmetall Defence. All three teams also had a number of other firms as part of their teams. The BAE Systems-led team design was an original design, with the team claiming that its design would exceed the survivability of the MRAP and would have enhanced mobility capabilities to allow it to operate in both urban and cross country environments. The General Dynamics team provided no details on its technical approach but stated its chosen design focused on soldier survivability and operational effectiveness and would incorporate mature technologies. The SAIC-led team stated its design would be based on the German tracked Puma IFV that was developed based on lessons learned from Iraq and Afghanistan. SAIC also emphasized all work, including production, would take place in the United States. Army Cancels the RFP When the Army released the RFP for the GCV Technology Development (TD) phase in February 2010, it anticipated awarding the first TD phase contracts in the fourth quarter of FY2010. On August 25, 2010, while the Army was reportedly in the process of selecting the winners of the TD RFP, the Army's new Assistant Secretary of the Army for Acquisition, Logistics and Technology [ASA(ALT)], Malcolm O'Neil, cancelled the RFP in order to provide more time for technology integration as well to insure the Army would use mature technologies in order to develop the GCV within the established seven-year time frame. The Army reportedly planned to reissue the RFP within 60 days of the cancellation. It was expected the original industry teams would submit new proposals and other companies might also submit proposals. Why the RFP Was Cancelled The Army, in conjunction with the Pentagon's acquisition office, conducted a Red Team review of the GCV program in order to "review GCV core elements including acquisition strategy, vehicle capabilities, operational needs, program schedule, cost performance, and technological specifications." This review found the GCV had too many performance requirements and too many capabilities to make it affordable and relied on too many immature technologies. In response, the Army pledged the new GCV RFP would "dial back the number of capabilities the new system must have—as well as significantly reworking the acquisition strategy by focusing on early technology maturity and setting firm cost targets." In particular the Army reportedly planned to set a $10 million per vehicle cost limit in response to reports that initial estimates projected that the GCV would cost more than $20 million per vehicle. Revised GCV RFP Issued On November 30, 2010, the Army issued a revised GCV RFP. Under this proposal, industry had until January 21, 2011, to submit proposals and the proposed vehicle could be tracked or wheeled. The Army included affordability targets of per unit cost for the vehicle between $9 million and $10.5 million and an operational sustainment cost of $200 per operational mile, with both affordability targets being in FY2010 dollars. In addition, the Army will require the GCV fit on a C-17 transport but not on a C-130. The Army was expected to award technology development contracts to three contractors by April 2011, and the Technology Development (TD) Phase is planned to last 24 months. An early prototype vehicle is expected by the middle of FY2014 and the first full-up prototype is expected by the beginning of FY2016. The Army planned for 1,874 GCVs initially, with the first production vehicle rolling off the assembly line in early April 2018, and the first unit should be equipped with GCVs in 2019. The new RFP is a fixed price incentive fee contract versus the cost-plus fixed fee contract of the previous RFP. The new contract has a ceiling of $450 million per contractor for the TD Phase. An incentive fee would split 80% to the government if the cost comes in under the negotiated $450 million ceiling cap, with 20% going to the contractor. If the cost comes in over the cap, the contractor assumes 100% of the additional cost. Defense Industry Concerns with the Revised RFP23 Reports suggest defense industry had a number of concerns with the revised RFP. According to one report "industry still doesn't get what the Army is looking for," suggesting many of the technical specifications the contractors expected the Army to spell out were left open-ended and industry would have to propose many of the vehicle's technologies and features. Another concern was industry was not clear on how many vehicles the Army intended to build and questioned whether the Army could afford the production in the long run. According to the Army, the GCV is intended to replace infantry fighting vehicles in ABCTs, which would be 50% of the Bradleys in the ABCT. Some analysts suggest the GCV's price tag per vehicle could make it vulnerable to future budget cuts, with one analyst noting the cost was so high "the program is sure to be politically controversial and therefore suffer much the same fate the Marine Corps Expeditionary Fighting Vehicle (EFV) has." Because of concerns the GCV program would not make it to production, issues regarding sustaining the industrial base have been raised. Analysts contend there are very few new combat vehicles currently in production, noting that Bradley A3 production ended in 2012; the last Stryker armored personnel carrier production ended in 2013; and the M-1 Abrams tank remanufacturing program is slated to end after 2014, leaving the improved Paladin self-propelled howitzer in production until the GCV starts production in 2017. Even though congressional action will keep the Abrams production line open, some defense industry analysts are concerned that with so few opportunities to develop and manufacture armored fighting vehicles, some long-standing U.S. defense firms might drop out of the business, thereby limiting bidding on any future armored fighting vehicle programs to foreign manufacturers. Defense Acquisition Board Approves GCV Entrance into Technology Development Phase26 On August 17, 2011, then Pentagon acquisition chief Ashton Carter signed an acquisition decision memorandum authorizing the Army to award technology demonstration contracts for the GCV program. Secretary Carter also directed the Army to conduct a "dynamic update" of the GCV's Analysis of Alternatives (AoA), which had been criticized by some as being inadequate. Secretary Carter also stipulated: The GCV average procurement unit cost (APUC) would be less than or equal to $13 million (expressed in FY2011 constant dollars); Combined cost of replenishment spares and repair parts less than or equal to $200 per mile (expressed in FY2011 constant dollars); and Seven years from technology development contract award to first production vehicle. Army Awards Technology Development (TD) Contracts27 On August 18, 2011—a day after Secretary Carter issued his acquisition decision memorandum—the Army awarded two technology development contracts. The first contract for $439.7 million went to the General Dynamics-led team and the second contract for $449.9 million went to the BAE Systems-Northrop Grumman team. The technology development phase is expected to last 24 months (not counting the period the contract was under protest). In April 2013, General Dynamics was reportedly awarded $180 million to extend the TD phase by six months and BAE was awarded $160 million for a six-month extension. SAIC-Boeing Team Files Protest Over GCV TD Contract Award29 On August 23, 2011, the third team vying for the GCV TD contract, SAIC-Boeing, filed a protest with the Government Accountability Office (GAO) contending there were errors in the evaluation process, claiming the government relied on evaluation criteria outside the published request for proposal and aspects of the team's bid were discounted because of a lack of familiarity with the German Puma infantry fighting vehicle that forms the basis of the SAIC-Boeing vehicle. Because of the protest, the General Dynamics and BAE Systems-Northrop Grumman teams were required to stop work until the protest was adjudicated. GAO Denies SAIC-Boeing Team Protest30 On December 5, 2011, GAO denied the SAIC-Boeing GCV protest, stating the Army's award of only two TD contracts was reasonable and consistent with the stated evaluation criteria and did not improperly favor the other two teams in the competition. On December 6, 2011, the Army lifted the stop-work order that had been placed on the General Dynamics and BAE Systems-Northrop Grumman teams so work could resume on the GCV. Reported Reasons Why the SAIC-Boeing Team Was Not Selected31 Reports suggest that the SAIC-Boeing GCV proposal was rejected by the Army primarily due to concerns over the vehicle's proposed force protection features. The Army's primary concern appeared to have been the vehicle's proposed active protection system and the underbody armor designed to protect crewmembers from IEDs. As part of GAO's examination of the protest, it was noted that the Army: Identified 20 significant weaknesses and informed SAIC that it was "of utmost importance" for the firm to address them, and that a failure to do so adequately would result in SAIC's proposal being found ineligible for award. When the Army asked SAIC to provide more information on underbody armor, SAIC responded the information was classified and was the property of the German Ministry of Defense (MOD). While SAIC and the German MOD offered potential solutions, the Army judged these as inadequate to address its concerns. There were also additional Army concerns—such as insufficient head clearance for crew members, problems with vehicle occupant seating, a risk of toxic fumes in the crew compartment due to battery pack location, and various hazards affecting a soldier's ability to exit the rear of the GCV—that played a role in GAO's denial of SAIC's protest. Program Activities DOD Initiates Major GCV Program Changes34 On January 16, 2013, the Under Secretary of Defense for Acquisition, Technology, and Logistics (USD AT&L) Frank Kendall issued an Acquisition Decision Memorandum and an accompanying information memorandum detailing major changes to the GCV program to "enable a more affordable and executable program." These changes include the following: The Technology Demonstration (TD) phase is extended for six months to enable contractors the ability to modify their designs in support of the requirement modifications to the Capability Development Document (CDD). While the contracts for the original 24 month TD were firm fixed price, the parallel work during this phase from the Analysis of Alternatives, Non Developmental Item (NDI) evaluations, and trade space evaluations with the contractors have provided opportunities to modify the requirements for a more affordable and executable GCV design. The additional six months in TD enables the contractors to complete preliminary designs that represent what we really want to produce. The Engineering and Manufacturing Development (EMD) plan is to award both EMD and production options to a single vendor. This single change saves the department nearly $2.5 billion in RDT&E resources. Milestone B will remain as a full and open competition for the EMD phase of the GCV Infantry Fighting Vehicle Program and allows other vendors (including non U.S. NDI product based vendors) to propose modified NDI vehicles. In support of full and open competition resulting in a single award for EMD, the Army's previously planned procurement of long lead materials for test rigs and production prototypes is not authorized at this time. This decision eliminates spending scarce resources on incomplete designs and is consistent with our full and open competitive intent. Lastly, in support of the schedule risk associated with the integration during EMD and the six month TD extension, I have directed Milestone C to move from FY2018 to FY2019 and the associated re-phasing of procurement dollars. I will drive this program to hold this schedule to the maximum extent possible; this shift is both more affordable and executable. All of these changes, when supported with the approval of the requirements changes for the CDD under review, will save a total of $4+ billion over the FYDP [Future Year Defense Plan—FY2014-FY2019]. The major changes include extended the current TD phase by six months, permitting only a single contractor to proceed to the GCV's EMD phase and postponing the program's Milestone C production decision until FY2019, almost a year longer than the previously planned early FY2018 Milestone C decision. There have been concerns expressed by some that designating only one EMD contractor will eliminate cost savings from competition and extending the TD phase by six months and the Milestone C decision by up to a year will add cost to the program. DOD Announces the Termination of the GCV Program37 On February 24, 2014, during a news conference outlining his recommendations to the President for DOD's FY2015 budget, Secretary of Defense Hagel stated: I have also accepted the Army's recommendation to terminate the current Ground Combat Vehicle program and re-direct the funds toward developing a next-generation platform. I have asked the leadership of the Army and the Marine Corps to deliver new, realistic visions for vehicle modernization by the end of this year. Discussions with Army officials suggest, however, while the GCV program will not move forward, unspecified funding will be provided by DOD to continue certain GCV-related engineering efforts. The Army also notes the GCV program's termination had nothing to do with performance but, instead, was based entirely budgetary constraints. FY2014 Budget Activity FY2014 Budget Request41 The FY2014 budget request for the GCV was $592.2 million for Research, Development, Test and Evaluation (RDT&E). FY2014 National Defense Authorization Act (P.L. 113-66)42 The FY2014 National Defense Authorization Act recommended fully funding the Administration's budget request. Consolidated Appropriations Act for FY2014 (P.L. 113-76)43 P.L. 113-76 appropriated $100.2 million for the GCV program for FY2014—a $492 million cut to the President's FY2014 budget request. In light of DOD's recent decision to terminate the GCV program, it is not known how the Army will use these funds. FY2015 Budget Activity FY2015 Budget Request44 Because of DOD's decision to conclude the GCV program, no funds were requested for the GCV in the FY2015 budget request. Potential Issues for Congress What Are the Army's Plans for a Bradley Replacement? For the second time in less than five years, the Army has cancelled its program intended to develop a replacement for the M-2 Bradley series infantry fighting vehicle. In the wake of this cancellation, there appears to be no clear way ahead for the development of a next generation infantry fighting vehicle. While the Secretary of Defense has called for the Army (and Marines) to "deliver new, realistic visions for vehicle modernization by the end of this year" Congress might decide to engage with Army leadership as they formulate their strategy to develop a replacement for the Bradley infantry fighting vehicle. Such a dialogue could facilitate greater understanding of the Army's future intentions and perhaps eventually facilitate a GCV follow-on program. As the Army will essentially be "going back to the drawing board" to develop a new fighting vehicle, it might also be a potential consideration to reexamine foreign-developed infantry fighting vehicles that were evaluated during the GCV's Analysis of Alternative phase. Some of the vehicles received highly favorable ratings during evaluations and could prove to be viable alternatives to initiating a third developmental effort to replace the Army's Bradleys. What Is the True Status of the GCV Program?45 Despite Secretary of Defense Hagel's statement that the GCV program is to be "terminated," reports suggest that the GCV program will continue on as part of still to be defined science and technology effort. Army officials reportedly stated $50 million in FY2015 funding would be set aside from an unidentified account (there was no FY2015 GCV RDT&E budget request) to preserve the engineering base associated with GCV, and that another $100 million in research and development funding would be used in the Army's labs and research and development centers that had been involved in GCV efforts. The report suggests plans for how the Army will continue to manage the terminated GCV program remain unclear, but there would likely be a scaled-down program office and an overall program manager to manage contractor efforts and coordinate science and technology activities. There appears to be a degree of disparity between DOD and the Army in terms of the true program status of the GCV. While DOD has terminated the GCV program, the Army appears to be continuing program activities and funding various unspecified aspects of the program. This situation could raise a number of issues for Congress. One issue is whether DOD and the Army have a common understanding of the GCV's program status and way ahead or whether disagreement exists regarding the precise status of the GCV program. Another question that might merit examination is, where in the FY2015 budget request is the $150 million for FY2015 GCV-related activities? Additionally, Congress might wish to examine how the Army will manage GCV efforts and what activities will continue to be funded and which entities will be involved in post-termination activities. Finally, Congress might seek greater clarity on how post GCV-termination science and technology efforts will provide "value added" for the next attempt to develop a Bradley replacement vehicle.

In April 2009, then-Secretary of Defense Gates announced he intended to significantly restructure the Army's Future Combat System (FCS) program. The FCS was a multiyear, multibillion dollar program that had been underway since 2000 and was at the heart of the Army's transformation efforts. In lieu of the cancelled FCS manned ground vehicle (MGV), the Army was directed to develop a ground combat vehicle (GCV) that would be relevant across the entire spectrum of Army operations and would incorporate combat lessons from Iraq and Afghanistan. The Army reissued a request for proposal (RFP) for the GCV on November 30, 2010, and planned to begin fielding the GCV by 2015-2017. On August 17, 2011, the GCV program was approved to enter the Technology Development Phase of the acquisition process and, a day later, the Army awarded two technology development contracts: $439.7 million to the General Dynamics-led team and a second contract for $449.9 million to the BAE Systems-Northrop Grumman team. Starting in May and running through June 2012, the Army tested a number of foreign candidates during a Network Integration Exercise. This test informed the Army's Analysis of Alternatives (AoA), which is a requirement before the GCV program can progress to the next developmental phase. The AoA reportedly found no suitable existing, less expensive combat vehicles that could meet the Army's GCV requirements. On January 16, 2013, the Department of Defense (DOD) initiated a series of major GCV program changes which, while slipping the program schedule to the right and going to a single competitor during Engineering and Manufacturing Development, could save over $4 billion from FY2014 to FY2019. The Administration's January 26, 2012, Major Budget Decision Briefing not only introduced a new Asia-Pacific strategic focus, but also delayed the GCV program for a year due to the SAIC-Boeing protest. On February 24, 2014, Secretary of Defense Hagel announced the termination of the GCV program. Army officials contend that this decision was strictly a budgetary one as the GCV program was not experiencing any developmental problems at the time of termination. The Army also notes that some funding might be provided to continue unspecified GCV engineering-related efforts. The Administration's FY2014 GCV Budget Request was $592.2 million in RDT&E funding. The FY2014 National Defense Authorization Act (P.L. 113-66) recommended fully funding the GCV budget request. The FY2014 Omnibus Appropriations Act (P.L. 113-76) appropriated $100.2 million for the GCV program for FY2014—a $492 million cut to the President's FY2014 budget request. Because DOD concluded the GCV program, there was no FY2015 GCV Budget Request. Potential issues for Congress include the Army's plans for a Bradley replacement vehicle and whether a previously evaluated foreign vehicle could be a suitable replacement. Another potential issue is the precise program status of the GCV, as DOD pronounced the program was "terminated" but reports suggest the Army will fund and continue selected unidentified GCV science and technology activities in FY2015.

PART I. INTRODUCTION Indexation of the minimum wage was considered some years prior to enactment of the Fair Labor Standards Act (FLSA) in 1938. It continues to be an issue of discussion and, in some cases at the state level, has been introduced as a part of the general minimum wage structure. This report provides an evolutionary history of minimum wage indexation and of the federal legislative interest in the concept. In 1937, Congress decided that certain low-wage workers should be protected by a federal minimum wage law, and set in motion initiatives that would evolve into the Fair Labor Standards Act of 1938. As amended through the years, the FLSA has become the primary federal statute dealing with wage rates for low-wage workers. As the law now stands, the general minimum wage is $5.85 per hour—to increase, in steps, to $7.25 per hour by July 2009. The federal minimum is fixed by statute and altered whenever there is sufficient support to do so in Congress. The result has been a fluctuation in the real (or inflation-adjusted) value of the minimum wage. It reached its highest level in 1968, and has since, intermittently, been allowed to decline in value. To reach the 1968 level in real terms, the current minimum would need to be slightly in excess of $9.50 per hour. In order to eliminate fluctuations in its real value, some have suggested that the federal minimum should be pegged to an outside economic variable: for example, to a component of the cost-of-living index or to some other relatively neutral series. A Matter of Philosophy The concept of a minimum wage, initially, was to provide workers with a minimum income. But how minimal? What might be included within a minimal standard? To whom should not less than the minimum be paid? And by whom? Men, it was assumed, would need at least the minimum wage to support themselves and their families. But what about women, especially those with an employed spouse? And young persons: youth workers? Are certain types of work, by definition, minimum wage work —deserving payment at the minimum wage or below? Early in the past century, some proposed a living, family, saving wage : that is, to allow for safe and healthful living, for procreation, and for setting aside a little for one's old age. Still, there were problems with definitions. How safe and how healthful? How much procreation: one child, two, or perhaps five or six? Setting aside a little for one's old age may be appropriate, but how much? A "Living Wage" and Basic Sustenance John A. Ryan, an early proponent of a minimum wage, argued in a 1906 study that a "laborer's right to a Living Wage is the specific form of his generic right to ... sufficient of the earth's products to afford him a decent livelihood." This right, Father Ryan suggested "... is as valid as his right to life: the difference is merely in degree of importance." Later, Ryan asked rhetorically: "Well, what is a decent livelihood?" With other scholars of the period, Ryan was willing to suggest at least a modest framework by way of answer—if the concept remained vague and, perhaps, arguable. It involved "... something more than the necessaries which will enable a worker to function effectively as an instrument of production...." And, further: ... that amount of goods which will enable a human being to live as a human being rather than as an animal, even a well fed animal. It supposes that he shall have food, clothing and shelter sufficient to maintain him and his family in health, and that they shall have the means of some recreation.... It means the requisites of a religious and moral life; ... It means also some opportunities for intellectual development, some reading matter, and at least an elementary education for the children. In general, therefore, it comprises an elementary degree of physical, mental, moral, religious, social and recreational welfare. But then, Ryan added, when the concept is presented in terms of money, men "...naturally differ considerably one from the other, and yet whenever the thing has been systematically undertaken men have been able to come to an agreement." Other scholars seemed equally sure. "[D]ifferences of opinion" may develop "over the concrete question of how much in any given case this wage must be," observed economist Henry R. Seager in 1918, but "the principle that a wage sufficient to maintain the wage earner and his family in full economic efficiency will be denied by no one." Seager declared: "The living wage is thus an indeterminate but highly important basic standard which all wage adjustment boards should have in mind...." Wage Boards vs. a Fixed Rate In 1890, the Consumers' League of the City of New York was established and quickly blossomed into the National Consumers' League. Its general purpose was social uplift. Through the next several years, League representatives began a systematic exploration of the plight of low-wage workers, attempting to connect an inadequate wage with malnutrition and vice. Gradually, attention came to focus upon the minimum wage. In 1911, Massachusetts became the first state to move for adoption of a minimum rate; the campaign then spread to Oregon, Wisconsin, Minnesota, California, and other states. The experiment was new to the United States, though it had been tried elsewhere. After considerable discussion, a wage board approach was taken. Speaking generally (because there were differences among the states and, in some states, other processes were utilized), the board would examine an industry and if it found that a significant body of workers was being paid less than what was considered minimal, a new standard might be adopted. In one case (Massachusetts), the penalty was moral suasion: publicity concerning the failure to pay a minimum wage. The purpose of the boards was to increase the general standard and, then, to maintain the value of the minimum wage at a constant level or, at least, at a level in keeping with the cost-of-living. As one advocate stated: "None of the American boards ever arrived at the intelligent arrangements achieved by some of the British trade boards of 'pegging the rate' at a given period by providing for its automatic increase and decrease with variation in the cost-of-living index number." Nonetheless, the cost-of-living connection was a very real presence throughout. During the early years of the minimum wage movement, there was always the threat that a statute would be declared unconstitutional. In the spring of 1937, the Supreme Court ruled in favor of a Washington state labor standards statute, triggering a new round of minimum wage initiatives. Given the new spirit of the Court, wage/hour legislation was promptly adopted by the Senate. In the House, various versions of the measure moved slowly and, only in the summer of 1938, notwithstanding the continuing Depression, was the Fair Labor Standards Act adopted and sent on to the White House (P.L. 75-718). In the beginning, the FLSA adopted both a fixed rate basis of calculation and the wage board approach. For covered workers (relatively few in number, mostly industrial workers), the basic rate was 25 cents an hour, to rise in steps to 40 cents an hour seven years from the date of enactment. At the same time, in order to reach a "universal minimum wage of 40 cents an hour" as rapidly "as is economically feasible without substantially curtailing employment," the Administrator of the new wage/hour board "shall from time to time convene" an industry committee for each industry where an increase would seem to be justified. PART II. FOCUSING ON INDEXATION Initial Concerns During 1937 and 1938 when the future FLSA was under consideration by the Congress, tensions arose that kept the bill from being enacted in its initial form. Speaking generally, a compromise was developed that allowed the several parties to claim victory in the negotiations. The northern states would have preferred a higher wage (40 cents an hour); the south agreed to settle for 25 cents an hour—leading up to 40 cents some years later. Representative Mary Norton (D-NJ), then chair of the Committee on Labor, argued that "a bill of this kind is very necessary if we are going to help the underpaid workers of our country, reduce the relief rolls, and spread employment." House Hearings in 1947 In the wake of World War II, given escalating costs of living, it seemed to some an appropriate time for expansion of coverage under the act. But in precisely what manner (and under what mechanism) remained unclear. Mary Norton, who had moved on to another assignment, returned to testify at the FLSA hearings. Like other witnesses, Norton cited the difficulties of surviving with a wage, in 1947, of 40 cents an hour. Ovie C. Fisher (D-TX) asked if she were opposed to inflation. "Definitely," she replied, but then: "... I do not think 65 cents an hour will ever bring about inflation, with the present cost of living in this country." Samuel McConnell, Jr. (R-PA), chair of the Subcommittee, then turned to Ms. Norton with a series of questions concerning motivation. "Frankly," Mrs. Norton stated, "... the 65-cent minimum that I have selected does not meet with what I think is necessary. I simply set that figure because I felt that the Congress might consider that rather then a 75-cent minimum ...." Chairman McConnell queried: "What would be the factors, in your mind, that would determine a minimum-wage rate." Norton replied: "... first of all, the high cost of living." The dialogue continued: Mr. McCONNELL. What kind of a cost of living? Would you consider the cost of living for the entire country, or the cost of living in a certain section? Mrs. NORTON. It is the cost of living for those people who are unorganized and have no other method of having their wages raised. McConnell continued to press for specifics. "You are definite, then, in your opinion, that the minimum wage is to be based on the cost of living, and you will stand by that?" Mrs. Norton opined: "Yes, sir; I believe that should definitely be considered." McConnell continued: Mr. McCONNELL. What I am getting at is, I would like to get a cost-of-living index, and fluctuate the minimum wages to that cost-of-living index, rather than relying on some political drive every so often to change it. Mrs. NORTON. How could you do that? It would mean you would have to come to Congress every couple of months to decide. Mr. McCONNELL. No, no; not come to Congress at all. I would set up a formula in the nature of a ratio that would fluctuate minimum-wage rates according to the cost of living. If we assume that is the way we are going to fix our minimum-wage rates, then we would have automatic fluctuations according to the change in the cost of living at different periods. Mrs. Norton agreed: "... I would be willing to go along with that." McConnell concurred. "I am assuming we would set it correctly in the beginning, and then there would be an automatic fluctuation according to the cost of living. If we are working on the assumption that the minimum wage rate is to be determined by the cost-of-living index, or by the cost of living," McConnell stated, "any way you want to say it, that is the way it would be handled." Then, he added: "... I have not stated my own opinion on this matter—I am trying to get from the witnesses just what they consider is the main factor in setting a minimum wage rate." Senator Taft Makes a Suggestion (1949) On April 11, 1949, Labor Secretary Maurice Tobin was questioned by Senator Robert A. Taft (R-OH) about "another kind of escalator clause"—"...one which was based on wages, on general average wages, as determined by the Bureau of Labor Statistics, say something like 60 percent." Taft had calculated the impact of a 75 cent minimum. "You might have to vary it in different types of industries," he said. "What would you think of a minimum wage based on that theory? Sixty percent of the average wages in the field—I would think you would have to have broad fields." Tobin queried: "Take, for example, shoes, and establish the minimum?" Taft continued: Manufacturing and perhaps service industries and perhaps mining. That might be separate, but roughly speaking, I think you probably would not need mining. What would you think of such a plan? It seems to me that is what we want to do. We want to say that anybody in an industry ought to be able to make a certain percentage of the average, even though he is inefficient, or the industry is inefficient, or anything else, and 60 percent, roughly speaking, seems to be the present thing in the manufacturing field. What would you think of such an escalator clause? Taft may have caught Tobin off-guard. Secretary TOBIN... I would like to illustrate by taking, for example, the break-down of any given classification of skill. Take shoes. There is a great, wide range of minimum wages for shoe cutters over the country. You get a break-down of men's work shoes, high-grade finished shoes, et cetera. Senator TAFT. We have this legislative problem. We have a 75-cent figure. Here is a 40-cent figure. When it once gets into the law, it is pretty much frozen. You have these variations in your industries. That is all right. However, as a basic figure in the law, instead of having to change the amount every other year to fit into changing conditions, could we not find a formula based on the average wages paid to all American workers, or something of that kind? Secretary TOBIN. I would want to consider that. I couldn't give you an answer immediately. Senator TAFT. I wish you would, because I think it is a possible legislative 'out' here. Secretary TOBIN. Under such an arrangement, you would take the factory wage, which is roughly around $55 a week at the present time. Rather, the average factory wage is $1.38 an hour; 60 percent of that would come out to 82.4 cents an hour. Senator TAFT. That is factory. Service would be somewhat lower. Secretary TOBIN. Service employees would be substantially lower. Senator Taft urged the Secretary to "think it over" and to "give us your views on it later." Tobin agreed that he would do so. Taft concluded that the average wage cost was more appropriate than the "cost of living." Reports and Amendments (1949) There has been, advised Representative Brooks Hays (D-AR) in 1949, "considerable interest in the so-called flexibility feature of the minimum-wage legislation." He noted the dispute as to whether the appropriate minima was "75 cents or 65 cents or some other amount" but, he added, "... in any event it seems to me that it should be governed by the cost of living." Hays continued: If we had had such a provision [i.e., a cost of living formulation] when the 1938 act was adopted, we would now have a minimum of around 54 cents on one formula or 65 cents on another formula, and we would be spared this unfortunate controversy as to whether or not it is to go to 75 cents.... He then turned to a study by Gustav Peck of the Legislative Reference Service (now, CRS), The Question of a Flexible Statutory Minimum Wage . Peck, Hays stated, "has assembled all of the arguments, pro and con, for tying the minimum wage to the cost of living index." He suggested that Peck's study would be "of particular interest to Members who favor the principle of flexibility in minimum-wage legislation." The Peck Report "A characteristic of all wages in a progressive society is their flexibility," Peck commenced. "Wages go up and down at different times in response to changes in the labor market situation, to changes in productivity and job content, to relative bargaining power, to cyclical influences, and to changes in the cost of living." Peck continued: A rise or fall in the cost of living changes the substance of a statutory minimum wage more than such a rise or fall affects other wages, because contract or competitive wages generally reflect changes in the cost of living while a legal minimum wage can not be changed at all except by action of the legislature or, in the case of wage-board determinations, only after time-consuming procedures. Congress had "resisted attempts to raise the minimum wage" and even during the 79 th and 80 th Congresses (post-war Congresses), "efforts to raise the 40-cent minimum died of inaction." Labor spokesmen had sought "flexibility" but always "upward." First, they called for general revision of the minimum to make the act "'more realistic.'" Second, they proposed insertion of "an escalator in any new law." Arguments in support of a revision of the minimum wage, he stated, include "increases in the cost of living, increases in actual minimum wages in industry, increases in profits and ability to pay, and general increases in productivity." Generally, the cost-of-living was regarded as "the most important determinant of a proper statutory minimum." Further, some argued, "[i]f prices should decline," then "there should be some provision in any new act to reduce the minimum wage with reductions in prices and the cost of living or ... reductions in average wages." Under the 1938 statute, a limited wage board had been created. Some argued, however, that a board might not be able to move any more quickly than Congress to increase the minimum wage. For a board, there would likely be "delay of recognition of a changed situation," "delay of fact-finding and hearings," and "delay of issuing revised orders." Thus, throughout the late 1930s and during the war years, the problem of statutory minimum wages remained "one of catching up with the realities of increasing prices and the cost of living." Peck continued: The Wage Board technique, at least as employed in the States, is not a complete answer to the flexibility problem because these laws were written with the express intent of raising minimum wages above the levels then being paid.... Even though it might be possible under the terms of some of the laws to make findings which would require downward adjustments of the minimum wage, no such adjustments have ever been made. Inflexible costs, he stated, could produce a "contraction of industry and employment" and end "in the midst of a real depression." He seemed to suggest that if wage rates could move either up or down (real flexibility), then indexation might be worth trying—so long as the timing was right and changes in the rate were not precipitous. The Lucas Amendment On April 14, 1949, Representative Wingate Lucas (D-TX) introduced a new minimum wage bill which contained "the Hays-McConnell flexible minimum" which he stated was "a splendid" concept. As the summer wore on, Lucas presented a series of brief statements on the floor, promoting the flexible minimum wage bill. He explained: It ties minimum wages in our law to the cost of living index so that wages will go up in time of inflation and go down in time of deflation. There will be stabilized employment. It is the best answer I have ever heard for a legal, equitable, and fair minimum wage. Lucas drew attention to the Peck study and urged Members "to get a copy and read it." He hoped others would be "as enthusiastic about this plan as I am." Debate began on August 8. Lucas stated: "If the employee can receive sufficient funds for his labor to provide him with rudimentary standards of decency, ... we will have reached our objective." Representative Adolph Sabath (D-IL) challenged the "great stress" that Lucas has placed on "the sliding-scale provision of his proposed substitute" which "would mean nothing but uncertainty and confusion." At this point, Lucas introduced his substitute which, among other things, provided for a minimum wage of 65 cents an hour with indexation to follow. There seemed a dispute among constituencies. "All employee groups, so far as I know, favor the fixed rather than the flexible minimum," stated Representative Kenneth Keating (R-NY). "So far as I remember, not a single employer has voiced a preference for the sliding minimum." Representative Jacob Javits (R-NY) was similarly disposed: "When we are fixing a minimum wage and a concrete floor, it must be a fixed figure and it should not vary with the cost-of-living index." Representative Charles Bennett (D-FL) was, in some measure, prescient. He stated that he had "no quarrel with the amount of 75 cents an hour" but urged certain safeguards. First . Some arrangement would be needed for "an exemption for small and marginal businesses." Second . There should be a "regional basis of arriving at minimum wages, for it is clear that the cost of living varies greatly between various sections of our country." Third . The minimum wage would need to be tied "to a cost-of-living formula...." Bennett continued: "I strongly favor the principle of tying the minimum wage to the cost-of-living formula, which principle is found in the Lucas bill now before us." Through a complex parliamentary maneuver, a bill by Representative John Lesinski (D-MI) was substituted for the text of the Lucas bill and was adopted by the House. In the process, the flexible minimum wage provision was defeated. The Ellender Amendment (1949) Senator Allen Ellender (D-LA) proposed his own addition to Lucas/Lesinski debate. Elected to the Senate in 1936, he recalled the turbulence that had marked the Depression Era and the war years, and observed: "The fact is ... that 10 years of experience" under the FLSA "are virtually worthless as a measuring stick of the probable effects of increasing the present wage minimum." Ellender stated that we "... proceed with the utmost caution and circumspection" lest our actions produce a "decline in employment, prices and production, and plunge the Nation into a recession or a major depression." On August 31, 1949, with some caution, Ellender proposed indexation of the federal minimum wage. Using a variation on the Consumer Price Index, he urged an increase of the minimum wage (then still 40 cents an hour) to 65 cents an hour—but with a ban of flexibility built into its future calculation. He added that "...in no event shall the minimum hourly wage prescribed by the Administrator be less than 55 cents an hour, nor in excess of 75 cents an hour." Ellender's introductory speech seemed at odds with the thrust of his proposal. He explained the ripple effect (the impact of the minimum wage on other wage differentials) and reviewed the southern case against the minimum wage. He had reached the 65 cent level, he stated, because, had the original 40 cent figure been indexed, "that 40-cent minimum would be about equivalent to a 66-cent minimum today." Ellender stated that proposed changes have been considered by "... at least three Congresses; and as yet no change has been effected. The legislative process," he stated, "is too slow and too cumbersome." For many of the same reasons, he objected to wage board procedures "for effecting changes in statutory wage minima." Ellender critiqued various indexes and then concluded that the Consumers' Price Index for Moderate-Income Families "is appropriate, feasible and practicable." Ellender read into the record testimony that seemed to endorse an up-or-down principle of escalation. For example, Jack Garrett Scott, general counsel of the National Associations of Motor Bus Operators: We urge that serious consideration be given to a statutory plan whereby the minimum wage is geared to living costs, both upward and downward , based upon indices of the Bureau of Labor Statistics, and subject to change each year by the Administrator according to the cost-of-living figures compiled and presented by that Bureau." (Italics added.) Howard B. Carlisle, Jr., the American Cotton Manufacturers' Association, was cited. During other distressed periods we reduced wages, but many mills managed to keep going.... The workers accepted these reductions because they preferred wage cuts to unemployment. But with a high minimum wage the mills cannot meet conditions realistically. If hard times come, they will have to shut down and throw their men out of work. Finally, the views of Donald Kirkpatrick, general counsel for the American Farm Bureau Federation, were added to the record. The AFBF, he stated: ... has directed its executive officers to oppose without compromise any increase in the maximum basic wage that is not tied to a cost-of-living index . Using the existing minimum-wage base ... would under a flexible formula, substantially increase the basic minimum wage. Under our proposal if the cost-of-living index goes up or down , then the basic minimum wage would be adjusted accordingly by the Administrator under a formula provided in the law. The American Farm Bureau Federation believes this to be sensible and sound in approach; one that will not strait-jacket our economy; ..." (Italics added.) In summing up, Senator Ellender argued that his plan was the only sensible one to be adopted. "There must be flexibility in respect to any wage law enacted." (See Table 1 for the rates of change over the years.) Others disagreed—notably, Senator Taft. Taft thought "75 cents an hour is a reasonable minimum wage" but suggested that some form of indexation might "be studied as a basis for minimum wages in the future.... We have had no expert advice on the subject." He continued: "Personally, I feel that the cost of living is not the proper basis for determining wages. The cost of living has always seemed to me to be an uncertain factor. It affects people in different ways. The cost of living for a man without a family is about half of the cost of living for a family of four." Taft added: "If there is a sliding scale, I should prefer to see it related to the general wage level in the United States, rather than to the cost of living." On the Ellender amendment, the vote was 26 yeas to 51 nays (nineteen Members not voting). As soon as the vote was announced, the Senator reintroduced a new amendment which was "identical with the one just voted upon except that instead of fixing the minimum at 65 cents, it is fixed at 70 cents." Once more, the amendment lost: 25 yeas to 51 nays (twenty Members not voting). But, in 1949, the minimum wage was raised to 75 cents an hour. [See Table 1 , below, for the various minimum wage (FLSA) enactments from 1938 through 1997.] Interim Adjustments The initial minimum wage (1938) was enacted as the United States was coming out of the Great Depression and just as it was about to enter World War II. Though it appears to have had little disruptive impact, the circumstances may not have been ideal for a test. The 1949 amendments may have been, similarly, obscured by the War in Korea. Thus, as Congress considered new legislation that would adjust the minimum wage, it seems to have done so with some measure of circumspection. The 1955 FLSA Amendments In the 84 th Congress, Members were confronted with a range of exemptions, exceptions, and a potential for a significant FLSA expansion. But, according to Representative Graham Barden (D-NC), then chairman, "the committee unanimously decided to consider two items at this time": the rate of the hourly wage and the date that an increase should become effective. Senator Paul Douglas (D-IL) reported the measure (S. 2168). In proposing a $1.00 an hour minimum wage (the Eisenhower Administration had asked for 90 cents), two factors were of influence, he stated: "the increase in the cost of living" and "the increase in productivity." Taking these increases into account, he stated, the minimum wage should be raised to just over $1.00 an hour. Douglas explained: In times past the Fair Labor Standards Act has suffered, and perhaps it suffers at this moment, from the fact that revisions are made sporadically. The [last] increase was postponed from 1944 to 1949; therefore, instead of a gradual increase, a jump was then made from 40 cents to 75 cents. Douglas sought a rate not "too severe for many industries and many firms to absorb" and urged a new "method of easier transition to higher schedules in the future." Rather than index the wage rate, per se, he proposed writing into DOL's reporting requirements a mandate that the Secretary make "recommendations" as to "any changes which may have occurred in the cost of living, changes in productivity, changes in the levels of wages and manufacturing...." The recommendations, he stated, "will make it possible for Congress to act more quickly in the future...." The measure was promptly adopted, with action now moving to the other chamber. In the House, minimum wage legislation was called up on July 19 and 20, 1955. Representative Samuel McConnell (R-PA), see the 1947 debates, stated: "For over 16 years [a] diligent search has been carried on to discover some scientific way to set a proper minimum rate, but no exact method has been developed. The most frequent factor mentioned," he stated, "is the cost of living [the Consumer Price Index]." But, with only that oblique reference to indexing, debate moved on to now familiar discussions of inflation, unemployment and regional concerns. Following two days of debate, the House passed a stripped down stand-alone $1.00 minimum wage increase (362 ayes to 54 nays)—sending the bill back to the Senate. Ultimately, the bill was adopted (P.L. 84-381). The 1960s and Early 1970s The 1949 and 1955 amendments to the FLSA had been contentious but relatively uncomplicated. The 1961 amendments "extended the minimum-wage and (with some exceptions) the overtime provisions of the Act to an estimated 3,624,000 additional workers." In 1966, the FLSA extended coverage "to 9.1 million workers not previously covered" by the minimum wage. In 1974, new legislation brought "approximately 7 million employees, including domestics," under coverage. As a result of the three enactments, the minimum wage moved from $1.00 per hour to $2.30 per hour, the latter taking effect in January 1976. Through the years following enactment of the FLSA, as noted above, indexation had been a more-or-less reoccurring theme. But the issue does not appear to have come up in a sustained fashion during consideration in 1961, 1966, and 1974. PART III. DEVELOPING LEGISLATION: THE 1970s AND EARLY 1980s The 1975 Indexation Proposal In 1975, Representative John Dent (D-PA), chair of the Subcommittee on Labor Standards, introduced H.R. 10130 , a bill that would have increased the minimum wage, in steps, to $3.00 per hour. Thereafter, an indexation formula, based upon the Consumer Price Index (or CPI) would take effect. Noting the increase in the cost-of-living, the AFL-CIO's Andrew Biemiller, agreed. "Some such escalator provision is essential if we are to maintain the purchasing power of the minimum wage...." John Erlenborn (R-IL), the Ranking Member, opposed indexation. You talk about inflation "and the loss of purchasing power of the dollar and a need to index the minimum wage so we can have automatic increases in it," he chided Biemiller, when "it is the wage demands of the people you represent that caused a good deal of the inflation that we are experiencing. So," he continued, "having caused the problem, you now come here and seek relief from it." The Hearing Proceeds In some respects, organized labor, appearing as the lead witness, set the stage for events that would follow. Much of the subsequent testimony represented a business perspective. Robert Thompson, speaking for the Chamber of Commerce, decried indexation as "the most harmful and fiscally unsound provision" of the bill. He asserted that "general application of an automatic cost-of-living escalator to minimum wage rates would greatly exacerbate the inflationary process." Thompson noted the upward flexibility of the bill and protested its impact for training and other costs of doing business. If indexation were agreed to, he suggested, a mechanism more suitable than the CPI should be used. "We think that tying the minimum wage to the Consumer Price Index will not only increase unemployment, but will feed the fires of inflation like nothing this Congress has ever done." Others were equally firm. Carl Madden, chief economist for the Chamber, termed indexing "genuinely terrifying to me." Indexing would be "a dangerous precedent," stated Donald White, American Retail Federation, adding "momentum to the vicious cycle of inflation." Carl Beck, of the National Small Business Association, argued that the CPI was an inexact instrument through which to measure relative wage rates and cited Julius Shiskin of BLS as his source. "I would suggest you contact Mr. Shiskin because he feels very strongly about it...." Using "the CPI as a determinant in wage adjustments" under the minimum wage, stated James McLamore, National Restaurant Association (NRA), "... would represent a fundamental change in national policy...." NRA opposed the concept: ... removing any necessity for Congress to periodically examine minimum wage rates would deny the existing opportunity for periodic examination of the relationship between wages and inflation and remove an important warning signal on the road to even higher inflation. McLamore pointed to merit systems. "Such recognition is important to any increase in productivity. We believe that making increases in the minimum wage automatic with increases in the CPI," he stated, "would soon destroy any merit increase system or place it beyond the means of most employers." Like others from industry, McLamore urged that Congress "should not abdicate the important responsibility of weighing the many factors not reflected in the CPI." Abraham Weiss, then an Assistant Secretary of Labor, presented perhaps the most extensive comment on indexation during the 1975 hearings—and much of it negative. Dent recognized the nature of DOL's comment and observed that he was "not tied to this particular bill...." But, the Congressman added: "I sincerely believe there has to be some mechanism other than periodic legislative enactments if it is intended to put a floor under wages ... so that a worker in that particular category would not be forced to rely on food stamps and welfare payments." Subsequent Comment With the close of the formal hearings, various submissions were made for the record. Here, there seems to have been considerable interest in indexation. The Amalgamated Clothing Workers of America, AFL-CIO, suggested: "One of the problems" with the FLSA, "has been that the rates could not be adjusted for some time after they had become obsolete." The union urged "greater flexibility" and suggested that "an escalator provision will provide this" but indicated that indexation would "not obviate the necessity of revising the basic rate." It seemed to suggest a shift from the minimum wage, per se, to the rate/mechanism for its increase. The Associated General Contractors of America (the AGC), an industry group, took an opposite approach describing indexation as "neither new" or "good" and, as businessmen, we find the proposal "unbelievable." Indexing, the AGC argued, "legislates inflation and makes it permanent." The Farm Bureau scorned indexation as the "most radical and far-reaching" provision of the bill and "totally unacceptable." While Robert W. Hite, associated with Mr. Steak, Inc. (Denver), termed the bill "ill-advised, poorly conceived, and fiscally irresponsible." No Further Action Yet one additional year had to run on the 1974 amendments. A new increase in the minimum wage may not have seemed timely and, in September 1976, Congressman Dent announced plans to hold back his bill until the 95 th Congress (1977) when there would be more time to consider all aspects of the legislation. The 1977 Indexation Proposals In February 1977, Representative Dent introduced H.R. 3744 , a bill to increase the minimum wage, to repeal the tip credit, and to provide "an automatic adjustment in such wage rate." Diverse other provisions would be added. Hearings in the House (1977) With the opening of the hearings in the House (March 9, 1977), the first witness was Andrew J. Biemiller of the AFL-CIO. Biemiller was followed by a series of industry witnesses and, ultimately, by the new Labor Secretary Ray Marshall. The Opening Witnesses Biemiller had come directly from a meeting of the AFL-CIO's Executive Council. In reporting the views of the Council, he stated: The Congress should act immediately to increase the Federal minimum wage to $3 an hour and include an automatic mechanism in the law to thereafter maintain the wage floor at 60 percent of average hourly earnings in manufacturing." (Italics added.) The Executive Council's projection to $3.00 per hour, immediately, followed by indexation at 60%, may have been unduly optimistic. Biemiller affirmed that indexation (because such wages would be quickly spent, of necessity) would boost the economy. There should be no youth sub-minimum wage. As to the alleged disemployment impact of the minimum wage, he stated: "We point to the record." The several Secretaries of Labor had not suggested such a result. Indeed, their reports "have shown substantial benefits and only rare, isolated instances of adverse effects, involving a few small firms and very few employees." As at prior hearings, a battery of industry witnesses followed Biemiller and proceeded to offer refutation. "Use of manufacturing wages for indexing would add especially to inflation because manufacturing wages have increased faster than average wages during the last 10 years," stated Jack Carlson, chief economist for the Chamber of Commerce. John Hutchens, president, United States Industrial Council, argued that indexing the minimum wage to "60 percent of average hourly earnings in manufacturing" would result in a "never-ending inflationary spiral." Similarly, Patrick O'Malley of the National Restaurant Association viewed adoption of indexation as "a major step toward adopting indexing as our national policy." Dent had taken into account the economic impact of indexation and, for the purposes of the hearings, had secured a panel of research economists generally knowledgeable about the field. Their views, if somewhat negative, were diverse. Dent's views were more pragmatic. "The minimum wage has always been a catchup. By the time an increase is passed, it brings people back to even," he said. "It is just a question of doing nothing, doing something, or doing too much. In between is where I would like to be." Secretary Marshall Speaks for the Administration The new Secretary of Labor in the Carter cabinet, Ray Marshall, was an economist. Marshall began with an analysis of the pending (Dent) bill. We have carefully reviewed this proposal and believe that in light of current economic conditions, a somewhat different approach is warranted at this time. Accordingly, the administration proposes an increase in the minimum wage to $2.50 per hour for all covered workers on July 1, 1977. We propose an annual indexing of the minimum wage, beginning on July 1, 1978, at a rate equal to 50 percent of straight time hourly earnings of production and nonsupervisory workers in manufacturing. The Administration's proposal would provide "for regular minimum wage increases on a yearly basis." He stated: "It would eliminate the irregular pattern which has characterized the history of minimum wage adjustments" and would "enable the business community to more accurately anticipate and adjust its wage costs" by providing increases at "regularly established intervals." Indexation would "reduce erosion of the real income of recipients." Noting that indexation "represents a major departure from previous methods of adjusting the minimum wage," Marshall urged that the issue be studied with a report made to the Congress. Dent's reply was immediate. "Your proposals are quite different than what this Congress had hoped for in a new minimum wage law. However," he added, "the committee will, as it always does, give it very serious consideration." Finally: "I have no questions to ask." Representative Erlenborn queried: You endorse "the concept of indexing" on behalf of the Administration. "Would I be wrong in interpreting that statement to indicate that you are reflecting an inflationary psychology in this administration that it would tie this to an index?" And, might this become "a way of life that we must anticipate." The Secretary responded: "No, sir. It would not." Others were equally critical. Representative Joseph Gaydos (D-PA), taking note of the Secretary's widely ranging interests in humane concerns, asked if he had "any problems" in "drastically reducing and suspending an increase in minimum wage?" Marshall responded: "It seems to me we are recommending no diminution in the minimum wage—it is a lower increase than others would recommend here—but the basic idea of having a minimum standard is there." Gaydos replied that "... I am disappointed ... I am grossly disappointed with the position that the Department takes in this matter." Representative Phillip Burton (D-CA) added: "I do hope that you do not personally believe that this is an adequate treatment of the problem." Congressman Dent stated: "Senator Taft advised that we ought to put minimum wage on a permanent increment base and we ought to do it with 60 percent based on the average hourly increase in manufacture." At that rate, the minimum today would be "about $3.36 per hour." Dent added: "It is very difficult to conceive how the economists of this administration could sit down and come up with this recommendation which is so far out of line." Hearings in the Senate (1977) The Senate hearings began on July 28, 1977, on S. 1871 , co-authored by Senator Harrison Williams (D-NJ) and Jacob Javits (R-NY). The bill would have raised the minimum wage to $2.65 an hour in January 1978—and would, thereafter, have indexed it, reaching 53 percent of the average hourly earnings formula (AHE). "Inflation takes its toll on everyone, but poor workers and their families, who must spend everything they earn merely to get by," Senator Williams stated, "feel its effects much more sharply than other workers in our society." Senator Javits reluctantly concurred. Normally, he stated, he had been "opposed to indexing" as a means for fighting inflation; but, we find that "... many collective bargaining agreements are indexed, social security is indexed, and many veterans' benefits are indexed, I do not see how we can avoid it in this situation." Senator Javits added: it "offers the advantage to employers of regular, predictable wage rate adjustments." Secretary Marshall Speaks for the Administration Marshall was the lead witness. "There was considerable disagreement over our initial approach," Marshall stated. Since then, the Administration had discussed the issue with Members of Congress, labor and industry groups, and the President has "... agreed with the minimum wage proposal which is now included in your bill, and in the bill moving through the House of Representatives." Indexation, Marshall suggested, was an important aspect of this bill. It would "protect minimum-wage workers" and "enable employers to plan and to anticipate adjustments" to their pay systems. Later, Javits questioned why the particular pattern for indexation had been chosen: was this "an eclectic choice." Marshall replied: "... the reason that we use the straight time hourly earnings in manufacturing is that it is a better statistical measure ... it is uninfluenced by a lot of extraneous factors, and it gets less feedback from the minimum wage process itself...." The Hearings Continue, Pro and Con Hearings in the Senate were extensive. Following the initial statement from the Administration, there appeared a series of witnesses representing labor and industry and simply individuals. General Views of Labor and Industry "In early 1977," AFL-CIO president George Meany recalled, "the AFL-CIO Executive Council urged the Congress to increase the minimum wage to $3 an hour and to include an automatic mechanism in the act which would maintain the minimum wage at 60 percent of average hourly earnings in manufacturing. That recommendation," he stated, "was—and is—fair and reasonable." Meany continued that, under the current system, "minimum wage workers sink further into poverty and the 'real' value of their wage is eroded." The putative value of $2.65 an hour "... is less than we would like, but the prospect of bringing the minimum wage above the poverty level in the early 1980's" and indexing thereafter will "... be guaranteeing the low-wage worker a realistic wage floor that will keep pace with general wage trends in the economy." Robert Thompson again spoke for the Chamber of Commerce. He argued that the "most dangerous and damaging part" of the proposed legislation was the indexation formula. Thompson stated that the bill was "bad economic policy" with a "robot-like mechanism" that fails to take into consideration "the underlying cost-push problems in our economy and, furthermore, treats inflation as if it were a permanent part of our economy." He chided: "It is the responsibility of Congress to review periodically the minimum wage law and relate it to the state of the economy. An indexed minimum wage would represent a congressional abdication ...." Harwell Proffitt, associated with Proffitt's Department Store, Alcoa, Tennessee, proposed a study. "To my knowledge, there has never been a detailed study undertaken to determine the likely economic, social, and political impact of indexing the minimum wage. Indexing," he stated, "has simply been offered as a supposedly painless alternative to the recurring headache of deciding whether an increase in the minimum wage is warranted." Richard Wood, the National Association of Convenience Stores, agreed: "Retailing strongly believes that the bill should provide for the establishment of a Presidential Blue Ribbon Study Commission...." Views from the Economic Community The Senate hearings, at mid-session, were given over to select economists. Two panels testified: one of generally liberal economists and a second, generally, more conservative. Robert R. Nathan, a consulting economist, was chairman, the National Consumers League. Nathan explained the economics and purchasing power of the minimum wage and observed that he would "... strongly favor the indexing provision because it does seem to me appropriate for the minimum wage level to take into consideration improvement factors in our economy." In his prepared statement, Nathan observed that indexation has "been adopted in government and business to cover a large proportion of wage and salary workers. Certainly," he stated, "the most poorly paid American workers are entitled to at least as much protection from wage erosion as the more highly paid workers." Walter Galenson, professor of economics, Cornell University, began by noting that the hearing marked the 40 th anniversary of the FLSA. Citing other economists, he suggested that there was still "'virtually no reliable quantitative work'" on the minimum wage. "One of the difficulties," he stated, with respect to most of the studies "... is that they are based upon macroeconomic data, and that heroic assumptions are necessary in order to distill out the effects of economic developments that are occurring simultaneously." In the interim, he stated: About all we can do is to make some tentative observations based upon a reading of our past experience, and to put in a reminder that for 40 years, the Fair Labor Standards Act has been of considerable benefit to many of the lowest paid in our society without having had any apparently harmful effects on the economy.... Galenson was "not a partisan of the general concept of wage indexing. It has led to many difficulties in countries that have practiced it for long periods. But," he observed, "it is a fact that a great many American workers now enjoy indexing, by collective agreement, and if any group in society needs this kind of protection, it is the low paid. Many, if not most of them are not unionized, and do not have collective bargaining machinery to prevent the erosion of their real incomes." Sar Levitan, George Washington University, followed. Levitan stated that he supported "the concept which will help prevent the erosion of minimum-wage protection in the face of future inflation and other wage increases. However," he stated, "... I believe the index should be set at 50 percent of the average manufacturing wage. More than 50 percent should not be attempted until we realize tight labor markets." The bill in question "is a workable compromise, and whatever reservations I have about indexing above 50 percent, I support the bill," he said. A second panel of economists followed. "Automation escalation [sic] compounds the problems of the minimum wage law," argued Thomas Sowell of the Hoover Institution, "by making it possible to close our eyes to its effects hereafter. This seems," he advised, "unconscionable when those affected are poor, vulnerable, powerless, and inarticulate." He added: If the Congress does not monitor what happens to them, there is no other powerful institution to do so. The set of incentives confronting the U.S. Department of Labor makes it unrealistic to expect it to critically evaluate minimum wage effects, and nearly 40 years of history makes it painfully apparent that it has no intention of doing so. Sowell stated the need for a critical evaluation of the minimum wage and noted: "... my hope would be that some way might be considered to have the statistical analysis of minimum wage effects performed by some organization other than the agency whose own fate is intertwined with that of the Fair Labor Standards Act." Marvin Kosters, associated with the American Enterprise Institute, tended to focus upon the youth sub-minimum wage and upon the more generalized impact of wage rates on unemployment. He suggested that indexation might cause Congress simply to set aside any further oversight of minimum wage issues. "... I believe that the opportunity for the Congress to periodically reassess minimum wage policy should be retained so that new research results and experience can be taken into account." He suggested that "establishing fixed increments is preferable to indexation because it more readily permits reassessment and revision of minimum wage policies in light of new information and experience." Like Kosters, Walter Williams of Temple University tended to focus upon the youth sub-minimum wage. "Indexing the minimum wage will reinforce the unemployment effect of the rise in the minimum wage," he stated. "One hope against the predicted large increase in youth unemployment, should the proposed amendment pass, is the inclusion of a significant youth differential." Otherwise, Williams was silent on indexation in his testimony before the Committee. Legislation Is Considered On September 14-15, 1977, minimum wage legislation was considered by the House. Senate consideration of the measure would take place on October 6-7, 1977. Debated in the House Representative Phillip Burton called up the minimum wage measure ( H.R. 3744 ), sharing time with Representative Erlenborn—each of whom would play a critical role in subsequent debate. Representative Carl Perkins (D-KY), chair, Committee on Education and Labor, introduced the bill as reported. It would have raised the federal minimum wage to $2.65 per hour after January 1, 1978, followed by indexation. The indexation formula, Perkins explained, had been conservatively drawn: no overtime or incentive pay, no fringe benefits, and a six-month lag between calculation and implementation. Erlenborn stated that he would offer an amendment on indexation. The bill "substitutes a mindless, thoughtless rule" for the "good judgement" our constituents have a right to expect from us. He continued: Instead of having the Congress look ... at the economic conditions, the rate of unemployment, the rate of inflation and other factors in the economy and then deciding whether and how much the minimum wage should be increased, the concept of this bill is to substitute ... an indexing formula that will ever drive the minimum wage up. Enactment of the bill will "signal a surrender by the Congress ... to inflation as a way of life...." Erlenborn proposed a series of step increases. Representative Quie, in support of the bill, explained the various technical aspects of indexation. He argued that the bill was not "a mindless" exercise because "... what we are doing is tying the minimum wage to forces in the economy, management, labor, and manufacturing." He concluded: "...I believe that that would be a far wiser route for us than to operate in the way we have operated in the past." On September 15, 1977, the first item was indexation. Erlenborn proposed as a substitute for the reported language: (1) not less than $2.65 an hour during the year beginning January 1, 1978, not less than $2.85 an hour during the year beginning January 1, 1979, and not less than $3.05 an hour after December 31, 1979, except as otherwise provided in this section; ... Indexation would, thus, be removed. Erlenborn affirmed: "... I do not think that this Congress can afford, economically or politically, to say that we are ready to guarantee rates of inflation as high as we now experience and rates of inflation that will probably rise ever higher." A recorded vote on the Erlenborn amendment resulted in 223 ayes to 193 nays—stripping indexation from the bill. Once the vote had been tallied, Representative Perkins proposed an amendment creating a Minimum Wage Study Commission. One portion read: (C) the economic consequences (if any) of authorizing an automatic increase in the rate prescribed in that Act [the FLSA] on the basis of an increase in an index of the earnings of a category of employees; ... Perkins had been a Member since 1949 "when we increased the minimum wage from 40 to 75 cents. We have increased it at various times up to $2.30 where it presently is." Perkins continued: "... in my opinion there would have been more stability in an indexing procedure such as has been proposed and defeated here today." Thereafter, Perkins yielded to Jim Guy Tucker (D-AR), who had originally suggested the concept of a Commission. "The question of indexing, regardless of the vote we just took, is not dead. We will have to look at this issue over and over as long as inflation exists." The Commission proposal was adopted: 301 ayes to 118 nays. While the Commission proposal was debated, Phillip Burton had prepared a new initiative, one that largely paralleled the reported bill. Erlenborn objected that the Burton proposal was not germane, but was overruled. On a vote of the House, the Burton proposal was defeated (189 ayes, 227 nays)—and, so was indexation. Debated in the Senate On October 6, 1977, Senator Williams called up the Senate version of the minimum wage amendments ( S. 1871 ). Floor debate continued through October 7, 1977. The Committee on Human Resources had produced a bill with an indexation formula; but, it was promptly jettisoned by the sponsors (Williams and Javits) once it came to the floor. The indexation formula was said to have been a "reasonable and important step." However, Williams stated, "in light of the concerns which have been expressed, I am proposing ... to forego the establishment of indexing for the minimum wage, at least for the next few years." Senator Orrin Hatch (R-UT) commended the sponsors "for withdrawing the indexing provision of the original bill. I think," he stated, "it is a very wise and judicious decision ...." John Tower (R-TX) was more critical. What has been done through the Javits-Williams concession, he suggested, "is to achieve the result without the formula.... It is back-door indexing ." (Italics added.) The Minimum Wage Study Commission (1978-1981) The Fair Labor Standards Act amendments of 1977 provided for establishment of a Minimum Wage Study Commission (MWSC). Among the mandates given to the Commission was to explore "the economic consequences (if any)" of indexation. The MWSC would have 36 months in which to prepare and to transmit a report to the President and to the Congress with legislative recommendations. The Commission reviewed the various aspects of the minimum wage, produced a seven volume report, and ceased to exist in 1981. The cost of the Commission was reported to have been $17 million. Former Congressman James O'Hara (D-MI) was named as Chairman, presiding over a blue ribbon panel of representatives from industry, labor, and the public, with an in-house staff of seven economists. Observations of the Commission "The key issue to be resolved in indexation," the Report of the Commission stated, "is the purpose of the minimum wage." Exploration focused upon the post-World War II years and, primarily, upon the 1950s through the 1970s. During the 1950s and 1960s, the Report explained, "legislated minimum wage increases caused marked improvements in purchasing power." That was not the case during the 1970s. Many "... minimum wage earners began working in the 1970s and experienced only the decline in the minimum's purchasing power." More critically, "... low-income workers in general and minimum wage workers in particular save very little, and cannot provide for the future erosion of the purchasing power of their earnings." Finally, those earlier minimum wage increases "... were not designed as a buffer for the unexpectedly high inflation of the 1970s and 1980s since Congress did not foresee the oil crisis and other economic phenomena that boosted the underlying inflation rate into double-digit figures...." The Report explained the pros and cons of indexation and noted the possible methods for its implementation. It seemed to conclude that there may be no really ideal base/formula for indexation. The effect of the various methods explored upon employment was assessed to be small "although it varies slightly with the method used." It was found that corporate profits would increase slightly under each of the plans studied, lending support to the theory "that firms find it easier to adjust to gradual and expected advances in labor costs than to the more abrupt legislated increases that have at times exacerbated inflation." But, had indexation attached to hourly earnings growth been attempted, the Report noted, "... the long-run impact on consumer price inflation, corporate profits, and real gross national product would have been small, though beneficial." In summary, the Commission concluded: First, the present system has not maintained the purchasing power of the minimum wage. Second, indexation is not necessarily inflationary if it is based on cost-of-living or other increases that have already taken place, as measured for example by average hourly earnings, the consumer price index without the mortgage interest payments or the implicit deflator. Third, indexation would have a small beneficial effect on the economy in the long run. In the short run, the Commission concluded, "... indexation could have either a small beneficial or small harmful effect depending on underlying economic conditions." Nonetheless, the Commission recommended that "...the minimum wage be indexed on the basis of average hourly earnings in the private economy and adjusted each year on the basis of the previous year's overall rate of change in this index." Further, it concluded "... that regular and predictable increases in the minimum wage would be non-inflationary and would be easier for business to adjust to than the irregular increases of the present system." Voices of Dissent: The Minority Report Following congressional practice, the report was divided into a majority finding with, in some cases, an expression of minority views. For the most part (with one exception), such minority/dissenting views were short and narrowly focused. The Robinson Dissent S. Warne Robinson, chairman of the board, G. C. Murphy Company, had been appointed to the Commission to represent industry. "The minimum wage," he began, "has always represented a trade-off among higher wages for some workers, fewer job opportunities for others, and higher prices for everyone." Robinson cited findings produced by "objective economists." These findings, he stated, "have shaken the very foundations" of the FLSA. Robinson stated that the majority "has refused to base its conclusions on the inescapable economic facts uncovered in our studies" but has, instead, provided "bold and unsupportable assertions" in support of the minimum wage. Robinson's comments, dealing with a variety of minimum wage-related issues, focused as well upon the issue of indexation. One of the "most far-reaching and least supportable recommendations" of the Commission, Robinson charged, "calls for automatic annual increases in the minimum wage...." Indexing is "by its nature inflationary." It "starts with the premise that inflation is a fixed and permanent part of the economy" and implies "a refusal to deal with the underlying causes of inflation." He continued: "Now is absolutely the worst conceivable time to be building inflationary forces deeper into the heart of our economy. Yet that's essentially what the majority recommendation for indexing the minimum wage would unavoidably do." Robinson reasoned that "there is no index that adequately distinguishes inflation-caused price increases from those caused by supply shocks." He stated that there were "other major problems with indexing"—i.e., that it "never applies equally to everyone." Thus, the result "is that anything short of a universal index will always end up redistributing income in some unintended way." He continued: This will mean those with the lowest job skills will face even worse employment prospects than at present; small business will be hurt harder, and labor-intensive industries like the retail and service trades will be forced to pass on their increased costs to consumers. Robinson contended: "Everyone eventually winds up worse off due to stepped up inflation including those who thought they were being protected by an index." Finally, Robinson suggested that "...Federal attempts to set wages in defiance of marketplace realities inevitably create inefficiency in the labor market and, in particular, deny employment to specific segments of the labor market suffering above-average rates of unemployment historically." Other Voices of Dissent Michael Wachter, then professor of economics, University of Pennsylvania, was also a dissenter. The Commission, he stated, "was firmly in favor of indexing and the only real question it debated was what index should be used." Wachter stated that the Commission "decided to index on a general wage rate rather than a price index," but that the "appropriate wage rate to be used as an index ... was not specified." He explained: "The lack of a decision on the appropriate index may seem unimportant, but it is the heart of the problem. There is no perfect index," he stated, "as all available indexes have serious weaknesses." He added: Indexing minimum wages means surrendering control not only of the minimum wage level or floor but also of the cost of the minimum wage policy to employers and the number of workers who may be displaced. This is not a decision to be surrendered casually to an index number with unknown properties. Wachter was quick to note that "once the choice of an index is made, no matter how poor the choice turns out to be, it is very difficult to change that index." Phyllis Ann Wallace, professor of economics, Sloane School of Business at MIT, pleaded for more time in which "to examine the practical issues of indexing the minimum wage." Like other dissenters from the Commission's report, Wallace observed: "Most of the suggested indexes as presently constructed have major flaws." In agreement with Wachter, Wallace concluded: "I, therefore ... would not support, at this time indexation of the minimum wage." PART IV. THE REAGAN PRESIDENCY Ronald Reagan (1981-1989) and Minimum Wage In 1977, when the Minimum Wage Study Commission was created, there was every reason to suspect that its report would be read avidly and that at least some of its recommendations might be adopted. That would not be the case. The Reagan Policy "The minimum wage has caused more misery and unemployment than anything since the Great Depression," Ronald Reagan was quoted as having said early in the campaign of 1980. How serious he may have been may not be entirely clear, but the Wall Street Journal reported that Reagan, if elected, would "try to repeal the minimum wage." In November 1980, Ronald Reagan was elected President. "Ronald Reagan wants to give teen-agers a better chance in the job market by lowering their minimum wage," stated a New York Times editorial. A headline in the Christian Science Monitor suggested: "Minimum Wage Cut for Youth Seen as Early Reagan-Labor Confrontation." As the 1981 Congress opened, Representative Erlenborn reportedly summed up the situation. The Daily Labor Report noted: The scheduling of additional annual increases in the nation's minimum wage may be 'too high a price to pay' for congressional passage of a lower, 'youth opportunity' wage, Representative John Erlenborn (R-Ill) tells the Industrial Relations Association of Chicago.... Some in Congress favored a youth sub-minimum wage proposal; others, a higher general minimum wage—but without the youth sub-minimum. Almost immediately, there commenced a series of hearings on youth employment and the sub-minimum wage which would tend to occupy Congress throughout the Reagan years. Few serious initiatives dealing with the minimum wage were considered during the Reagan years. For minimum wage workers, there was no increase in wages during the period. Nor was a youth sub-minimum enacted. The trade-off suggested by Representative Erlenborn seemed to be holding. The Minimum Wage Study Commission and Its Impact Even as the MWSC was being organized, the American Enterprise Institute (AEI) announced a three-year research program "to evaluate the effects of the minimum wage." Simon Rottenberg, University of Massachusetts, was chosen as director. "The Congress enacts minimum wage laws," he reportedly said, "because a majority of its members apparently believe that this is an effective strategy for improving the condition of low income workers. Many economists have concluded, however, that such laws are not efficient instruments for ameliorating poverty." In late 1979, AEI hosted a conference in Washington, D.C., dealing with the minimum wage and published the papers in a single volume in 1981—almost at the same time as the report of the MWSC was released. There followed from AEI a series of monographs dealing with aspects of the minimum wage. Although none of this work concerned indexation, specifically, the generally conservative AEI publications tended to counter the more liberal MWSC report. When the MWSC Report was published in the spring of 198l, it seems generally to have been ignored. Minimum wage was not then before the Congress. By the end of the decade when Congress was again ready to act on minimum wages, the MWSC report seemed somewhat out-of-date and appears to have been utilized by each side to support their particular perspectives. PART V. LEGISLATIVE INITIATIVES: THE LATE 1980s Minimum Wage and Indexation: 1987-1988 In early 1987, several bills were introduced that dealt with the minimum wage. Two bills ( H.R. 1834 and S. 837 ) proposed step increases, followed by indexation. In this case, the mechanism was to create a rate "equal to 50 percent of the average private, nonsupervisory, nonagricultural hourly wage" rounded upward to 5 cents. Hearings in the House On March 26, 1987, Representative Augustus Hawkins (D-CA), with others, introduced H.R. 1834 , a bill to raise the minimum wage to $4.65 and to index it. On April 9, 1987, Representative Austin J. Murphy (D-PA), chair of the Subcommittee on Labor Standards, convoked a hearing on the measure. The first speaker was Mario Biaggi (D-NY) who lamented the long interval without an increase in the minimum wage, endorsed indexation, and urged Congress to move the bill forward. Gerald Kleczka (D-WI) took a somewhat different stand (referring to H.R. 659 , his own minimum wage bill). "No indexing, no other frills...." The Kleczka bill had two 50-cent increases—the latter to take effect on January 1989. Kleczka stated: "...we have an administration which is not very friendly to the proposal to begin with, and the more complicated we get, the more things we add onto the legislation, I think increases the chance of a veto...." Murphy questioned: Mr. MURPHY. I take it you are not, then, opposed to the Biaggi approach of a 3- to 4-year mandatory increase plus indexing, but you think— Mr. KLECZKA. The chances of getting that signed into law, I think are very remote. Mr. MURPHY. Your objections are practical, then, rather than philosophical? Mr. KLECZKA. Right. Let's get the bill signed. Representative Tommy Robinson (D-AR) concurred. "If we put indexing in the minimum wage, I think it will be veto bait and it will be vetoed." As the hearings progressed, there were the usual witnesses for and against an increase in the minimum wage—and, from industry, very strong opinions with respect to indexation. More supportive of the concept was the testimony of Mary Dublin Keyserling, speaking on behalf of the National Consumers League. She thought it "encouraging ... to hear that the bill is to index the minimum wage." In October 1987, Lane Kirkland, AFL-CIO president, appeared before the Subcommittee. Like Mrs. Keyserling, Kirkland supported indexation. The indexing proposed in the House bill, Mr. Chairman, is clearly necessary to prevent the deterioration of the minimum wage experienced over the last decade. If indexing had been in place, a gradual adjustment in the minimum wage would have taken place year by year. As other wage levels in general rose, minimum wages would have risen with them. Indexing brings certainty and stability to the process of adjusting the minimum wage. Workers who experience poverty, Kirkland continued, "must depend on other forms of income such as public assistance, and to the extent that they do, the U.S. taxpayers are subsidizing low-wage employers." Hearings in the Senate On March 25, Senator Edward Kennedy (D-MA) introduced S. 837 , the Minimum Wage Restoration Act of l987. It was roughly the equivalent of the Hawkins bill, calling for indexing at the rate of 50 percent of average hourly earnings in manufacturing (AHE). As chairman of the Committee on Labor and Human Resources, Senator Kennedy commenced a series of hearings on the bill beginning on June 10, 1987. "Since the first minimum wage was signed into law 49 years ago, Congress has adjusted it six times. Each time," Kennedy stated, "we have heard dire prophecies of unemployment, inflation, and business failures. And six times these prophecies have been false, and America has prospered." The Senate hearings paralleled those of the House and had many of the same witnesses. But testimony dealing with indexation may have been more subdued. Senator Dan Quayle (R-IN) remarked in passing: "My own viewpoint as concerns the bill before us is that indexing should be discarded." Claiborne Pell (D-RI) expressed similar thoughts. "I must say I share the reservation expressed here about the indexing. That must be examined very carefully, indeed, and I am concerned about it." Secretary of Labor William Brock, unlike Secretary Marshall in 1977, largely ignored the issue. Even James O'Hara, a former Member of Congress and former chair of the MWSC, presented only a brief statement of support—though he was more expansive during questioning. Industry, as with prior hearings, seemed to have taken a hard-line in opposition to indexation. Labor, for the most part, was more supportive. Following the pattern of 1977, a quartet of economists appeared to lay out the pros and cons of an increase in the minimum wage—with a certain amount of disagreement. Gerald Adams, University of Pennsylvania, and David Swinton, associated with the Southern Center for Studies in Public Policy (Clark College), took basically a pro-minimum wage position. John Glennie, with Robert Nathan Associates, and Finis Welch, of UCLA, seemed more critical of the concept. Action by the Congress (1988) By 1988, it had been nearly eleven years since Congress had acted to increase the minimum wage: seven years since the last step increase had taken effect. During that time, workers employed at the minimum wage had fallen behind as inflationary pressures escalated. House Action on H.R. 1834 In late February 1988, as the House Subcommittee on Labor Standards moved toward a mark-up on H.R. 1834 , issues remained. Within the Subcommittee (and, later, within the full Committee), there were apparent disagreements. "It seems clear that indexation has to come out of the bill at some point," Representative Timothy Penny (D-MN) was quoted as saying. "The question is when." Hawkins took a different approach. "My position is to protect indexing...." The dispute rested between indexation and congressional oversight. On March 3, the Subcommittee on Labor Standards met. Several Members, it was reported, "expressing reservations about the size of the increase and the indexing provided in the bill...." For three hours, the Subcommittee discussed the wage measure and, on a vote of 6 ayes to 3 nays (along party lines), the bill was ordered to be reported to the full committee. In the process, the indexation provision was dropped. Reportedly, Penny had "offered the amendment to strike the indexing provision." Hawkins suggested that it was still possible to restore the indexation formula in full committee; but that the chances were no better than "50-50." On March 10, the Committee on Education and Labor conducted a full-Committee mark-up and adopted a bill with a fourth sequential increase in the minimum wage to $5.05. Jay Power, lobbyist for the AFL-CIO, was asked if the final step increase made losing the vote on indexation somewhat easier to swallow. "It does," he was quoted as having said. "But it would be our hope to restore indexing on the floor." Delays of one sort or another followed and, ultimately, the House bill ( H.R. 1834 ) did not come to the floor. Senate Action on S. 837 The Senate, as in 1977, was aware of the action by the House Subcommittee on Labor Standards on the indexation provision and of divisions within the House on the general question of raising the minimum wage. In Committee in the Senate, with Kennedy as chair, mark-up began on S. 837 on June 22, 1988. Under the new bill (a substitute), the final rate was lowered to $4.55 per hour. As the Senators met, the bill "still includes indexing." However, as the bill moved through mark-up, the indexation provision was dropped. In early September, presidential candidate George H. W. Bush indicated that he would support "a slight increase" in the minimum wage. There was some indication that President Reagan might "consider a reasonable increase" if a training wage were included. This new compromise seemed to please no one. Critics of the minimum wage were angered. "'Seven years of effort to educate the public' about the dangers of raising the minimum wage 'have been undermined by the Bush proposal,'" Senator Hatch was reported to have said. Labor would not support the bill with a training wage included. In late September, two attempts at cloture failed and, on September 26, the minimum wage bill was pulled from the floor. George Bush and the FLSA Amendments of 1989 Early in the 101 st Congress, new minimum wage legislation was quickly introduced. With the change of Administrations in 1989, there was also a change of focus on the minimum wage—though the new President was very specific as to what he would (and would not) accept. Again, indexation became an issue. House Action on H.R. 2 On January 3, 1989, Hawkins introduced H.R. 2 , a bill "to restore the minimum wage to a fair and equitable rate." The bill, referred to the Committee on Education and Labor with Hawkins as chair, called for an increase in the minimum wage, in steps, to $4.65 an hour after December 31, 1991, together with other wage/hour changes and, finally, a "Minimum Wage Review Board." The Review Board Proposal On the strength of the several hearings conducted during the 100 th Congress, H.R. 2 was reported from the Subcommittee to the full Committee, but without, it appears, reference to the Review Board. On March 14, 1989, a full Committee hearing was held with the new Secretary of Labor, Elizabeth Dole, who explained what it was that the President wanted in a new minimum wage bill. There was considerable discussion about the potential impact of a minimum wage increase—the potential for job loss, the proposal for a sub-minimum wage for youth—but no reference was made to the Board. As reported from the Committee on Education and Labor, March 20, 1989, the Board became somewhat more critical—though still, apparently, not of major importance. It would have five members and would be "... required to conduct continuous analyses of economic and other relevant data, and to submit periodic recommendations to the Congress on the adjustments necessary to preserve the purchasing power of the minimum wage." The Board would provide a "permanent group of experts" to advise Congress "on the advisability of making periodic adjustments in the minimum wage." The authors stated two purposes for the Board. First , its "foremost" and most compelling need was "to prevent the minimum wage issue from being neglected for an inordinate length of time." Second , there was perceived to be a need for an interpretive body that could deal, expertly, with the "controversy [that] has erupted over the economic impact" of minimum wage proposals. Floor Action in the House Though indexation had proven controversial, the Board proposal seems to have sparked only a very limited response in the House. During the initial debates, views were mixed and relatively low-key. Charles Hayes (D-IL) made passing reference to the "... Board which will advise Congress on the economic effects of wage adjustments." Bruce Vento (D-MN) was "pleased that this legislation provides for the establishment of an advisory board to review relevant data and make periodic recommendations to Congress on adjustment of the minimum wage...." Donald Payne (D-NJ) pointed to the decline in value of the minimum wage during the Reagan era and affirmed that the new Board would attempt to redress that. With these recommendations, "Congress would be armed with objective economic data to ensure bipartisan support for future minimum wage increases." There was also dissent. Ron Marlenee (R-MT) stated that the Board would provide a "back door to pay increases each year." This sounds, he said, "... like another measure to delegate our authority to an unelected commission to propose solutions to politically sensitive problems." Marlenee affirmed: "... the American people do not want us to abrogate our authority to yet another commission?" As debate moved into a second day, Representative William Goodling (R-PA) was more outspoken. "A minimum wage review board is a backdoor indexing mechanism. That is all it is," he charged. Later, Goodling reiterated (at various times during the debate) that the issue was backdoor indexing. "Why do I say that," Goodling protested. "Very simply because now if they want to recommend, they must recommend each year to the Congress. That means each year there is a good possibility that the same thing comes up over and over again." Hawkins advised his colleague, Mr. Goodling: "This review board is purely advisory. If they recommend an increase, that increase would be submitted to this body and to the other body as well, as a recommendation. It would not be automatic." Goodling was, seemingly, not convinced. On March 23, 1989, the House adopted a Murphy substitute (now endorsed by Hawkins and others), containing the Minimum Wage Review Board. The vote was 248 yeas to 171 nays. The measure was promptly dispatched to the Senate. A Compromise Within Congress In the Senate, a new bill was substituted for H.R. 2 and was also titled H.R. 2 . The Senate-passed bill omitted any reference to the Review Board; but a conference committee, following much of the House-passed version, sustained the Board, and it became a part of the final bill. As reported from Conference, the Board would have been a congressional entity. The five members of the Board would have been congressional appointees. "The managers view the Minimum Wage Review Board," the conference report stated, "as a vital new tool in helping the Congress to discharge its legislative and oversight responsibilities over" the FLSA. Further, the conference report opined that the Board must have "appropriate information" upon which to base its recommendations and called upon the Secretary of Labor to "increase and improve" the Department's survey capabilities. The Conference Report in the House As the debate moved forward, there was, in the background, a threatened veto from President Bush. On May 11, 1989, Representative Hawkins called up the conference report on H.R. 2 . Hawkins termed the bill "a reasonable, yet meaningful adjustment" of the minimum wage. "While this measure is less than what we had originally hoped for, it is an essential step toward ensuring a fair and livable wage for the lowest paid workers." Conversely, Representative Goodling argued: "They know [proponents of an increase in the minimum wage] it will be vetoed, I know it will be vetoed; they know it will be sustained, I know it will be sustained." He urged his colleagues "to vote against the conference report." Debate on the conference report proceeded in a routine manner. The matter of indexation—albeit, backdoor indexation , in the words of Representative Goodling—was largely ignored as the House moved forward with the conference report. Ultimately, it was adopted: 247 ayes to 172 nays. The Conference Report in the Senate On May 17, 1989, the conference report was called up in the Senate. Senator Kennedy reviewed the reasons for supporting a minimum wage increase, but did not appear to raise the principle of indexation. However, Senator Hatch followed and he did refer to the issue of "backdoor indexing." The Board's task "is predetermined," he stated. "Each year, they are to transmit to the Congress an official recommendation for a minimum wage increase." In an aside to Members, Hatch observed: "I wonder how many of my colleagues are anxious to vote every year in perpetuity on a minimum wage bill." The conference report was agreed to by a vote of 63 ayes to 37 nays. The President Vetoes H.R. 2 On June 13, 1989, the issue was resolved. Supporters of a minimum wage increase were assembling for a news conference to urge the President to sign H.R. 2 . Meanwhile, during a flight to Lincoln, Nebraska, President Bush authorized the White House to transmit his veto message to the Congress. While the assemblage waited, the veto message was read to the House. The increase in the minimum wage, the President said, was of "an excessive amount," would "stifle the creation of new job opportunities," and "would damage the employment prospects of our young people and least advantaged citizens." It would "accelerate inflation" and would "not help those in poverty." He affirmed: "Economists universally agree that such an increase in the minimum wage will result in the loss of job opportunities." Most grievous, the training wage it included was "ineffective." It was too short: a "60-day limitation" for learning the nuances of entry-level employment. "This can be accomplished only through a permanent trainee differential." He opined that the training wage "would do little to save jobs" and affirmed that he "cannot support it." The Board, the President stated, "threatens to compound the bill's inflationary effect," adding that "it would be required to make annual recommendations to the Congress for increasing the minimum wage in light of increases in wages and prices since any previous minimum wage adjustment." Finally: "This has been termed, accurately, a 'back-door' indexing provision. It is unacceptable." Reaction in the House and an Attempt to Override Action to override the veto fell to the House. The parties were split. Representative Charles Hayes (D-IL) termed the President's action "outrageous." Conversely, Representative Cass Ballenger (R-NC) affirmed: "I support this veto." And, he added: "Those who really care about the working poor know that the issue is not raising the minimum wage, but minimizing poverty." On June 14, 1989, Representative Hawkins led off an appeal for an override of the President's veto. There follow a series of speeches, in some measure redundant. Ultimately, the vote was cast: ayes, 247; nays; 178. To override a presidential veto, a two-thirds majority was necessary. Since that was not achieved, the override attempt failed. During debate on the override, the issue of indexation does not appear to have been raised. A New Minimum Wage Bill (H.R. 2710) Following the veto of H.R. 2 , there seemed to be some confusion in Congress. Kennedy and Hawkins had initially scheduled a joint House-Senate hearing on the minimum wage but, Labor Secretary Dole indicated that she would not be able to testify because of "serious scheduling problems." Meanwhile, new legislation was introduced in the Senate ( S. 1182 )—and, on June 21, in the House. This later bill ( H.R. 2710 ) was to become the basis for accommodation with the White House. In the Senate, S. 1182 , as introduced and reported, contained the Review Board language—as did the House bill as introduced. On September 14, 1989, the House Subcommittee on Labor Standards met and marked up a bill with a vote of 7 ayes to 4 nays. The Subcommittee met the President's demand for a $4.25 limit on the minimum wage. Despite this accommodation to the President, the Review Board likely remained in the act. In late September, Representative Goodling indicated that further accommodation had been reached with the White House—but negotiations continued. Finally, a substitute bill was introduced and reported, giving the President the lower minimum wage rate which he had sought, a training wage for youth (with a termination date), an expanded small business exemption, and an increase in the tip credit provisions. The Minimum Wage Review Board language had been eliminated. On November 1, the measure was called up in the House and passed: 382 ayes to 37 nays. On November 8, the Senate approved the measure: 89 yeas to 8 nays. The measure was signed into law by the President on November 17, 1989 ( P.L. 101-157 ). PART VI. CONTEMPORARY POLICY: 1991-2008 The 1990s and Beyond John Dent, who had evinced an early interest in minimum wage indexation, retired from Congress in 1979. Augustus Hawkins, who had fought for indexation in the 1980s, retired in 1990. In the Senate, Jacob Javits and Harrison Williams left office in the early 1980s. One might have anticipated a shift away from the issue of indexation of the minimum wage. The reverse, however, may have been true. A Change of Policy In 1938, the structure and administration for federal minimum wage legislation were established. Thereafter, the practice had been to enact one or more step increases in the rate of the minimum and to implement them at regularly scheduled times. The Congress would evaluate the state of the economy and would raise the minimum wage rate to a higher level. This approach was at times effective in maintaining the value of the minimum wage (e.g., in the middle 1960s); but on other occasions, it was not. For example, from 1981 through 1989 (the Reagan years), the minimum declined in real terms. Again, from 1997 through the present, no change has been enacted in the federal minimum wage rate. The general rate has remained at $5.15 since 1997. The highest rate currently under consideration would raise it to $7.25 per hour—to be phased-in two years and 60 days from the date of enactment. If the minimum wage had been indexed to its late 1960s value, it would now be in excess of $9.05 per hour. Meanwhile, about 27 states have entered the minimum wage arena with wages in excess of the federal, but with very different state standards. Several have indexed their minimum wage rates: Washington, Oregon, Vermont, Florida, with six other states now in the process of implementing indexation. It is possible that the issue of indexation may arise during debates in the 110 th Congress. Recent Proposals for Minimum Wage Indexation Since 1992, there have been a series of proposals calling for indexation of the minimum wage. The proposals vary, as does their intent. None of the proposals has yet, it appears, been a subject of hearings. None of these measures has been enacted. But, then, no new minimum wage legislation has been enacted as stand-alone legislation since 1989. This segment of the report inventories various indexation proposals of the past 15 years. The 102nd Congress On September 30, 1992, Representative George Miller (D-CA) introduced H.R. 6067 , referred to the Committee on Education and Labor, Subcommittee on Labor Standards. The bill would have indexed the minimum wage "to the cost of living in the same manner as Social Security benefits are indexed." Miller described the extensive use of indexation in a variety of federal programs. "The concept that the Federal minimum wage should be a living wage, enabling workers to support their families, has become a myth," he said. "At $4.25 per hour, the minimum wage is inadequate to keep workers out of poverty." The 103rd Congress On January 5, 1993, Representative Miller, with some modification, reintroduced his proposal from the 102 nd Congress ( H.R. 281 ) which was, again, referred to the Subcommittee on Labor Standards. On January 27, 1993, Representative Bernard Sanders (I-VT) introduced ( H.R. 692 ), a roughly comparable proposal to the Miller bill, using the Social Security formula for indexing the minimum wage. It was referred to the Subcommittee on Labor Standards. The pre-indexation rate would have been $5.50. "[M]illions of Americans," he stated, "find themselves working fulltime, but still unable to maintain a decent standard of living." Sanders took note of the tendency toward a contingent workforce ("no health insurance, no vacation days, no pensions—and of course, no job security") and stated: "A record 26.6 million Americans, 10.4 percent of our people, are now on food stamps—the highest percentage since the program started in 1964." Sanders added: "In effect, the taxpayers are subsidizing the low wages being paid by corporations through food stamps, Medicaid, and other programs for the working poor." His bill would have increased the minimum wage to $5.00 and indexed it to inflation. On March 11, 1993, Senator Paul Wellstone (D-MN), introduced S. 562 , which was referred to the Committee on Labor and Human Resources. The Wellstone bill would have raised the minimum wage, in steps, to $6.75 beginning on September 1, 1996, and then would have indexed the rate to "50 percent of the monthly average hourly earnings for nonfarm, nonsupervisory private workers" rounded to the nearest multiple of $0.05. The measure provided "that any amount determined under this subparagraph shall not be less than the amount applicable under this paragraph for the preceding year ." (Italics added.) Wellstone explained that the bill "would gradually restore the value of the Federal minimum wage" and, further: "It would also ensure that the minimum wage no longer erodes as a result of inflation, congressional inaction, or some combination of both, by permanently tying the minimum wage to a traditional index: one-half of average hourly U.S. private sector wages." The bill would "...break the cycle of minimum wage hikes enacted at irregular intervals by the Congress...." The 104th Congress On January 4, 1995, Representative Sanders introduced H.R. 363 calling for an increase in the minimum wage to $5.50 an hour by December 30, 1995. Thereafter, the minimum wage would be indexed under the Social Security formula. On January 11, 1995, Senator Kennedy (with Paul Wellstone) introduced S. 203 . The bill would have raised the minimum wage, in steps, to $5.75 an hour beginning from September 1, 1997. The bill, which also proposed a Commission to study the minimum wage, was referred to the Committee on Labor and Human Resources. The "Commission on the Minimum Wage" would have been composed of 9 members: three each appointed by the Secretaries of Labor, of Commerce, and of Health and Human Services. The duties of the "Commission" would have been to study and make recommendations to Congress on: A) means to restore the minimum wage to the level relative to the average hourly wage that existed when the Congress adjusted the minimum wage during the period 1950 through 1980; and, (B) means to maintain such level with minimum disruption to the general economy through periodic adjustments to the minimum wage rate. The report was to be issued not later than September 1, 1997, after which (in 30 days) the Commission would expire. Members were to serve "without compensation." On May 2, 1996, Senator Wellstone introduced S. 1722 , an omnibus social policy bill the first segment of which dealt with the minimum wage. The bill was referred to the Committee on Labor and Human Resources. The Wellstone bill would have increased the minimum wage, in steps, to $5.15 an hour after September 1, 1997, and would, thereafter, index it "to not less than ... 45 percent of the monthly average hourly earnings for nonfarm, nonsupervisory private workers for the preceding 12 months...." The bill also stated that the amount " shall not be less than the amount applicable under this paragraph for the preceding year ...." (Italics added.) The 105th Congress On July 28, 1997, Representative Sanders introduced H.R. 2278 , the "Liveable Wage Act of 1997." The bill was referred to the Committee on Education and the Workforce. Following in the wake of the 1996 FLSA amendments, the bill would have increased the minimum wage to $6.50 after December 30, 1997. At the beginning of each calendar year after December 30, 1998, the Secretary would have adjusted the minimum wage in proportion to benefits payable under the Social Security Act. On January 1, 1998, Senator Kennedy introduced S. 1573 . The bill, which would have raised the minimum wage, in steps, to $6.65 per hour, would also have indexed the minimum wage, beginning from the $6.65 figure. It instructed the Secretary to adjust the minimum wage on September 1, 2001 (and each year thereafter), "to reflect increases in the Consumer Price Index for All Urban Consumers during the most recent 12-month period for which data are available." The bill was referred to the Committee on Labor and Human Resources. In the House, Representative David Bonior introduced H.R. 3100 , the "American Family Fair Minimum Wage Act of 1998"—with 107 co-sponsors. The bill, paralleling Senator Kennedy's bill in the Senate ( S. 1573 ) was referred to the Subcommittee on Workforce Protections. The 106th Congress On February 8, 1999, Representative Sanders introduced H.R. 627 to raise the minimum wage to $6.50 by December 30, 1999. Afterwards, indexation, under the Social Security formula, was included. The measure was assigned to the Subcommittee on Workforce Protections. On March 3, 1999, Representative Jack Quinn (R-NY) introduced H.R. 964 . The measure called for an increase of the minimum wage, in steps, to $6.15 per hour by September 1, 2001. It also called for indexation of the minimum wage "in proportion to increases in the Consumer Price Index for all urban consumers" to begin on September 1, 2002. The bill contained two collateral provisions: "an increase shall not exceed 4 percent in any one calendar year" and "the minimum wage will never fall below the previous year's level." The bill was assigned to the Subcommittee on Workforce Protections. The 107th Congress On August 2, 2001, Representative Sanders introduced H.R. 2812 . The bill would have raised the minimum wage, in steps, to $8.15 per hour as of January 1, 2003. In addition, it called for indexation of the minimum wage along a modified Social Security principle. The term "cost of living adjustment" means the applicable increase percentage under the Social Security Act "effective for benefits payable in January of the next calendar year." The bill was assigned to the Subcommittee on Workforce Protections. The 108th Congress On September 9, 2004, Representative Chris Bell (D-TX), introduced H.R. 5043 . The measure would have increased the minimum wage, in steps, to $7.00 per hour and, then, would have indexed it in accordance with the Consumer Price Index for all urban consumers to be altered annually. The bill was assigned to the Committee on Education and the Workforce. The 109th Congress On May 4, 2006, Senator Hillary Clinton (D-NY) offered S. 2725 ("Standing with Minimum Wage Earners Act of 2006"), to increase the minimum wage, in steps, to $7.25 per hour beginning 24 months and 60 days after enactment. It provided automatic adjustment "... for the year involved by a percentage equal to the percentage by which the annual rate of pay for Members of Congress increases for such year ...." The measure was referred to the Committee on Health, Education, Labor, and Pensions. When introducing S. 2725 , Ms. Clinton pointed out that the "... Federal minimum wage is currently $5.15 an hour, an amount that has not been increased since 1997. Sadly," she stated, "during that time, Congress has given itself eight annual pay raises. We can no longer stand by and regularly give ourselves a pay increase while denying a minimum wage increase to help the more than 7 million men and women working hard across this nation." On June 29, 2006, Representative Al Green (D-TX) introduced H.R. 5731 , a bill that proposed indexation of the minimum wage. It was referred to the Committee on Education and the Workforce. Under the proposal, the Secretary of Labor shall determine the minimum wage rate applicable under subsection (a)(1) of the FLSA and "shall publish such wage rate in the Federal Register not later than October 1 of each year." The bill states: The minimum wage rate determined by the Secretary ... shall be the minimum hourly wage sufficient for a person working for such wage 40 hours per week, 52 weeks per year, to earn an annual income in an amount that is 12 percent higher than the Federal poverty threshold for a two person household, with one person a child under age 18, and living in the 48 contiguous States, as published for each such year by the Census Bureau. The bill states that if such determination "... results in a lower minimum wage than that then in effect, the Secretary shall not adjust the minimum wage then in effect pursuant to this subsection." Neither bill was enacted. The 110th Congress In the 110 th Congress, Representative Al Green introduced a new version of his bill of the 109 th Congress: now, H.R. 4637 . On December 18, 2007, Senator Clinton introduced S. 2514 , a bill that largely followed her bill of the prior Congress. In a statement, Senator Clinton observed: "If we in Congress can give ourselves a raise, surely we can raise the pay of working families struggling to make ends meet." Recalling the long period since the most recent minimum wage increase (since 1997), she stated: "My bill would ensure that working families faced with a rising cost of living each year are not forced to wait another ten years for an increase in the minimum wage." The Clinton proposal would raise the minimum wage, in steps, to $9.50 an hour on July 1, 201l, and then index it beginning on July 1, 2012, to increases in the salary of Members of Congress. In the 110 th Congress, the general federal minimum wage was again a subject of legislation, adoption of which occurred during the spring of 2007. The bill was signed on May 25, 2007. However, the focus was narrow, and the issue of indexation was not addressed in legislative format. PART VII. FOR THE FUTURE? Some Observations Minimum wage workers, for the most part, accept low-wage work because no other work is available. Whether they are very young, lack training, suffer infirmities, or have other responsibilities (for example, care for family members or academic scheduling), work at the minimum wage would likely not have been their first choice if higher-paying jobs were available. Absent alternative and more remunerative employment opportunities, some do use entry-level work as an interim measure. Some also remain at such work through the better part of a lifetime—presumably not by choice. For persons who have entered the workforce at a minimum wage level, wages may be of some importance. Some employers already pay a rate above the minimum; others pay only the wage that is required by law: that is, the minimum wage under the Fair Labor Standards Act. Few minimum wage workers, it would appear, are union members and work under a collectively negotiated agreement. In the case of non-union employees, their wage may be determined by congressional action. Congress over the years has acted sporadically in this area. It is possible that the resultant gaps in mandating an increase have occurred by design: a conviction that the minimum wage, per se, is bad public policy and that its inflationary erosion would, over time, render its use as a wage floor less important. It may also have been the result of indifference or the urgency of competing national priorities. For proponents of a higher minimum wage for the working poor, such gaps may have produced a renewed interest in indexation. With indexation, regardless of the mechanism used, there would be "regular, predictable, wage rate increases" for minimum wage workers. For the workers themselves, at least that minimal amount would be automatically added to their paycheck. For employers, such a rate increase (generally in response to inflationary pressures) could reasonably be anticipated and prepared for. Were indexation to be adopted, however, some things may be lost and some parties may be adversely affected. By not indexing the minimum wage (and by allowing its continuing decline in real terms), certain employers are freed from having to pay higher wages. Further, with indexation, low-wage workers could expect progressively higher wages—and may feel less need of trade unions. Although indexation might alleviate the need for oversight of the rate of worker remuneration, it might also eliminate discussion of overtime pay, child labor, and related subjects. Finally, for Members of Congress, a periodic review of the minimum wage may have a certain resonance with voters: permitting some to claim credit for an increased wage while others may want to show how firmly they opposed such an increase. Would indexation (whatever its merits) resolve the matter of minimum wage increases? With a formula established (whether based on Social Security, a percentage of average hourly earnings, or the CPI), might a new campaign arise to take its place? For example, if indexation were based on a percentage of average hourly earnings (40% or 50% or 53%), would proponents of a "living, family, saving wage" now protest that the rate continues to provide a poverty level income and that some adjustment may be necessary: to 60% or 70%? A more practical side may emerge to the indexation question. First . There is no perfect methodology for indexation, though that issue might be addressed through hearings. Second . If an increase in the minimum wage could be made automatic during good times, might a decrease also be made automatic during periods of high unemployment or other economic upheavals? If the minimum wage goes up when times are good, some might argue, then might it not come down when conditions are more problematic? Third. How might indexation (whether an increase or a decrease) be factored into other areas of policy, such as trade policy or immigration? Fourth . Is there a nexus between productivity and a wage increase? If there is a merit system in place, how might that be affected by an automatic increase in wage rates? Fifth . Inflation may be yet another matter. Some view indexation as a method through which lower wage workers can cope with pressures of the cost of living. But, others view indexation, in its own right, as an engine of inflation that, once in place, would be basically unstoppable. Through the years, at least since the 1940s, indexation has been frequently discussed but, perhaps, not actually explored in its varied aspects. Several of the states now have indexation in place: several more will soon have such a system installed. Such experimentation by the states may hold promise—or a threat—for policy makers.

Indexation of the minimum wage (linking the minimum wage to an outside economic variable) in a variety of forms has been a subject of discussion at least since the early years of the 20th century. When early proponents of a wage floor began to consider the matter as public policy within the United States, they established a series of state wage boards. These boards were given the authority to fix a reasonable rate below which most workers were not permitted to be paid. The powers of the boards varied from one state to the next and, where they were reasonably effective, there was the constant fear that the courts would intervene and overturn whatever authority the boards may have had. The boards wrestled with a variety of methods for setting the minimum wage. Some made surveys of the cost-of-living for low-wage employees and tried to render a measure of equality between such costs (however defined) and income derived from work. But surveys proved difficult and, gradually, a reliance developed upon governmental agencies. It was not necessarily a neat fit, and questions remained. In 1938, largely moving beyond the state boards, Congress passed the Fair Labor Standards Act (the FLSA). The act established the federal minimum at 25 cents an hour for those relatively few workers actually covered. Since 1938, Congress has revisited the act in a sporadic fashion. The result, through the years, has been a series of gradual expansions of the act and some variation in wage rates—but, generally, since the 1960s, a downward spiral in the real value of the minimum wage has set in. During the Reagan era, no new increases were made, and only two (the 1989 and 1996 amendments) have been made in subsequent years. At present, at least five states (Missouri, Montana, Oregon, Vermont, and Washington) index their state minimum wage standards. In several other states, the issue has recently been considered. In the 110th Congress, two bills dealing with indexation have been introduced: H.R. 4637 (Al Green) and S. 2514 (Clinton). The issue was not dealt with in the general minimum wage legislation (H.R. 2206, P.L. 110-28), enacted in early 2007. Following a preliminary introduction of the topic, this report reviews the several relatively distinct periods during which indexation, in one form or another, was before the Congress. This report will be updated if conditions warrant.

Background In the early 1990s the Federal Bureau of Investigation (FBI) asked Congress for legislation to assist law enforcement agencies to continue conducting electronic surveillance. The FBI argued that the deployment of digital technologies in public telephone systems was making it increasingly difficult for law enforcement agencies to conduct electronic surveillance of communications over public telephone networks. As a result of these arguments and concerns from the telecommunications industry, as well as issues raised by groups advocating protection of privacy rights, the Communications Assistance for Law Enforcement Act (CALEA) was enacted on October 25, 1994 (47 U.S.C. 1001-1021), in the final days of the 103 rd Congress. CALEA is intended to preserve the ability of law enforcement officials to conduct electronic surveillance effectively and efficiently, despite the deployment of new digital technologies and wireless services by the telecommunications industry. CALEA requires telecommunications carriers to modify their equipment, facilities, and services to ensure that they are able to comply with authorized electronic surveillance. These modifications were originally planned to be completed by October 25, 1998. Since that time, the Federal Communications Commission (FCC) issued two additional orders establishing June 30, 2002, as the date by which telecommunications carries must have upgraded all their systems. Equipment manufacturers have fulfilled their obligation to provide CALEA solutions and carriers are implementing them. The FBI and FCC continue to monitor and review the implementation of this program. Some Technical Terms As a result of the revolution in digital technology in telecommunications, the process of wiretapping and other electronic surveillance has become more complex, and legal ambiguities have been introduced. As a background to understanding the problems associated with CALEA implementation, the definitions of several terms are necessary. Electronic surveillance refers to either the interception of communications content (as in a conversation) also known as wiretapping, or the acquisition of call-identifying information (the number dialed). The latter activity is accomplished through the use of pen register devices, which capture call-identifying information for numbers of outgoing calls from the location of lawful interception, and traps and traces, which capture information for numbers received at the location of lawful interception, much like consumer caller ID systems. Under current federal law, law enforcement (i.e., police or the FBI) must obtain a court order before conducting any of these activities. However, a wiretap requires a higher "evidentiary burden" than a pen register or trap and trace, including showing that there is probable cause for believing that a person is committing one of a list of specific crimes. Under traditional analog technology, it was easy to separate the above categories of electronic surveillance. However, the advent of digital signal transmission technologies has made that distinction less clear. Information signals (voice or data) can be transmitted over telephone networks in one of two ways: circuit-switched and packet-switched modes. In circuit-switched systems, a communications path is established between the parties and dedicated exclusively to one conversation for the duration of the call. In packet-switched systems, the information is broken down into smaller pieces called "packets" using a digital process. Each packet contains a small part of the message content along with call-identifying information called a "header" that indicates the origination and destination points of the information. Each packet is transmitted separately and is reassembled into the complete message at the destination point. The packet-switched mode is the signal transmission technology used in all Internet communications. Packet switching is considered a more efficient use of a network than circuit switching because the same line can be used for multiple communications simultaneously. Although the circuit-switched mode was historically used in all voice telephone calls, the packet-switched mode is increasingly being used for voice and data transmissions over telephone networks. CALEA's Main Provisions CALEA requires telecommunications carriers to assist law enforcement in performing electronic surveillance on their digital networks pursuant to court order or other lawful authorization. The telecommunications industry, privacy rights groups, and law enforcement agencies agree that CALEA was not intended to expand law enforcement's authority to conduct electronic surveillance. On the contrary, CALEA was intended only to ensure that after law enforcement obtains the appropriate legal authority, carriers will have the necessary capabilities and sufficient capacity to assist law enforcement in conducting digital electronic surveillance regardless of the specific telecommunications systems or services deployed. CALEA (47 U.S.C. 1002) directs the telecommunications industry to design, develop, and deploy solutions that meet certain assistance capability requirements for telecommunications carriers to support law enforcement in the conduct of lawfully-authorized electronic surveillance. Pursuant to a court order or other lawful authorization, carriers must be able, within certain limitations, to: (1) expeditiously isolate all wire and electronic communications of a target transmitted by the carrier within its service area; (2) expeditiously isolate call-identifying information that is reasonably available on a target; (3) provide intercepted communications and call-identifying information to law enforcement; and (4) carry out intercepts unobtrusively, so targets are not made aware of the electronic surveillance, and in a manner that does not compromise the privacy and security of other communications. To allow carriers to give law enforcement the means to conduct its wiretaps, CALEA (47 U.S.C. 1003) requires the Attorney General to determine the number of simultaneous interceptions (law enforcement agencies' estimate of their maximum capacity requirements) that telecommunications carriers must be able to support. To maintain privacy rights of individuals, CALEA (47 U.S.C. 1004) requires telecommunications carriers to ensure that any interception of communications or access to call-identifying information that is conducted within their premises can only be done with a court order. It also requires the specific intervention of an officer or employee of the carrier acting in accordance with regulations prescribed by the Federal Communications Commission (FCC). CALEA (47 U.S.C. 1005) directs telecommunications carriers to consult with telecommunications equipment manufacturers to develop equipment necessary to comply with the capability and capacity requirements identified by the FBI. For efficient industry-wide implementation of the above requirements, CALEA (47 U.S.C. 1006) directs the law enforcement community to coordinate with the telecommunications industry and state utility commissions to develop suitable technical standards and establish compliance dates for equipment. In its Eighth Annual Report , the FBI stated that, "to date, most manufacturers have either complete, or nearly complete, CALEA solutions available for their carrier customers." CALEA (47 U.S.C. 1008) gives the Attorney General, subject to the availability of appropriations, authority to pay telecommunications carriers for all reasonable costs directly associated with the modifications performed by carriers in connection with equipment, facilities, and services installed or deployed on or before January 1, 1995 (known as the "grandfather" date). Major Events Following Enactment of CALEA Initial Delays CALEA gave implementation responsibility to the Attorney General, who, in turn, delegated the responsibility to the FBI. The FBI leads that nationwide effort on behalf of federal, state, and local law enforcement agencies. FBI officials initially anticipated that it would take a year for a standard to be developed and agreed upon by law enforcement, the telecommunications carriers, and the equipment manufacturers. Telecommunications consultants estimated that it would take the industry another three years to design, build and deploy new systems to comply with CALEA. Instead, industry and law enforcement became involved in a protracted dispute over what should be required for law enforcement's wiretapping capabilities. By March 1997, the completion of the capability standard was overdue by 16 months. The FBI attempted to expedite the industry's implementation of CALEA by releasing regulations that included a cost recovery plan for the federal government's payment of costs associated with CALEA, as well as capability and capacity requirements for the industry to meet. The plan required more extensive upgrades to networks than the telecommunications industry believed were necessary for law enforcement to preserve its wiretapping capabilities. Industry groups and privacy advocates disputed the FBI's plan. They argued that the FBI was attempting to expand its surveillance capabilities beyond the congressional intention of CALEA, and was attempting to unfairly shift costs and accountability away from the federal government onto private industry. Furthermore, the industry argued that, without an adopted capability standard, it could not begin designing, manufacturing, and purchasing the equipment to achieve CALEA compliance. In December 1997, the Telecommunications Industry Association (TIA, representing telecommunications equipment manufacturers) adopted, over the objections of the law enforcement community, a technical standard, J-STD-025, also known as the "J-standard." This standard prescribes upgrades to network devices to meet CALEA's assistance capability requirements for local exchange, cellular, and broadband personal communications services (PCS). Although the FBI claimed that the J-standard did not provide all of the capabilities needed, the industry asserted that CALEA's language stated that telecommunications carriers would be compliant if they met publicly available standards adopted by the industry. Privacy rights groups, on the other hand, protested two aspects of the J-standard that they asserted would make information beyond what is legally required available to law enforcement. One was a feature enabling the telecommunications network to provide location information for users of mobile wireless telecommunications services. The location information protocols in J-STD-025 allow law enforcement agencies to obtain information on the physical location of the nearest cell site (i.e., the receiver/transmitter antenna and base station) of mobile phone handsets at the beginning and end of each call. Wireless carriers are now deploying another technology (called triangulation) that will enable the carriers, and law enforcement, to track wireless telephone users more precisely, potentially within a few meters. The other was a feature enabling the network to access packet-mode data from telephone calls using more advanced systems. Privacy rights groups argued that these capabilities would violate the Fourth Amendment rights of individuals against unreasonable searches and seizures. Despite these objections, telecommunications manufacturers began designing new switches and upgrades to existing switches according to the J-standard. Currently, equipment manufacturers have successfully incorporated the J-standard into their new equipment and carriers are now well underway with their efforts to upgrade their systems. The FBI's "Punch List" In the negotiations to develop the J-standard, TIA had refused to include some of the capabilities that law enforcement officials claimed they needed to facilitate digital wiretapping. As a result, in March 1998, the FBI petitioned the FCC to require the telecommunications industry to adopt eleven additional capabilities. Industry and privacy rights groups protested that the FBI's plan would unlawfully expand enforcement capabilities. Eventually, the "punch-list" included the following six items: Content of subject-initiated conference calls—Would enable law enforcement to access the content of conference calls supported by the subject's service (including the call content of parties on hold). Party hold, join, drop—Messages would be sent to law enforcement that identify the active parties of a call. Specifically, on a conference call, these messages would indicate whether a party is on hold, has joined or has been dropped from the conference call. Subject-initiated dialing and signaling information—Access to all dialing and signaling information available from the subject would inform law enforcement of a subject's use of features (such as the use of flash-hook and other feature keys). In-band and out-of-band signaling (notification message)—A message would be sent to law enforcement whenever a subject's service sends a tone or other network message to the subject or associate (e.g., notification that a line is ringing or busy). Timing information—Information necessary to correlate call-identifying information with the call content of a communications interception. Dialed digit extraction—Information would include those digits dialed by a subject after the initial call setup is completed. Capacity Requirements The FBI's subsequent implementation actions were also opposed by the telecommunications industry. In March 1998, the FBI announced its estimated capacity requirements for local exchange, cellular, and broadband PCS. The industry protested the FBI's estimates, arguing that it would require telephone carriers to accommodate thousands of wiretaps simultaneously, an impractical and unnecessary burden. In July 1998, the FBI developed guidelines and procedures to facilitate small carrier compliance with its capacity requirements, and asked carriers to identify any systems or services that did not have the capacity to accommodate those requirements. In December 1998, the FBI began a proceeding to develop capacity requirements for services other than local exchange, cellular, and broadband PCS, asked additional questions of interested parties in June 2000. These technologies and services included paging, mobile satellite services, specialized mobile radio, and enhanced specialized mobile radio. To date, the proceeding is still pending. Previous FCC Actions As a result of petitions from the industry and the FBI, the FCC became involved in the implementation of CALEA. In October 1997, the FCC released its first Notice of Proposed Rule Making (NPRM) on CALEA implementation. The NPRM sought comments from interested parties regarding a set of policies and procedures proposed by the FCC for telecommunications carriers to follow. The proposed procedures would (1) preclude the unlawful interception of communications, (2) ensure that authorized interceptions are performed, (3) maintain secure and adequate records of any interceptions, and (4) determine what entities should be subject to these requirements, whether the requirements are reasonable, and whether to grant extensions of time for compliance with the requirements. In response to the NPRM, telecommunications carriers, privacy rights groups, and the FBI submitted comments to the FCC to attempt to influence the final decision. Then, in April 1998, the FCC released a Public Notice requesting comments on issues raised in those petitions concerning the dates that carriers were required to comply with CALEA and the dispute over the J-standard. Based on comments it received, the FCC extended the implementation deadline until June 30, 2000, stating that without a standard, the necessary equipment would not be available in time. In October 1998, the FCC initiated a proceeding to review the technical capabilities prescribed by the J-standard. The goal of that proceeding was to determine whether telecommunications carriers should be required under CALEA to meet the FBI's "punch list" items. The FCC addressed these issues in several documents released over the following year. In March 1999, the FCC's First Report and Order established the minimum capability requirements for telecommunications carriers to comply with CALEA. Telecommunications carriers were required to ensure that only lawful wiretaps occur on their premises and that the occurrence of wiretaps is not divulged to anyone other than authorized law enforcement personnel. On August 2, 1999, the FCC decided to allow carriers to decide how long they would maintain their records of law enforcement's wiretap, pen register, and trap and trace interceptions. On August 31, 1999, the Second Report and Order established a definition for "telecommunications carrier" to include all common carriers, cable operators, electric and other utilities that offer telecommunications services to the public, commercial mobile radio services, and service resellers. The definition did not include Internet service providers (ISPs), which were explicitly excluded under the CALEA statute. The FCC's Third Report and Order, released August 31, 1999, adopted technical requirements for wireline, cellular, and broadband PCS carriers to comply with CALEA requirements. The ruling adopted the J-standard, including the two capabilities that were opposed by the privacy rights groups (i.e., the ability to provide location information and packet-mode data to law enforcement). As described above, the FCC also adopted six of the punch list capabilities requested by the FBI to be implemented by telecommunications carriers. The Order required all aspects of the J-standard except for the packet-mode data collection capability to be implemented by June 30, 2000. The Order required carriers to comply with the packet-mode data capability and the six punch list capabilities by September 30, 2001. (The FCC ultimately extended the date by which all telecommunications carriers must have upgraded their systems to June 30, 2002. ) On April 9, 2001, the FCC adopted its Second Order on Reconsideration, which clarified the arrangements telecommunications carriers must make to ensure that law enforcement agencies can contact them when necessary, and the interception activity that triggers a record-keeping requirement. In September 2001, FCC released a tandem Order and Public Notice on CALEA implementation. In the Order, the Commission extended until November 19, 2001, the deadline by which wireline, cellular, and broadband personal communications services (PCS) carriers must implement a packet-mode communications electronic surveillance capability, or to seek individual relief under section 107(c) of CALEA. The notice explained the petitioning process for telecommunications carriers seeking relief under section 107(c) for an extension of the new compliance deadline with respect to packet-mode communications, as well as other safe harbor standards. Finally, on April 11, 2002, the FCC released an Order on Remand, which responded to a decision issued by the United States Court of Appeals for the District of Columbia Circuit vacating four of the punch list electronic surveillance capabilities mandated by the Third Report and Order in this proceeding. The FCC found that all of the capabilities were necessary and authorized by CALEA and had to be provided by wireline, cellular, and broadband PCS telecommunications carriers by June 30, 2002. The FCC also required that two additional punch list capabilities that were mandated by the Third Report and Order, but not reviewed by the Court of Appeals be provided by that same date. The FCC granted preliminary extensions to requesting carriers with respect to punch list implementation that will expire on June 30, 2004. It granted preliminary extensions in connection with "packet" services that had been scheduled to expire on November 19, 2003, but that date was further extended to January 30, 2004. No further action with respect to that extension has been taken. Government Activity: 2004 - Present The FBI and other law enforcement agencies, the FCC, and Congress are all concerned with CALEA-related issues, particularly with respect to packet-based services (i.e., voice over Internet Protocol [VoIP]) and "push-to-talk" services offered by wireless providers. FBI Activity The FBI has remained active in promoting its positions related to its CALEA powers. Comments to the FCC's Wireless Broadband Task Force Report On April 22, 2005, the Department of Justice (DOJ) filed comments on the FCC's Wireless Broadband Task Force Report, requesting that the FCC "continue to preserve the vital national security and criminal law enforcement capabilities of CALEA as it develops a deregulatory framework for wireless broadband Internet access services." Reply comments in the proceeding were due May 23, 2005. Notice of Information Collection Under Review On April 13, 2005, the FBI published a 60-day Notice of Information Collection Under Review. The notice announced a CALEA Readiness Survey program, which seeks to evaluate the effectiveness of CIU programs for implementing CALEA solutions in the Public Switched Telephone Network. Comments in this proceeding were accepted until June 13, 2005. Petition for Declaratory Ruling On March 10, 2004, the FBI, the DOJ, and the Drug Enforcement Administration petitioned the FCC to identify additional telecommunications services not identified specifically within CALEA that should be subject to it. The services named in the FBI petition include some now considered beyond the scope of CALEA by many observers, including services that fall under the FCC's definition of "information services" under the Communications Act of 1934. However, CALEA provides the FCC a broader framework to determine that a service is a "telecommunications service." Comments and replies to the petition were due April 12 and April 27, 2004, respectively. The FCC ruled on this Petition on August 5, 2005, discussed below (See "FCC Action," page 10). Inspector General Report The FBI's Inspector General issued a report in April 2004 on CALEA implementation. In its report, the IG expressed concern over the cost estimates for obtaining CALEA compliance, which have varied widely. Industry has stated it believes estimates full compliance will cost approximately $1.3 billion; the FBI has estimated costs in the range of $500 million to $1 billion. Further, in December 2003, the FBI estimated that an additional $204 million would be necessary to complete deployment of CALEA. The IG stated in its report that it did not believe implementation costs could be determined with any degree of specificity, but that it was unlikely CALEA could be implemented with the $49.5 million that remains unobligated from current funding. FCC Activity In response to law enforcement's petition and after considering the comments and replies from interested parties, the FCC released an NPRM and Declaratory Ruling on August 4, 2004. Additionally, the FCC has issued two Orders in this matter. Declaratory Ruling In the Declaratory Ruling accompanying the NPRM, the FCC clarified that commercial wireless "push-to-talk" services are subject to CALEA, regardless of the technologies that wireless providers choose to apply in offering them. First Report and Order On August 5, 2005, the FCC ruled that providers of certain broadband and interconnected VoIP services must accommodate law enforcement wiretaps. The FCC found that these services can be considered replacements for conventional telecommunications services currently subject to wiretap rules, including circuit-switched voice service and dial-up Internet access. As such, the new services are covered by CALEA, which requires the FCC to preserve the ability of law enforcement to conduct wiretaps as technology evolves. The rules are limited to facilities-based broadband Internet access service providers and VoIP providers that offer services permitting users to receive calls from, and place calls to, the public switched telephone network—these providers are called interconnected VoIP providers. In making its ruling, the FCC found that the definition of "telecommunications carrier" in CALEA is broader than the definition of that term in the Communications Act and can, therefore, include providers of services that are not classified as telecommunications services under the Communications Act. CALEA contains a broader definition of telecommunications provider that authorizes the FCC to classify an entity a telecommunications carrier if it finds that such service is a replacement for a substantial portion of the local telephone exchange. The FCC established a deadline of 18 months from the effective date of the Order for providers to achieve full compliance and adopted a Further Notice of Proposed Rulemaking to seek more information about whether specific classes of facilities-based broadband Internet access providers should be exempt from CALEA (i.e., small and rural providers and providers of broadband networks for educational and research institutions). A coalition of organizations filed a Petition for Review with the United States Court of Appeals for the District of Columbia Circuit on October 25, 2005. Specifically, the "petitioners seek relief from the Order on the grounds that it exceeds the Commission's statutory authority and is arbitrary, capricious, unsupported by substantial evidence, and contrary to law. Petitioners request that this Court vacate the Order and the Final Rules adopted therein and grant such other relief as may be appropriate." Second Report and Order On May 3, 2006, the FCC addressed several issues regarding CALEA implementation, specifically, the Order: Affirms the May 14, 2007, CALEA compliance deadline for facilities-based broadband Internet access and interconnected VoIP services (as established by the First Report and Order) and clarifies that the date will apply to all such providers. Explains that the FCC does not plan, at this time, to intervene in the standards-setting process in this matter. Permits telecommunications carriers the option of using Trusted Third Parties (TTPs) to assist in meeting their CALEA obligations. Restricts the availability of compliance extensions to equipment, facilities, and services deployed prior to October 25, 1998. Finds that the commission may, in addition to law enforcement remedies available through the courts, take separate enforcement action under section 229(a) of the Communications Act against carriers that fail to comply with CALEA. Concludes that carriers are responsible for CALEA development and implementation costs for post-January 1, 1995, equipment and facilities, and declines to adopt a national surcharge to recover CALEA costs. Requires all carriers providing facilities-based broadband Internet access and interconnected VoIP service to submit interim reports to the FCC to ensure that they will be CALEA-compliant by May 14, 2007, and also requires all such providers to which CALEA obligations were applied in the First Report and Order to come into compliance with the system security requirements in the commission's rules within 90 days of the effective date of this Second Report and Order. Court Challenge In June 2006, the United States Court of Appeals for the District of Columbia Circuit affirmed the FCC's decision concluding that VoIP and facilities-based broadband Internet access providers have CALEA obligations similar to those of telephone companies. Congressional Activity: 111th and 110th Congresses No bills were introduced in the 110 th Congress that would have amended the CALEA statute and no bills have been introduced in the 111 th Congress.

The Communications Assistance for Law Enforcement Act (CALEA, P.L. 103-414, 47 U.S.C. 1001-1010), enacted October 25, 1994, is intended to preserve the ability of law enforcement officials to conduct electronic surveillance effectively and efficiently despite the deployment of new digital technologies and wireless services that have altered the character of electronic surveillance. CALEA requires telecommunications carriers to modify their equipment, facilities, and services, wherever reasonably achievable, to ensure that they are able to comply with authorized electronic surveillance actions. Since 2004, the Federal Communications Commission (FCC) has been considering a number of questions as to how to apply CALEA to new technologies, such as Voice over Internet Protocol (VoIP). In August 2005, in response to a March 2004 petition by a group of law enforcement agencies, the FCC released a Notice of Proposed Rulemaking and Declaratory Ruling which required providers of certain broadband and interconnected VoIP services to accommodate law enforcement wiretaps. The FCC found that these services could be considered replacements for conventional telecommunications services already subject to wiretap rules, including circuit-switched voice service and dial-up Internet access. The Order is limited to facilities-based broadband Internet access service providers and VoIP providers that offer services that use the public switched telephone network ("interconnected VoIP providers). In May 2006, the FCC addressed several outstanding issues regarding CALEA implementation. Among other clarifications, the FCC (1) affirmed its May 14, 2007 compliance deadline for facilities-based broadband Internet access and interconnected VoIP services, and clarified that the date applied to all such providers; (2) explained that the FCC does not plan to intervene in the standards-setting process in this matter; (3) permitted telecommunications carriers the option of using Trusted Third Parties to assist in meeting their CALEA obligations; (4) restricted the availability of compliance extensions to equipment, facilities, and services deployed prior to October 25, 1998; (5) found that the FCC may enforce action under section 229(a) of the Communications Act against carriers that fail to comply with CALEA; and (6) concluded that carriers are responsible for CALEA development and implementation costs for post-January 1, 1995, equipment and facilities, and declined to adopt a national surcharge to recover CALEA costs. In June 2006, the United States Court of Appeals for the District of Columbia Circuit affirmed the FCC's decision concluding that VoIP and facilities-based broadband Internet access providers have CALEA obligations similar to those of telephone companies.

Introduction The 21st Century Cures Act ( P.L. 114-255 ) was signed into law on December 13, 2016, by President Barack Obama. On November 30, 2016, the House passed the House amendment to the Senate amendment to H.R. 34 , the 21st Century Cures Act, on a vote of 392 to 26. The bill was then sent to the Senate where it was considered and passed, with only minor technical modification, on December 7, 2016, on a vote of 94 to 5. The law consists of three divisions: Division A—21st Century Cures Act; Division B—Helping Families in Mental Health Crisis; and Division C—Increasing Choice, Access, and Quality in Health Care for Americans. CRS has published a series of reports on this law, one on each Division. This is the report for Division A of the law. Division A of the law provides funding for biomedical research—including the Precision Medicine Initiative (PMI) and the Cancer Moonshot Initiative—and for the opioid crisis response; modifies Food and Drug Administration (FDA) pathways for the approval of regulated medical products; and makes a number of reforms to the National Institutes of Health (NIH). Division A of the law also includes and builds on provisions from both the previously passed House bill, H.R. 6 (The 21 st Century Cures Act, passed in July 2015), and a package of Senate medical innovation bills that were considered in the early part of 2016. As noted, both the House and the Senate considered previous legislation to support medical innovation, primarily through reforms to the NIH and changes to the drug, biologic and device approval pathways at the FDA. On February 3, 2015, Senators Lamar Alexander and Patty Murray, chairman and ranking Member of the Committee on Health, Education, Labor and Pensions, announced the start of a bipartisan initiative to "examine the process for getting safe treatments, devices and cures to patients and the roles of the [FDA] and the [NIH] in that process." 1 This initiative culminated in a package of 19 bipartisan bills that were reported out of the Senate Health, Labor, Education, and Pensions (HELP) Committee in a series of three executive sessions held on February 9, 2016; March 9, 2016; and April 6, 2016. One of these 19 bills, The Adding Zika Virus to the FDA Priority Review Voucher Program Act ( S. 2512 ), subsequently was passed by both chambers and signed into law on April 19, 2016 ( P.L. 114-146 ). The Senate's medical innovation package was that chamber's companion effort to the House's 21 st Century Cures initiative, which resulted in the House passage of H.R. 6 , the initial version of the 21 st Century Cures Act, on July 10, 2015, on a vote of 344 to 77. H.R. 6 was the result of a series of hearings and roundtable meetings hosted by the House Energy and Commerce Committee dating back to spring 2014. The hearings and roundtables focused on a broad range of topics, including modernizing clinical trials, incorporating patient perspectives into medical research and regulatory processes, precision/personalized medicine, digital health care, and more. While it consisted of many different provisions, H.R. 6 was primarily focused on efforts to increase strategic investments in medical research at NIH and change some aspects of how the FDA executes its regulatory oversight mission with regard to the review and approval of new drugs, biologics, and medical devices. This report provides a brief summary of each provision of the 21 st Century Cures Act (Division A of P.L. 114-255 ), by title, subtitle, and section. The Division includes five titles, as follows: (1) Innovation projects and state responses to opioid abuse; (2) Discovery; (3) Development; (4) Delivery; and (5) Savings. Most provision summaries include a brief background of current law in addition to a description of the new provision of law. Throughout the report, clarity takes priority over consistency. For example, some summaries are more detailed than others where such detail is necessary to highlight important changes. A list of acronyms used throughout this report can be found in Appendix of this report. Title I-Innovation Projects and State Responses to Opioid Abuse Section 1001. NIH Innovation Projects The National Institutes of Health (NIH) is the lead federal agency charged with performing and supporting biomedical and behavioral research. It also has major roles in training biomedical researchers and disseminating health information. Congress doubled the NIH budget from $13.65 billion to $27.1 billion in the five-year period from FY1998 to FY2003; during that period, annual increases in the 14%-15% range were the norm. Since then, increases from regular appropriations have been between 1.0% and 3.2% each year. The growth rate of the NIH budget has been at or below the rate of inflation, which for biomedical research in FY2015 is estimated to be 2.2%. NIH funding in FY2015 was 22% lower than the FY2003 level, the peak of the doubling period in constant 2012 dollars. A recent analysis of U.S. expenditures on biomedical research found that "U.S. government research funding declined from 57% (2004) to 50% (2012) of the global total, as did that of U.S. companies (50% to 41%), with the total U.S. (public plus private) share of global research funding declining from 57% to 44%. Asia, particularly China, tripled investment from $2.6 billion (2004) to $9.7 billion (2012) preferentially for education and personnel." The United States continues to be the top supporter of both public and industry medical research. However, some Members of Congress and many in the biomedical research community have expressed concern over the rapidly increasing investments being made by other countries in this area of research. Many of those who are concerned about the U.S. global position in biomedical research investment have made frequent calls for increased support for research at NIH. However, another recent analysis of U.S. biomedical research funding cautioned that the past pattern of rapid doubling of the NIH budget followed by slowdowns in federal funding "created an unsustainable hypercompetitive system that is discouraging even the most outstanding prospective students from entering our profession—and making it difficult for seasoned investigators to produce their best work." Rather than short-term infusions of cash that disappear, the authors recommend that greater emphasis be placed on the predictable and stable growth of federal funds for the research enterprise. In responding to questions raised by Senator Elizabeth Warren during a May 5, 2015, Senate hearing, NIH Director Francis Collins agreed that continued NIH budget increases—ranging from 3.7% annually to inflation plus 4% or 5%—would be preferred to a temporary larger investment that disappears. The Advisory Committee to the Director of NIH, authorized under PHSA Section 222, provides "advice on matters pertinent to NIH mission responsibilities in the conduct and support of biomedical research." Provision Section 1001 establishes the "NIH Innovation Account" in the Treasury, to which specified amounts are transferred for each of FY2017 through FY2026. Such amounts from the account are authorized to be appropriated to the NIH Director for the purpose of carrying out the NIH Innovation Projects. Amounts appropriated from this account are available until expended. Specifically, the provision authorizes appropriations to support the Precision Medicine Initiative, specified amounts for FY2017 through FY2026, total not to exceed $1.455 billion; the Brain Research through Advancing Innovative Neurotechnologies Initiative (BRAIN Initiative), specified amounts for FY2017 through FY2026, total not to exceed $1.511 billion; cancer research, specified amounts for FY2017 through FY2023, total not to exceed $1.8 billion; and regenerative medicine using adult stem cells, specified amounts for FY2017 through FY2020 that total $30 million; no funds are to be appropriated for this activity after FY2020. This research is to be undertaken in coordination with the FDA. Within six months of enactment, the NIH Director must submit to the specified congressional committees a work plan including the proposed allocation of funds authorized to be appropriated for each year, FY2017 through FY2026, for the NIH Innovation Projects. Prior to submitting the work plan, the NIH Director must seek recommendations on the allocations of funds and the contents of the proposed work plan from the Advisory Committee to the Director of NIH. The work plan must include recommendations from this Advisory Committee, the amount of money to be obligated or expended in each fiscal year for each NIH Innovation Project, a description and justification of each such project, and a description of how each such project supports the strategic research priorities identified in the NIH Strategic Plan. Not later than October 1 of each year, FY2018 through FY2027, the Director of NIH must submit to the specified congressional committees a report including the amount of money obligated or expended in the prior fiscal year for each NIH Innovation Project, a description of any such project using funds provided by this section, and whether such projects are advancing the strategic research priorities identified in the NIH Strategic Plan. The specified House and Senate committees may request an update on the allocation of funding under this section or the description of the NIH Innovation Projects, which the NIH Director must provide in the form of additional reports or testimony. Section 1001 specifies that these funds may be used only for NIH Innovation fund projects (notwithstanding any transfer authority in any appropriations act). The section also specifies that amounts in the account are not available until appropriated in subsequent appropriations acts. Notably, the amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 through FY2026, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 through FY2026. Section 1001 sunsets on September 30, 2026. Section 1002. FDA Innovation Projects The Food and Drug Administration (FDA) regulates the safety of foods (including dietary supplements), cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. FDA's budget (i.e., its total program level) has two funding streams: annual appropriations (i.e., discretionary budget authority, or BA) and industry user fees. In FDA's annual appropriations, Congress sets both the total amount of appropriated funds and the total amount of user fees that the agency is authorized to collect and obligate for that fiscal year. Appropriated funds are largely for the Salaries and Expenses account, with a much smaller amount for the Buildings and Facilities account. The different user fees contribute only to the Salaries and Expenses account. Between FY2012 and FY2016, FDA's total program level increased from $3.832 billion to $4.745 billion. Although congressionally appropriated funding increased by 9% over that time period, user fee revenue increased more than 50%. In FY2016, user fees accounted for 42% of FDA's total program level. The Science Board to the FDA is an advisory committee that provides "advice to the Commissioner and other appropriate officials on specific complex scientific and technical issues important to FDA and its mission, including emerging issues within the scientific community." Among other things, the Science Board is also tasked with providing, where requested, "expert review of Agency sponsored intramural and extramural scientific research programs." Provision Section 1002 establishes the "FDA Innovation Account," to which a total of $500 million is authorized to be transferred over a nine-year period (FY2017-FY2025). It specifies that amounts in the account are not available until appropriated in subsequent appropriations acts and that once made available, these amounts are available until expended. The amounts from the account are authorized to be appropriated to the FDA Commissioner for the purpose of carrying out the FDA Innovation Projects specified as activities under subtitles A through F of Title III (e.g., Subtitle A—Patient Focused Drug Development, Subtitle B—Advancing New Drug Therapies, Subtitle F—Medical Device Innovations), as well as Section 3073 of this Act establishing FDA Intercenter Institutes; these activities are described later in this report. The amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 through FY2025, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 through FY2025. Within six months of enactment, the FDA Commissioner is required to submit to the specified congressional committees a work plan including the proposed allocation of funds authorized to be appropriated for each fiscal year (FY2017 through FY2025) for the FDA Innovation Projects. Prior to submitting the work plan, the FDA Commissioner must seek recommendations on the allocations of funds and the contents of the proposed work plan from the Science Board. The work plan must include recommendations from the Science Board, the amount of money to be obligated or expended in each fiscal year for each FDA Innovation Project, and a description and justification of each such project. Section 1002 requires the FDA Commissioner, not later than October 1 of each fiscal year 2018 through 2026, to submit to the specified congressional committees a report including the amount of money to be obligated or expended in each fiscal year for each FDA Innovation Project, a description of any such project using funds provided by this section, and how the activities are advancing public health. The specified House and Senate committees may request an update on the allocation of funding under this section or the description of the FDA Innovation Projects, which the FDA Commissioner must provide in the form of additional reports or testimony. Section 1002 specifies that these funds may be used only for FDA Innovation fund projects (notwithstanding any transfer authority in any appropriations act). Section 1002 sunsets on September 30, 2025. Section 1003. Account for the State Response to the Opioid Abuse Crisis The Substance Abuse and Mental Health Services Administration (SAMHSA) administers block grants authorized by PHSA Title XIX and numerous other grants authorized by PHSA Title V, as well as other activities. Each state that receives a block grant from SAMHSA is required to submit to the HHS Secretary a report about block grant funds received in the preceding fiscal year—including the purposes for which funds were expended, the state's activities under the block grant, and the recipients of block grant funds. Provision Section 1003 establishes the "Account for the State Response to the Opioid Abuse Crisis" in the Treasury, to which $500 million is transferred for each of FY2017 and FY2018. Such amounts from the account are authorized to be appropriated to the HHS Secretary for use as grants to support state responses to opioid abuse. Specifically, the provision authorizes appropriations to support two categories of grants to states: (1) grants "for the purpose of addressing the opioid abuse crisis" and (2) grants for activities that supplement opioid-related activities undertaken by the state agency that administers the substance abuse block grant. Section 1003 requires that such funds (1) shall not be used for any other purpose (notwithstanding any transfer authority in any appropriations act) and (2) shall be subject to the same requirements as SAMHSA's substance abuse prevention and treatment programs under PHSA Titles V and XIX. It further requires a state receiving such a grant to include specified information about the use of the grant in the report already required in connection with the block grants. The amounts in the account are not available until appropriated in subsequent appropriations acts. Notably, the amounts subsequently appropriated (i.e., the budget authority and the resulting outlays) for FY2017 and FY2018, up to the amounts transferred, are to be subtracted from any cost estimates provided for purposes of budget controls. Effectively, the appropriations from the account will not be counted against any spending limits, such as the statutory discretionary spending limits; that is, the amounts appropriated from the account will be considered outside those limits for FY2017 and FY2018. Title II- Discovery Subtitle A- National Institutes of Health Reauthorization Section 2001. National Institutes of Health Reauthorization NIH derives its statutory authority from the Public Health Service Act of 1944 (PHSA), as amended. PHSA Section 301 grants the HHS Secretary broad permanent authority to conduct and sponsor research. In addition, PHSA Title IV, "National Research Institutes," authorizes in greater detail various activities, functions, and responsibilities of the NIH Director and the institutes and centers. The last major NIH reauthorization was the NIH Reform Act of 2006 ( P.L. 109-482 ). The NIH Reform Act, in PHSA Section 402A, authorized total funding levels for NIH appropriations for FY2007 ($30,331,309,000), FY2008 ($32,831,309,000), and such sums as necessary for FY2009. Overall NIH authorization expired at the end of FY2009 and has not been extended by Congress. Annual appropriations, together with Section 301 of the PHSA, have provided authority for NIH programs to continue from FY2009 to the present. Provision Section 2001 amends PHSA Section 402A, to authorize appropriations for NIH in FY2018 ($34,851,000,000), FY2019 ($35,585,871,000), and FY2020 ($36,472,442,775). Section 2002. Eureka Prize Competitions Section 105 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) provides federal agencies with broad authority to carry out programs designed to stimulate innovation through prize competitions. Before passage of P.L. 111-358 , only certain federal agencies had the authority to initiate prize competitions. The White House Office of Science and Technology Policy (OSTP) publishes annual reports on the implementation of Section 105 as required by P.L. 111-358 . Currently a number of federal government agencies, including NIH, sponsor challenges or prize competitions in science and medical research. A current list of such challenges is available on the Challenge.gov website. A search of the website on December 8, 2016, resulted in 15 competitions conducted by NIH or one of the NIH ICs. Examples of research topics covered in the various challenges include breast cancer genetics, antimicrobial resistance, and drug abuse and addiction research. Provision Section 2002 requires the NIH Director, under authorities in 15 U.S.C. §3719, to support prize competitions for one or both of the following goals: (1) identifying and funding areas of biomedical science that could realize significant advancements through a prize competition and (2) improving health outcomes, particularly with respect to human diseases and conditions such as those that are serious and represent a significant disease burden in the United States. With regard to the second goal, the prize competition may also target human diseases and conditions where public and private investment in research is disproportionately small relative to federal government expenditures for prevention and treatment activities and those diseases and conditions with potential for a significant return on investment. The section requires the NIH Director to collect information on the effect of prize competition innovations on advancing biomedical science or improving health outcomes and the effect of the innovations on federal expenditures. This information must be included in the NIH triennial report, required in PHSA Section 403. Subtitle B- Advancing Precision Medicine Precision medicine is a relatively new term for what has traditionally been called personalized medicine, the idea of providing health care to individuals based on specific patient characteristics. On February 25, 2016, the White House hosted a Precision Medicine Initiative (PMI) Summit to mark the one-year anniversary of the initiative's launch, first announced in the 2015 State of the Union address. In the first year, the PMI's three key entities—National Institutes of Health (NIH), Food and Drug Administration (FDA), and the Office of the National Coordinator for Health Information Technology (ONC)—began work in this area. The FY2017 President's budget requests a total of $309 million for the PMI: $4 million to FDA, $5 million to ONC, and the remaining $300 million to NIH. Precision medicine research efforts rely on the collection of large amounts of health and other data; therefore, access to this data may be a concern in the context of this type of research. The sharing of genetic and genomic data among private individuals, researchers, and the federal government has, at times, prompted concerns that the information, if collected or retained by a federal executive branch agency, could be subject to public release pursuant to the Freedom of Information Act (FOIA). FOIA, however, specifies nine categories of information that may be exempted from the rule of disclosure, allowing agencies to withhold applicable records. Exemption 3 allows agencies to withhold applicable records if the data are specifically exempted from disclosure by a statute other than FOIA, if that statute meets criteria laid out in FOIA. These types of Exemption 3 statutes are often referred to as b(3) exemptions because they are authorized in 5 U.S.C. §552(b)(3). As a mechanism for addressing compelled disclosure of research data, NIH currently issues Certificates of Confidentiality pursuant to PHSA Section 301(d) (42 U.S.C. §241(d)) at the request of an investigator. A Certificate of Confidentiality protects investigators from being compelled to disclose information that would identify research subjects in any civil, criminal, administrative, legislative, or other proceeding. In this way, having a Certificate of Confidentiality can help promote participation in research by adding an additional layer of privacy protection. At the other end of the spectrum, the sharing of research data—specifically, genomic data generated by NIH-funded research—has also received attention in the context of precision medicine. NIH has established a comprehensive policy for the sharing of genomic data that "applies to all NIH-funded research that generates large-scale human or non-human genomic data as well as the use of these data for subsequent research." This policy requires investigators to outline their data-sharing plans as part of their funding applications; if investigators fail to submit the required data, NIH may withhold funding. Sections 2011-2014. Precision Medicine Establishment and Data Protections Provisions Title II, Subtitle B, has four sections (Sections 2011-2014) that together aim to support precision medicine by (1) codifying the PMI; (2) requiring issuance of Certificates of Confidentiality to investigators of federally funded research; (3) protecting identifiable, sensitive information from release under FOIA; and (4) requiring the sharing of NIH-supported research data in certain circumstances. Section 2011 codifies the President's Precision Medicine Initiative (PMI) in a new PHSA Section 498E, by encouraging the HHS Secretary to establish and carry out the PMI, and by allowing specified components and authorities in the carrying out of the PMI as well as identifying requirements of the initiative, including, for example, complying with existing law and regulation regarding human research subjects protections. It also requires, not later than one year after enactment, the HHS Secretary to submit a report to Congress on relevant data access policies and procedures, and consultation with experts in the development of those policies. Section 2012 amends PHSA Section 301(d) to require the HHS Secretary to issue a Certificate of Confidentiality to research investigators of research funded wholly or in part by the federal government in which sensitive, identifiable information is collected to protect the privacy of research participants. The section prohibits the individual with the certificate from disclosing sensitive information about the research participants, with certain exceptions, as specified, and would make this type of information immune from the legal process. In addition, the section requires that these protections exist in perpetuity and that the HHS Secretary must minimize the burden to researchers of compliance with this section, and must coordinate across involved HHS entities. The requirements of this section become effective 180 days after the date of enactment of the act. Section 2013 amends PHSA Section 301 to allow the HHS Secretary to exempt from disclosure under FOIA exemption (b)(3) specified biomedical information that identifies an individual or that has an associated risk that the information may be reidentified. The HHS Secretary is required to make each such exemption available in writing and to the public, upon request. However, this does not limit individual research participants access to their own data. Section 2014 amends PHSA Section 402(b) to allow the HHS Secretary to require recipients of NIH grants or agreements to share data generated from such NIH grants or agreements in a manner consistent with all applicable federal law regarding human subject protections, propriety interests, confidential commercial information, and intellectual property. Subtitle C- Supporting Young Emerging Scientists Section 2021. Investing in the Next Generation of Researchers. Congress has had a long-standing interest in developing the future biomedical research workforce. Recent concerns have focused on ways to reduce the time between when young investigators complete their training and when they receive their first independent NIH research grant (i.e., achieve research independence). NIH has created a number of initiatives to shorten this time, in part to better retain young investigators in biomedical research. The Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act, 2016 ( P.L. 114-113 , Division H), instructed the NIH Director to enter into a contract with the National Academy of Sciences (NAS) to conduct a comprehensive study of the policies affecting the next generation of researchers in the United States. Provision Section 2021 amends Part A of Title IV of the PHSA by adding a new Section 404M, which establishes the Next Generation of Researchers Initiative (the Initiative) within the office of the NIH Director. The Initiative requires the NIH Director to coordinate all NIH policies and programs focused on promoting and providing opportunities for new researchers and for promoting earlier research independence. Among other things, the NIH Director would have to coordinate with relevant agencies, professional associations, and academic institutions to improve and update information on the biomedical workforce to inform training, recruitment, and retention programs of biomedical researchers. In establishing the Initiative, the NIH Director is required to consider recommendations made by NAS in its study on the next generation of researchers. Not later than two years after completion of the NAS study, the NIH Director would be required to submit a report to specified congressional committees regarding any actions taken by NIH with respect to the NAS recommendations. Section 2022. Improvement of Loan Repayment Program. NIH funds seven loan repayment programs for researchers. Three of these are intramural programs that provide educational loan repayment benefits to researchers in exchange for undertaking research while employed by NIH. Intramural loan repayment programs support researchers from disadvantaged backgrounds, those who are investigating AIDS, and those undertaking general research (including general research by physicians during their fellowship training). Four of these programs help extramural researchers repay their educational loans. These funds are awarded competitively to researchers who are employed by a qualifying educational institution. Specific programs are available to extramural researchers investigating health disparities, undertaking contraception and infertility research, engaging in clinical research, and examining pediatric-related topics. Researchers may receive up to $35,000 per year in loan repayment benefits under each of these programs. Under current law, appropriations for loan repayments remain available until the end of the second fiscal year after they are appropriated. Provision Section 2022 renames PHSA Section 487A "Intramural Loan Repayment Program" and consolidates existing NIH intramural loan repayment programs. Specifically, it (1) transfers the authority to administer these program from the HHS Secretary to the NIH Director; (2) increases annual loan repayment amounts from a maximum of $35,000 to a maximum of $50,000; and (3) provides loan repayment benefits for individuals who conduct research in areas of emerging scientific or workforce needs, in addition to individuals who conduct research on AIDS, and clinical researchers from disadvantaged backgrounds. In addition, Section 2022 authorizes the NIH Director to amend the categories eligible for intramural loan repayment as scientific and workforce priorities change. Finally, the section prohibits the NIH Director from entering into a loan repayment contract with individuals unless they have substantial amounts of educational loans relative to income as determined by the NIH Director and permits amounts appropriated for new loan repayment contracts to remain available until the end of the second fiscal year after they are appropriated. Section 2022 similarly amends the NIH's extramural loan repayment program. Specifically, it (1) retitles PHSA 487B "Extramural Loan Repayment Program," (2) transfers authority for the program from the HHS Secretary to the NIH Director, (3) increases loan repayment amounts to a maximum of $50,000 per year, (4) prohibits the NIH Director from entering into a loan repayment contract with individuals unless they have substantial amounts of educational loans relative to income as determined by the NIH Director, and (5) permits amounts appropriated for new loan repayment contracts to remain available until the end of the second fiscal year after they are appropriated. In addition, Section 2022 retains authorization for current topics eligible for extramural loan repayment (contraception and infertility, pediatric research, minority health disparities, clinical research, and clinical research conducted by individuals from disadvantaged backgrounds). The section makes extramural researchers who are conducting research in an area of emerging scientific or workforce need eligible for loan repayment benefits, and it authorizes the NIH Director to amend the categories eligible for extramural loan repayment as scientific and workforce priorities change. Finally, Section 2022 repeals existing authorizations for NIH loan repayment programs in PHSA Sections 464z, 487C, 487E, and 487F. It requires a GAO report, not later than 18 months after enactment, that (1) reports on NIH efforts to attract, retain, and develop emerging scientists, including underrepresented individuals in the sciences; (2) reports on the research areas where individuals are receiving increased loan repayment amounts; and (3) analyzes the impact of changes included in this act on addressing workforce shortages. Subtitle D- National Institutes of Health Planning and Administration Section 2031. National Institutes of Health Strategic Plan PHSA Section 402(b)(5) specifies that the NIH Director "shall ensure that scientifically based strategic planning is implemented in support of research priorities as determined by the agencies of the National Institutes of Health." Current law does not direct NIH Institutes and Centers (ICs) to coordinate or collaborate in the development of IC strategic plans. NIH provides access to many of its strategic plans on the agency's website. The NIH Reform Act of 2006 ( P.L. 109-482 ) enhanced the authority of the NIH Director's Office to perform strategic planning and provided for trans-NIH initiatives by enacting the Common Fund into law and requiring strategic planning for the fund. The Common Fund is part of the Office of the Director and is intended to support research in emerging areas of scientific opportunity, public health challenges, and knowledge gaps that might benefit from collaboration between two or more ICs. Provision Section 2031 amends PHSA Section 402 by adding a new subsection (m), which describes a strategic plan for NIH. Within two years of enactment, and once every six years thereafter, the NIH Director, in consultation with the IC Directors, must develop and submit to the appropriate committees of Congress, and post on the NIH website, a six-year NIH Strategic Plan. The NIH Strategic Plan is expected to provide direction to the biomedical research investments made by NIH, facilitate IC collaboration, leverage scientific opportunity, and advance biomedicine. The NIH Strategic Plan must identify research priorities, such as advancement of treatment, cure and prevention of health conditions, emerging scientific opportunities, and rising public health challenges. The research strategy must address the disease burden in the United States, including rare diseases, and the many factors that contribute to health disparities. Other elements to be included in the NIH Strategic Plan are (1) coordination of research among the ICs; (2) priorities for funding research through the Common Fund; (3) training the biomedical workforce; and (4) collaboration with other agencies and departments. The individual IC strategic plans are required to be prepared regularly, to be informed by the NIH Strategic Plan, and to have a common template. The NIH Director must consult with the IC directors, researchers, patient advocacy groups, and industry leaders when developing the strategic plan. Section 2032. Triennial Reports PHSA Title IV establishes numerous reporting requirements for the NIH Director related to the activities of the agency. Specifically, PHSA Section 403(a) requires the NIH Director to submit to Congress biennially a report on NIH activities. Among other things, the report must include an assessment of the state of biomedical and behavioral research, and details of all the research activities conducted or supported by the ICs of NIH. Provision Section 2032 amends PHSA Section 403(a) by replacing the biennial reporting requirement of the NIH Director with a triennial requirement. The section adds new, and clarifies existing, reporting requirements, including a description of intra-NIH activities and funding made available for conducting and supporting research that involves collaboration between an IC and one or more other ICs. Section 2033. Increasing Accountability at the National Institutes of Health PHSA Section 405 specifies that the National Cancer Institute Director is appointed by the President and the Directors of the other NIH Institutes are appointed by the HHS Secretary. Each NIH Institute Director reports directly to the NIH Director. Research supported by NIH is first evaluated by a peer review system. Scientists who seek to compete for NIH research funding must submit detailed applications describing the research they plan to undertake. NIH considers the applications under a two-tiered system of peer review. First, the applications are reviewed for scientific and technical merit by committees composed of nongovernment scientists who are experts in the relevant fields of research. Each application is thoroughly discussed and given a score representing the average of the scores assigned by the reviewers. That score becomes the main determinant in whether an applicant will receive funding from an IC for the research proposal. The funding decisions are fine-tuned by a second level of peer review in the ICs, when the applications are considered for program relevance by the IC's National Advisory Councils or Boards, which are composed of scientific and lay representatives. Section 202 of the Labor/HHS/ED Appropriations Act, 1993, states at the end of the section that the payment of compensation to consultants or individual scientists appointed for limited periods of time is "not to exceed the per diem rate equivalent to the maximum rate payable for senior-level positions," which is "not less than 120% of the minimum rate of basic pay payable for GS–15 of the General Schedule; and ... not greater than the rate of basic pay payable for level III of the Executive Schedule." Provision Section 2033 amends PHSA Section 405 with regard to the appointment and terms of the Director of the National Cancer Institute and the directors of other NIH ICs. It requires that directors of ICs be appointed by the HHS Secretary acting through the NIH Director. The Director of the National Cancer Institute continues to be appointed by the President. It specifies five-year terms for the IC Directors who are appointed by the HHS Secretary acting through the NIH Director, and authorizes the NIH Director to remove an IC Director prior to the end of a five-year term if necessary. It permits the director of an IC to be reappointed at the end of a five-year term, with no limit to the number of terms served. It requires that, if the office of a director of an IC becomes vacant before the end of a five-year term, the director appointed to fill the vacancy begin a new five-year term (as opposed to finishing the five-year term of the previous director). Each current IC Director is deemed to be appointed for a five-year term as of the date of enactment. Section 2033 specifies that the compensation limitations in Section 202 of the Labor/HHS/ED Appropriations Act, 1993, related to time-limited appointments of consultants and individual scientists, do not apply to directors appointed under this new authority. The section adds a new requirement that before a new research grant is made by an IC, the IC Director will review and approve the award, taking into consideration the mission of the IC, the scientific priorities identified in the strategic plan, "programs or projects funded by other agencies on similar research topics and advice by staff and the advisory council or board of such national research institute or national center." Section 2033 also requires the HHS Secretary to submit a report to Congress, not later than two years following enactment, "on efforts to prevent and eliminate duplicative biomedical research that is not necessary for scientific purposes." Among other things, the report must "describe how the HHS Secretary operationally distinguishes necessary and appropriate scientific replication from unnecessary duplication, and provide examples of instances where the HHS Secretary has identified unnecessarily duplicative research and the steps taken to eliminate the unnecessary duplication." Section 2034. Reducing Administrative Burden for Researchers The Federal Demonstration Partnership (FDP) is "a cooperative initiative among 10 federal agencies and 119 institutional recipients of federal funds, sponsored by the National Academies, with a purpose of reducing the administrative burdens associated with federal research grants and contracts." In 2005 and 2012, FDP conducted surveys of principal investigators of federally funded projects to determine the impact of federal regulations and requirements on the research process. In both surveys, researchers reported spending 57% of their time engaged in research and 43% of their time in completing pre- and post-award requirements. "The most commonly experienced administrative responsibilities included those related to federal project finances, personnel, and effort reporting. These were also among the most time-consuming responsibilities. For researchers engaged in projects that required human or animal subjects, the related Institutional Review Board (IRB) and Institutional Animal Care and Use Committee (IACUC) requirements were by far the most time-consuming. Other areas viewed as particularly time-consuming were those involving clinical trials, subcontracts, and cross-agency differences." Provision Section 2034 includes a series of requirements that aim to address the administrative burden on researchers funded by NIH and other federal agencies. First, it directs the HHS Secretary, within two years of enactment, to lead a review by research funding agencies of all financial conflict-of-interest regulations and policies and to make revisions to harmonize the policies and reduce the administrative burden on researchers, as appropriate. It also requires the HHS Secretary to update this policy and, in doing so, take into account certain specified considerations regarding financial interest disclosures. Second, it requires the NIH Director to implement measures that aim to reduce the administrative burdens experienced by primary NIH grant awardees related to monitoring grant sub-recipients. Third, the HHS Secretary, in consultation with the NIH Director, is required to evaluate financial expenditure reporting procedures and requirements for NIH funding recipients and take appropriate action to avoid duplication of effort and minimize burden to funding recipients. Fourth, within two years of enactment, the HHS Secretary, in consultation with the NIH Director, the Secretary of Agriculture, and the FDA Commissioner, must complete a review of regulations and policies for the care and use of laboratory animals and make appropriate revisions to reduce administrative burden on investigators. Fifth, the HHS Secretary is required to clarify the applicability of OMB Uniform Guidance requirements regarding documentation of personnel expenses for entities receiving HHS grants. Finally, within one year of enactment, the OMB Director is required to establish a Research Policy Board, consisting of up to 10 federal and 9 to 12 nonfederal members, as specified, to provide the NIH Director and other members of the federal government with information on the effects of regulations related to federal research requirements. The board makes recommendations on harmonizing regulations and policies to minimize administrative burden across federal research agencies. Within two years of enactment, and once thereafter, the board must submit a report to specified offices in OMB, the heads of relevant federal departments and agencies, and specified House and Senate committees. The report must provide recommendations on scientific research policy, including regulatory benefits and burdens. The board will sunset on September 30, 2021. The section also requires that GAO, within four years of enactment, conduct an evaluation of board activities regarding its purpose and responsibilities and submit a report to Congress. Section 2035. Exemption of the National Institutes of Health from the Paperwork Reduction Act Requirements. The Paperwork Reduction Act (PRA, 44 U.S.C. Chapter 35), enacted in 1980 and amended in 1995, established the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB). Congress required that agencies seek OIRA permission before collecting information from the public. The first of 11 stated purposes was to "minimize the paperwork burden for individuals ... and other persons resulting from the collection of information by and for the Federal Government." The PRA requires that federal agencies receive clearance from OIRA before requesting most types of information from the public. PRA clearance is required when standardized information is collected from 10 or more respondents within a 12-month period. PRA does not apply to certain types of scientific research, including collections that are neither sponsored nor conducted by the agency and those that are subject to a clinical exception. Provision Section 2035 amends PHSA Section 301 by adding a subsection stating that the PRA does not apply to the collection of information during the conduct of NIH research. Section 2036. High-Risk, High-Reward Research Other transaction (OT) authority is a special vehicle used by certain federal agencies for obtaining or advancing research and development (R&D). An OT is not a contract, grant, or cooperative agreement, and there is no statutory or regulatory definition of "other transaction." Only those agencies that have been provided OT authority may engage in other transactions. Generally, OT authority is created because the government needs to obtain leading-edge R&D from commercial sources, but some companies (and other entities) are unwilling or unable to comply with the government's procurement regulations and certain procurement statutes that govern contracts. Provision Section 2036 adds a new PHSA Section 402(n) to allow the NIH Director to approve requests by IC Directors, or program officers within the Office of the Director, to engage in transactions other than a contract, grant, or agreement with respect to projects that carry out (1) the Precision Medicine Initiative, or (2) "research that represents important areas of emerging scientific opportunities, rising public health challenges, or knowledge gaps that deserve special emphasis and would benefit from conducting or supporting additional research that involves collaboration between 2 or more [ICs], or would otherwise benefit from strategic coordination and planning." This provision also requires internal NIH reporting on the use of this authority and requires the HHS Secretary, through the NIH Director, to submit a report to Congress evaluating the activities under this new subsection by September 30, 2020. Section 2037. National Center for Advancing Translational Sciences. Prior to FDA approval, medical products are tested in a clinical trial using human volunteers to see how the products compare to standard treatments or to no treatment. FDA uses the data from clinical trials to determine whether to approve a manufacturer's application for marketing a medical product. Clinical trials are conducted in three phases. Phase I trials try to determine dosing, document how a drug is metabolized and excreted, and identify acute side effects. Usually, a small number of healthy volunteers (between 20 and 80) are used in Phase I trials. Phase II trials include more participants (about 100-300) who have the disease or condition that the product potentially could treat. In Phase II trials, researchers seek to gather further safety data and preliminary evidence of the drug's beneficial effects (efficacy), and they develop and refine research methods for future trials with this drug. Sometimes Phase II clinical trials are divided into Phase IIA (to assess dosing requirements) and Phase IIB (to study efficacy). If the Phase II trials indicate that the drug may be effective—and the risks are considered acceptable, given the observed efficacy and the severity of the disease—the drug moves to Phase III. In Phase III trials, the drug is studied in a larger number of participants with the disease (approximately 1,000-3,000). This phase further tests the product's effectiveness, monitors side effects and, in some cases, compares the product's effects to a standard treatment, if one is already available. As more and more participants are tested over longer periods of time, the less common side effects are more likely to be revealed. Under current law in PHSA Section 479, NIH's National Center for Advancing Translational Sciences (NCATS) may develop and provide infrastructure and resources for all phases of clinical trials research; however, it may support clinical trial activities only through the end of Phase IIA, with specific exceptions. NCATS may support clinical trial activities through the end of Phase IIB for treatment of a rare disease or condition if (1) it gives public notice for a period of at least 120 days of NCATS's intention to support the clinical trial activities in Phase IIB; (2) no public or private organization provides credible written intent to NCATS that the organization has timely plans to further the clinical trial activities or conduct clinical trials of a similar nature beyond Phase IIA; and (3) NCATS ensures that support of the clinical trial activities in Phase IIB will not increase the federal government's liability beyond the award value of the center's support. This section does not authorize the HHS Secretary to disclose trade secret information or other privileged or confidential information. Provision Section 2037 amends PHSA Section 479 to extend NCATS's authority to support clinical trial activities through the end of Phase IIB (instead of Phase IIA) and extends the exception for treatment of a rare disease or condition through the end of Phase III (instead of Phase IIB). It adds material to the NCATS annual/biennial report regarding methods and tools developed since the previous report and whether such methods and tools are being used by the FDA to support medical product reviews. Under the Cures Act, the next NCATS report, following enactment, will include a complete list of all such methods and tools developed by research supported by NCATS. Section 2038. Collaboration and Coordination to Enhance Research Racial and ethnic minorities traditionally have been underrepresented in clinical trials. For example, according to a 2011 report from an FDA-sponsored conference, "African Americans represent 12% of the U.S. population but only 5% of clinical trial participants and Hispanics make up 16% of the population but only 1% of clinical trial participants." Biological differences (e.g., genetic differences) may affect how people process or respond to medical products. This variation could make a treatment less effective or perhaps more toxic for individuals with specific genotypes. Therefore, it is important to study in clinical trials the safety and effectiveness of medical products in a broadly representative sample of people who will likely use the products following FDA approval. PHSA Section 492B requires the NIH Director to include women and minorities in NIH-funded clinical research and to conduct or support outreach to recruit minorities and women into clinical research. Section 492B(d) requires the NIH Director, in consultation with the directors of the NIH's Office of Research on Women's Health and the Office of Research on Minority Health, to develop guidelines regarding the requirements under Section 492B. Provision Section 2038 amends PHSA Section 402(b), requiring the NIH Director, in assessing research priorities, to assemble accurate data on study populations in clinical research that specifies the inclusion of women, members of minority groups, relevant age categories (including pediatric subgroups), and other demographic variables. The data must be disaggregated by research area, condition, and disease categories and made publically available on the NIH website. The NIH Director is required to foster collaboration between the ICs that conduct research on human subjects, allow for an increase in the number of subjects studied, and utilize a diverse study population with special consideration of the determinants that contribute to health disparities. Section 2038 amends PHSA Section 492B to make the biennial report a triennial report and requires that the report contain specified data on the number of women and members of minority groups included in clinical research projects conducted during the reporting period. Section 2038 amends PHSA Section 486 to specify that the coordinating committee for the Office of Research on Women's Health will include NIH IC Directors or their senior staff-level designees. Section 2038 adds a new PHSA Section 404N, Population Focused Research, which requires the NIH Director to encourage efforts to improve research related to the health of sexual and gender minority populations through the increased participation of such groups in clinical research. The HHS Secretary, in collaboration with the NIH Director and taking into account the recommendations of the National Academy of Medicine, is required to continue to support research for the development of appropriate measures related to reporting health information of sexual and gender minority populations. Within two years of enactment, the HHS Secretary is required to disseminate and make public such measures. Section 2038 also amends PHSA Section 464z-3, adding that the National Institute on Minority Health and Health Disparities Director may foster partnerships between the ICs and may encourage the funding of collaborative research to achieve the goals of NIH related to minority health and health disparities. Section 2038 requires the NIH Director, within two years of enactment and taking into consideration the findings of the working group established under Section 2039, to develop policies for basic research to assess relevant biological variables, including sex, and how differences between male and female cells, tissues, or animals may be studied and permits the NIH Director to amend these policies as appropriate. It also requires the NIH Director to (1) consult with the Office of Research on Women's Health, the Office of Laboratory Animal Welfare, and appropriate members of the scientific and academic communities; and (2) conduct outreach in developing (and updating) policies on the influence of sex as a variable in basic research, among other requirements. With respect to clinical research involving women and minorities, the NIH Director must, within one year of enactment, update the guidelines established under PHSA Section 492B(d) to reflect the science regarding sex differences and improve adherence to the requirements of Section 492B of the PHSA, among other things. Section 2038 requires the NIH Director, within six months of enactment, to convene a workshop of experts on pediatrics and older populations to provide input on appropriate age groups to be included in research studies. Within six months of the workshop, the NIH Director must determine if it is necessary to update NIH policies "on the inclusion of relevant age groups in clinical studies." The Director is required to make available to the public the findings and conclusions of the workshop and the updates to policies. The Director must ensure that age-related data reported in the triennial report are made publicly available on the NIH website. Section 2039. Enhancing the Rigor and Reproducibility of Scientific Research Research supported by NIH is evaluated by a peer review system. Scientists competing for NIH funding submit detailed applications describing their research plan. NIH considers the applications under a two-tiered system of peer review. First, the applications are reviewed for scientific and technical merit by committees composed of nongovernment scientists who are experts in the relevant fields of research. Each application is thoroughly discussed and given a score, which becomes the main determinant in whether an applicant will receive IC funding. A second level of review occurs in the ICs when the applications are considered for program relevance by the IC's National Advisory Councils or Boards, composed of scientific and lay representatives. The peer review system does not necessarily evaluate the applications for reproducibility. Provision Section 2039 requires the HHS Secretary, acting through the NIH Director, to convene a working group to make recommendations for a formal policy to enhance the rigor and reproducibility of NIH-funded scientific research. The working group must consider various specified factors, including, for example, preclinical and clinical experiment design and methods of statistical analysis. It also requires the NIH Director, not later than 18 months after enactment, to consider the recommendations and develop or update policies as appropriate. Finally, the NIH Director must issue a report to the HHS Secretary and Congress, within two years of enactment, regarding the recommendations and any subsequent policy changes. This section does not authorize the HHS Secretary to disclose trade secret information or other privileged or confidential information. Section 2040. Improving Medical Rehabilitation Research at the National Institutes of Health PHSA Section 452 established in 1990 the National Center for Medical Rehabilitation Research (the Center) within the Eunice Kennedy Shriver National Institute of Child Health and Human Development (NICHD) at NIH to conduct and support research, and disseminate information, on the rehabilitation of individuals with physical disabilities. It also required the NIH Director to create a Medical Rehabilitation Coordinating Committee and a National Advisory Board on Medical Rehabilitation Research. The section also requires NICHD Director—in collaboration with the Director of the Center, the Coordinating Committee, and the Advisory Board—as created by this section—to develop, and periodically revise and update, a comprehensive plan for medical rehabilitation research. Provision Section 2040 amends PHSA Section 452 instructing the Director of the Center—in collaboration with the Director of the Institute, the coordinating committee, and the advisory board—to develop and, not less than every five years, revise and update a comprehensive plan for medical rehabilitation research. The research plan must include goals and objectives for such research. Prior to revising and updating the research plan, the Director of the Center must report to the coordinating committee and the advisory board on the progress made toward achieving the research goals and objectives, and provide recommendations for revising and updating the plan. Within 30 days of revising and updating the plan, the Director of the Center is required to transmit the plan to the President, and to specified congressional committees. In addition, Section 2040 requires the HHS Secretary, along with the other federal agencies, to review their medical rehabilitation research programs and take action to avoid duplication among those programs through actions such as entering into interagency agreements. Finally, Section 2040 defines medical rehabilitation research as "the science of mechanisms and interventions that prevent, improve, restore, or replace lost, underdeveloped, or deteriorating function." Section 2041.Task Force on Research Specific to Pregnant Women and Lactating Women Provision Within 90 days of enactment, Section 2041 requires the HHS Secretary to establish a Task Force on Research Specific to Pregnant and Lactating Women. The section specifies the duties, membership, meeting schedule, and reporting requirements of the task force, which would be terminated two years after its establishment, with an option for a two-year extension. It requires the HHS Secretary, not later than two years after enactment, to update regulations and guidance, as appropriate, regarding the inclusion of pregnant women and lactating women in research. This section does not authorize the HHS Secretary to disclose trade secret information or other privileged or confidential information. Section 2042. Streamlining National Institutes of Health Reporting Requirements PHSA Title IV establishes numerous reporting requirements for the NIH Director related to the activities of the agency. Specifically, PHSA Section 403(a) requires the NIH Director to submit to Congress biennially a report on NIH activities. Among other things, the report must include an assessment of the state of biomedical and behavioral research, and details of all the research activities conducted or supported by the ICs of NIH. Provision Section 2042 modifies or eliminates a number of different NIH reporting requirements. Within two years of enactment, the heads of each IC must submit to the NIH Director a report on the amount of funding made available for conducting or supporting research that involves collaboration between a given IC and at least one other IC. This information will be included in the triennial report required by Section 403(a), as amended by Section 2032. It also (1) eliminates an annual reporting requirement regarding the number of experts and consultants whose services are used by NIH; (2) makes a minor modification to the doctoral degree reporting requirement; (3) makes a technical correction to a vaccine reporting requirement; (4) changes the NCATS annual report to a biennial report; (5) eliminates the report on Centers of Excellence; (6) eliminates the periodic reports on rapid HIV testing; and (7) eliminates the National Institute on Nursing Research biennial report. Section 2043. Reimbursement for Research Substances and Living Organisms PHSA Section 301(a) establishes the general research authorities of the Public Health Service through the HHS Secretary. Specifically, it requires the HHS Secretary to "conduct in the Service, and encourage, cooperate with, and render assistance to other appropriate public authorities, scientific institutions, and scientists in the conduct of, and promote the coordination of, research, investigations, experiments, demonstrations, and studies relating to the causes, diagnosis, treatment, control, and prevention of physical and mental diseases and impairments of man." As part of these authorities, the HHS Secretary is authorized to make available substances and living organisms for biomedical and behavioral research. Provision Section 2043 amends PHSA Section 301(a) allowing the HHS Secretary, where research substances and living organisms are made available to researchers through contractors, to direct the contractors to collect payments for the costs incurred while making these substances and organisms available. These amounts would be credited to the appropriations accounts that incurred such costs and would be available until expended. Section 2044. Sense of the Congress on Increased Inclusion of Underrepresented Populations in Clinical Trials PHSA Section 492B requires that the NIH Director ensure that clinical research conducted or supported by NIH include members of minority groups as subjects. Each IC advisory council must prepare biennial reports describing the manner in which the IC has complied with this requirement. The report is submitted to the IC Director and is included in the biennial report under PHSA Section 403. Provision Section 2044 states that it is the sense of Congress that the National Institute on Minority Health and Health Disparities should include within its strategic plan ways to increase representation of underrepresented populations in clinical trials. Subtitle E- Advancement of the National Institutes of Health Research and Data Access Sections 2051. Technical Updates to Clinical Trials Database Sponsors of clinical trials for drugs, biologics, and devices regulated by the FDA are required to submit registration and summary results information to ClinicalTrials.gov, the clinical trial registry and results data bank operated by NIH's National Library of Medicine (NLM) pursuant to PHSA Section 402 subsections(i)-(j). Subparagraph 402(j)(2)(B) requires the NIH Director to ensure that the public may, in addition to keyword searching, search the entries in the data bank by various specified criteria, including the disease or condition being studied, the name of the drug or device under investigation, and the location of the clinical trial. The NIH Director is instructed to add search categories as deemed necessary and to ensure that the data bank is easy to use, and that its entries are easily compared. Under PHSA Section 402(j), those responsible for specified clinical trials of FDA-regulated products have been required to submit registration information to ClinicalTrials.gov since December 2007, submit summary results information for clinical trials of approved products since September 2008, and submit adverse events information since September 2009. The section also required the HHS Secretary, by rulemaking, to expand the requirements for submission of summary results information, and authorized the HHS Secretary to use rulemaking to make other changes in the requirements for submission of registration and results information. In November 2014, HHS published a proposed rule to clarify and expand requirements for the submission of clinical trial registration and results information to ClinicalTrials.gov. The comment period was extended until March 23, 2015; about 900 comments were received. The final rule was published on September 21, 2016, and is expected take effect on January 18, 2017. Provision Section 2051 amends PHSA Section 402(j)(2)(D), regarding posting of data, by adding new language requiring the NIH Director to inform responsible parties of the option to request that information for a medical device clinical trial be publically posted prior to the date of clearance or approval. Section 2051 adds language that defines "combination product" for purposes of this database. Section 2052. Compliance Activities Reports PHSA Section 402(i)-(j) delineates the requirements for the clinical trials database but currently does not require the submission of a report to Congress. Provision Section 2052 requires the HHS Secretary, acting through the NIH Director and in collaboration with the FDA Commissioner, to submit to Congress, not later than two years after enactment, a report that "describes education and outreach, guidance, enforcement, and other activities undertaken to encourage compliance with Section 402(j) of the PHSA" (i.e., with submission to the clinical trials database). This section also requires the HHS Secretary, acting through the NIH Director and in collaboration with the FDA Commissioner, to submit to Congress a report on registered clinical trials, as specified, including activities undertaken by the HHS Secretary to educate responsible persons about compliance with the requirements in Section 402(j). The HHS Secretary must submit an initial report not later than two years after the compliance date of the final rule implementing Section 402(j) of the PHSA. Two follow-up reports are required, which include information on actions taken to enforce compliance with the ClinicalTrials.gov reporting requirements. Section 2053. Updates to Policies to Improve Data PHSA Section 492B requires the NIH Director to include women and minorities in NIH-funded clinical research and to conduct or support outreach to recruit minorities and women into clinical research. Section 492B(c) requires the NIH Director to "ensure that the trial is designed and carried out in a manner sufficient to provide for a valid analysis of whether the variables being studied in the trial affect women or members of minority groups, as the case may be, differently than other subjects in the trial." Provision Section 2053 amends PHSA Section 492B(c), adding that the NIH Director must consider whether grant award recipients conducting research related to the inclusion of women and minority populations in clinical research have complied with the reporting requirements of ClinicalTrials.gov. The NIH Director must also take such compliance into consideration when awarding any future grants to such an entity. The Director of NIH must encourage the reporting of results to ClinicalTrial.gov "through any additional means determined appropriate by the Director." Section 2054. Consultation PHSA Section 402(i)-(j) requires that the HHS Secretary consult with FDA, NIH, and the Centers for Disease Control and Prevention (CDC) prior to establishing the "data bank of information on clinical trials for drugs for serious or life-threatening diseases and conditions." In addition, it requires that the HHS Secretary consult with experts in risk communication to ensure that posted information regarding the database is not misleading to patients or the lay public. The HHS Secretary must also consult with other federal agencies to ensure that clinical trial information is submitted to the database. Provision Section 2054 requires, within 90 days of enactment, the HHS Secretary to consult with relevant federal agencies, including FDA, the Office of the National Coordinator for Health Information Technology, and NIH, as well as other stakeholders (including patients, researchers, physicians, industry representatives, and developers of health information technology), to receive recommendations to improve ClinicalTrials.gov, including improvements in usability, functionality, and search capability. Subtitle F- Facilitating Collaborative Research Section 2061. National Neurological Conditions Surveillance System The PHSA does not explicitly authorize or require surveillance of neurological diseases in general, although the HHS Secretary may conduct such activities under general authorities in PHSA Title III. Surveillance is explicitly authorized for certain specified neurological disorders (e.g., amyotrophic lateral sclerosis and autism spectrum disorder). Provision Section 2061 adds a new PHSA Section 399S-1, which requires the HHS Secretary, through the CDC Director and in consultation with specified parties, to establish a National Neurological Conditions Surveillance System by enhancing and expanding relevant surveillance infrastructure and activities. The system may include a registry. In establishing the system, the HHS Secretary is required to collect and manage information in order to facilitate research and, as is practicable, to include information on incidence and prevalence, demographics, risk factors, and diagnostic and progression markers. Additional data elements may include the natural history, prevention, detection, management, and treatment approaches for the diseases, and the development of outcome measures. The HHS Secretary initially may address a limited number of neurological diseases. The section also authorizes the HHS Secretary to award grants, contracts, or cooperative agreements with public or private nonprofit entities to implement this provision. The HHS Secretary must make information and analysis obtained from the system available to other federal health agencies and state and local agencies, and, as appropriate and subject to federal privacy laws, to researchers and the public. Within one year of the establishment of a system under this section and biennially thereafter, the HHS Secretary must provide to Congress and the public an interim report on such system. A report on implementation of this section is due to Congress four years after enactment. The section authorizes to be appropriated $5 million for each of fiscal years 2018 through 2022 to carry out activities under this section. Section 2062. Tick-Borne Diseases The HHS Secretary is given broad authority to conduct research related to disease under Title III of the PHSA. Specifically, the HHS Secretary is required to conduct research, investigations, experiments, demonstrations, and studies relating to the causes, diagnosis, treatment, control, and prevention of disease. The act does not explicitly address tick-borne diseases, but HHS agencies do carry out research and public health activities on tick-borne diseases under the Secretary's general authority. Provision Section 2062 requires the HHS Secretary to continue to conduct or support epidemiological, basic, translational, and clinical research related to vector-borne diseases, including tick-borne diseases. It also requires the HHS Secretary to ensure that the triennial report of the NIH Director to Congress includes information on NIH activities with respect to tick-borne diseases. The section also requires the HHS Secretary to establish a working group to review the status of research on tick-borne diseases and relevant federal activities, and to report on such activities and any recommended changes every two years. The section provides requirements related to the working group's membership, responsibilities, meeting frequency, and reporting. The working group is subject to the Federal Advisory Committee Act (FACA), and will terminate six years after enactment. Section 2063. Accessing, Sharing, and Using Health Data for Research Purposes The Health Information Portability and Accountability Act (HIPAA) privacy rule describes the circumstances under which HIPAA-covered entities such as health plans and health care providers are permitted to use or disclose individually identifiable health information (i.e., protected health information, or PHI) without an individual's written authorization. In general, covered entities may use or disclose PHI for the purposes of treatment, payment, and other routine health care operations with few restrictions. The disclosure of PHI to researchers generally requires an individual's authorization unless an Institutional Review Board (or equivalent Privacy Board) waives the authorization. A covered entity may, however, allow researchers access to PHI to prepare a research protocol, provided the PHI is not removed from the covered entity. The privacy rule traditionally has required authorizations to be study-specific; authorizations for future research were prohibited. In a January 2013 final rule, HHS permitted authorizations for future research if a sufficiently clear description of the future research is provided. Provision Section 2063 instructs the HHS Secretary, within one year of enactment, to issue guidance clarifying some of the privacy rule's restrictions on researchers' access to PHI. First, the HHS Secretary is required to clarify that the rule's provision prohibiting researchers from removing PHI during preparation of a research protocol permits remote access to PHI by researchers, provided appropriate security and privacy safeguards are in place and the PHI is not copied or retained by the researchers. Second, the Secretary is required to clarify the circumstances under which a HIPAA authorization to use or disclose PHI for future research contains sufficient information; for example, the authorization (1) sufficiently describes the purposes such that it would be reasonable for an individual to expect that the PHI could be used or disclosed for future research; (2) states that the authorization will either expire at a specified time or will remain valid unless revoked by the individual; and (3) provides revocation instructions to the individual. Finally, Section 2063 requires the HHS Secretary, within one year of enactment, to convene a working group to study the uses and disclosures of PHI for research purposes. The working group must include various specified federal and nonfederal members, and must report to the HHS Secretary within one year of its establishment with recommendations on whether the uses and disclosures for research purposes should be modified, as specified. The HHS Secretary must submit the report to Congress and make it publicly available, at which time the working group shall terminate. Subtitle G- Promoting Pediatric Research Section 2071. National Pediatric Research Network In 2013, PHSA Section 409D(d) established the NIH Pediatric Research Network "in order to more effectively support pediatric research and optimize the use of Federal resources." Provision Section 2071 amends PHSA Section 409(D)(d) to (1) eliminate language telling the NIH Director to consult with the Director of the Eunice Kennedy Shriver National Institute of Child Health and Human Development but (2) retains language telling the NIH Director to collaborate with the ICs that carry out pediatric research, (3) amends language to require the NIH Director (it had previously been permitted) to award funding to support the pediatric research consortia, and (4) require that support for the pediatric research consortia not exceed five years. Section 2072. Global Pediatric Clinical Study Network Provision Section 2072 expresses the sense of Congress that (1) NIH should encourage a global pediatric clinical study network through funding to support new and early stage investigators; (2) the HHS Secretary should engage with clinical investigators and international authorities, including those in the European Union, during the formation of the network to encourage their participation; and (3) the HHS Secretary should continue to encourage and facilitate the network after it is established. Title III-Development47 Subtitle A-Patient Focused Drug Development The Food and Drug Administration Safety and Innovation Act (FDASIA; P.L. 112-144 ) expanded FDA's authorities and strengthened the agency's ability to safeguard and advance public health. FDASIA added a new FFDCA Section 569C "Patient Participation in Medical Product Discussion," facilitating increased involvement of patients earlier in the regulatory process for medical product review. Section 569C directs the HHS Secretary to develop and implement strategies to solicit the views of patients during the medical product development process and consider the perspectives of patients during regulatory discussions by (1) fostering participation of a patient representative who may serve as a special government employee in appropriate agency meetings with medical product sponsors and investigators; and (2) exploring means to provide for identification of patient representatives who do not have any, or have minimal, financial interests in the medical products industry. Sections 3001-3004. Patient Experience Data, Patient-Focused Drug Development Guidance, Streamlining Patient Input, Report on Patient Experience Drug Development Provisions Section 3001 amends FFDCA Section 569C by adding a new subsection (b), "Statement of Patient Experience," requiring the HHS Secretary, upon approval of a new drug application (NDA), to make public any patient experience data and related information submitted and reviewed as part of the application. "Data and information" refers to patient experience data, information on patient-focused drug development tools, and other relevant information, as determined by the HHS Secretary. "Patient experience data" is defined as (1) data that are collected by any persons (including patients, family members and caregivers of patients, patient advocacy organizations, disease research foundations, researchers, and drug manufacturers); and (2) are intended to provide information about patients' experiences with a disease or condition, including—(A) the impact of such disease or condition, or a related therapy, on patients' lives; and (B) patient preferences with respect to treatment of such disease or condition. Section 3002 requires the HHS Secretary, acting through the FDA Commissioner, to develop a plan to issue draft and final guidance, over a period of five years, regarding the collection of patient experience data and the use of such data in drug development. This section specifies the contents of the guidance documents (e.g., methods that could be used to collect and submit patient experience data, and methodologies, standards, and technologies that could be used to collect and analyze clinical data for regulatory decisionmaking). Section 3003 exempts FDA from the Paperwork Reduction Act clearance process when requesting patient experience data under sections 3001 and 3002 of the 21 st Century Cures Act. Section 3004 requires the HHS Secretary, acting through the FDA Commissioner, to publish on the FDA website, no later than June 1 of 2021, 2026, and 2031, a report "assessing the use of patient experience data in regulatory decision-making, in particular with respect to the review of patient experience data and information on patient-focused drug development tools...." Subtitle B-Advancing New Drug Therapies Section 3011. Qualification of Drug Development Tools Lengthy clinical trials have been found to contribute to the high cost of drug development. In clinical settings where the disease course is long and an extended period of time would be required to measure the intended clinical benefit of a drug, surrogate endpoints—based on the measurement of biomarkers—may be used to determine the clinical benefit of a product, rather than clinical endpoints. Surrogate endpoints "enable smaller, faster, and thus cheaper clinical trials. In addition, pharmaceutical companies argue that using surrogates means that fewer patients are exposed during testing, and beneficial new medications reach the market faster. The main disadvantage of these endpoints is that favorable effects on surrogates do not automatically translate into benefits to health." A number of drugs have been approved on the basis of surrogate endpoint data and, after adoption into medical practice, have been shown to be harmful through clinical trials or other subsequent analysis. The FDA uses surrogate endpoints in about half of new drug approvals. The Institute of Medicine defines a clinical endpoint as "a characteristic or variable that reflects how a patient [or consumer] feels, functions, or survives. Death is one example of a clinical endpoint." IOM defines "surrogate endpoint" in the following way: a biomarker that is intended to substitute for a clinical endpoint. A surrogate endpoint is expected to predict clinical benefit (or harm or lack of benefit or harm) based on epidemiologic, therapeutic, pathophysiologic, or other scientific evidence. For example, blood pressure has served as a surrogate endpoint for morbidity and mortality due to cardiovascular disease in trials of several classes of antihypertensive drugs. A surrogate endpoint represents a special use of a biomarker, in which the biomarker substitutes for a clinical endpoint. FDASIA ( P.L. 112-144 ) amended FFDCA Section 506 (on fast track products) by adding the following: "The HHS Secretary shall ... establish a program to encourage the development of surrogate and clinical endpoints, including biomarkers, and other scientific methods and tools that can assist the HHS Secretary in determining whether the evidence submitted in an application is reasonably likely to predict clinical benefit for serious or life-threatening conditions for which significant unmet medical needs exist." Provision Section 3011 adds a new FFDCA Section 507, "Qualification of Drug Development Tools," which requires the HHS Secretary to establish a process for the qualification of drug development tools. A drug development tool is defined to include (1) a biomarker; (2) a clinical outcome assessment; and (3) any other method, material, or measure that the HHS Secretary determines aids drug development and regulatory review. Under new FFDCA Section 507, the HHS Secretary is allowed to accept a qualification submission based on factors that include its scientific merit, and the HHS Secretary is allowed to prioritize review of a qualification submission based on factors including, for example, the severity, rarity, or prevalence of the disease being targeted or the availability or lack of an alternative treatment. The HHS Secretary is allowed, through grants or other specified mechanisms, to consult with biomedical research consortia and may consider their recommendations in review of the qualification submission. "Biomedical research consortia" is defined as collaborative groups that may take the form of public-private partnerships and may include, among others, government agencies, institutions of higher education, patient advocacy groups, industry representatives, clinical and scientific experts, and other relevant individuals. The HHS Secretary is required to carry out a full review of the qualification package and to determine if the drug development tool at issue is qualified for its proposed context of use. A qualified drug development tool is allowed to be used to obtain approval or licensure of a drug or biologic or to support a product's investigational use. The HHS Secretary is allowed to rescind or modify the granted qualification if he or she determines the drug development tool is not appropriate for the proposed context; if the HHS Secretary does this, the requestor would be granted a meeting, upon request, with the HHS Secretary to discuss the basis of the decision. New FFDCA Section 507 requires the HHS Secretary to make public on the FDA website, and update at least biannually, information about the qualification submissions, the HHS Secretary's determinations in response to the submissions, and any subsequent modifications to the HHS Secretary's determinations, among others. It also specifies that nothing in this section is to be construed to allow the HHS Secretary to release any information contained in an application for approval or licensure of a drug or biologic that is confidential commercial or trade secret information; in addition, nothing in the section is allowed to be construed as altering the standards of evidence for approval or licensure of a drug or biologic or to limit the Secretary's authority to approve or license such products. The section also requires the HHS Secretary, not later than three years after enactment, to publish draft guidance to implement new FFDCA Section 507, in consultation with the biomedical research consortia and other interested parties through a collaborative public process. The guidance is required to, for example, provide "a conceptual framework describing appropriate standards and scientific approaches to support the development of biomarkers." The HHS Secretary is required to issue final guidance not later than six months after the comment period for the draft guidance closes. To inform the guidance, the HHS Secretary is required, in consultation with the biomedical research consortia, to develop a taxonomy for the classification of biomarkers for use in drug development. The HHS Secretary is required to make this publicly available not later than two years after enactment and to finalize the taxonomy not later than one year after the public comment period closes. The section requires the HHS Secretary, not later than two years after enactment, to convene a public meeting regarding the qualification process under new FFDCA Section 507. The HHS Secretary is also required to publish a report on FDA's website, not later than five years after enactment, to include specified information. Section 3012. Targeted Drugs for Rare Diseases Precision medicine is a relatively new term for what has traditionally been called personalized medicine (or targeted medicine), the idea of providing health care to individuals based on specific patient characteristics. This approach relies on companion diagnostics to target drugs and biological products to specific subsets of patients. Rare diseases often have genetic origins, and advances in medicine have resulted in the development of new treatments that work by targeting the genetic mutations that cause these diseases. It is inherently difficult to develop drugs for rare diseases because of the small patient population available to conduct clinical trials, so targeted therapies are generally first developed for patients with the most frequent disease-causing mutations. However, to provide therapies for the full spectrum of certain genetic rare diseases, additional targeted therapies would need to be developed. Targeted therapies, because they may be treating small subsets of patients, sometimes qualify as "orphan drugs." Such drugs are called orphan drugs because firms may lack the financial incentives to sponsor products to treat small patient populations. Orphan drugs receive their designation pursuant to FFDCA Section 526(a), a designation that was created by the Orphan Drug Act ( P.L. 97-414 ) to encourage firms to develop pharmaceuticals to treat rare diseases and conditions by providing an extended period of market exclusivity. FFDCA Section 526(a) defines "rare disease or condition" as any disease or condition that affects fewer than 200,000 persons in the United States, or affects more than 200,000 persons in the United States and for which there is no reasonable expectation that the cost of developing and making the drug available in the United States will be recovered from U.S. sales. Provision Section 3012 adds a new FFDCA Section 529A "Targeted Drugs for Rare Diseases," with the purpose of facilitating the "development, review, and approval of genetically targeted drugs and variant protein targeted drugs to address an unmet medical need in one or more patient subgroups, including subgroups of patients with different mutations of a gene, with respect to rare diseases or conditions that are serious or life-threatening; and maximize the use of scientific tools or methods, including surrogate endpoints and other biomarkers, for such purposes." Section 3012 allows the HHS Secretary to permit the sponsor of a new drug application for a genetically targeted drug or a variant protein-targeted drug to rely on data and information that has been previously developed and submitted, either by the same or a different sponsor (with permission), as part of an approved application that incorporates or uses the same or similar genetically targeted technology or for a variant protein-targeted drug. It defines genetically targeted drugs, genetically targeted technology, and variant protein targeted drugs. New FFDCA Section 529A is not to be construed to limit the HHS Secretary's product approval authorities, or to entitle sponsors to obtain information in another sponsor's application without permission of the other sponsor. Section 3013. Reauthorization of Program to Encourage Treatments for Rare Pediatric Diseases FDASIA ( P.L. 112-144 ) added a new FFDCA Section 529, creating the pediatric priority review voucher program. This voucher program, funded by user fees, provides a transferable voucher, under specified conditions, to a sponsor of an approved new drug or biological product for a rare pediatric disease to be used for the priority review of another application. The term "rare pediatric disease" refers to a disease that affects (1) individuals aged from birth to 18 years, and (2) fewer than 200,000 persons in the United States, or affects more than 200,000 persons in the United States and for which there is no reasonable expectation that the cost of developing and making the drug available in the United States will be recovered from U.S. sales. For example, in 2014, BioMarin was awarded a rare pediatric disease priority review voucher for the drug Vimizim (elosulfase alfa) —a treatment for a rare congenital enzyme disorder. BioMarin sold the voucher to Sanofi and Regeneron for $67.5 million, and it was then used to speed the approval of Praluent (alirocumab) injection, a cholesterol-lowering treatment. FDASIA terminated the authority to award such vouchers one year after the HHS Secretary awards the third-priority voucher and required the GAO, beginning on the date of the third voucher award, to study and then report on the effectiveness of the voucher program in the development of products that prevent or treat rare pediatric diseases. FDA awarded the third voucher in March 2015, triggering the March 2016 sunset of this authority. This authority was extended until September 30, 2016, by the Consolidated Appropriations Act of 2016 ( P.L. 114-113 ). The Advancing Hope Act of 2016 ( P.L. 114-229 ), reported as part of the package of Senate medical innovation bills, was signed into law on September 30, 2016. The law temporarily extended the program's authority through December 31, 2016. It also amended the definition of "rare pediatric disease" in FFDCA Section 529(a) by adding the following words in italics: "The disease is a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents . " It also added the requirement that the sponsor of a rare pediatric disease product application that intends to request a voucher for a rare pediatric disease product notify the HHS Secretary of such intent upon submission of the rare pediatric disease product application. In addition, the law required that GAO study the voucher program and report to Congress, by January 31, 2022, on the program's effectiveness as an incentive for developing drugs that treat or prevent rare pediatric diseases and that would not otherwise have been developed. Provision Section 3013 extends the authority to award such priority review vouchers until September 30, 2020. A new drug application or a biologics license application submitted to FDA after the enactment of the 21 st Century Cures Act for a product designated as a rare pediatric disease drug before September 30, 2020, remains eligible to receive a priority review voucher, provided it is approved by September 30, 2022. This provision also removes the requirement that GAO study the pediatric priority review program under FFDCA Section 529. Section 3014. GAO Study of Priority Review Voucher Programs Under the Prescription Drug User Fee Act (PDUFA) of 1992, FDA agreed to specific goals for improving the drug review time and created a two-tiered system of review times: Standard Review and Priority Review. Compared with the amount of time standard review generally takes (approximately 10 months), a priority review designation means FDA's goal is to take action on an application within 6 months. An application for a drug may receive priority review designation if it is for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. An application may also receive priority review if it is the subject of a priority review voucher. Currently, FDA has two authorized priority review voucher programs (the rare pediatric disease priority review program, and the tropical disease priority review program), funded by user fees, which provide a transferable voucher, under specified conditions, to a sponsor of an approved new drug or biological product to be used for the priority review of another application. The purpose of the priority review drug voucher programs is to incentivize development of new treatment for diseases that may otherwise not attract development interest from companies due to either cost or lack of market opportunities. Section 3086 of this bill creates a third priority review voucher program to encourage the development of drugs and vaccines for agents that present a threat to national security. Provision Section 3014 requires the Comptroller General to conduct a study addressing the effectiveness and impact of three FDA priority review voucher programs: (1) the neglected tropical disease priority review voucher program, (2) the rare pediatric disease priority review voucher program, and (3) the priority review voucher program for drugs and vaccines to treat agents that present a national security threat. It requires the Comptroller General to submit a report to Congress with specified contents (including drug indications, value of the voucher, resources used for drug review under these programs, and consideration of program improvements) by January 31, 2020. The Comptroller is directed to conduct the study and issue the specified reports in a way that does not compromise national security. Section 3015. Amendments to the Orphan Drug Grants The Orphan Drug Act of 1983 ( P.L. 97-414 ) was signed into law to incentivize development of drugs to treat rare diseases, each of which affects fewer than 200,000 individuals in the United States. Since the law's passage, FDA has approved over 400 new orphan drugs and biological products. Incentives for sponsors of orphan drugs include seven years of market exclusivity, tax credits for clinical trial expenses, user fee waivers, and eligibility for federal grants to cover costs of qualified clinical testing expenses. The FFDCA contains provisions to grant market exclusivity for statutorily defined time periods (in months or years) to the holder of an approved drug application for a product that is, for example, a drug used in the treatment of a rare disease or condition, the first generic version of a drug to come to market, certain pediatric uses of approved drugs, and new qualified infectious disease products. During the period of exclusivity, FDA does not grant marketing approval to another manufacturer's product. Section 5 of the Orphan Drug Act (21 U.S.C. 360ee) allows the HHS Secretary to make grants and enter into contracts with certain entities to assist in "defraying the costs of qualified clinical testing expenses incurred in connection with the development of drugs for rare diseases and conditions." Section 5 defines "qualified testing" as human clinical testing (i) which is carried out under an exemption for a drug for a rare disease or condition under section 505(i) of the Federal Food, Drug, and Cosmetic Act (or regulations issued under such section); (ii) which occurs after the date such drug is designated under section 526 of such Act and before the date on which an application with respect to such drug is submitted under section 505(b) or under section 351 of the Public Health Service Act; and (B) preclinical testing involving a drug is designated under section 526 of such Act and before the date on which an application with respect to such drug is submitted under section 505(b) or under section 351 of the Public Health Service Act. Provision Section 3015 amends Section 5 of the Orphan Drug Act (21 U.S.C. 360ee) to broaden the use of grants made by the HHS Secretary to assist in "defraying the costs of developing drugs for rare diseases or conditions" to include "prospectively planned and designed observational studies and other analyses conducted to assist in the understanding of the natural history of a rare disease or condition and in the development of a therapy." Section 3016. Grants for Studying Continuous Drug Manufacturing In March 2015 congressional testimony, the then FDA Commissioner spoke of new manufacturing technologies that could eventually "lower costs, limit drug shortages, and reduce supply chain vulnerabilities." Continuous manufacturing, for example, could produce a drug in a "continuous stream" rather than in a "series of sequential and discrete" operations. She noted the need for "academic research in this area and expanding opportunities for collaboration, possibly through public-private partnerships or consortia." Provision Section 3016 allows the HHS Secretary to "award grants to institutions of higher education and nonprofit organizations for the purpose of studying and recommending improvements to the process of continuous manufacturing of drugs and biological products and similar innovative monitoring and control techniques." Subtitle C-Modern Trial Design and Evidence Development Section 3021. Novel Clinical Trial Designs The traditional approach to clinical trials for drugs has focused on a design planned in advance that includes specific treatments and doses and durations, specified decision rules for patient/subject assignment to treatment groups, and prespecified statistical analysis to test a prespecified qualitative and quantitative hypothesis. Because the analytic plan is set in advance, it does not lend itself to unintentional (or intentional) bias as data are reviewed. A researcher may feel strongly about a hypothesis and hope that the results will confirm an idea, but he or she must carry out the analysis so the results can be understood and replicated by others. A drawback to trials with this kind of static design is that they tend to take a long time and cannot adapt to new information learned during the trial. In recent years, some clinical and methodological researchers have looked to adaptive trial designs and statistical analyses using techniques (such as Bayesian statistics) that can provide mid-course feedback. Because a mistaken finding of effectiveness or safety could put a dangerous drug on the market or delay the approval of a useful drug, FDA has acted cautiously in accepting alternative trial designs. In 2010, FDA published draft guidance on the use of adaptive trial design. Provision Section 3021 requires the HHS Secretary to conduct a public meeting and issue guidance to assist sponsors in "incorporating complex adaptive and other novel trial designs into proposed clinical protocols and applications for new drugs" under FFDCA Section 505 and biological products under PHSA Section 351. Such guidance must address, for example, the use of complex adaptive and other novel trial designs, including how such trials "help to satisfy the substantial evidence standard" under FFDCA Section 505(d), and the types of quantitative and qualitative information that should be submitted for review. Prior to updating or issuing guidance, the HHS Secretary is required to consult with stakeholders through a public meeting. Not later than 18 months after the date of the public meeting, the HHS Secretary, acting through the FDA Commissioner, must update or issue draft guidance, and final guidance not later than one year after the close of the public comment period on the draft. Section 3022. Real World Evidence To approve a new drug for marketing in the United States, FDA reviews the sponsor's new drug application (NDA) to assess, among other things, whether the drug is safe and effective for its intended purpose. FFDCA Section 505(d) refers to "substantial evidence," which it defines as evidence consisting of adequate and well-controlled investigations, including clinical investigations, by experts qualified by scientific training and experience to evaluate the effectiveness of the drug involved, on the basis of which it could fairly and responsibly be concluded by such experts that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof. If the Secretary determines, based on relevant science, that data from one adequate and well-controlled clinical investigation and confirmatory evidence (obtained prior to or after such investigation) are sufficient to establish effectiveness, the Secretary may consider such data and evidence to constitute substantial evidence for purposes of the preceding sentence. The Secretary shall implement a structured risk-benefit assessment framework in the new drug approval process to facilitate the balanced consideration of benefits and risks, a consistent and systematic approach to the discussion and regulatory decisionmaking, and the communication of the benefits and risks of new drugs. Nothing in the preceding sentence shall alter the criteria for evaluating an application for premarket approval of a drug. The associated rule (21 C.F.R. 314.126) describes characteristics of "adequate and well-controlled studies," which include a statement of objectives, an analytic plan, a control group, quantification of treatment duration and timing, and method of sample size determination. The study design would lead to the identification of appropriate research subjects and include methods to minimize bias in the assignment of subjects to treatment groups as well as in data analysis. These characteristics basically describe a controlled (often randomized) clinical trial. The rule, however, places these characteristics in the context of having "been developed over a period of years and are recognized by the scientific community as the essentials of an adequate and well-controlled clinical investigation." The rule states that FDA should "consider" these characteristics in its determination of effectiveness claims. Provision Section 3022 adds a new FFDCA Section 505F, "Utilizing Real World Evidence," requiring the HHS Secretary to "establish a program to evaluate the potential use of real world evidence to help to support the approval of a new indication for a drug approved under Section 505(c) and to help support or satisfy postapproval study requirements." The provision defines "real world evidence" as "data regarding the usage, or the potential benefits or risks, of a drug derived from sources other than randomized clinical trials." Section 3022 requires the HHS Secretary to establish a draft framework for implementing the program to include specified content (e.g., sources of real world evidence such as ongoing safety surveillance, observational studies, claims, and patient-centered outcomes research activities). It also requires the HHS Secretary, in developing the framework, to consult with interested parties, which could be done via a public-private partnership or a contract, grant, or other appropriate arrangement. The HHS Secretary is required to use the new "program to evaluate the potential use of real world evidence" to inform the development of guidance for industry. This section is not to be construed to alter the standards of evidence for approval of drugs or biologics, including the substantial evidence standard, or to alter "the Secretary's authority to require postapproval studies or clinical trials, or the standards of evidence under which studies or trials are evaluated." Sections 3023-3024. Protection of Human Research Subjects, Informed Consent Waiver or Alteration for Clinical Investigations Provisions The HHS Human Subject Regulations are a core set of federal standards for protecting human subjects in HHS-sponsored research. These regulations are commonly referred to as the "Common Rule" because the same requirements have been adopted by many non-HHS federal departments and agencies, who apply the regulations to the research they fund. Under the Common Rule, research protocols must be approved by an Institutional Review Board (IRB) to ensure that the rights and welfare of the research subjects are protected. The rule lists several criteria for IRB approval, including the requirement that researchers obtain the informed consent of their research subjects. In addition, it sets out the types of information that must be provided to prospective research subjects during the informed consent process, including an explanation of the purpose of the research, a description of the research procedures, and a description of the risks and benefits of the research. An IRB may decide to waive the informed consent requirement if it determines that (1) the research poses no more than minimal risk to the subjects, (2) the waiver will not adversely affect the rights and welfare of the subjects, and (3) the research is not practicable without a waiver. HHS has promulgated additional protections for certain vulnerable populations involved in research. Those groups include pregnant women, human fetuses, and neonates; prisoners; and children. FDA has issued its own set of Human Subject Regulations, which are similar, but not identical, to the Common Rule. FDA applies these regulations to all the research it regulates, including clinical trials of new drugs and medical devices, regardless of the source of funding for the research. Humanitarian use devices, which are currently approved by FDA for diagnosing or treating diseases or conditions that affect fewer than 4,000 individuals in the United States each year, may be used in a facility only after a local IRB has approved their use in that facility, except in certain emergency situations. In July 2011, HHS published an advance notice of proposed rulemaking (ANPRM) requesting public comment on a broad range of amendments to the Common Rule, with the goal of "enhancing the effectiveness of the research oversight system by improving the protections for human subjects while also reducing burdens, delays, and ambiguity for investigators and human subjects." HHS sought comments on such changes as refining the current risk-based regulatory framework, coordinating IRB review of multisite studies, and harmonizing the regulations and guidance of different agencies. Last fall, HHS and 15 other federal departments and agencies jointly released a proposed rule to amend the Common Rule. A final rule has not yet been published. Provisions Section 3023 requires the HHS Secretary, to the extent possible, to harmonize differences between the HHS Human Subject Regulations and the FDA Human Subject Regulations. The HHS Secretary is required to modify the HHS and FDA regulations and associated rules for vulnerable populations to reduce regulatory duplications and unnecessary delays; accommodate multisite and cooperative research projects; incorporate local consideration, community values, and mechanisms to protect vulnerable populations; and to ensure that human research that is subject to the HHS regulations or to the FDA regulations may use joint or shared IRB review, an independent IRB, or some other IRB arrangement to avoid duplication of effort. Within three years of enactment, the HHS Secretary, in consultation with specified stakeholders, is required to issue regulations or guidance as necessary to implement the harmonization required under this section. The HHS Secretary is further required to submit, within two years of enactment, a report to Congress on the progress made toward completing such harmonization. Section 3024 amends FFDCA Section 520(g) ("Exemption for Devices for Investigational Use") to allow the HHS Secretary, subject to such conditions as he may prescribe, to waive the informed consent requirement for individuals participating in the clinical trial of a medical device if the trial poses no more than minimal risk to the participants and includes appropriate safeguards to protect their rights, safety, and welfare. Section 3024 also amends FFDCA Section 505(i) (regarding the investigational use of drugs) to modify the existing requirement for informed consent as a condition of the HHS Secretary granting an exemption to allow manufacturers, or sponsors of investigations, to not require certification of informed consent for individuals participating in the clinical trial of a drug if it is not feasible, if it is contrary to the best interest of human beings, or if the trial poses no more than minimal risk to the participants and includes appropriate safeguards to protect their rights, safety, and welfare (new language in italics). Subtitle D-Patient Access to Therapies and Information Section 3031. Summary Level Review FFDCA Section 505 and accompanying regulations provide the framework for FDA's approval of a sponsor's new drug application (NDA). For a drug whose active ingredient has never been FDA-approved, the law requires the sponsor to submit an NDA that includes data to provide evidence of the drug's safety and effectiveness for its intended use, information about the manufacturing process, and the drug labeling. Once a product has an approved NDA, FDA requires that the manufacturer submit a supplemental NDA each time the manufacturer wants to change the labeling, the manufacturing process, or the dosing, or when it wants to add a new indication (a new intended use) of the drug. Regulations at 21 C.F.R. Sections 314.50 and 314.54 describe the required contents of those applications. Regarding clinical data, the regulations direct the applicant to submit, in addition to descriptions and analysis of controlled and uncontrolled clinical studies, (iv) A description and analysis of any other data or information relevant to an evaluation of the safety and effectiveness of the drug product obtained or otherwise received by the applicant from any source, foreign or domestic, including information derived from clinical investigations, including controlled and uncontrolled studies of uses of the drug other than those proposed in the application, commercial marketing experience, reports in the scientific literature, and unpublished scientific papers. (21 C.F.R. 314.50(d)(5)(iv)) The clinical data submission must also include an "integrated summary of the data demonstrating substantial evidence of effectiveness for the claimed indications." Provision Section 3031 amends FFDCA Section 505(c) and PHSA Section 351(a)(2) to permit the HHS Secretary to rely upon "qualified data summaries" to support the approval of a supplemental NDA submitted by the sponsor of an approved drug seeking to add a new "qualified" indication to the approval. A "qualified indication" is one "for a drug that the HHS Secretary determines to be appropriate for summary level review." This provision adds that such supplemental application is eligible only if data demonstrating the safety of the drug are available and acceptable to the HHS Secretary, and all data used to develop the qualified data summaries are submitted as part of the supplemental NDA. It requires the HHS Secretary to post on the FDA website, and update annually, the number of applications reviewed solely based on a qualified data summary, and the average time for completion of reviews using and not using the review flexibility, among other specified information. This section defines qualified data summary as a "summary of clinical data that demonstrates the safety and effectiveness of a drug with respect to a qualified indication." Section 3032. Expanded Access Policy FDA regulates the U.S. sale of drugs and biological products, basing approval or licensure on evidence of the safety and effectiveness for a product's intended uses. Without that approval or licensure, a manufacturer may not distribute the product except for use in the clinical trials that will provide evidence to determine that product's safety and effectiveness. Under certain circumstances, however, FDA may permit the sponsor to provide an unapproved or unlicensed product to patients outside that standard regulatory framework. One such mechanism is expanded access to investigational drugs, commonly referred to as "compassionate use." If excluded from a clinical trial because of enrollment limitations, a person, acting through a physician, may request access to an investigational new drug outside of the trial. FDA may grant expanded access to a patient with a serious disease or condition for which there is no comparable or satisfactory alternative therapy, if, among other requirements, probable risk to the patient from the drug is less than the probable risk from the disease; if there is sufficient evidence of safety and effectiveness to support the drug's use for this person; and if providing access "will not interfere with the ... clinical investigations to support marketing approval." The widespread use of expanded access is limited by an important factor: whether the manufacturer agrees to provide the drug, which—because it is not FDA-approved—cannot be obtained otherwise. FDA does not have the authority to compel a manufacturer to participate. Manufacturers may consider several factors in deciding whether to provide an investigational drug, such as available supply, perceived liability risk, limited staff and facility resources, and need for data to assess safety and effectiveness. Although FDA reports the number of investigational drug requests it receives, manufacturers do not. Provision Section 3032 adds a new FFDCA Section 561A, "Expanded Access Policy Required for Investigational Drugs," to require a manufacturer or distributor of an investigational drug to be used for a serious disease or condition to make its policies on evaluating and responding to compassionate use requests publicly available. Required elements of the policy include contact information for the manufacturer or distributor of the drug, request procedures, "the general criteria the manufacturer or distributor will use to evaluate such requests for individual patients, and for responses to such requests," anticipated time to acknowledge request receipts, and a hyperlink or other reference to the clinical trial record containing information about expanded access to the drug. The new section states that posting of policy would not guarantee patients access to an investigational drug. The provision also allows a manufacturer or distributor to revise its policy at any time. Section 3032 becomes effective on the later of the date that is 60 days after the enactment of the 21 st Century Cures Act or "the first initiation of a phase 2 or phase 3 study ... with respect to such investigational drug." Sections 3033-3036. Regenerative Therapies Regenerative medicine is defined by NIH as "the process of creating living, functional tissues to repair or replace tissue or organ function lost due to age, disease, damage, or congenital defects." The regulation of cells or tissues intended for implantation or infusion into a human patient is the responsibility of the FDA Center for Biologics Evaluation and Research (CBER). FDA refers to such cells as HCT/Ps, which stands for human cells, tissues, and cellular and tissue-based products. Stem cells are one example of HCT/P. CBER held a public workshop on standards development for cellular therapies and regenerative medicine products in March 2014. Provisions Section 3033 adds a paragraph (g) to FFDCA Section 506 to require the HHS Secretary, at the request of the sponsor of a drug, to facilitate an "efficient development program for, and expedite review of" a drug that qualifies as a regenerative advanced therapy. To be eligible for such designation, the drug must (1) be a regenerative medicine therapy, (2) be intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and (3) have preliminary clinical evidence indicating that the drug has the potential to address unmet medical needs for such a disease or condition. This designation may be requested with or after submission of an investigational new drug (IND) application. An application regarding a regenerative medicine therapy is eligible for priority review and for accelerated approval in addition to "early interactions [with FDA] to discuss any potential surrogate or intermediate endpoint." The term "regenerative medicine therapy" includes cell therapy, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products, except for those regulated under PHSA Section 361 and 21 C.F.R. 1271. This section specifies the procedure through which the sponsor of a drug could request such designation, how the HHS Secretary would respond to the request, and postapproval requirements. This section is not to be construed to alter the authority of the HHS Secretary to approve drugs and license biologics pursuant to the FFDCA and PHSA Section 351, respectively, including standards of evidence, or to alter the requirement of postapproval studies. Section 3034 requires the HHS Secretary, acting through the FDA Commissioner, to issue draft guidance within one year of enactment of the 21 st Century Cures Act, and final guidance not later than 12 months after the close of the public comment period on the draft guidance, "clarifying how, in the context of regenerative advanced therapies, the HHS Secretary will evaluate devices used in the recovery, isolation, or delivery of regenerative advanced therapies," as specified. Section 3035 requires that before March 1 of each calendar year, with respect to the previous calendar year, the HHS Secretary submit a report to Congress on (1) the number and type of applications for regenerative advanced therapies filed, approved or licensed, withdrawn, or denied, and (2) the number of such applications or therapies that were granted accelerated approval or priority review. Section 3036 amends the FFDCA by adding a new Section 506G, "Standards for Regenerative Medicine and Regenerative Advanced Therapies." This section requires the HHS Secretary, in consultation with the National Institute of Standards and Technology (NIST) and specified stakeholders, to facilitate an effort toward the development of standards for regenerative medicine and advanced therapies through a transparent public process to support, such as "through regulatory predictability, the development, evaluation, and review of" such therapies. It also requires the HHS Secretary to review and update relevant regulations and guidance, as appropriate. This section further requires the Office of Combination Products (OCP) to help coordinate timely review of combination products across relevant agency centers and to ensure that persons are designated in each primary agency center as points of contact for the sponsors of combination products. It specifies additional duties for OCP related to communication, and facilitating meetings between the agency and the sponsors. It requires the HHS Secretary, not later than four years after enactment and after a public comment period, to issue final guidance on the combination product review process, as specified, and adds reporting requirements to the annual report to Congress on the activities of OCP, as specified. It amends FFDCA Section 520(h)(4) to prohibit the use of information contained in an application for premarket approval of a class III device from being used in an application for premarket approval of a combination product that contains an approved drug constituent, unless the applicant provides a patent certification and notifies the holder of the approved application and patent owner that the patent is invalid or will not be infringed upon. It also requires the HHS Secretary to identify, not later than 18 months after enactment, types of combination products and manufacturing processes that the HHS Secretary proposes may adopt different good manufacturing processes or streamlined mechanisms. This list is to be published in the Federal Register , finalized after public comment, and updated as needed. Section 3037. Health Care Economic Information Under FFDCA Section 502, a drug or device is deemed to be misbranded if, among other things, its labeling is false or misleading. Section 502(a) specifies that health care economic information provided in the course of selecting drugs for managed care or other similar organizations, by a formulary committee or similar entity, is not to be considered false or misleading if the information "directly relates" to a use of the drug as approved under FFDCA Section 505 or licensed under PHSA Section 351(a); the information must also be based on competent and reliable scientific evidence. Information that helps substantiate the health care economic information presented in accordance with this section must be made available to the HHS Secretary upon request. Health care economic information is defined to mean "any analysis that identifies, measures, or compares the economic consequences, including the costs of the represented health outcomes, of the use of a drug to the use of another drug, to another health care intervention, or to no intervention." Health care providers generally may prescribe a drug for an unapproved use when they judge that it is medically appropriate for their patient (often called "off-label" use). Drug companies, however, are not allowed to promote or distribute information about unapproved uses that have not been determined by FDA to be safe and effective. Drug and device companies have argued that current regulations prevent them from distributing important information to physicians about off-label uses of their products. In November 2016, FDA held a two-day public meeting to obtain input from various groups regarding off-label uses of approved or cleared medical products. Provision Section 3037 amends FFDCA Section 502(a) by allowing drug and device companies to promote health care economic information to payors (e.g., insurance companies), in addition to formulary committees and other similar entities "with knowledge and expertise in the area of health care economic analysis." This section allows for health care economic information to be "related" to an FDA-approved indication rather than "directly-related" as required by current law. This section maintains the "competent and reliable scientific evidence" standard and adds that, where applicable, the health care economic information must be accompanied by "a conspicuous and prominent statement describing any material differences" between the health care economic information and a product's approved labeling. It also amends the definition of health care economic information by (1) expanding the scope of the term "any analysis" to include "clinical data, inputs, clinical or other assumptions, methods, results, and other components underlying or comprising the analysis"; (2) specifying that analyses comprising health care economic information could be based on the economic consequences of the use of a drug, which may in turn be based on the separate or aggregated clinical consequences of the represented health outcomes; and (3) adding that health care economic information does not include analyses that relate only to a non-FDA-approved indication. Section 3038. Combination Product Innovation FDA regulatory authority over medical product safety and effectiveness covers drugs, biological products, and medical devices. The agency generally divides responsibilities for the review of marketing applications in its product-centered offices. The Center for Drug Evaluation and Research (CDER) reviews new drug applications for approval, the Center for Biologics Evaluation and Research (CBER) reviews biologics license applications for licensure, and the Center for Devices and Radiological Health (CDRH) reviews premarket approval applications for approval and 510(k) notifications for clearance. In 2002, Congress directed FDA to establish an Office of Combination Products (OCP) to facilitate the timely review and regulation of drug-device, drug-biologic, and device-biologic combination products, pursuant to the requirements in FFDCA Section 503. Both drugs and devices are defined in the FFDCA as products intended to diagnose, prevent, or treat disease, or otherwise affect the structure or any function of the body. Unlike a drug, however, a device "does not achieve its primary intended purposes through chemical action within or on the body ... and is not dependent upon being metabolized for the achievement of its primary intended purposes." OCP is required to determine the primary mode of action of a combination product and regulate it based on that determination. Generally, OCP treats a drug-device combination product as a drug unless the manufacturer can prove that it satisfies the device exclusionary clause (i.e., the product does not rely on chemical action to achieve its primary intended purpose). A manufacturer whose product is assigned to CDER will have a higher standard of evidence, a potentially higher requirement for supporting data, a higher user fee, and probably a longer premarket review time period than a manufacturer whose product is assigned to CDRH. Provision Section 3038 amends FFDCA Section 503(g) to require the HHS Secretary to assign a primary center for the regulation of combination products and to conduct premarket review of these products under a single application whenever appropriate, among other things. It requires the HHS Secretary to determine the primary mode of action for a combination product—defined as the single mode of action expected to make the greatest contribution to the overall intended therapeutic effects of the product—in order to determine how best to review the product. The HHS Secretary is not permitted to determine that the primary mode of action is that of a drug or biologic solely because the combination product has any chemical action within or on the body. If the sponsor of a combination product disagrees with the HHS Secretary's determination and requests an explanation, the HHS Secretary must provide a substantive scientific rationale for the determination. In addition, the sponsor may propose and, subject to an agreement with the HHS Secretary, conduct additional studies to establish the relevance of any chemical action in the product's primary mode of action. The sponsor may also request a meeting on such combination product, as specified, "to establish clarity and certainty." This paragraph also specifies other procedures for communication between the agency and the sponsor. For premarket review of a combination product that includes an approved constituent component (e.g., a drug or device), the HHS Secretary is allowed to require that a sponsor submit only that information that is necessary to determine the safety of the combination product, including any incremental risks or benefits posed by the product, taking into account any prior findings for the approved constituent parts. For a combination product submitted through a device pathway (515, 510(k), or 513(f)(2)) that contains an approved drug constituent, the applicant must certify any patents that claim the approved drug or its use for which the applicant has not obtained a right of reference, and give notice to the holder of the approved application and patent owner that the patent is invalid or will not be infringed upon. A combination product containing an approved drug constituent that is submitted through a device pathway is eligible for certain regulatory exclusivity periods: new chemical entity exclusivity (five years), new clinical investigation exclusivity three years), pediatric exclusivity (six months), qualified infectious disease product exclusivity (five years), and orphan drug exclusivity (seven years). Notwithstanding any other provision of this subsection, an application for a combination product submitted through a device pathway that contains an approved drug constituent would be considered a 505(b)(2) application for specified purposes. It does not prohibit a sponsor from submitting separate applications for the constituent parts of a combination product, unless the HHS Secretary determines that a single application is necessary. This section further requires OCP to help coordinate timely review of combination products across relevant agency centers and to ensure that persons are designated in each primary agency center as points of contact for the sponsors of combination products. It specifies additional duties for OCP related to communication and facilitating meetings between the agency and the sponsors. It requires the HHS Secretary, not later than four years after enactment and after a public comment period, to issue final guidance on the combination product review process, as specified, and adds reporting requirements to the annual report to Congress on the activities of OCP as specified. It amends FFDCA Section 520(h)(4) to prohibit the use of information contained in an application for premarket approval of a class III device from being used in an application for premarket approval of a combination product that contains an approved drug constituent, unless the applicant provides a patent certification and notifies the holder of the approved application and patent owner that the patent is invalid or will not be infringed upon. It also requires the HHS Secretary to identify, not later than 18 months after enactment, types of combination products and manufacturing processes that the HHS Secretary proposes may adopt different good manufacturing processes or streamlined mechanisms. This list is to be published in the Federal Register , finalized after public comment, and updated as needed. Subtitle E-Antimicrobial Innovation and Stewardship Section 3041. Antibacterial Resistance Monitoring. According to the CDC, each year in the United States, at least 2 million people become infected with bacteria that are resistant to antibiotics, and at least 23,000 of them die from these infections. The U.S. National Strategy for Combating Antibiotic-Resistant Bacteria (CARB) identifies five interrelated goals to control antibiotic resistance (AR): Antibiotic Stewardship: the judicious use of antibiotics in health care and agricultural settings; One Health Surveillance: integration of public health and animal disease, food, and environmental surveillance for resistant bacteria; Diagnostic Innovations: new technologies such as "point-of-care" antibiotic susceptibility tests and tests to identify viral infections; Treatment, Prevention, and Control Research and Development: efforts to boost basic research, facilitate clinical trials of new antibiotics, attract private investment, and increase the number of antibiotic drug candidates in the drug development pipeline; and International Collaboration: engagement in global AR activities through multiple venues. Provision Section 3041, "Antibacterial Resistance Monitoring," defines the term "antimicrobial" to include any antibacterial or antifungal drugs, and may include drugs that eliminate or inhibit the growth of other microorganisms, as appropriate. The section amends PHSA Section 319E to require the HHS Secretary to carry out the following activities, as specified: (1) encourage and assist in reporting of antimicrobial drug use, drug resistance, and antimicrobial stewardship programs in health care facilities of the Indian Health Service (IHS), Department of Veterans Affairs (VA), and Department of Defense (DOD); (2) report annually on antimicrobial drug resistance trends, stewardship programs, and other matters; (3) provide guidance and other informational materials about antimicrobial stewardship for residential and ambulatory health care facilities; (4) assist states with their antimicrobial resistance prevention activities; and (5) establish a mechanism for facilities to report antimicrobial stewardship activities and evaluate drug resistance data, including for drugs approved under the Limited Population Pathway established in Section 3042 of this Act. The HHS Secretary is required, consistent with laws prohibiting disclosure of trade secret and confidential information, to make data collected pursuant to this section publicly available. Section 3042. Limited Population Pathway. Antimicrobial drugs are intended for short-term use, making the development of new ones potentially less attractive to drug developers. Addressing barriers to antimicrobial drug approval may help counter this problem. The so-called limited population drug approval pathway for new antimicrobial drugs is one such approach, involving smaller clinical trials in a limited population of patients that have serious or life-threatening infections and unmet medical needs due to the lack of an effective approved antimicrobial drug. Provision Section 3042 creates a new product review pathway in FFDCA Section 506(h), "Limited Population Pathway for Antibacterial and Antifungal Drugs." This pathway allows the HHS Secretary to approve an antibacterial or antifungal drug as a limited population drug if (1) the drug is intended to treat a serious or life-threatening infection in a limited population of patients with unmet needs; (2) the standards for new drug approval or biologics licensure are met; and (3) the HHS Secretary receives a written request from the sponsor to approve the drug as a limited population drug. This review pathway includes the following elements, among others: The HHS Secretary's determination of the safety and efficacy of a limited population drug reflects the benefit-risk profile of the drug in the intended limited population, considering the availability or lack of alternative treatments for this population. Products approved using this pathway must carry prominent labeling noting, among other things, the intended use for a limited and specific population of patients. Sponsors must submit promotional materials to FDA for review 30 days prior to dissemination. Sponsors may pursue this pathway concurrently with other expedited development or approval pathways, as applicable. Section 3042 also requires the HHS Secretary to issue, within 18 months of enactment, draft guidance describing criteria, processes, and other considerations for demonstrating the safety and effectiveness of limited population drugs, and final guidance within 18 months of the close of the public comment period on the draft guidance. It requires the HHS Secretary to provide prompt advice to the sponsor regarding the approval of a limited population drug. If such drug obtains approval for a broader indication, this legislation allows the HHS Secretary to remove any post-marketing conditions, such as labeling and promotional review requirements, regarding limited population use. The HHS Secretary must report to Congress at least every two years on the number of requests for approval and the number of approvals of limited population drugs. The Comptroller General must report by December 2021 on activities under this section, the extent to which the limited population drug pathway facilitated approval of treatments for limited populations, and the effects of such pathway, if any, on antimicrobial and antifungal drug resistance. This section shall not be construed to alter the HHS Secretary's authority to approve drugs pursuant to the FFDCA or PHSA. Section 3043. Prescribing Authority. In general, the FFDCA regulates the actions of product sponsors in marketing, labeling, and promotion of medical products, but does not regulate the actions of health care providers engaged in the practice of medicine. Consequently, providers are generally allowed to prescribe drugs for uses or at doses other than those uses or doses approved by FDA. This is referred to as "off-label" use. Provision Section 3043 states that provisions in Subtitle E and any amendments to them shall not be construed to restrict the prescribing authority of health care professionals (such as off-label prescribing) or limit the practice of health care. Section 3044. Susceptibility Test Interpretive Criteria for Microorganisms; Antimicrobial Susceptibility Testing Devices. Laboratory tests can help clinicians determine whether a drug is likely to work against a specific infection by showing whether the infectious organism is susceptible (vs. resistant) to that drug. The criteria that distinguish susceptibility from resistance are called "breakpoints." Under current law and regulation, breakpoint information must be provided on antimicrobial drug labels, and labels for Antimicrobial Susceptibility Testing (AST) devices must reflect the relevant drug label(s). Generally, sponsors must apply to FDA to make changes to information contained in these drug and device labels, and FDA must pre-approve label changes for these drugs and devices. However, the susceptibility of infectious organisms may change over time, sometimes rapidly, rendering label information inaccurate for clinical decision-making purposes. FDA, clinicians, and others have sought to streamline FDA's process to ensure that antimicrobial drug and AST device labels reflect current information. Provision Section 3044 establishes a new FFDCA Section 511A, "Susceptibility Test Interpretive Criteria for Microorganisms." The stated purpose is to clarify the HHS Secretary's authority to efficiently update susceptibility test interpretive criteria to address the development of drug resistance; to provide for public notice of the availability of recognized interpretive criteria and interpretive criteria standards; and to clear (under FFDCA Section 510(k)), classify (under FFDCA Section 513(f)(2)), or approve (under FFDCA Section 515) AST devices using updated, recognized susceptibility test interpretive criteria. The section requires the HHS Secretary to identify appropriate susceptibility test interpretive criteria, as specified, and to, within one year of enactment, establish and maintain a public "Interpretive Criteria Website," listing (1) any criteria standards established by a nationally or internationally recognized standard development organization, where such organization meets specified requirements for transparency and management of potential conflicts of interest, among other things; and (2) criteria that, although determined by the HHS Secretary to be appropriate with respect to approved or licensed antimicrobial drugs, lack a recognized standard, for one of several stated reasons. The website must include several specific disclaimers regarding the uses and limitations of the information presented. The HHS Secretary is required to publish in the Federal Register a notice of establishment of the website not later than the date on which it is established. The provision clarifies that reference to the website in the labeling of an antimicrobial drug does not constitute misbranding, and states that FFDCA Section 511A shall not be construed to allow the HHS Secretary to disclose protected trade secret or confidential information. The HHS Secretary is required to review any new or updated criteria standards from a recognized standard development organization, and other changes to interpretive criteria, revise the website accordingly, and publish a notice of any such revisions on the FDA agency website, at least every six months. The website must also be revised upon the approval of any antimicrobial drug when such approval is based on criteria other than those already listed. All such notices must be compiled and published in the Federal Register at least annually, with a request for public comments. The HHS Secretary shall consider public comments, among other things, in revising website content. Both criteria standards and non-standard criteria listed on the website are considered to be recognized standards for the purpose of premarket review and other legal requirements for devices, pursuant to FFDCA Section 514(c)(1). However, sponsors may use standards other than those listed by FDA under this section in seeking approval or clearance of a drug or device. Antimicrobial drugs approved after the Interpretive Criteria Website is established must carry a reference to the website on the label. Sponsors of antimicrobial drugs approved before the website is established must submit, within one year of establishment of the website, supplemental applications to similarly change the label. Section 3044 allows the HHS Secretary, so long as other requirements for clearance are met, to authorize the marketing of an AST device for which the label references information from the website in lieu of information from clinical trials, and directs practitioners to information on the labels of antimicrobial drugs for which susceptibility is measured using such device. Finally, the section explicitly recognizes interpretive criteria standards posted on the Interpretive Criteria Website as device standards. It also (1) requires the HHS Secretary to report to Congress regarding progress in implementing this section; and (2) exempts FDA from requirements under the Paperwork Reduction Act when updating the list of susceptibility test interpretive criteria standards. This section shall not be construed to alter the HHS Secretary's authority to clear devices pursuant to the FFDCA or PHSA. Subtitle F-Medical Device Innovations Section 3051. Breakthrough Devices FDA requires all medical device product manufacturers to register their facilities, list their devices with the agency, and follow general controls requirements. FDA classifies devices according to the risk they pose to the patient. Medical devices that present only minimal risk can be legally marketed upon registration alone. These low-risk devices are deemed exempt from premarket review, and manufacturers need not submit an application to FDA prior to marketing. About two-thirds of medical devices listed with FDA are exempt from premarket review; therefore, these devices would not have a need for "priority review." Most moderate- and high-risk devices must go through premarket review to obtain the agency's permission prior to marketing. FDA grants this permission when a manufacturer meets regulatory premarket requirements and agrees to any necessary postmarket requirements, which vary according to the risk that a device presents. In general, for moderate-risk and high-risk medical devices, manufacturers can use two pathways to bring such devices to market with FDA's permission: (1) the premarket approval (PMA) pathway ( approval ) and (2) the 510(k) pathway ( clearance ). There is a fundamental difference between the PMA and 510(k) pathways. In a PMA review, FDA determines whether the device is reasonably safe and effective for its intended use. In a 510(k) review, FDA determines whether the device is substantially equivalent to another device whose safety and effectiveness may never have been assessed. The time it takes to review a medical device—total review time—is composed of the time FDA handles the application—FDA time—plus the amount of time the device sponsor or submitter takes to respond to requests by FDA for additional information about the device. Under FFDCA Section 515(d)(5), in order to provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating human diseases or conditions, the HHS Secretary is required to provide review priority for devices that represent breakthrough technologies for which no approved alternatives exist, that offer significant advantages over existing approved alternatives, or whose availability is in the best interest of the patients. To implement this requirement, the FDA, on April 23, 2014, issued the following draft guidance: Expedited Access for Premarket Approval Medical Devices Intended for Unmet Medical Need for Life Threatening or Irreversibly Debilitating Diseases or Conditions - Draft Guidance for Industry and Food and Drug Administration Staff . As indicated in the title, the FDA draft guidance covered only premarket approval (PMA) medical devices; FDA issued final guidance on April 13, 2015, that addressed de novo 510(k) devices, which it concluded are not eligible for the full scope of the priority review program. The guidance focuses on balancing risks versus benefits for patients, drafting a Data Development Plan by the medical device sponsor, and collecting postmarket data on medical devices that have received a priority review designation. As described in the FDA guidance, for a medical device that has received a priority review designation, the expedited review process involves lower requirements in the premarket review process, such as less information in the PMA application, in exchange for increased collection of postmarket data and reliance on the use of surrogate endpoints. According to FDA, the Expedited Access PMA (EAP) program features "earlier and more interactive engagement with FDA staff—including the involvement of senior management and a collaboratively developed plan for collecting the scientific and clinical data to support approval—features that, taken together, should provide these patients with earlier access to safe and effective medical devices." FDA intends to withdraw approval for a device if the sponsor fails to adhere to the postmarket requirements, such as data collection, or if the postmarket data prove the device is not safe and effective. Comments on the April 2014 FDA draft guidance questioned FDA's ability to enforce postmarket study requirements and urged the agency and Congress "to evaluate whether FDA has sufficient authorities to promptly withdraw product approval if the necessary data are not promptly collected or suggest that the product benefits do not outweigh risks." One media source stated that, regarding the EAP program, FDA "estimates that, at least in the early stages, on average, about six devices a year may qualify for the program, and the [agency] believes it has the resources available to handle that volume." The estimated six devices would represent about 15% of FDA's total PMA applications in one year. Other comments on the FDA draft guidance questioned whether FDA has sufficient resources to dedicate to the EAP program. Provision Section 3051 adds a new Section 515C, "Breakthrough Devices," to Chapter V of the FFDCA. The new section requires the HHS Secretary to establish a program to provide priority review for devices that (1) provide more effective diagnosis or treatment of a life-threatening or irreversibly debilitating condition, and (2) represent breakthrough technologies for which no approved alternatives exist, offer significant advantages over existing alternatives, or are, once available, in the best interest of patients. The section allows requests from device sponsors for designation of priority review of not only PMA medical devices, but also 510(k) devices and one other type of regulatory decision involving a medical device. The section requires the HHS Secretary in 60 days to determine whether the request for priority review would be granted. Such requests are to be evaluated by a team of experienced FDA staff and senior managers. If the HHS Secretary approves a priority review designation for a device, the HHS Secretary may not withdraw the designation because another "breakthrough" device was subsequently cleared or approved, thereby resulting in the specified criteria (i.e., no approved alternatives exist, offer significant advantages over existing approved or cleared alternatives, or the availability of which is in the best interest of patients) no longer being met. Each priority review device is assigned a team of staff, "including a team leader with appropriate subject matter expertise and experience." Senior FDA personnel oversee each team to facilitate the efficient development and review of the device. Among other things, the HHS Secretary is required to "provide for interactive communication with the device sponsor during the review process," and expedite "the Secretary's review of manufacturing and quality systems compliance." The HHS Secretary is required to "disclose to the sponsor, not less than 5 business days in advance the topics of any consultation concerning the sponsor's device that the HHS Secretary intends to undertake with external experts or an advisory committee and provide the sponsor an opportunity to recommend such external experts." The HHS Secretary may, as appropriate, "coordinate with the sponsor regarding early agreement on a data development plan." The HHS Secretary may ensure that clinical trial design is as efficient as practicable and may facilitate "expedited and efficient development and review of the device through utilization of timely postmarket data collection" with regard to PMA applications. Agreements on clinical protocols are binding, but they may be subject to change under certain circumstances. The provision specifies that both the agreement and subsequent changes to the clinical protocol must be agreed to in writing. The HHS Secretary is required to issue, not later than one year after enactment, guidance on the implementation of the new Section 515C of the FFDCA. In addition, the HHS Secretary is required to issue a report, on January 1, 2019, to the Senate Health, Education, Labor and Pensions Committee and the House Energy and Commerce Committee describing the program added under new FFDCA Section 515C, including recommendations to strengthen the program and better meet patient needs in a timely manner. Section 3052. Humanitarian Device Exemption The Humanitarian Device Exemption (HDE) was intended to encourage the development of devices that help treat and diagnose diseases or conditions that affect fewer than 4,000 individuals in the United States per year. An HDE application is similar to a PMA but is exempt from the effectiveness requirements to encourage manufacturers to develop devices for these small markets. Provision Section 3052 amends FFDCA Section 520(m) and allows an HDE to be granted to treat and diagnose diseases or conditions that affect not more than 8,000 individuals in the United States. Within 18 months of enactment, the HHS Secretary, acting through the Commissioner of the FDA, is required to publish draft guidance that "defines the criteria for establishing 'probable benefit'" when evaluating whether the health benefit of an HDE device outweighs the risk of injury or illness from using such a device. Section 3053. Recognition of Standards Under the Medical Device Amendments of 1976 (MDA, P.L. 94-295 ), FDA was required to classify all medical devices into one of three classes. Congress provided definitions for the three classes—Class I, Class II, Class III—based on the risk (low-, moderate-, and high-risk, respectively) posed by the device to patients. Device classification determines the type of regulatory requirements that a manufacturer must follow. General controls are the minimum regulations that apply to all FDA-regulated medical devices. Class II devices are those under current law that "cannot be classified as Class I because the general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness of the device." Although Class II includes devices that pose a moderate risk to patients, currently only some have information—or special controls—available to reduce or mitigate risk. Special controls include special labeling requirements, premarket data requirements, postmarket surveillance, patient registries, guidelines, and performance standards. According to a 2011 report by the Institute of Medicine, about "15% of all device types classified in Class II are subject to special controls." This is because "FDA has not promulgated performance standards or special controls for the vast majority of types of Class II devices." Although "FDA has procedures for developing, adopting, and implementing guidance and standards," it has been "persistently hindered in fully developing those materials by a lack of or limitations on human, fiscal, and technologic resources and capabilities." According to a 1988 Government Accountability Office (GAO) report, FDA estimated that "40 staff- years (not staff-hours) would be required to develop a single performance standard." In response to agency problems with developing performance standards, the Safe Medical Devices Act of 1990 ( P.L. 101-629 ) simplified the process of establishing performance standards for Class II devices and authorized the use of alternative restrictions, called special controls, at the agency's discretion. The Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) allowed FDA to recognize an appropriate performance standard developed by a U.S. or international organization involved in standard development. Provision Section 3053 amends FFDCA Section 514(c) by adding two new subparagraphs and two new paragraphs. Under the section, any person may submit to FDA a request for the agency to recognize "all or part of an appropriate standard established by a nationally or internationally recognized standard organization." The HHS Secretary is required to make a determination to recognize all, part, or none of the standard within 60 days, with a written response indicating the rationale for such a determination, "including the scientific, technical, regulatory, or other basis for such determination." The response and rationale for recognition must be made publically available. Under the section, the HHS Secretary is required to provide to all FDA employees who review premarket submissions for devices "periodic training on the concept and use of recognized standards for purposes of meeting a premarket submission requirement or other applicable requirement." The HHS Secretary must publish guidance identifying the principles for recognizing standards. Section 3054. Certain Class I and Class II Devices Under the Medical Device Amendments of 1976 (MDA), the manufacturer of a new product would submit a notice to the FDA 90 days prior to marketing. This type of premarket review is known as a 510(k) notification, after the section of the MDA requiring that FDA be notified of the new product before it is marketed. The Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) eliminated the requirement of a 510(k) submission for most Class I devices and a small proportion of Class II device types. A 2009 GAO study found that 67% of device types were exempt from premarket review; Class I devices made up 95% and Class II devices made up 5% of these exempt devices. On July 1, 2015, FDA released guidance that exempts 120 medical devices from premarket notification requirements; draft guidance was issued on August 1, 2014. The 120 devices are primarily Class II but include a few Class I devices and some pre-amendment (pre-MDA) unclassified devices. The guidance states that until "publication of a final rule or order exempting these devices from 510(k), FDA does not intend to enforce compliance with 510(k) requirements for these devices. FDA does not expect manufacturers to submit 510(k)s for these devices during this time period." Provision Section 3054 amends FFDCA Section 510(l) and requires the HHS Secretary, within 120 days of enactment and at least once every five years thereafter, as the HHS Secretary determines appropriate, to identify and publish in the Federal Register "any type of class I device that the Secretary determines no longer requires a report under subsection (k) to provide reasonable assurance of safety and effectiveness." Upon publication, each type of Class I device so identified is exempt from the 510(k) requirement and the "classification regulation applicable to each such type of device" is deemed amended to incorporate the exemption. Similarly, the section amends FFDCA Section 510(m) and requires the HHS Secretary, within 90 days of enactment, to publish in the Federal Register "a list of each type of class II device that the Secretary determines no longer requires a report under subsection (k) to provide reasonable assurance of safety and effectiveness." The HHS Secretary must provide a 60-day public comment period after publication of such a list. Not later than 210 days after enactment, the HHS Secretary is required to publish in the Federal Register a list representing the final determination on the types of Class II devices that no longer require a 510(k) notice prior to marketing. Upon publication of the final list, each type of Class II device so listed is exempt from the 510(k) requirement and the "classification regulation applicable to each such type of device" is deemed amended to incorporate the exemption. Section 3055. Classification Panels FDA advisory committees "provide independent expert advice to the agency on a range of complex scientific, technical, and policy issues. An advisory committee meeting also provides a forum for a public hearing on important matters. Although advisory committees provide recommendations to FDA, FDA makes the final decisions." In April 2015, FDA issued draft guidance entitled "Procedures for Meetings of the Medical Devices Advisory Committee." Once final, the draft guidance will replace two earlier FDA guidance documents. The draft guidance provides information on the processes associated with Medical Devices Advisory Committee panel meetings, such as types of panel meetings, information exchange for panel meetings, and conduct of panel meetings. The Medical Devices Advisory Committee includes 17 different advisory panels, which address topics in various specialty areas. FDA may refer a matter to a particular device panel for advice on a premarket submission if the submission is, for example, of significant public interest or is highly controversial. The agency may also ask a panel to provide advice on regulatory actions, such as device classification, or general scientific matters "that are related to a device type or a general topic that is relevant to medical device safety and effectiveness." Under current law, the advisory panels are composed of persons who are qualified by training and experience to evaluate the safety and effectiveness of the devices to be referred to the panel and who, to the extent feasible, possess skill in the use of, or experience in the development, manufacture, or utilization of, such devices. The HHS Secretary shall make appointments to each panel so that each panel shall consist of members with adequately diversified expertise in such fields as clinical and administrative medicine, engineering, biological and physical sciences, and other related professions. In addition, each panel shall include as nonvoting members a representative of consumer interests and a representative of interests of the device manufacturing industry. Scientific, trade, and consumer organizations shall be afforded an opportunity to nominate individuals for appointment to the panels. Provision Section 3055 amends FFDCA Section 513(b)(5) by adding two new subparagraphs that require the HHS Secretary to ensure that there is "adequate expertise" on a device classification panel, including by giving the device manufacturer the opportunity to provide advice "on the expertise needed among the voting members of the panel," among other things. The HHS Secretary is required to ensure this expertise when "a device is specifically the subject of review by a classification panel." The provision defines "adequate expertise" to mean that the classification panel reviewing a premarket submission includes "two or more voting members, with a specialty or other expertise clinically relevant to the device under review, and at least one voting member who is knowledgeable about the technology of the device." Each year the HHS Secretary must provide an "opportunity for patients, representatives of patients, and sponsors of medical device submissions to provide recommendations for individuals with appropriate expertise to fill voting member positions on classification panels." The section amends FFDCA Section 513(b)(6) regarding the panel review process and participation in the panel meeting, adding that the device manufacturer, or its representative, must be allowed time during a panel meeting to correct misstatements of fact or provide clarifying information, subject to the discretion of the panel chairperson. The section strikes subparagraph (B) in FFDCA Section 513(b)(6) and replaces it with a similar subparagraph, delineating that adequate time for presentations is required to be provided to the device manufacturer and the HHS Secretary, and adds that the panel may pose questions to the representative of the manufacturer and consider the responses in the panel's review of the device. Section 3056. Institutional Review Board Flexibility The HHS Human Subject Regulations are a core set of federal standards for protecting human subjects in HHS-sponsored research. These regulations are commonly referred to as the Common Rule because the same requirements have been adopted by many other federal departments and agencies, which apply the regulations to the research they fund. Under the Common Rule, research protocols must be approved by an Institutional Review Board (IRB) to ensure that the rights and welfare of research subjects are protected. FDA has issued its own set of Human Subject Regulations, which are similar, but not identical, to the Common Rule. FDA applies these regulations to all the research it regulates, including clinical trials of new drugs and medical devices, regardless of the source of funding for the research. All clinical evaluations of investigational devices (unless exempt) must have an investigational device exemption (IDE) before the clinical study is initiated. An IDE allows an unapproved device (most commonly an invasive or life-sustaining device) to be used in a clinical study to collect the data required to support a PMA submission. The IDE permits a device to be shipped lawfully for investigation of the device without requiring that the manufacturer comply with other requirements of the FFDCA, such as registration and listing. Devices approved by FDA via the HDE are for diagnosing or treating diseases or conditions that affect fewer than 4,000 individuals in the United States each year. An HDE application is similar to a PMA, but it is exempt from the effectiveness requirements. Such devices may be used in a facility only after a local IRB has approved their use in that facility, except in certain emergency situations. Provision Section 3056 amends FFDCA Section 520(g), regarding IDEs, and FFDCA Section 520(m), regarding HDEs, by removing the word "local" in all references to local IRBs, including in the stipulation that an approved humanitarian use device may be used in a facility only after a local IRB has approved such use, except in certain emergency situations. Section 3057. CLIA Waiver Improvements The Clinical Laboratory Improvement Amendments (CLIA) of 1988 (CLIA, P.L. 100-578 ) provide the Centers for Medicare & Medicaid Services (CMS) with authority to regulate clinical laboratories to ensure the accuracy of test results, given that these results affect clinical decisionmaking. CLIA requires laboratories to receive certification before they are allowed to carry out clinical laboratory testing on a human sample. CLIA certification is based on the level of complexity of testing that a laboratory is performing, graded as low, moderate, or high. FDA is responsible for categorizing clinical laboratory tests according to their level of complexity. Laboratories that perform only low-complexity tests (called waived tests ) receive a certificate of waiver (COW) from CMS. Conversely, only laboratories certified to do so may perform moderate- and high-complexity tests. FDA determines whether a test is waived (i.e., low-complexity) or not based on information submitted by the test's manufacturer, and FDA has issued guidance to support the manufacturer's submission of this information. Under current law, waived tests are those "that have been approved by FDA for home use or that, as determined by the HHS Secretary, are simple laboratory examinations and procedures that have an insignificant risk of an erroneous result." The guidance recommends ways to demonstrate that a test is both "simple" and has "an insignificant risk of an erroneous result." Demonstrating the latter includes showing that a test's accuracy is comparable to a method whose accuracy has already been established and documented. (Section V of the guidance document addresses approaches to demonstrating accuracy.) Provision Section 3057 requires the HHS Secretary, acting through the FDA Commissioner, to, not later than one year after enactment, publish draft guidance that revises Section V of the current guidance, including providing clarification on the appropriate use of comparable performance between a waived and moderately complex laboratory user to demonstrate accuracy. It also requires the HHS Secretary, not later than one year after the comment period for the draft guidance closes, to publish final revised guidance. Section 3058. Least Burdensome Device Review Section 205 of the Food and Drug Administration Modernization Act of 1997 (FDAMA, P.L. 105-115 ) amended FFDCA Section 513, adding two provisions commonly referred to as the "Least Burdensome Provisions." (FFDCA Section 513(a)(3)(D)(ii) and Section 513(i)(1)(D)). The two provisions stipulate that FDA consider the "least burdensome" data or information "necessary" to demonstrate a reasonable assurance of device effectiveness in a PMA application or substantial equivalence to predicate devices with differing technological characteristics in certain 510(k) notifications. The two provisions are as follows: FDA published final guidance on the least burdensome provisions on October 4, 2002. Under the guidance, FDA may allow the use of non-clinical data—such as laboratory and/or animal testing—in place of clinical data for the approval of PMA devices in certain circumstances, such as "devices or modifications of approved devices for which scientifically valid information is available in the public domain." When clinical data are needed, FDA allows manufacturers to consider study designs to shorten the length of the study. Such study designs include the use of "surrogate endpoints and statistical methods, such as Bayesian analyses," and study designs other than the gold standard—the randomized controlled trial. Although FDA allows for substitution of laboratory data in certain circumstances, the absence of problems in laboratory testing may not always predict what happens to a device over time in the human body, where forces that cannot be replicated in laboratory testing act upon the device. The 2002 FDA guidance states, "[r]eliance on postmarket controls (e.g., ... postmarket surveillance, and the Medical Device Reporting requirements) should be considered as a mechanism to reduce the premarket burden for 510(k)s and PMAs, while still ensuring the safety and effectiveness of the device." However, the FDA's authority to require postmarket studies of medical devices is limited. A September 2015 GAO study found that of the 392 postmarket surveillance studies ordered by FDA between May 1, 2008, and February 24, 2015, 88% were inactive, 10% were ongoing, and 2% were complete. Activities related to implementing the least burdensome provision, including training for staff and advisory panels, are posted on FDA's website. Provision Section 3058 amends FFDCA Section 513 by adding a new subsection (j), "Training and Oversight of Least Burdensome Requirements." The HHS Secretary must ensure that each FDA employee involved in the review of premarket submissions, including supervisors, receives training on the "meaning and implementation of the least burdensome requirements" and must periodically assess the implementation of such requirements, including employee training. The FDA ombudsman responsible for device premarket review is required to conduct an audit of the least burdensome training, including the effectiveness of the training, 18 months after enactment. The audit must include "interviews of persons who are representatives of the industry regarding their experience in the device premarket review process" and a list of the measurement tools used to assess the implementation of the least burdensome requirement. A summary of the audit findings must be submitted to the Senate HELP Committee and the House Energy and Commerce Committee and posted on the FDA website within 30 days of completion of the audit. Regarding PMA applications, the section amends FFDCA Section 515(c), adding a new paragraph that requires the HHS Secretary to "consider the least burdensome appropriate means necessary to demonstrate device safety and effectiveness." It defines the term necessary to mean "the minimum required information that would support a determination by the HHS Secretary that an application provides a reasonable assurance of the safety and effectiveness of the device" and states that the role of postmarket information must be considered in determining the least burdensome means of demonstrating a reasonable assurance of device safety and effectiveness. In addition, the provision amends FFDCA Section 517A(a), adding that each substantive summary of the scientific and regulatory rationale for any decision made by FDA's Center for Devices and Radiological Health (CDRH) regarding the submission or review of a PMA, a 510(k), or an IDE must include a brief statement on how the least burdensome requirements were considered and applied. Section 3059. Cleaning Instructions and Validation Data FFDCA Section 510(k) requires medical device manufacturers to register with the HHS Secretary and, at least 90 days prior to introducing a device intended for human use into interstate commerce, to report to the HHS Secretary (1) the class in which the device is classified and (2) actions taken to comply with applicable device regulatory requirements under FFDCA Sections 514 and 515. This notification requirement is part of the 510(k) premarket approval pathway, a process that is unique to medical devices and, if successful, results in FDA clearance . Under the 510(k) pathway, the manufacturer must demonstrate that a new device is substantially equivalent to a device already on the market (a predicate device). Substantial equivalence is determined by comparing the performance characteristics of a new device with those of a predicate device; clinical data demonstrating safety and effectiveness are usually not required. Reusable medical devices are those devices that may be reprocessed and used on multiple patients. In March of 2015, FDA released final guidance on the reprocessing of reusable medical devices: Reprocessing Medical Devices in Health Care Settings: Validation Methods and Labeling . This guidance states that, among other things, "[m]anufacturers seeking to bring to market certain reusable devices, such as duodenoscopes, bronchoscopes and endoscopes, should submit to the FDA for review their data validating the effectiveness of their reprocessing methods and instructions." Under Section 604 of the Food and Drug Administration Safety and Innovation Act (FDASIA), the HHS Secretary was required to withdraw draft guidance, issued by FDA in July 2011, entitled " Guidance for Industry and FDA Staff—510(k) Device Modifications: Deciding When to Submit a 510(k) for a Change to an Existing Device ," and leave the prior guidance issued in 1997 in effect. Although patient and consumer groups have generally supported a more rigorous 510(k) notification system, industry had voiced concerns that the 2011 guidance would slow the device regulatory process. Section 604 of FDASIA also required a report to House and Senate committees on when a 510(k) notification should be submitted for a modification or change to a legally marketed device. Any new draft guidance (or proposed regulation) on 510(k) device modification could not be issued before the committees received the report. Final guidance (or regulation) could not be issued until one year after the committees had received the report. This report was completed by FDA in January 2014. Provision Section 3059 amends FFDCA Section 510 by adding a new subsection (q), "Reusable Medical Devices," which requires the HHS Secretary, not later than 180 days after enactment, to identify and publish a list of reusable device types for which reports under Section 510(k) must include (1) instructions for use and (2) validation data regarding cleaning, disinfection, and sterilization. Reports issued after the publication of this list are required to include instructions for use and validation data, as specified by the HHS Secretary. The section also requires the HHS Secretary, acting through the FDA Commissioner and not later than one year after the date on which the comment period closes for the draft guidance, to issue final guidance regarding when a notification under 510(k) would have to be submitted for a modification or change to a legally marketed device. Section 3060. Clarifying Medical Software Regulation Increasingly, health care facilities are using computer systems for routine administrative and financial transactions (e.g., patient scheduling, claims processing) and for capturing and exchanging clinical information (e.g., electronic health records). One area that is undergoing especially rapid growth and innovation is mobile health. This term refers to the use of portable devices, such as smartphones and tablets, for medical purposes. Users interface with mobile devices through the use of software applications ("apps"). Some apps simply access stored medical information, while others capture and input patient data into an electronic health record (EHR). Many apps now provide clinical decision support (CDS) using algorithms that use clinical information to generate customized (i.e., patient-specific) diagnosis and treatment recommendations. Regulators are particularly interested in mobile apps that could pose a risk to patients if they malfunction. These include apps used to display and transfer data from a patient monitor; apps that control an existing device; and apps that transform a mobile platform into a medical device (e.g., an app that allows patients to use their smartphone to record electrocardiograms using a lead that connects to the phone). Under the FFDCA, the FDA has regulatory authority over software that meets the statutory definition of a medical device and is "intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease." FDA released a nonbinding guidance document on mobile medical apps in September 2013, in which it stated its intention to focus on the functionality of the mobile health product, not the mobile platform itself. Thus, the agency did not intend to regulate smartphone or tablet manufacturers. FDA further stated its intention to adopt a risk-based approach by applying its regulatory oversight to "only those mobile apps that are medical devices and whose functionality could pose a risk to patient safety if the mobile app were to not function as intended." In February 2015, FDA released updated guidance on its risk-based approach to regulating mobile medical apps. The agency provided examples of mobile apps that do not meet the statutory definition of a medical device and so are not subject to its regulatory authority, including apps used to automate general office operations in health care settings. The agency then gave examples of mobile apps that may meet the definition of a medical device but for which the agency intends to exercise enforcement discretion—meaning that it does not intend to apply regulatory oversight—because the apps pose minimal risk to the public. This category includes mobile apps that help asthmatics track inhaler usage and asthma episodes; apps that give patients a portal into their own EHR; and apps intended for individuals to log, track, or make decisions related to general wellness (e.g., Fitbit products). Finally, FDA provided examples of mobile apps that are the focus of the agency's regulatory oversight. These apps meet the definition of a medical device, and they pose a significant risk to patient safety if they do not function as intended. Examples include apps that connect to an existing device for the purpose of controlling its operation, function, or energy source; apps that are used in active patient monitoring or analyzing patient-specific medical device data from a connected device; and apps that transform a mobile platform into a regulated medical device. The updated guidance did not address regulation of CDS software. Provision Section 3060 amends FFDCA Section 520 to exclude certain types of health software from the FFDCA definition of medical device, including products that provide a variety of administrative and health management functions; electronic health record technology that creates, stores, transfers, and displays patient information; and software that interprets and analyzes patient data to help make clinical diagnosis or treatment decisions (including CDS tools). In general, this would preclude FDA from regulating these products as medical devices. However, Section 3060 creates an exception allowing FDA to exercise regulatory authority if the agency determines that the use of the software "would be reasonably likely to have serious adverse health consequences" based on specified criteria. One of the criteria is the likelihood and severity of patient harm if the software were not to perform as intended. The exception would apply to EHR systems (and other software that simply creates, stores, transfers, and displays data), as well as CDS and other analytic tools. Section 3060 requires the HHS Secretary to report, within two years of enactment and biennially thereafter, on the health risks and benefits associated with software determined to be excluded from the medical device definition, and a summary of the impact of such software on patient safety. Finally, Section 3060 amends FFDCA Section 513(b) to require the HHS Secretary to classify a health software accessory based on its intended use, "notwithstanding the classification of any other device with which such accessory is intended to be used." Subtitle G-Improving Scientific Expertise and Outreach at FDA Section 3071. Silvio O. Conte Senior Biomedical Research and Biomedical Product Assessment Service The Silvio O. Conte Senior Biomedical Research Service (SBRS), established in PHSA Section 228, is a special hiring mechanism used by the HHS Secretary to attract and retain accomplished scientists to work in Public Health Service (PHS) agencies. It is not subject to civil service requirements under Title 5 of the U.S. Code , and it is distinct from other PHS hiring mechanisms, such as the PHS Commissioned Corps. SBRS requirements are as prescribed in law and regulation (42 C.F.R. Part 24). Currently, SBRS is limited to 500 members, who are accomplished doctoral-level scientists in biomedical research or clinical research evaluation. The rate of pay may not exceed that for Level I of the Executive Schedule (currently about $206,000 per year) unless approved by the President. The HHS Secretary may contribute up to 10% of a Servicemember's pay to that person's already established retirement system at the institution of higher education at which the member had been employed. Provision Section 3071 renames the SBRS as the Silvio O. Conte Senior Biomedical Research and Biomedical Product Assessment Service (the Service). It increases the number of authorized members to 2,000 and adds "biomedical product assessment" as a desired field of expertise. It clarifies that the HHS Secretary is not required to reduce the number of employees serving in other HHS employment systems to offset the number of new employees in the Service. The provision requires the HHS Secretary to appoint experts to agencies within HHS, "taking into account the need for the expertise of such expert." It also authorizes the appointment of persons who hold "a master's level degree in engineering, bioinformatics, or a related or emerging field," broadening the current requirement for doctoral-level members. It increases the upper pay rate limit to that of the President (currently $400,000 per year) but eliminates the authority to contribute to a member's preexisting retirement system. Finally, the provision requires GAO, within four years of enactment, to study and report to Congress on the changes to the Service and their effects on HHS departments and agencies. Section 3072. Hiring Authority for Scientific, Technical, and Professional Personnel Title 5 of the U.S. Code provides the broad framework of requirements under which many federal employees are hired; however, some subsets of employees are hired under alternative government-wide or agency-specific authorities. Numerous hiring authorities target scientists and other technical workers, for whom federal agencies such as FDA compete with the private sector and nonfederal public employers. For example, FFDCA Section 714 authorizes the HHS Secretary to appoint employees to positions in FDA to perform, administer, or support activities related to review of medical device applications and human generic drugs "without regard to the provisions of title 5, United States Code, governing appointments in the competitive service." Provision Section 3072 adds a new FFDCA Section 714A, "Hiring Authority for Scientific, Technical, and Professional Personnel," which authorizes the HHS Secretary to "appoint outstanding and qualified candidates to scientific, technical, or professional positions that support the development, review, and regulation of medical products" within the competitive service "without regard to the provisions of title 5, United States Code, governing appointments in the competitive service." The FDA Commissioner is allowed to determine pay (not to exceed the annual rate of pay of the President) for the purposes of retaining qualified employees, notwithstanding certain General Schedule pay rate requirements. It specifies that this information will be publicly available and that this new provision does not affect the FDA's streamlined hiring authority in FFDCA 714. The provision also requires the HHS Secretary, not later than 18 months after the enactment of the 21 st Century Cures Act, to submit a report to Congress on workforce planning and certain specified elements with regard to the FDA workforce. This provision also requires the Comptroller General to conduct a study of FDA's ability "to hire, train, and retain qualified scientific, technical, and professional staff ... necessary to fulfill the mission of the [FDA] to protect and promote public health," among other specified contents with regard to the FDA workforce. Section 3073. Establishment of Food and Drug Administration Intercenter Institutes FDA regulatory authority over medical product safety and effectiveness covers drugs, biological products, and medical devices. The agency generally divides responsibilities for the review of marketing applications in its product-centered offices. CDER reviews new drug applications for approval, CBER reviews biologics license applications for licensure, and CDRH reviews premarket approval applications for approval and 510(k) notifications for clearance. As part of the Vice President's Cancer Moonshot Initiative, the Obama Administration has proposed an Oncology Center of Excellence to streamline collaboration across FDA's Human Drugs, Biologics, and Devices and Radiological Health programs. According to the FDA's FY2017 Congressional Justification, "With the continued development of companion diagnostic tests and the use of combinations of drugs and biologics to treat cancer using methods developed through the science of precision medicine, to most benefit those affected, FDA needs to take an integrated approach in its evaluation of products for the prevention, screening, diagnosis, and treatment of cancer." Although the Administration's proposed center of excellence is specific to cancer, there has arguably been an increase in the number and complexity of diagnostics and therapeutics for other diseases as well, and some groups have suggested that such pilots could be done in other areas (e.g., cardiology, neurology, and infectious disease). Provision Section 3073 adds a new FFDCA Section 1014, "Food and Drug Administration Intercenter Institutes," requiring the HHS Secretary to establish one or more "Intercenter Institutes" for a major disease area(s). Such institutes will be responsible for coordinating activities applicable to specific disease area(s) between CDER, CBER, and CDRH; for example, coordinating staff from the three centers with diverse product expertise relevant to a major disease area, and streamlining the review of medical products related to that major disease area. This provision requires the HHS Secretary to establish at least one institute within one year of enactment, and to provide a public comment period while each institute is being implemented. In addition, this provision allows the HHS Secretary to terminate any such institute if the HHS Secretary determines that it is no longer benefitting the public health. Section 3074. Scientific Engagement Following allegations of misspent funds during a 2010 General Services Administration meeting held in Las Vegas, the Office of Management and Budget (OMB) imposed restrictions on conference travel for federal employees in memorandum M-12-12. The memorandum directed agencies, beginning in FY2013, to spend at least 30% less than what was spent in FY2010 on travel expenses, and stated that agencies "must maintain this reduced level of spending each year through FY 2016." Senior-level agency approval is required for all conferences sponsored by an agency where the conference expenses to the agency exceed $100,000. Agencies are prohibited from spending more than $500,000 on a single conference. However, this restriction may be waived if the agency head "determines that exceptional circumstances exist whereby spending in excess of $500,000 on a single conference is the most cost-effective option to achieve a compelling purpose." Provision Under Section 3074, if attendance at a scientific meeting is directly related to the professional duties of scientific or medical professionals of HHS, then the meetings would not be considered to be conferences for the purposes of (1) federal reporting requirements in annual appropriations acts, and (2) a restriction in OMB memorandum M-12-12 or any other regulation restricting such travel, but would not exempt these meeting from federal travel regulations. The provision also requires that each HHS operating division, not later than 90 days after the end of the fiscal year, post on its website an annual report on scientific meeting attendance and related travel spending for each fiscal year, including details as specified. Section 3075. Drug Surveillance The Food and Drug Administration Amendments Act of 2007 (FDAAA, P.L. 110-85 ) required FDA to take several actions regarding how it informs the public, expert committees, and others about agency actions and plans and information the agency has developed or gathered about drug safety and effectiveness. Among other things, the law required biweekly screening of the FDA Adverse Event Reporting System (FAERS) database and quarterly reporting on the FAERS website regarding new safety information or potential signals of a serious risk. The FDAAA also required the development and maintenance of a website with extensive drug safety information, and required the HHS Secretary to "prepare, by 18 months after approval of a drug or after use of the drug by 10,000 individuals, whichever is later, a summary analysis of the adverse drug reaction reports received for the drug, including identification of any new risks not previously identified, potential new risks, or known risks reported in an unusual number." The FDAAA also named the risk-management process "risk evaluation and mitigation strategies" (REMS) and expanded the risk-management authority of FDA. A REMS may include "an elements to assure safe use" (ETASU), which is a restriction on distribution or use that is intended to (1) allow access to those who could benefit from the drug while minimizing their risk of adverse events and (2) block access to those for whom the potential harm would outweigh potential benefit. Provision Section 3075 amends FFDCA Section 505(k)(5) to require the HHS Secretary to conduct regular screenings of the FAERS database instead of the bi-weekly screenings required by current law. This provision requires the HHS Secretary to post guidelines on the FDA website, with input from experts, that detail best practices for drug safety surveillance using FAERS and criteria for public posting of adverse event signals. This provision also amends FFDCA Section 505(r)(2)(D) to remove the requirement that the HHS Secretary prepare a summary analysis of the adverse drug reaction reports received for a drug "by 18 months after approval" and instead requires that the HHS Secretary make publicly available on the FDA website "best practices for drug safety surveillance activities for drugs newly approved under this section or section 351 of the [PHSA]." This provision also amends FFDCA Section 505-1(f)(5)(A), expanding the authority to evaluate the ETASU for a drug to include "or other advisory committee," compared with current law, which designates this responsibility to the HHS Secretary "through the Drug Safety and Risk Management Advisory Committee (or successor committee)" of the FDA. This provision also amends FFDCA Section 505-1(f)(5)(B) to change the requirement that the committee evaluate the ETASU for one or more drugs from "annually" to "periodically." Section 3076. Reagan-Udall Foundation for the Food and Drug Administration Background FFDCA Section 770, as added by FDAAA ( P.L. 110-85 ), created the Reagan-Udall Foundation for the Food and Drug Administration, a nonprofit organization "to advance the mission" of FDA. Its duties cover activities such as identifying and then prioritizing unmet needs; awarding grants or entering into other agreements with scientists, academic consortia, public-private partnerships, nonprofit organizations, and industry; holding meetings and publishing information and data for use by FDA and others; and taking action to obtain patents and licensing of inventions, among others. It is led by a Board of Directors, four of whom are ex officio members, as well as 14 members who are appointed to the Board by the ex officio members, including nine from candidates provided by the National Academy of Sciences, and five from candidates provided by "patient and consumer advocacy groups, professional scientific and medical societies, and trade organizations." Section 770 specifies that of the 14 appointed members, four must be representatives of the "general pharmaceutical, device, food, cosmetic, and biotechnology industries;" three must be representatives of academic research organizations; two must be representatives of patient or consumer advocacy organizations; one must be a representative of health care providers; and four must be "at-large members with expertise or experience relevant to the purpose of the Foundation." Provision Section 3077 amends FFDCA Section 770 to change the membership of the Board of Directors to allow the voting members of the board to increase the size of the board and appoint new members by majority vote, without regard to the balance of expertise and affiliation required by current law. It limits to 30% of the membership "representatives of the general pharmaceutical, device, food, cosmetic, and biotechnology industries." The obligation to ensure specific expertise among the members is broadened to rest with all members of the board, not only ex officio appointees. As with the current law, each board member's term of office would last for four years, and initially appointed board members' terms would expire on a staggered basis, as determined by the ex officio members. This provision adds that for the additional board members appointed pursuant to the 21 st Century Cures Act, the terms of office for the initially appointed persons may expire on a staggered basis, as determined by the members of the board. The provision removes the salary cap of the foundation's Executive Director, which is now set at the compensation of the Commissioner. It also amends the language regarding separation of funds. The current requirement is that funds received from the Treasury be held in separate accounts from funds received from other sources, including private entities. The provision changes the requirement, so that funds received from the Treasury are "managed as individual programmatic funds, according to best accounting practices." Subtitle H-Medical Countermeasures Innovation Following the terrorist attacks of 2001, the federal government determined that it needed additional medical countermeasures (such as diagnostic tests, drugs, vaccines, and other treatments) to respond to an attack using chemical, biological, radiological, or nuclear (CBRN) agents. The Project BioShield Act ( P.L. 108-276 ), the Pandemic and All-Hazards Preparedness Act (PAHPA, P.L. 109-417 ), and the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (PAHPRA, P.L. 113-5 ) established new authorities and programs in the Department of Health and Human Services (HHS) to support the development and procurement of new CBRN medical countermeasures. The Health and Human Services Assistant Secretary for Preparedness and Response (ASPR) coordinates the government-wide effort to develop and procure medical countermeasures. The ASPR is required to provide Congress an annual coordinated 5-year budget plan that includes countermeasure activities outside the ASPR's office such as basic research at National Institutes of Health and stockpiling in the Strategic National Stockpile at the Centers for Disease Control and Prevention. As part of the ASPR Office, the Biomedical Advanced Research and Development Authority (BARDA) supports advanced research and development of CBRN countermeasures through contracts and public-private partnerships. The BARDA also implements Project BioShield, a special process and funding mechanism that allows for the use of specifically appropriated funds to procure countermeasures that still need up to 10 more years of development. The Cures Act places additional requirements on and provides additional authorities for ASPR and BARDA. It also modifies the process for Project BioShield procurements. Sections 3081-3085. Medical Countermeasures Innovation Provisions Section 3081 requires the HHS Secretary to provide "timely and accurate recommended utilization" guidelines for medical countermeasures in the Strategic National Stockpile. Additionally, it amends the requirement for the HHS Secretary to report to Congress when the amount available for Project BioShield procurements falls below $1.5 billion. This section specifies the recipients of the report as the Senate Committee on Health, Education, Labor, and Pensions, the Senate Committee on Appropriations, the House Committee on Energy and Commerce, and the House Committee on Appropriations. This report is now required by "March 1 of each year in which" the amount available drops below $1.5 billion rather than the previously required deadline of within 30 days of its occurrence. Section 3082 moves contracting authority for Project BioShield and BARDA advanced research and development from the ASPR to the BARDA Director. This move was recommended by the Blue Ribbon Panel on Biodefense to "reduce unnecessary bureaucratic delays, improve efficiency and decision making, and enhance BARDA program effectiveness and accountability." Section 3083 requires ASPR to provide additional information in its annual "coordinated 5-year budget plan" and requires that it be made publicly available in "a manner that does not compromise national security." This section also adds the requirement that the budget plan also consider the development of countermeasures and products for emerging infectious diseases that may present "a threat to the nation." Section 3084 allows the HHS Secretary to partner with "an independent, non-profit entity" to "foster and accelerate the development of medical countermeasures; ... promote the development of new and promising [countermeasure] technologies; ... [and] address unmet public health needs ... such as novel antimicrobials for multidrug resistant organisms and multiuse platform technologies for diagnostics, prophylaxis, vaccines, and therapeutics." This partner may provide business advice and use venture capital practices to invest in companies developing medical countermeasures. The U.S. intelligence community has successfully used a similar strategic investor model to address its unmet technology needs through In-Q-Tel. This section establishes certain criteria for the partner, including prior experience in technology innovation and successful partnering with the federal government. The HHS Secretary acting through the BARDA Director is to provide the entity with the government needs and requirements and a description of the work to be done under the agreement. The entity is required to provide regular reports on the spending of funds provided by HHS and on progress meeting the identified needs. The Comptroller General is to evaluate this partnership no later than four years after enactment. This authority sunsets on September 30, 2022. Section 3085 removes the requirement that the President approve each specific use of Project BioShield appropriations. The Blue Ribbon Study Panel on Biodefense recommended this change to streamline the Project BioShield contracting process. This section also specifies the congressional committees that HHS must notify following a decision to use Project BioShield funds as the Senate Committee on Health, Education, Labor, and Pensions, the House Committee on Energy and Commerce, and the Appropriation Committee in each chamber. Section 3086. Encouraging Treatment for Agents that Present a National Security Threat Under the Prescription Drug User Fee Act of 1992 (PDUFA), FDA agreed to specific goals for improving the drug review time and created a two-tiered system of review times: Standard Review and Priority Review. Compared with the amount of time standard review generally takes (approximately 10 months), a Priority Review designation means FDA's goal is to take action on an application within 6 months. An application for a drug may receive priority review designation if it is for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness, or if it is the subject of a priority review voucher. Currently, FDA has two authorized priority review voucher programs (the rare pediatric disease priority review program and the tropical disease priority review program), funded by user fees, which provide a transferable voucher, under specified conditions, to a sponsor of an approved new drug or biological product to be used for the priority review of another application. The purpose of the priority review drug voucher programs is to incentivize development of new treatment for diseases that may otherwise not attract development interest from companies due to either cost or lack of market opportunities. Provision Section 3086 adds new FFDCA Section 565A, "Priority Review to Encourage Treatments for Agents that Present National Security Threats," establishing a new priority review voucher program, funded by user fees, to provide a transferable voucher, under specified conditions, to a sponsor of an approved new human drug product application for a material threat medical countermeasure to be used for the priority review of another application. This section defines a "material threat medical countermeasure application" as, among other things, a human drug application "to prevent, or treat harm from a biological, chemical, radiological, or nuclear agent identified as a material threat" under the Public Health Service Act, or "to mitigate, prevent, or treat harm from a condition that may result in adverse health consequences or death and may be caused by administering a drug, or biological product against such agent." The HHS Secretary's authority to award such voucher is set to sunset on October 1, 2023. Section 3087. Paperwork Reduction Act Waiver During a Public Health Emergency PHSA Section 319 authorizes the HHS Secretary to determine the existence of a public health emergency, which in turn authorizes certain further actions to enhance response flexibility, such as waivers of requirements for grant-making and hiring. The Paperwork Reduction Act (PRA) ensures that federal agencies do not overburden the public with federally sponsored data collections. Among other things, the PRA requires review and preclearance of federal data collection proposals by OMB. Such preclearance and other requirements could slow the collection of information needed to prepare for and respond to public health emergencies. Provision Section 3087 would add a provision to PHSA Section 319 to waive requirements for voluntary data collection under the Paperwork Reduction Act (PRA) if the HHS Secretary determines (1) that the conditions of a public health emergency under PHSA Section 319 are met or there is a significant likelihood that such conditions will arise, and (2) that applicable preparedness and response activities would necessitate a waiver of PRA requirements. A waiver becomes effective when the HHS Secretary posts a notice of such waiver on the HHS website. Its termination must be similarly posted. The duration of a waiver is a matter of Secretarial discretion in order to facilitate reasonable preparedness, response, and post-response activities. Section 3088. Clarifying FDA Emergency Use Authorization Under normal circumstances, drugs, devices, and biologics may be introduced into interstate commerce only if they have been approved, cleared, or licensed, respectively, by the FDA. But if the Secretary of HHS declares, pursuant to FFDCA Section 564, that an emergency exists due to a specified biological, chemical, radiological, or nuclear agent (which may include a naturally occurring disease outbreak), the HHS Secretary may temporarily authorize the use of unapproved products, or unapproved uses of approved products, for response to the emergency. This authorization is referred to as an Emergency Use Authorization (EUA). This authority did not previously extend to drugs approved for use in animals. Provision Section 3088 provides a set of amendments that make EUA provisions applicable to animal drugs by referencing FFDCA Sections 504 (regarding animal drugs used in feeds), 512 (regarding requirements for approval of new animal drugs), and 517 (regarding animal drugs for minor animal species or minor uses). Subtitle I-Vaccine Access, Certainty, and Innovation A vaccine may be both a commercial product and a public good, and Congress has established several federal payment mechanisms, health insurance coverage requirements, and other incentives to support the production and use of vaccines in the United States. Some of these incentives are tied to recommendations of CDC and/or its Advisory Committee on Immunization Practices (ACIP). The ACIP is a group of medical and public health experts that develop recommendations on use of vaccines in the civilian U.S. population. In contrast to FDA, which licenses vaccines when they are shown to be safe and effective for individuals, ACIP and CDC also consider epidemiology and vaccine availability, and may recommend routine use of a vaccine for only a subset of the population for whom FDA has licensed its use. Vaccine manufacturers have an interest in understanding the factors considered by ACIP and CDC, as well as FDA, in making vaccine use and licensing decisions. The ACIP is not explicitly authorized in the PHSA or elsewhere in federal law. Its authority is based in general authority of the HHS Secretary to establish advisory committees. However, the ACIP has been given explicit statutory roles under the PHSA and the Social Security Act (SSA). The ACIP's actions pursuant to these roles affect reimbursement for immunizations, and thereby affect the market for vaccine products. These roles are as follows: PHSA Section 2713 requires most private health insurance plans, unless grandfathered, to cover, without cost-sharing, immunizations recommended by the ACIP. Pursuant to regulations, this requirement is effective for a vaccine if and when an ACIP recommendation for use of that vaccine has been adopted by CDC and published on CDC's Immunization Schedules. SSA Section 1928 establishes the Vaccines for Children (VFC) program, which provides federally purchased vaccines free of charge to eligible children. VFC vaccines are those for which the ACIP has issued a recommendation for use in children. In 1986, in order to stabilize the pediatric vaccine market, Congress waived the liability of manufacturers (in most cases) and established the National Vaccine Injury Compensation Program (VICP) to compensate persons injured by certain vaccines. Initially the list of covered vaccine types and associated compensable injuries and time frames (called the "Injury Table") was provided in law. Prior to the enactment of the Cures Act, the HHS Secretary could, through rulemaking, create or modify compensable injuries and time frames for vaccines on the Injury Table, but could not add additional vaccine types. An exception existed for new vaccines that were recommended by CDC for routine use in children, which were automatically included in the Injury Table. In 2013, the Advisory Commission on Childhood Vaccines (ACCV), which advises on the VICP, informed the HHS Secretary that the VICP authority could discourage the growing use of vaccines for pregnant women, as the law did not allow for addition of such vaccines to the Injury Table unless they were also recommended for routine use in children, and did not clearly cover injury to an infant born to a woman who was vaccinated during pregnancy. Sections 3091-3093. Predictable Review Timelines of Vaccines by the ACIP, Review of Processes and Consistency of ACIP Recommendations, Encouraging Vaccine Innovation Provisions Section 3091 requires the ACIP to consider the use of any vaccine newly licensed or licensed for a new indication by FDA at the committee's next regularly scheduled meeting. If ACIP does not issue recommendations regarding such vaccine at such meeting, it must provide an update on the status of its review. The section also requires the ACIP to make recommendation in a timely manner regarding (1) a vaccine designated by FDA as a breakthrough therapy to treat a serious or life-threatening disease or condition (pursuant to FFDCA Section 506), or (2) a vaccine that could be used in a public health emergency. Section 3092 requires the CDC Director to review, as specified, ACIP processes and consistency in issuing recommendations, and to publish a report on such review not later than 18 months after enactment, including recommendations to improve the consistency of ACIP's processes. Section 3093 requires the CDC Director to ensure that the agency's infectious disease centers and divisions coordinate their immunization program and policy efforts, including through consultation with stakeholders. The section also requires the HHS Secretary, within one year of enactment, to publish and provide to Congress a report on ways to promote innovation in the development of vaccines against infectious diseases, including the processes to determine priority needs, and on obstacles (and proposed remedies) to vaccine innovation. The HHS Secretary may consult with specified stakeholders, including vaccine developers, in producing this report. Section 3093 also amends PHSA Sections 2111 and 2114 (which authorize the VICP petition process and vaccine injury table) to require the HHS Secretary to incorporate into the table of covered vaccines any vaccine recommended by CDC for routine use in pregnant women. It clarifies that both the woman and a child or children in utero when the vaccine was administered are eligible for compensation. Title IV- Delivery Sections 4001 through 4008 of Title IV address the federal policies to promote the adoption and use of EHR technology. They are based on the provisions in S. 2511 , the Improving Health Information Technology Act, which was reported by the Senate HELP Committee on April 5, 2016. These eight sections are discussed below. The Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 authorized Medicare and Medicaid incentive payments to acute-care hospitals and physicians who attest to being meaningful users of certified electronic health record (EHR) technology. The law instructed the HHS Secretary to make the measures of "meaningful use" more stringent over time, which CMS has done in stages. Stage 1 of meaningful use requires eligible hospitals and physicians to use EHR technology to meet a series of meaningful use objectives that generally involve capturing and storing structured patient data (e.g., vital signs, medications, lab test results). Providers must use EHR technology that has been tested and certified as having the capability to perform these functions. Testing and certification entities are authorized by the HHS Office of the National Coordinator for Health Information Technology (ONC). Stage 2 of meaningful use requires eligible hospitals and physicians to use their EHR technology to perform more advanced functions, such as giving patients access to their electronic health information and exchanging patient data during transitions of care (e.g., a hospital discharge to a rehabilitation facility, or a physician referral). Beginning in 2015, hospitals and physicians that are not meaningful EHR users are subject to a Medicare payment adjustment (i.e., penalty) unless they qualify for a hardship exception. CMS published a final rule in October 2015 modifying the meaningful use Stage 2 objectives and establishing the objectives for Stage 3, which hospitals and physicians must meet by 2018. The agency made significant changes to the meaningful use program in response to the concerns of health care providers about the challenges and burdens they face in making EHR technology work. For example, CMS eliminated several clinical documentation objectives, and instead focused on a few objectives that capture more advanced uses of the technology (e.g., CDS, health information exchange). CMS also published an accompanying final rule (the 2015 Edition final rule) that expands the certification program. In addition to certifying the next generation of EHR technology that hospitals and physicians need to achieve meaningful use Stage 3, the program will be able to certify health information technology (HIT) products with a different combination of capabilities and functionalities that meet the needs of other types of health care providers and settings that are not eligible to participate in the EHR incentive program. The 2015 Edition final rule for the certification program established new transparency requirements for HIT developers. It also seeks to improve interoperability, for example, by requiring certified HIT products to adopt new and updated vocabulary and content standards for structured health information, including a common clinical data set composed of standardized data elements, and by improving the testing of the ability of HIT systems to transmit, receive, and use standardized clinical documents. ONC released a national interoperability roadmap in October 2015—developed over an 18-month period with input from numerous stakeholders—to coordinate efforts around achieving HIT interoperability. The roadmap establishes interoperability goals for the next 10 years, with 2017 set as the deadline for individuals and health care providers along the care continuum to be able to send, receive, find, and use core clinical data. ONC expects the roadmap to evolve in partnership with the public and private sectors as technology and policy dictate. The roadmap discusses the payment and regulatory drivers for promoting interoperability, as well as the central policy and technical components of a fully interoperable nationwide health information infrastructure. A key challenge is overcoming legal and governance barriers to trusted information exchange by getting stakeholders to agree to and follow a common set of standards, services, policies, and practices that facilitate exchange and use of electronic health information without limiting competition. Medicare Access and CHIP Reauthorization Act of 2015 (MACR A) MACRA declared it a national objective to achieve widespread interoperability of certified EHR technology by the end of 2018. The law defines interoperability as the ability of health information systems to not only exchange clinical information but to also use the information based on common standards in order to improve care and patient outcomes. In addition, MACRA instructed the HHS Secretary, within one year of enactment, to submit a report to Congress on ways to help health care providers compare and select certified EHR technology, such as through surveying EHR users and vendors and making such information publicly available. Finally, MACRA required the HHS Secretary, in consultation with stakeholders, to establish interoperability metrics to measure progress toward achieving the national objective of widespread interoperability of certified EHR technology by July 1, 2016. If that objective is not met by December 31, 2018, the HHS Secretary will have until December 31, 2019, to submit a report to Congress identifying the barriers to widespread interoperability and providing recommendations for achieving it. Information Blocking ONC released a report to Congress on health information blocking in April 2015. The report defined information blocking as knowingly and unreasonably interfering with the exchange or use of electronic health information, and examined the nature and extent of the practice based on available evidence. It also detailed the actions that ONC is taking, in coordination with other federal agencies, to address information blocking. Finally, the report identified gaps in authority that limit the ability of ONC and other federal agencies to effectively target, deter, and remedy such conduct. MACRA requires eligible hospitals and physicians, beginning April 2016, to indicate through meaningful use attestation (or some other process specified by the HHS Secretary) that they have not knowingly and willfully taken any action to limit or restrict the interoperability of their certified EHR technology. Patient Access The Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule gives individuals the right of access to inspect, obtain a copy of, and transmit to a third party a copy of their health information. One of the meaningful use objectives that must be met by hospitals and physicians using certified EHR technology is to provide individuals with the ability to view, download, and transmit (VDT) their electronic health information. As part of meeting that objective, the 2015 Edition final rule for the certification program requires EHR developers to publish application programming interfaces (APIs); that is, programming instructions to enable other software application developers to produce apps giving individuals access to their clinical data. Patient Matching ONC released a report on patient identification and matching (i.e., linking patient records with the correct individual) in February 2014. It recommended standardizing patient attributes for the purpose of information exchange, coordinating activities among organizations, and introducing EHR certification criteria for capturing patient identification standards. Patient matching was addressed in the 2015 Edition final rule for the HIT certification program. Certified EHR systems must be able to create a summary-of-care document that includes the following standardized patient data: first name; last name; previous name; middle name (including middle initial); suffix; date of birth (year, month, and day are required fields; hours and minutes are optional); address; phone numbers (home, business, cell); and sex. Sections 4001-4008. Policies to Promote the Adoption and Use of EHR Technology Provisions Section 4001 ("Assisting Doctors and Hospitals in Improving Quality of Care for Patients") requires the HHS Secretary to develop, within one year of enactment, a strategy and recommendations for reducing the regulatory and administrative burdens of using EHR technology. In addition, it eases EHR documentation requirements by allowing physicians, as consistent with state law, to delegate electronic medical record documentation to non-physicians, provided certain criteria are met. It requires ONC to encourage the voluntary certification of HIT for use in medical specialties and sites of service, and to adopt certification criteria for HIT used by pediatricians. It also requires the HHS Secretary to submit to the HIT Advisory Committee of the ONC, within six months of enactment, a report on meaningful use statistics, as specified. Section 4002 ("Transparent Reporting on Usability, Security, and Functionality") amends PHSA Section 3001(c)(5) to require the HHS Secretary, within one year of enactment, to issue a rule that requires HIT developers, as a condition of certification, (1) to provide assurances that they will not engage in information blocking; (2) not to prohibit or restrict communication regarding the usability, security, or functionality of their HIT product; and (3) publish application programming interfaces, among other things. Section 4002 also establishes Medicare EHR payment adjustment hardship exceptions for hospitals and physicians whose EHR technology has been decertified, and for physicians eligible for merit-based incentive payments (MIPS). Finally, this section adds a new PHSA Section 3009A, which establishes an EHR reporting program to help providers choose EHR products. It instructs the HHS Secretary to convene stakeholders to develop reporting criteria that reflect EHR product usability, interoperability, and security, and requires EHR developers—as a condition of maintaining certification—to submit reports based on those criteria for each of their certified products. This section authorizes to be appropriated $15 million in total for the purposes of carrying out the information blocking and Medicare EHR payment provisions. Section 4003 ("Interoperability") amends PHSA Section 3000(c) to require ONC, in collaboration with other federal entities, to convene stakeholders to develop and publish on its website a trusted exchange framework and a common agreement among existing health information networks to exchange electronic health information, as steps in achieving an interoperable nationwide health information network. It also requires the HHS Secretary to establish a digital contact directory for health care professionals, practices, and facilities. Finally, Section 4003 eliminates the existing HIT Policy Committee and HIT Standards Committee and adds a new PHSA Section 3002 to replace them with a single new committee—the HIT Advisory Committee—which assumes their responsibilities and duties, and is required to produce annual progress reports on advancing interoperability nationwide, as specified. Section 4004 ("Information Blocking") defines the practice of information blocking; directs the HHS Secretary to identify via rulemaking reasonable and necessary activities that do not constitute information blocking; and authorizes the HHS Office of Inspector General (OIG) to investigate and penalize information-blocking practices by HIT developers, health information exchanges and networks, and health care providers. It establishes civil monetary penalties for developers, exchanges, and networks that engage in information blocking, and requires the OIG to refer to the appropriate agency health care providers who engage in information blocking to be subject to appropriate disincentives under federal law. OIG is authorized to refer instances of information blocking to the HHS Office for Civil Rights (OCR) if a HIPAA privacy consultation would resolve the matter. Section 4004 also requires ONC, in consultation with OCR, to issue guidance on common legal, governance, and security barriers that prevent the trusted exchange of electronic health information. It authorizes ONC to share information about information blocking investigations with the Federal Trade Commission. Finally, it requires ONC to implement a process for the public to report instances of information blocking or problems with interoperability. Section 4005 ("Leveraging Electronic Health Records to Improve Patient Care") requires certified HIT to be able to transmit data to and receive data from clinical data registries, as defined. It also extends federal privilege and confidentiality protections to HIT developers who report and analyze patient safety information related to HIT use. Section 4006 ("Empowering Patients and Improving Patient Access to Their Electronic Health Records") amends PHSA Section 3009 to facilitate patient access to their electronic health information by requiring the HHS Secretary to encourage partnerships between health information networks, health care providers, and other stakeholders to offer access through secure, user-friendly software. This section also requires the HHS Secretary, in coordination with OCR, to educate providers on using exchanges to provide patient access, and to issue guidance to exchanges on best practices for providing patient access. It requires ONC and OCR to develop policies that support dynamic technology solutions for promoting patient access, and to help educate individuals and providers on patients' rights under HIPAA. Finally, ONC may require that HIT standards and certification support patients' access to their electronic health information. Section 4007 ("GAO Study on Patient Matching") requires that GAO conduct a study, within one year of enactment, to review the policies and activities of ONC and other relevant stakeholders, and to make recommendations regarding patient matching, the effectiveness of such efforts, and performance related to additional factors, such as privacy and security of patient information. GAO must report its findings to Congress within two years of enactment. Section 4008 ("GAO Study on Patient Access to Health Information") requires GAO to study patients' access to their own health information, including barriers to access (such as fees and formats), complications that health care providers experience when providing access, and methods patients may use for requesting their personal health information. GAO must report its findings to Congress within 18 months of enactment. Section 4009. Improving Medicare Local Coverage Determinations CMS administers the Medicare program through contracts with private entities, such as Medicare Administrative Contractors (MACs). MACs assist CMS in administering Medicare's day-to-day operations, such as paying fee-for-service (FFS) claims, enrolling providers, coordinating provider customer service, and other activities. MACs also conduct program integrity activities, including prepayment and post-payment claims review, provider audits, and overpayment recoupment. In addition, MACs develop and implement local coverage determinations (LCD) for their jurisdictions. Medicare covers a broad range of medical treatments, services, and equipment needed by beneficiaries, but there are limitations to Medicare's coverage. To be covered by Medicare, items or services must be considered reasonable and necessary for the diagnosis or treatment of an illness or injury, or to improve the functioning of a body part. Medicare law defines categories of services and items that Medicare routinely covers, but the law does not specify which services or under what conditions these items and services are covered. Under the reasonable and necessary provision, the HHS Secretary has discretion to determine what specific items and services will be covered and under what conditions. The HHS Secretary has authority to make Medicare coverage policy decisions both nationally and locally. LCDs are MAC decisions on whether, and under what circumstances, to cover a particular item or service on a contractor-wide basis. National coverage decisions (NCDs) are made by CMS to describe the circumstances under which Medicare will cover an item or service on a nationwide basis. The vast majority of coverage policy is determined on a local level by MACs. MACs initiate LCDs and may develop them in the absence of relevant NCDs or as a supplement to an NCD, as long as the LCD policy does not conflict with national Medicare policy. CMS's Medicare Program Integrity Manual (Chapter 13, Local Coverage Determinations) instructs MACs on LCD development. The process includes several mechanisms for local stakeholder input, including notice and comment periods for new LCDs and state-based physician advisory committees, referred to as Carrier Advisory Committees (CACs), to provide formal LCD input. In developing LCDs, MACs use medical literature, the advice of local medical societies and medical consultants, public comments, and comments from the provider community in the MAC's jurisdiction. MACs are responsible for ensuring that LCDs are consistent with all statutes, rulings, regulations, and national coverage decisions. Provision Section 4009 requires the HHS Secretary to require MACs to display on their websites and on the Medicare website, at least 45 days prior to the effective date, the following information for each LCD developed by a MAC for its jurisdiction: the entire proposed LCD; where and when the proposed LCD was first made public; hyperlinks to the proposed LCD and responses to comments submitted to the MAC on the proposed LCD; a summary of evidence considered by the contractor during the LCD development, as well as a list of sources of evidence; and an explanation of the rationale in support of the proposed LCD. Section 4009 is effective for LCDs proposed or revised 180 days after the enactment date. Section 4010. Medicare Pharmaceutical and Technology Ombudsman Prior to the passage of the Cures Act, the HHS Secretary was not required to offer ombudsman services to entities that manufacture pharmaceutical, biotechnology, medical device, or diagnostic products for which these entities are seeking Medicare coverage. Medicare law requires the HHS Secretary to conduct a satisfaction survey at least every five years of beneficiaries, as well as providers and suppliers who submitted appeals (SSA Section 1869(e)) and to submit a report to Congress on the results of the survey. In addition, SSA Section 1808(c) requires the HHS Secretary to appoint a Medicare Beneficiary Ombudsman. The Medicare Beneficiary Ombudsman was created to identify and address systemic issues that affect Medicare beneficiaries, but the Medicare Beneficiary Ombudsman did not help pharmaceutical, biotechnology, medical device, or diagnostic product manufacturers resolve complaints, grievances, or requests about Medicare coverage. The Medicare Beneficiary Ombudsman is prohibited from serving "as an advocate for any increases in payments or new coverage of services," but may "identify issues and problems in payment or coverage policies." Provision Section 4010 requires the HHS Secretary to provide within 12 months of enactment a pharmacy and technology ombudsman within CMS. The pharmacy and technology ombudsman is required to receive and respond to complaints, grievances, and requests (regarding coverage, coding, or payment) from pharmaceutical, biotechnology, medical device, or diagnostic product manufacturers whose products are covered by Medicare or for which coverage was sought. The pharmaceutical and technology ombudsman is subject to the same prohibition on advocacy and authority to identify issues as the Medicare Beneficiary Ombudsman. Section 4011. Medicare Site-of-Service Price Transparency Some Medicare-covered items and services can be provided either in a physician's office, in a hospital outpatient department, or in a freestanding or hospital-operated ambulatory surgical center (ASC); the payments would be determined by the Medicare physician fee schedule (MPFS), the Medicare hospital outpatient prospective payment system (OPPS) fee schedule, or the Medicare ASC payment system, respectively. The Medicare Payment Advisory Commission (MedPAC) has recommended (including its March and June 2013 reports to Congress) that Medicare implement "site-neutral" policies, for instance, those that would equalize outpatient payment rates at hospitals with those of free-standing physician offices. Provision Section 4011 would establish new requirements "to facilitate price transparency with respect to items and services for which payment may be made either to a hospital outpatient department or to an ambulatory surgery center." Beginning in 2018 and in each year thereafter, the HHS Secretary will make information available to the public via a searchable website on (1) the estimated Medicare payment amounts for the items and services provided under both the hospital OPPS fee schedule and the ASC payment system, and (2) the estimated amount of beneficiary liability for each item or service. The estimated amount of beneficiary liability would be calculated based on the amount for which an individual who does not have any Medicare supplemental coverage is responsible. The HHS Secretary would include notice of the availability of such information in the annual explanation of Medicare benefits sent to all beneficiaries. The HHS Secretary could also use existing mechanisms, such as the CMS Physician Compare website, to make this information available to beneficiaries. To implement this subsection, the HHS Secretary would transfer $6 million from the Supplemental Medical Insurance Trust Fund to the CMS Program Management Account for FY2017; these funds would remain available until expended. Section 4012. Telehealth Services in Medicare Telehealth is the use of electronic information and telecommunications technologies to support remote clinical health care, patient and professional health-related education, and other health care delivery functions. Medicare Part A does not cover services furnished through telehealth. Medicare Part B does cover "telehealth services," which are defined under Social Security Act Section 1834(m)(4)(F) as a set of service codes corresponding to various primary care and psychiatric visits furnished by physicians and other practitioners. With some exceptions, Part B telehealth services must be provided through live videoconferencing. Under Medicare Part B telehealth, the facility where the beneficiary is located is referred to as the "originating site," and the site where the practitioner is located is referred to as the "distant site." CMS makes a payment to the physician or other practitioner at the distant site for rendering the telehealth service, and it pays a separate facility fee to the originating site. Under Social Security Act Section 1834(m)(4)(C), only certain categories of providers and suppliers may serve as telehealth originating sites. Further, within those categories, only providers or suppliers that are located in a documented health professional shortage area or in a county that is not included in a Metropolitan Statistical Area, or are participating in federal telemedicine demonstration projects, are eligible to be originating sites. Provision Section 4012 requires CMS and the Medicare Payment Advisory Commission (MedPAC) to conduct evaluations and submit information to Congress concerning telehealth. CMS is required, no later than one year after the date of enactment of the provision, to provide information on (1) subpopulations of Medicare beneficiaries whose care would be most improved by the expansion of telehealth services; (2) activities by the CMS Center for Medicare and Medicaid Innovation (CMMI) that examine the use of telehealth; (3) the types of high-volume Medicare services that might be suitable for telehealth reimbursement; and (4) barriers that might prevent the expansion of telehealth services under Part B. MedPAC is required, no later than March 15, 2018, to provide information identifying (1) the telehealth services that are reimbursable under Medicare Parts A and B under current law; (2) telehealth services that currently are reimbursable by private health insurance plans; and (3) potential ways to incorporate into Medicare Parts A and B telehealth services that are not paid for under those programs but are paid for by private health insurance plans. Section 4012 also expresses the sense of Congress that eligible telehealth "originating sites" should be expanded. Section 4012 provides that any expansion of telehealth services in Medicare should recognize that telemedicine is the delivery of safe, effective, quality health care services by a health care provider, using technology as the mode of care delivery; should meet or exceed the applicable conditions for Medicare coverage and payment if the same service were provided in person; and should involve clinically appropriate means for delivering services. Title V-Savings Section 5001. Savings in the Medicare Improvement Fund The Medicare Improvements for Patient and Providers Act ( P.L. 110-275 ) established Social Security Act Section 1898, which makes funds available to the HHS Secretary "to make improvements under the original Medicare fee-for-service program under parts A and B … including adjustments to payments for items and services furnished by providers of services and suppliers under such original Medicare fee-for-service program." Many subsequent laws have modified the amount in the fund, but to date none of the monies have been expended. Most recently, the Comprehensive Addiction and Recovery Act of 2016 ( P.L. 114-198 ) modified Section 1898 to make $140 million available "during and after 2021." Provision Section 5001 would change the amount available in the fund from $140 million to $270 million. Section 5002. Medicaid Reimbursement to States for Durable Medical Equipment States generally are free to set payment rates for items and services provided under Medicaid as they see fit, subject to certain exceptions and a general requirement that payment policies are consistent with efficiency, economy, and quality of care and are sufficient to provide access equivalent to the general population's access. However, there are federal upper payment limits on fee-for-service reimbursement of certain Medicaid providers. Federal upper payment limit regulations specify that states cannot pay more in the aggregate for certain types of services than the amount that would be paid for the services under the Medicare principles of reimbursement; the Medicare principles of reimbursement are based on methodologies that apply to regions and certain metropolitan areas, and may result in different payment amounts in different states. The Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) applies an upper payment limit to durable medical equipment (DME) under Medicaid for items and services furnished on or after January 1, 2019. Provision Section 5002 requires the federal upper payment limit on DME be implemented one year earlier – for items and services furnished on or after January 1, 2018. Section 5003. Penalties for Violations of Grants, Contracts, and Other Agreements Social Security Act Title XI identifies Medicare- and Medicaid-related anti-fraud provisions, which include penalties and exclusions on individuals and other entities that engage in certain types of federal health program misconduct (federal health programs include Medicare and Medicaid, as well as other programs that provide health benefits or insurance funded by the federal government). Under Social Security Act Section 1128A, the HHS OIG is authorized to impose civil monetary penalties (CMPs) and assessments on individuals, organizations, agencies, or other entities, that engage in improper conduct related to federal health care programs, including penalties for knowingly presenting or causing to be presented to a federal or state employee or agent false or fraudulent claims (beneficiaries are not subject to civil penalties under Social Security Act Section 1128A). For example, penalties may apply to services that were not provided as claimed, or claims that were part of a pattern of providing items or services that a person knows or should know are not medically necessary. In addition, certain payments made to physicians to reduce or limit services are also prohibited. Social Security Act Section 1128A provides for monetary penalties of up to $10,000 for each item or service claimed, up to $50,000 under certain additional circumstances, as well as treble damages. Social Security Act 1128, exclusion from federal health programs is mandatory under certain circumstances, and permissive in others. Exclusions are mandatory for those convicted of certain offenses, including (1) a criminal offense related to the delivery of an item or service under Medicare, Medicaid, or a state health care program; (2) a criminal offense relating to neglect or abuse of patients in connection with the delivery of a health care item or service; and (3) a felony relating to the unlawful manufacture, distribution, prescription, or dispensing of a controlled substance. The HHS OIG has permissive authority to exclude entities or individuals from federal health programs under a number of circumstances such as: convictions for certain fraud misdemeanors, theft, embezzlement, breach of fiduciary duty, or other financial misconduct; convictions for interference or obstruction of criminal investigations; and revocation or suspension of a health care practitioner's license for reasons bearing on the individual's or entity's professional competence, professional performance, or financial integrity. Provision Section 5003 amends Section 1128A of the Social Security Act by adding new subsections (o), (p), (q), (r), and (s). Under Section 5003 any person (including organizations, agencies, or other entities, but excluding beneficiaries) who commits improper conduct related to grants, contracts, or other agreements funded by HHS is subject to CMPs as follows: Knowingly presents or causes to be presented a specified claim that the individual knows or should know was false is subject, in addition to other penalties prescribed by law, to CMPs of up to $10,000 for each specified claim. In addition, individuals determined to have presented these specified claims is subject to assessments of up to three times the amount of the specified claim in lieu of damages sustained by the United States or a specified state agency. Knowingly makes, uses or causes to be made or used a false statement, omission, or misrepresentation of a material fact in an application, proposal, bid, progress report, or other document required to receive or retain funding for HHS-funded grants, contracts, or other agreements is subject, in addition to other penalties prescribed by law, to CMPs of up to $50,000 for each false statement, omission, or misrepresentation of material fact. In addition, individuals determined to have made, used, or caused to be made these false or fraudulent specified claims are also subject to assessments of up to three times the total amount of the funds or property obligated to the HHS Secretary in lieu of damages sustained by the United States or a specified state agency; Knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent specified claim under an HHS-funded grant, contract, or other agreement is subject, in addition to other penalties prescribed by law, to CMPs of up to $50,000 for each false record or statement. In addition, individuals determined to have made, used, or caused to be made these false or fraudulent specified claims are subject to assessments of up to three times the amount of the specified claim in lieu of damages sustained by the United States or a specified state agency. Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit funds or property to the HHS Secretary or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit funds or property related to an HHS-funded grant, contract, or other agreement are subject, in addition to other penalties prescribed by law, to CMPs of up to $50,000 for each false record or statement or $10,000 for each day that the individual knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay. In addition, individuals determined to have made, used, or caused to be made these false or fraudulent specified claims are subject to assessments of up to three times the total amount of the funds or property obligated to the HHS Secretary in lieu of damages sustained by the United States or a specified state agency). Fails to grant timely access, upon reasonable request (as defined in regulations issued by the HHS Secretary), to the HHS OIG for conducting audits, investigations, evaluations, or other statutory functions related to grants, contracts, and other agreements with HHS is subject, in addition to other penalties prescribed by law, to CMPs of up to $15,000 for each day of the failure to grant timely access. In addition to CMPs, Section 5003 authorizes the HHS Secretary to exclude individuals who knowingly commit improper conduct related to HHS-funded grants, contracts, and other agreements from participation in federal health care programs and to direct appropriate state agencies also to exclude these individuals from participation in any state health programs. The Social Security Act Sections 1128A(c), (d), (g) and (h) apply to Section 5003 CMPs or assessments as they do to penalties, assessments or proceedings under Social Security Act Section 1128A(a). Section 5003 also specifies that in applying the Social Security Act Section 1128A(d), references to claims under Social Security Act Section 1128A(d) are treated as a reference to claims as defined in Section 5003. Section 5003 defines the following terms applicable to Social Security Act Section 1128A(o) and (p): Department means the Department of Health and Human Services (HHS). Material means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property. Other agreement includes a cooperative agreement, scholarship, fellowship, loan, subsidy, payment for a specified use, donation agreement, award, or sub-award (regardless of whether one or more of the persons entering into the agreement was a contractor or subcontractor). Program beneficiary means, in the case of grant, contract, or other agreement designed to accomplish the objective of awarding or otherwise furnishing benefits or assistance to individuals and for which the HHS Secretary provides funding, an individual who applies for, or who receives, such benefits or assistance from a grant, contract, or agreement. Program beneficiary does not include, with respect to a grant, contract, or other agreement, an officer, employee, or agent of an individual or entity that receives an HHS-funded grant or enters into a contract or other agreement. Recipient includes a sub-recipient or subcontractor. Specified state agency means an agency of state government established or designated to administer or supervise the administration of a grant, contract, or other agreement funded in whole or in part by the HHS Secretary. Under Section 5003, a specified claim under Social Security Act Section 1128A means any application, request, or demand under a grant, contract, or other agreement for money or property, whether or not the United States or a specified state agency has title to the money or property, that is not a claim [Social Security Act Section 1128A(i)(2), defines a claim as an application for payments for items and services under a federal health care program] and that: (1) is presented or caused to be presented to an officer, employee, or agent of HHS or any agency thereof or any specified state agency; or (2) is made to a contractor, grantee, or any other recipient if the money or property is to be spent or used on HHS's behalf or to advance an HHS program or interest, and if HHS: (A) provides or has provided any portion of the money or property requested or demanded; or (B) will reimburse the contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded. In addition, the term obligation as used in Social Security Act Section 1128A(o) means an established duty, whether fixed or not fixed, arising from an express or implied contractual, grantor-grantee, or licensure-licensee relationship, for a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment. Section 5003 also requires the following conforming amendments be made: by adding "specified claims" to "claims" in Social Security Act Section 1128A(e); and (A) in Social Security Act Section 1128A(f) in the matter before paragraph (1), inserting "or specified claim (as defined in subsection (r)) after "district where the claim"; and inserting "or, with respect to a person described in subsection (o), the person)" after "claimant"; and (B) in the matter following paragraph (4) inserting "(or, in the case of a penalty or assessment under subsection (o), by a specified State agency (as defined in subsection (q)(6))," after "or a State agency". Section 5004. Reducing Overpayments of Infusion Drugs Although most outpatient prescription drugs are covered under Medicare Part D, Medicare covers certain drugs and biologicals under Part B. Biological products are derived from living organisms rather than inorganic chemical compounds. Part B drugs and biologicals include drugs furnished incident to physician services, immunosuppressive drugs following a Medicare-covered organ transplant, erythropoietin for treating individuals with anemia who have end-stage renal disease, certain oral anti-cancer drugs, and drugs administered through DME. Medicare providers and suppliers purchase Part B drugs, and then are paid by Medicare after administering the drugs to beneficiaries. Generally, Medicare reimburses physicians and other providers, such as hospital outpatient clinics, for Part B drugs and biologicals at 106% of the volume weighted average of each drug's average sales price (ASP) billed under the same billing code. Health care providers also are paid separately for the administration of Part B drugs and biologicals to patients. Some Part B drugs and biologicals however, such as blood products, vaccines, and drugs administered through DME are reimbursed differently. Drugs administered through DME, such as infusion pumps, are reimbursed at 95% of the drug's average wholesale price (AWP) in effect on October 1, 2003. A drug or biological's AWP is a commercially published reference price, but not an average paid by purchasers or charged by wholesalers. AWP is considered a manufacturer's suggested wholesale price to retailers and is published in drug pricing compendia. AWP is not defined in statute or regulation. Section 303(b) of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA; P.L. 108-173 ) required the HHS Secretary to establish a competitive acquisition program for certain DME products in specified areas. Under the DME competitive acquisition program as described in the Social Security Act Section 1847, payment for DME items in competitive bidding areas is based on supplier bids, rather than on a Medicare DME fee schedule. Medicare Part B drugs administered through DME are included in DME competitive bidding. The DME competitive acquisition program started in nine metropolitan areas in January 2011 and has since expanded to 100 metropolitan areas. Several HHS OIG reports, such as the February 2013 report, Part B Payments for Drugs Infused through Durable Medical Equipment (OEI-12-12-00310), have shown that under the Medicare Part B drug reimbursement methodology based on AWP the amount Medicare paid DME suppliers for some drugs furnished through DME was substantially greater than what it cost DME suppliers to purchase those drugs. Based on an April 2015 OIG study, Implementing OIG Recommendations Could Have Reduced Payments for DME Infusion Drugs by Hundreds of Millions of Dollars (OEI-12-15-00110), other Part B drugs furnished through DME, such as insulin (administered through an infusion pump), the amount it cost DME suppliers to purchase some drugs was considerably less than what Medicare paid for those drugs drug acquisition costs generally exceeded the Medicare payment rate. Provision Beginning on January 1, 2017, Section 5004 requires Medicare to reimburse DME suppliers for Medicare Part B infusion drugs and biologicals furnished through DME in the same manner as other Medicare Part B drugs; on the basis of 106% of the volume weighted average of the ASPs of drugs included in the same Medicare billing code. Section 5004 excludes Medicare Part B drugs and biologicals furnished through DME from the DME competitive acquisition program. Section 5005. Increasing Oversight of Termination of Medicaid Providers Prior to passage of the Cures Act, state Medicaid programs were required to promptly notify the HHS Secretary (and for physicians, also the state licensing board) when they terminated, suspended, otherwise sanctioned, or prohibited providers (or other individuals) from participating under the state Medicaid plan. In addition, prior to passage of the Cures Act, states were required to terminate individuals or entities from their state Medicaid program when the HHS Secretary or another state Medicaid program terminated participating providers for cause -- fraud, integrity, or quality issues. States also may terminate providers for reasons other than cause such as inactivity, death, and failure to renew their license or revalidate enrollment, but states are not obligated to report non-cause terminations to the HHS Secretary. States also were required to deny claims for items or services provided by terminated individuals or entities for the duration of the termination and the HHS Secretary is required to recover the federal share of claims paid by states (or Medicaid managed care entities) to terminated providers. The Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) Section 6401(b)(2) required the CMS Administrator to establish a process to notify all state Medicaid and CHIP programs within 30 days of the effective date of a provider termination by Medicare or any state Medicaid or CHIP program. To address the notification requirement, CMS established an Internet web-based portal which was replaced in 2014 by the "Termination Notification Database." Both the web-based portal and the Termination Notification Database enable states to voluntarily report provider and other entity terminations and also to identify individuals and entities that other state programs terminated. In March 2014 and August 2015 reports, the HHS OIG identified shortcomings with the voluntary termination reporting such as that the state provider termination data included providers terminated for reasons other than cause and the reported data were often insufficient for other states to confidently use to identify terminated providers. Prior to passage of the Cures Act, states were not required to enroll providers employed by Medicaid managed care entities and, potentially, terminate those providers for cause, although states were obligated to inform managed care plans of the requirement to screen all employees and contractors for federal health program exclusions. Managed care entities under contract to state Medicaid programs were required to identify providers in the plan's network, who were terminated or otherwise sanctioned by a state Medicaid agency or Medicare. In addition, state Medicaid programs were required to identify and report to the CMS administrator or the HHS Secretary terminations for cause and other sanctions on Medicaid managed care providers. Provision Beginning on July 1, 2018, Section 5005 requires states to submit information within 30 days of the effective date on participating providers of services or any other person under a Medicaid state plan or a waiver who was terminated. Following the notice to the HHS Secretary that a provider was terminated, states are required to submit to the HHS Secretary the following information, as appropriate, on terminated providers: (1) the terminated provider's name; (2) the type of provider; (3) the provider's practice specialty; (4) the provider's date of birth, Social Security number, national provider identification number, and state license or certification number; (5) the termination reason; (6) a copy of the termination notice; (7) the effective date of the termination; and (8) any other information the HHS Secretary requires. The termination notice effective date is defined as the later of (a) the date on which the termination is effective, as specified on the termination notice, or (b) the date on which all applicable appeal rights have been exhausted or the timeline for appeal has expired. Section 5005 requires the HHS Secretary within 30 days of notification of a provider termination to review the provider termination and, if appropriate, include the termination in Termination Notification Database or similar system that was developed under ACA Section 6401(b)(2). Under Section 5005, by July 1, 2018 states are required to include a provision in Medicaid and CHIP managed care contracts that managed care entities will terminate from their networks any providers of services or individuals terminated from Medicare or any state Medicaid or CHIP program. Beginning on July 1, 2018, Section 5005 requires the HHS Secretary to prohibit payment to states for Medicaid expenditures for terminated fee-for-service (FFS) providers under a Medicaid state plan or waiver. The effective date for the prohibition is 60 days after the date on which terminated providers are added to the termination database or similar system required by ACA Section 6401(b)(2). Beginning on July 1, 2018, Section 5005 requires the HHS Secretary to prohibit payments to states for managed care expenditures incurred by the state for Medicaid state plan services (or waivers) provided by terminated providers. Beginning on July 1, 2018, the HHS Secretary is prohibited from reimbursing states for the federal share of services provided by managed care entities unless the state has a contract with the managed care entity that complies with the Section 5005 requirement for Medicaid managed care contracts to include a provision requiring managed care entities terminate providers from the managed care entity network who were terminated from Medicare or other state Medicaid or CHIP programs. By July 1, 2017, in consultation with state Medicaid directors, the HHS Secretary is required by Section 5005 to issue regulations establishing uniform terminology for describing the reasons providers are terminated from Medicaid or CHIP. By January 1, 2017, Section 5005 requires states to require that Medicaid FFS and managed care entity (by January 1, 2018) providers to enroll with the state by submitting the following identifying information the providers: (1) name, (2) specialty, (3) date of birth, (4) Social Security number, (5) national provider identification number (if applicable), (6) federal taxpayer identification number, and (7) state license or certification number (if applicable). Participating FFS and managed care entity providers include entities that furnish items and services, order, prescribe, refer, or certify Medicaid eligibility for services under a Medicaid state plan or waiver. Section 5005 specifies that certain Medicaid requirements must apply to states under CHIP in the same manner as they apply to state Medicaid programs. More specifically, Section 5005 requires state CHIPs to terminate providers if the providers were terminated by Medicare or other state Medicaid or CHIP programs. By January 1, 2017, Section 5005 requires state CHIPs to require participating FFS providers to enroll by submitting identifying information. In addition, Section 5005 requires the Secretary to limit federal matching payments to states if states have not implemented the requirement that managed care contracts include a provision agreeing to terminate providers who were terminated by Medicare or other state Medicaid or CHIP programs. Before March 31, 2020, the HHS OIG is required to submit a report to Congress on the implementation of Section 5005. The report is required to include the following: (1) an assessment of the extent to which providers who are included in the termination notification database as required by Section 5005 are terminated from participation in state Medicaid plans or waivers; (2) information on federal financial participation paid to states in violation of Section 5005 prohibition on payments to states for terminated providers and payments to Medicaid managed care entities that were required to terminate providers who were terminated under Medicare or other state Medicaid plans or waivers; (3) an assessment of the extent to which state contracts with Medicaid managed care entities comply with the new Section 5005 requirement that state managed care contracts include a provision barring terminated providers from participation in Medicaid and CHIP provider networks; and (4) an assessment of the extent to which states are enrolling FFS and managed care providers participating in Medicaid or under a waiver as required by Section 5005. Section 5006. Requiring Publication of Fee-for-Service Provider Directory Provider directories—lists of the health care providers contracted to furnish care under a health care program—are useful in ensuring that eligible individuals have access to covered services. States have considerable discretion in how they communicate sources of available care under their fee-for-service (FFS) Medicaid programs to beneficiaries. Federal law currently does not require state Medicaid programs to publish FFS provider directories. For Medicaid services furnished through managed care, by contrast, provider directories are federally required. Under new Medicaid managed care regulations that will take effect for contract years beginning on or after July 1, 2017, the directories must cover a wider range of providers, include more information, and be available on the managed care entity's website. Provision Section 5006 requires state Medicaid programs to publish annually and make available on their websites a FFS provider directory. The directory must identify participating physicians and may at state option include other participating provider types, listing at minimum the provider's contact information and specialty. For providers that participate in a primary care case management (PCCM) system, the directory must indicate whether the physician or other provider is accepting new Medicaid patients and the provider's cultural and linguistic capabilities. The requirements of Section 5006 do not apply to any state where all Medicaid beneficiaries receiving services under the Medicaid state plan or waiver, except Indians or Alaska Natives, are enrolled in a comprehensive risk-based managed care organization (MCO) or similar prepaid health plan. Section 5006 will bring the administration of Medicaid FFS and managed care programs into closer alignment. The state FFS provider directories must be published no later than January 1, 2017. If the Secretary of Health and Human Services determines that state legislation would be required for any particular state to have the authority to amend its Medicaid state plan to require the publication of a FFS provider directory, then the state will be considered compliant with the timing requirement of Section 5006 so long as it publishes its provider directory before the first day of the first calendar quarter after the close of the first regular legislative session beginning after the date of enactment of the Cures Act. Section 5007. Fairness in Medicaid Supplemental Needs Trusts Under federal Medicaid law, most trusts are counted as an asset in determining Medicaid eligibility for aged and disabled individuals and are subject to asset transfer rules. However, there are certain exceptions in current law to the general rule of counting trusts as an asset. Specifically, Medicaid does not count certain special-needs trusts and pooled trusts as assets and does not apply asset transfer rules to these trust types. This exception is commonly referred to as the "special needs trust exception." In order for a trust to meet this exception under Medicaid, a trust must contain the assets of an individual under age 65 (i.e., non-elderly individual) who meets the statutory definition of disability under SSA Section 1614(a)(3). SSA Section 1917(d)(4)(A) permits only parents, grandparents, legal guardians, or a court to establish a special needs trust on behalf of a non-elderly disabled individual. Such trusts must contain assets of the disabled individual and the trust must be used to provide funding for certain expenditures that supplement Medicaid benefits, subject to certain limitations. Special needs trusts allow non-elderly individuals with disabilities to maintain their eligibility for Medicaid. When the beneficiary dies, the state receives the remaining proceeds of the trust equal to any amounts paid for medical assistance provided under the state Medicaid program. Provision Section 5007 makes a technical correction to the language regarding special needs and pooled trusts under Medicaid, which are exempt from asset counting and transfer rules, to allow non-elderly individuals with disabilities to establish a special needs trust on their own behalf. This provision is effective on or after the date of enactment. Section 5008. Eliminating Federal Financial Participation with Respect to Expenditures under Medicaid for Agents Used for Cosmetic Purposes or Hair Growth Outpatient prescription drugs are an optional Medicaid benefit, but all states cover prescription drugs for most beneficiary groups. Medicaid law requires prescription drug manufacturers who wish to sell their products to Medicaid agencies to enter into rebate agreements with the HHS Secretary on behalf of states. Under these voluntary rebate agreements, drug manufacturers pay a rebate to state Medicaid agencies for drugs purchased for Medicaid beneficiaries. Most drug manufacturers participate in the Medicaid drug rebate program. The Medicaid rebate program requires states to cover all of a participating manufacturer's drugs, but states have the option to not cover or restrict use of certain drugs, drug classes, or drug uses which are identified in the Social Security Act, Section 1927(d)(2). This list of Medicaid excluded drugs includes drugs used for cosmetic purposes or hair growth. When states elect to cover the statutorily excluded drugs, drug classes or drug uses, they receive federal financial participation (FFP), the federal share of state Medicaid expenditures. States are prohibited from receiving FFP when they cover certain statutorily excluded drugs, such as sexual or erectile dysfunction drugs, except when those drugs are medically necessary for other purposes. Provision Beginning with the enactment date of the Cures Act, Section 5008 prohibits states from receiving FFP for drugs used for cosmetic purposes and hair growth, except when those drugs are medically necessary. Section 5009. Amendment to the Prevention and Public Health Fund Section 4002 of the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , as amended) established the Prevention and Public Health Fund (PPHF), to be administered by the HHS Secretary, and provided it with a permanent annual appropriation. Prior to enactment of the Cures Act, appropriations to the PPHF were as follows: for FY2010, $500 million; for each of fiscal years 2012 through 2017, $1 billion; for each of fiscal years 2018 and 2019, $1.25 billion; for each of fiscal years 2020 and 2021, $1.5 billion; and for FY2022, and each fiscal year thereafter, $2 billion. Provision Section 5009 amends the PPHF appropriation as follows: for each of fiscal years 2018 and 2019, $900 million; for each of fiscal years 2020 and 2021, $1 billion; for FY2022, $1.5 billion; for FY2023, $1 billion; for FY2024, $1.7 billion; and for FY2025 and each fiscal year thereafter, $2 billion. This amendment decreases the total PPHF appropriation for FY2018 through FY2024 by $3.5 billion. Section 5010. Strategic Petroleum Reserve Drawdown The Strategic Petroleum Reserve (SPR) was authorized by Congress as part of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6241) (EPCA). Congress authorized the SPR as a response to rising oil prices and petroleum product shortages related to the oil embargo established against the United States, the Netherlands, and Canada by the Organization of the Arab Petroleum Exporting Countries (OAPEC). The SPR is authorized to hold up to 1 billion barrels of oil, although it currently holds 695 million barrels. The OAPEC embargo also fostered the creation of the International Energy Agency (IEA). The IEA was established to enable oil-importing nations to develop plans and measures for emergency responses to energy crises. IEA member countries, including the United States, are committed to maintaining oil stocks (inventories) equivalent to 90 days of their prior year's net imports, developing programs for demand restraint in the event of emergencies, and agreeing to participate in an oil sharing program in times of emergency shortage. The current SPR oil inventory represents 149 days of net import coverage. The President may authorize an SPR drawdown upon determining that a severe oil supply interruption exists nationally, or internationally, or is imminent. The Secretary of Energy also has limited authority to release oil from the SPR for a test drawdown. Provision Section 5010 directs the Secretary of Energy to drawdown and sell crude oil from the SPR in the amount of 10 million barrels during FY2017, 9 million barrels in FY2018, and 6 million barrels in FY2019, for a total of 25 million barrels. The resultant oil sales revenue is to be deposited in the general fund of the Treasury during the fiscal year corresponding to the year of sale. Section 5010 amends SPR drawdown limitations as specified in subparagraphs (c) and (d) of EPCA Section 161 (h)(2). The amendment sets the minimum holding levels of the SPR at 450 million barrels, instead of the current minimum holding level of 500 million barrels. Section 5011. Rescission of Portion of ACA Territory Funding ACA Section 1323 provides that each U.S. territory can choose whether to establish a health insurance exchange by October 1, 2013. If a territory elects to establish an exchange, it could receive a portion of a $1 billion appropriation to provide financial assistance to individuals who obtain coverage through the exchange. If a territory does not elect to establish an exchange, it could receive an increase in Medicaid funds. No territory elected to establish an exchange. Provision Section 5011 rescinds $464 million from unobligated amounts of the $1 billion appropriation for U.S. territories that elect to establish an exchange. Section 5012. Medicare Coverage of Home Infusion Therapy Medicare Part B covers a variety of durable medical equipment (DME) when it is medically necessary and prescribed by a physician. Durable medical equipment (DME) is equipment that (1) can withstand repeated use, (2) has an expected life of at least three years (effective for items classified as DME after January 1, 2012), (3) is used to serve a medical purpose, (4) generally is not useful in the absence of an illness or injury, and (5) is appropriate for use in the home. Infusion pumps are DME, and the drugs infused are covered supplies necessary for the functioning of the DME. Infusion pumps are covered by Medicare if, in part, the administration of the drug in the home is reasonable and necessary, an infusion pump is necessary to safely administer a drug, and either (a) the drug is administered by a prolonged infusion of at least 8 hours because of proven improved clinical efficacy, or (b) the drug is administered by intermittent infusion (each episode of infusion lasting less than 8 hours) that does not require the beneficiary to return to a physician's office prior to the beginning of each infusion and toxicity or adverse side effects of the drug are unavoidable without infusing it at a strictly controlled rate. The DME benefit does not include coverage of personnel to assist with the infusion (as the requirement that the administration of the drug in the home is reasonable is a condition of coverage). Under a separate provision of law (not DME), Social Security Act, Section 1861(s)(2)(Z), Medicare Part B is required to cover intravenous immune globulin (IVIG) for the treatment of primary immune deficiency diseases in the home. However, the statutes do not cover the items and services necessary for the in-home administration of IVIG. The specific items and services are the supplies and in-home nursing services necessary to inject the IVIG intravenously. The Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 (Medicare IVIG Access Act, P.L. 112-242 ) requires the HHS Secretary to establish a demonstration project to evaluate the benefit of providing payment for items and services needed for the in-home administration of IVIG. The IVIG demonstration began August 2014 and will end September 30, 2017. The Medicare IVIG Access Act also required the HHS Secretary to establish a per visit payment amount for items and services (including nursing services) needed for the in-home administration of IVIG based on national per visit low-utilization payment amount under the prospective payment system for home health services covered under Medicare. In order to receive payments under Medicare Part B and retain a Medicare billing number, DME suppliers that furnish items of equipment or provide services under Medicare Part B must comply with quality and other Medicare conditions of participation requirements. Medicare conditions of participation for DME suppliers include being licensed in the state where suppliers are located and being accredited by an independent accreditation organization approved by CMS. Provision Section 5012 creates a new Medicare home infusion therapy benefit, effective January 1, 2021. Home infusion therapy is defined as a specific set of items and services furnished by a qualified home infusion therapy supplier , which are furnished in the home to an individual who is under the care of an applicable provider and who has a plan prescribed by a physician that specifies the type, amount, and duration of infusion therapy to be provided. The physician must also periodically review the plan. Specifically, the items and services included in home infusion therapy consist of professional services, including nursing services, training and education (not included as part of the training and education associated with durable medical equipment), remote monitoring and monitoring services, and home infusion therapy drugs. A qualified home infusion supplier means a pharmacy, physician, or other provider or supplier licensed by the State in which she practices and who furnishes infusion therapy to individuals with acute or chronic conditions requiring administration of home infusion drugs, ensures safe and effective administration, is accredited, and meets other requirements determined by the Secretary; a home infusion therapy supplier may meet these qualification requirements by subcontracting with another pharmacy, physician, provider of services, or supplier who meets the requirements. An applicable provider (whom cares for the individual) is defined as a physician, nurse practitioner, and a physician assistant. Home has the same definition under the home infusion therapy benefit as under the durable medical equipment benefit. Home infusion drug is defined as a drug or biologic administered intravenously or subcutaneously for an administration period of 15 minutes or more, in the home of an individual through a DME pump, and does not include insulin pump systems or self-administered drugs or biologicals on a self-administered drug exclusion list. Prior to furnishing home infusion therapy, the physician who establishes the plan is required to notify the beneficiary of the options available for infusion therapy (home, physician's office, hospital outpatient department.) Section 5012 requires the Secretary to implement a payment system for the new benefit described above. The payment is to be determined on a per-day basis, and is to vary by type of therapy and nursing utilization, and is to be adjusted by a geographic wage index, patient acuity, and complexity of drug administration. The payments will be updated yearly by the percent increase in the Consumer Price Index for all urban consumers for the 12-month period ending in June of the preceding year, adjusted for a measure of nationwide economic productivity. The per-day payment amounts determined in this way are prohibited from exceeding the cost of infusion therapy services provided in a physician's office. In addition, the Secretary has discretion to make adjustments to reflect outliers (or excessively costly patients) in a budget-neutral manner. In developing the payment system, the Secretary may consider the costs of providing infusion therapy, consult with suppliers, and consider payments for similar services under Medicare Part A or Medicare Advantage, and private insurance. Section 5012 allows the Secretary to consider prior authorization requirements for home infusion therapy services. Section 5012 requires the Secretary to designate organizations for accrediting home infusion therapy suppliers by not later than January 1, 2021. The Secretary is to consider the following factors in designating the accreditation organizations: (a) the ability of the organization to conduct timely reviews, (b) the ability of the organization to take into account the capacities of suppliers located in rural areas, (c) whether the organization has established reasonable fees for their accreditation services, and (d) such other factors as the Secretary determines appropriate. The Secretary is required to review the list of designated accreditation organizations, taking into account those factors specified above, and may, by regulation , modify the list of accreditation organizations. If the Secretary removes an organization from the list of accreditation organizations, any supplier that is accredited by the organization will be considered to have been accredited for the remainder of the effective period of accreditation, even after the organization is removed from the list of accrediting organizations. If an accrediting organization is designated by the Secretary before January 1, 2019, and a supplier is accredited by the organization before January 1, 2021, then that supplier will be considered to have been accredited as of January 1, 2023 and for the remainder of the effective period of accreditation; this provision would allow suppliers that received accreditation early to avoid having to be re-accredited for an extended period. Appendix. List of Acronyms ACA: Patient Protection and Affordable Care Act ( P.L. 110-148 , as amended) ACCV: Advisory Commission on Childhood Vaccines ACIP: Advisory Committee on Immunization Practices ASC: ambulatory surgical center ASPR: Health and Human Services Assistant Secretary for Preparedness and Response AST: Antimicrobial Susceptibility Testing BARDA: Biomedical Advanced Research and Development Authority BRAIN Initiative: Brain Research through Advancing Innovative Neurotechnologies Initiative CACs: Carrier Advisory Committees CARB: National Strategy for Combating Antibiotic-Resistant Bacteria CBER: FDA Center for Biologics Evaluation and Research CBRN: chemical, biological, radiological, or nuclear CDC: Centers for Disease Control CDER: Center for Drug Evaluation and Research CDRH: Center for Devices and Radiological Health CDS: clinical decision support The Center: National Center for Medical Rehabilitation Research CLIA: Clinical Laboratory Improvement Amendments of 1988 CMPs: civil monetary penalties CMS: Centers for Medicare & Medicaid Services CMMI: Center for Medicare and Medicaid Innovation COW: certificate of waiver DME: durable medical equipment DOD: Department of Defense EHR: electronic health record EPCA: Energy Policy and Conservation Act of 1975 (42 U.S.C. 6241) ETASU: elements to assure safe use EUA: Emergency Use Authorization FACA: Federal Advisory Committee Act FAERS: FDA Adverse Event Reporting System database FDP: Federal Demonstration Partnership FDA: Food and Drug Administration FDAAA: Food and Drug Administration Amendments Act of 2007 ( P.L. 110-85 ) FDAMA: Food and Drug Administration Modernization Act of 1997 ( P.L. 105-115 ) FDASIA: Food and Drug Administration Safety and Innovation Act ( P.L. 112-144 ) FFDCA: Federal Food, Drug, and Cosmetic Act FFS: fee-for-service FOIA : Freedom of Information Act FY: Fiscal Year GAO: Government Accountability Office GS : General Schedule HHS: Department of Health and Human Services HELP: Senate Health, Labor, Education, and Pensions Committee HIPAA: Health Insurance Portability and Accountability Act of 1986 HCT/Ps : human cells, tissues, and cellular and tissue-based products HDE: Humanitarian Device Exemption HIT: health information technology HITECH: Health Information Technology for Economic and Clinical Health Act of 2009 IHS: Indian Health Service IRB: Institutional Review Board IACUC: Institutional Animal Care and Use Committee IC: NIH Institutes and Centers IDE: investigational device exemption IEA: International Energy Agency IOM: Institute of Medicine LCD: local coverage determinations MACRA: Medicare Access and CHIP Reauthorization Act of 2015 MACs: Medicare Administrative Contractors MCO: managed care organization MDA: Medical Device Amendments of 1976 ( P.L. 94-295 ) MedPAC: Medicare Payment Advisory Commission MPFS: Medicare physician fee schedule NAS: National Academy of Sciences NCATS: NIH's National Center for Advancing Translational Sciences NCDs: National coverage decisions NDA: new drug application NIH: National Institutes of Health (NIH) NICHD: Eunice Kennedy Shriver National Institute of Child Health and Human Development NLM: National Library of Medicine OAPEC: Organization of the Arab Petroleum Exporting Countries OCP: Office of Combination Products OCR: HHS Office for Civil Rights OIG: HHS Office of Inspector General OIRA: Office of Information and Regulatory Affairs OMB: Office of Management and Budget ONC: Office of the National Coordinator for Health Information Technology OSTP: White House Office of Science and Technology Policy OT: Other transaction OPPS: Medicare hospital outpatient prospective payment system fee schedule PAHPRA: Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 ( P.L. 113-5 ) PCCM: primary care case management system PDUFA: Prescription Drug User Fee Act of 1992 PHI: protected health information PHS: Public Health Service agencies PHSA: Public Health Service Act of 1944 PMA: premarket approval pathway PMI: Precision Medicine Initiative PPHF: Prevention and Public Health Fund PRA: Paperwork Reduction Act (44 U.S.C. Chapter 35) R&D: research and development REMS: risk evaluation and mitigation strategies SAMHSA: Substance Abuse and Mental Health Services Administration SBRS : Silvio O. Conte Senior Biomedical Research Service SSA: Social Security Act SPR: Strategic Petroleum Reserve VA: Department of Veterans Affairs VDT: view, download, and transmit VFC: Vaccines for Children program VICP: National Vaccine Injury Compensation Program

The 21st Century Cures Act (P.L. 114-255) was signed into law on December 13, 2016, by President Barack Obama. On November 30, 2016, the House passed the House amendment to the Senate amendment to H.R. 34, the 21st Century Cures Act, on a vote of 392 to 26. The bill was then sent to the Senate where it was considered and passed, with only minor technical modification, on December 7, 2016, on a vote of 94 to 5. The law consists of three divisions: Division A—21st Century Cures Act; Division B—Helping Families in Mental Health Crisis; and Division C—Increasing Choice, Access, and Quality in Health Care for Americans. CRS has published a series of reports on this law, one on each Division. This is the report for Division A of the law. This report provides a brief summary of each provision of the 21st Century Cures Act (Division A of P.L. 114-255), by title, subtitle, and section. The Division includes five titles, as follows: (1) Innovation projects and state responses to opioid abuse; (2) Discovery; (3) Development; (4) Delivery; and (5) Savings. Title I provides funding for biomedical research, including the Precision Medicine Initiative (PMI) and the Cancer Moonshot Initiative, for the opioid crisis response, and for the Food and Drug Administration (FDA) to support certain new activities authorized by the law. Title II, consisting of seven subtitles, requires or authorizes a number of activities to support biomedical research, including the reauthorization of the National Institutes of Health (NIH) and the reform of that agency through numerous administrative, reporting, and data access provisions. The Title includes provisions that support young investigators funded by NIH; pediatric research; collaborative research such as research on neurological disease; and precision medicine efforts, and specifically the PMI. Title III, consisting of ten subtitles, focuses on modifying the drug and device approval pathways at the FDA to support innovation, and specifically includes provisions that support patient-focused drug development and streamlined and clarified pathways to approval for drugs, combination products, antimicrobials, Orphan drugs, drugs for rare disease, and regenerative therapies. This Title also contains provisions making modifications to the medical device approval pathway and reforms to the FDA's hiring process. Finally, it addresses FDA's regulation of medical countermeasure and vaccine development. Title IV focuses on health care delivery, and includes provisions that together address the federal policies to promote the adoption and use of electronic health record (EHR) technology, as well as a handful of Medicare delivery provisions addressing telehealth services in Medicare, site-of-service price transparency for certain Medicare services, Local Coverage Determinations (LCDs) under Medicare, and a technology and pharmaceutical ombudsman for Medicare. Title V provides savings for the Division, and includes Medicare and Medicaid savings; Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended) savings, including Prevention and Public Health Fund (PPHF) and territory funding; and savings from the Strategic Petroleum Reserve (SPR) drawdown.

Introduction Corinthian Colleges, Inc. (CCI) was the parent company of several private, for-profit institutions of higher education, including the Everest Institute, Everest Colleges, Heald Colleges, and Wyotech Technical Schools (Wyotech). CCI operated more than 100 of these institutions across the nation, with total enrollments of approximately 72,000 students who annually received roughly $1.4 billion in federal financial aid. On June 19, 2014, the U.S. Department of Education (ED) announced that it had placed CCI on an increased level of financial oversight known as Heightened Cash Monitoring 1 (HCM1), coupled with a 21-day waiting period for funds reimbursement, as a stipulation to its continued participation in the Higher Education Act (HEA) Title IV federal student aid programs. ED had taken this action in response to CCI's failure to address concerns relating to a variety of practices, including failing to provide ED with requested data related to inconsistences in job placement rates that had been presented to students. In response to its limited access to federal student aid funds, CCI announced it might have to close its schools. On July 3, 2014, to avoid abrupt closure, CCI and ED reached an agreement under which the company agreed to develop a plan to sell or teach-out its educational programs. In exchange, ED agreed to immediately release $16 million in federal student aid (FSA) funds to CCI's current students. Subsequently, the Zenith Education Group (Zenith) was formed as a nonprofit provider of career education programs. Zenith is a subsidiary of the Educational Credit Management Corporation (ECMC), a nonprofit student loan guaranty agency involved in the administration of loans made through the Federal Family Education Loan (FFEL) program. Zenith was formed for the purpose of buying a large portion of CCI's schools. In February 2015, Zenith agreed to buy 53 of CCI's schools. As part of the terms of the final agreement with ED and the Consumer Financial Protection Bureau (CFPB), Zenith agreed to provide $480 million in debt relief to former CCI students for private student loans advanced by CCI to its students (known as Genesis loans). On April 14, 2015, ED notified CCI that it would fine the company $30 million for misrepresenting its job placement data at its Heald College locations. Approximately one week later, CCI closed its remaining 30 schools, at which approximately 13,500 students were enrolled at the time. In early May 2015 CCI filed for Chapter 11 bankruptcy under the U.S. Bankruptcy Code. Finally, on November 16, 2015, ED announced additional findings against CCI for misrepresenting placement rates to former CCI students and prospective students at its Everest Colleges and Wyotech campuses in California and its Everest University online program based in Florida. Student Loans Are former CCI students eligible to have their student loans discharged? Former CCI students may be provided some relief from being required to repay their student loans, depending on the type of loan they seek to have discharged and specific borrower circumstances. Private Education Loans Under the terms of its agreement with ED and the CFPB concerning Zenith's purchase of certain CCI schools, Zenith agreed to provide approximately $480 million in debt relief for former CCI students who took out private education loans, known as Genesis loans, which were advanced by CCI to its students. The debt relief will benefit former CCI students with qualifying loans, regardless of whether the CCI schools they attended were purchased by Zenith. These borrowers' total loan balances will immediately be reduced by 40%, but borrowers will remain responsible for repaying the remaining balance of the loan. Borrowers who are eligible for this type of debt relief do not need to take additional steps to receive it. Their loan servicer will notify them if they qualify for the relief. Federal Student Loans For HEA Title IV federal student loans (i.e., loans made under the Direct Loan (DL), Federal Family Education Loan (FFEL), and Perkins Loan programs) different procedures for borrowers to receive debt relief may apply depending on whether a borrower's loan would be discharged on the basis of a school closure or on the basis of the borrowers asserting a defense against repayment. Closed School Loan Discharge Students who attended a CCI school that closed may be eligible to have the full balance of their outstanding HEA Title IV loans discharged. In general, borrowers of Title IV loans may be eligible to have the full balance of their outstanding HEA Title IV loans discharged if they, or the student on whose behalf a parent borrowed in the case of Parent PLUS Loans, are unable to complete the program in which they enrolled due to the closure of the school. Borrowers who have their loans discharged due to a school closure are also eligible to be reimbursed for any amounts previously paid on those loans, and if any adverse credit history was associated with the loan (e.g., default), the loan discharge will be reported to credit bureaus so that they may delete the adverse credit history associated with the loan. Typically, to be eligible for loan discharge due to school closure, the student must have stopped attending the school within 120 days of the school's closing date and the student must also have been unable to complete the program of study at either the closed school or a comparable educational program at another school, either through a teach-out or by transferring credits to another school. If the closing school offers the option for students to complete their education through a teach-out at another school, a student may refuse the option and would still qualify for loan discharge. If a student refuses the teach-out, later enrolls at another school in a program substantially similar to the one in which he or she had been enrolled, receives credit for work completed at the closed school, and completes the new program, then the student may not qualify for closed school discharge. On June 8, 2015, ED announced that borrowers who were attending the CCI schools that closed in April 2015, and those students who withdrew within 120 days of those schools closing, would be immediately eligible for closed school discharge of their Title IV student loans, so long as they neither finish their program of study through a teach-out nor transfer the credits they earned at a CCI school to another school in a similar program. Additionally, ED expanded the withdrawal timeframe for students who attended those CCI schools that closed in April 2015. ED will now permit those students who withdrew from those schools after June 20, 2014, to have their Title IV student loans discharged due to school closure. As a result of the expanded timeframe, ED estimates approximately 15,000 students in total are eligible to have their Title IV student loans discharged under this procedure, approximately 1,500 more students than would have been eligible without the expansion. Borrowers who are eligible for this type of relief must fill out the Closed School Loan Discharge Application and return it to their loan servicer. While their applications are being considered, borrowers are required to continue making payments on their loans, although loan servicers are permitted to grant forbearance until a decision is made. Additionally, to obtain discharge a borrower must cooperate with ED in any judicial or administrative proceeding brought by ED to recover amounts discharged from the school. If a borrower fails to cooperate with ED, the loan discharge may be revoked. Borrower Defense Against Repayment Borrowers who attended a CCI school that was purchased by Zenith and borrowers who attended a CCI school that closed but who are ineligible for closed school loan discharge may seek debt relief on their FFEL or DL program loans by asserting certain defenses against repayment. In certain circumstances, borrowers of DL program loans may be able to assert as a defense against repayment of their loan "acts or omissions of an institution of higher education," as specified in regulation. ED has determined in regulation that such acts and omissions are those that would "give rise to a cause of action against the school under applicable State law." If the borrower's defense is successful, ED will determine the amount of debt relief to which the borrower is entitled, which can include relief from repaying all or part of the outstanding loan balance and reimbursement for previous amounts paid toward the loan. Additionally, if any adverse credit history was associated with the loan (e.g., default) the loan discharge will be reported to credit bureaus so that they may delete the adverse credit history associated with the loan. Unlike the case of a loan discharge due to school closure, there is no clearly established process for a borrower to seek debt relief through a defense against repayment, as ED has infrequently needed to process such claims in the past. On October 20, 2015, ED announced it would establish a negotiated rulemaking committee to create procedures for a borrower to use in a defense against repayment claim and to determine which IHE acts and omissions a borrower may assert in such a claim. In the interim, ED appointed a Special Master tasked with overseeing borrower defense issues for former CCI students, specifically, and to help develop a broader system to support students at other IHEs who believe they may have a defense against repayment. Additionally, ED has determined that borrowers who submitted a claim for borrower defense before June 8, 2015, and those borrowers who subsequently do so, may request that their loans be placed in forbearance and that collections on any defaulted loans cease. ED has created a streamlined process for asserting a defense against repayment for certain borrowers who attended CCI's Heald College locations. ED found that CCI misrepresented job placement rates for a majority of programs at its Heald College campuses between 2010 and 2014 and fined the company $30 million for those misrepresentations. ED determined that these findings qualify borrowers enrolled in specified Heald College programs during specified time periods for a loan discharge through a newly established expedited process specific to those former Heald College students. ED has provided a list of Heald College programs and enrollment periods that determine which borrowers may be eligible for the expedited process on its website. Under the expedited process, eligible borrowers need only complete an attestation form, asserting that they relied on the fraudulent job placement rates. While borrowers' claims are being processed, they may request that their loans be placed in forbearance and that collections on any defaulted loans cease. Recently, ED also announced findings against CCI of misrepresenting placement rates to former CCI students and prospective students at its Everest Colleges and Wyotech campuses in California and its Everest University online program based in Florida. Although ED has not yet determined whether these findings qualify borrowers enrolled at these additional CCI schools for the expedited defense against repayment process, the Special Master has begun a review of the findings and speculates that the findings will enable ED to provide borrower defense against repayment relief to the additional students at these schools. How many former CCI students are eligible for or have received federal student loan discharge as a result of CCI's actions? Closed School Discharge It is estimated that approximately 15,000 former CCI students may be eligible for closed school discharge under the expanded withdrawal timeframes. As of November 18, 2015, the Special Master reported that ED had received 10,527 applications for closed school discharge of federal student loans from former CCI students. Of those applications, thus far, 5,814 had been approved, resulting in approximately $75,461,790 in federal student loans being discharged under the closed school discharge provisions. Defense Against Repayment The number of borrowers potentially eligible for debt relief under a defense against repayment claim is currently unknown. However, as of November 18, 2015, 5,340 borrowers from Heald, Everest, and Wyotech schools had submitted defense against repayment claims to ED. As of December 3, 2015, the Special Master has reviewed only those claims submitted by Heald students under the expedited process. He reported that he has recommended debt relief under this process for 1,312. ED has accepted these recommendations and has begun the loan discharge process, which will result in $27,832,370 in discharged Title IV loans. How will the discharge of federal student loans affect former CCI students' future eligibility for loans? Loan discharge due to school closure or a successful defense against repayment claim is unlikely to adversely affect a student's eligibility for future HEA Title IV loans. It appears that neither lifetime loan limit amounts nor the limits on the amount of time for which a student may receive specified loans are likely to be negatively impacted. For students who received a loan discharge due to school closure, the amount of the loan originally disbursed will not count against their lifetime loan limit amounts. Moreover, the HEA specifically states that the period of attendance "at an institution at which a student was unable to complete a course of due to the closing of the institution shall not be considered for purposes of calculating the student's period of eligibility for additional assistance under this title," thus, the limits on the amount of time for which a student can receive a DL program Subsidized Loan are also unlikely to be impacted negatively. Will the discharge of student loans create an income tax liability for former CCI students?40 In general, when all or part of a borrower's debt is forgiven, including student loan debt, the Internal Revenue Code (IRC) provides that the amount of the canceled debt is included in the borrower's gross income—that is, the borrower must pay income taxes on the amount of discharged debt. The amount is generally included in gross income in the year of discharge. There has been uncertainty about whether former CCI students would be taxed on the amount of their discharged federal student loans, or if they would qualify for a statutory or common law exemption, such as one of those discussed below. On December 3, 2015, the IRS issued Revenue Procedure 2015-57, which addresses the tax treatment for borrowers who took out federal student loans to attend a CCI school. Under the revenue procedure: 1. former CCI students whose federal student loans are discharged under a defense against repayment claim will not be subject to tax on the amount of the loan discharge; 2. former CCI students whose federal student loans are discharged under the closed school discharge procedure will not be subject to tax on the amount of the loan discharge; and 3. former CCI students will not have to increase the taxes they owe in the year of discharge in order to account for previously claimed education-related credits and deductions. For example, a borrower who had deducted student loan interest will not be required to pay back the deduction's benefit by increasing his or her taxes by the amount of the benefit once the loan is discharged. The revenue procedure does not address the tax treatment of former CCI students whose private education loans were forgiven. As such, it appears these students may be subject to having the amount of the discharged loan included as part of their gross income unless they qualify for a statutory or common law exemption. For example, the forgiven debt would not be taxable for any students who were insolvent (i.e., their liabilities exceeded the fair market value of their assets immediately prior to discharge). Another legal theory under which these borrowers might be able to avoid taxation is the disputed debt (or contested liability) doctrine, which provides that a discharged debt is not considered income for federal tax purposes if the loan was based on fraud or misrepresentation. In order to exclude a discharged loan from income under a statutory or common law exemption, a borrower would need to determine that he or she qualified for the exclusion based on his or her individual circumstances and be able to show that the determination was correct if the IRS were to contest it. Other Types of Federal Education Benefits49 Is there any relief for former CCI students who received Pell Grants? There are no statutory or regulatory provisions that provide relief to students who used Pell Grants to attend an institution of higher education (IHE) that closed. Additionally, there are no provisions to restore a portion of a student's eligibility toward the Pell lifetime eligibility limit of 12 full-time semesters (or the equivalent). It appears unlikely that students who used Pell Grants to attend a CCI school will be able to have their Pell Grant eligibility restored. Is there any relief for former CCI students who receive GI Bill benefits? There are no statutory or regulatory provisions that provide relief to students who used GI Bill educational assistance benefits to attend an IHE that closed. Additionally, there are no provisions to restore a portion of a student's GI Bill entitlement, which is typically equal to 36 months (or the equivalent for part-time educational assistance) of enrollment. The Department of Veterans Affairs has indicated that "no debts will be created against students because of the school closure." In other words, students will not have to repay benefits received for periods of enrollment that did not occur as a result of the school's closure. Thus, it appears unlikely that students who used GI Bill educational assistance benefits to attend a CCI school will be able to have their entitlement restored for the amount used to attend a CCI school; however, they will not be responsible for repaying GI Bill benefits received and used to attend a CCI school.

Corinthian Colleges, Inc. (CCI) was the parent company of several private, for-profit institutions of higher education, including the Everest Institute, Everest Colleges, Heald Colleges, and Wyotech Technical Schools. CCI operated more than 100 of these institutions across the nation, with total enrollments of approximately 72,000 students who annually received roughly $1.4 billion in federal financial aid. In summer 2014, the Department of Education (ED) limited CCI's access to federal student aid in response to CCI's failure to address concerns relating to a variety of practices, including failing to provide ED with requested data related to CCI's Title IV federal student aid participation. To avoid abrupt closure of its schools due to the financial stresses that the limited access to federal student aid put on CCI, the company and ED reached an agreement under which CCI agreed to sell or "teach-out" its educational programs. Subsequently, the Zenith Education Group (Zenith) was formed by the Education Credit Management Corporation (ECMC) as a nonprofit entity for the purpose of buying a large portion of CCI's schools. Those CCI schools not purchased by Zenith closed. This report answers several frequently asked questions regarding the effect of the sale and closure of CCI's schools as they relate to former CCI students' student aid, including the following: Are former CCI students eligible to have their student loans discharged? How many former CCI students are eligible for or have received federal student loan discharge as a result of CCI's actions? How will the discharge of federal student loans affect former CCI students' future eligibility for loans? Will the discharge of student loans create an income tax liability for former CCI students? Is there any relief for former CCI students who received Pell Grants? Is there any relief for former CCI students who received GI Bill benefits? Additional information on the HEA federal student loan programs is available in CRS Report R40122, Federal Student Loans Made Under the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers, by [author name scrubbed]; and CRS Report RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act, by [author name scrubbed] and [author name scrubbed]. Additional information on the Pell Grant program is available in CRS Report R42446, Federal Pell Grant Program of the Higher Education Act: How the Program Works and Recent Legislative Changes, by [author name scrubbed]. Additional information veterans' education benefits is available in 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]; and CRS Report R42785, GI Bills Enacted Prior to 2008 and Related Veterans' Educational Assistance Programs: A Primer, by [author name scrubbed]. Additional information on institutional eligibility to participate in the Higher Education Act Title IV federal student aid programs is available in CRS Report R43159, Institutional Eligibility for Participation in Title IV Student Financial Aid Programs, by [author name scrubbed].

Introduction The movement of air pollutants across state lines, known as interstate transport, has posed a decades-long challenge to air quality protection. The Clean Air Act (CAA) assigns responsibility to states to limit emissions from sources within their borders as needed to attain federal health-based air quality standards. A state's air quality, however, may be affected by emissions from upwind sources located in a different state. Hence, controlling emissions within the border of a state may not be sufficient to attain the air quality standard. The downwind state lacks authority to limit emissions from the sources in the upwind state(s) but is nonetheless responsible for attaining the federal standards. Interstate transport has made it difficult for some downwind states to attain federal standards for ozone and fine particulate matter (PM 2.5 ). Both of these pollutants are formed by precursor emissions that can travel long distances. Specifically, sulfur dioxide (SO 2 ) and nitrogen oxide (NO x ) contribute to the formation of PM 2.5 in the air. NO x and volatile organic compounds (VOCs) react in sunlight to form ground-level ozone, the main component of smog. Studies have shown that these precursor emissions, as well as ozone and PM 2.5 , are regional pollutants, meaning that they can travel hundreds of miles through the atmosphere. For example, Bergin et al.'s study of the eastern United States concluded that regional transport affected air quality in most eastern states. They attributed an average of 77% of each state's ozone and PM 2.5 concentrations to emissions from upwind states. These regional emissions are associated with health impacts and are therefore of concern. For example, research shows that ground-level ozone is associated with aggravated asthma, chronic bronchitis, heart attacks, and premature death. Studies have also linked exposure to particulate matter to respiratory illnesses, such as aggravated asthma, as well as heart attacks and premature death. The CAA's "Good Neighbor" provision recognizes such interstate issues and requires states to prohibit emissions that significantly contribute to air quality problems in another state (Section 110(a)(2)(D)). It requires each state's implementation plan—a collection of air quality regulations and documents—to include adequate provisions to prohibit emissions that either "contribute significantly" to nonattainment or "interfere with maintenance" of federal air quality standards in another state. Since the 1990s, the U.S. Environmental Protection Agency (EPA) and the states have implemented various regional programs to address interstate air transport. Many of these programs have since concluded. The current program—the Cross State Air Pollution Rule (CSAPR, pronounced "Casper")—is an emissions trading program for 28 states in the eastern part of the United States. EPA established CSAPR to limit interstate transport of power sector SO 2 and NO x emissions and help states comply with the 1997 and 2006 PM 2.5 standards as well as the 1997 and 2008 ozone standards. EPA has attributed emission reductions to CSAPR and the agency's other emissions trading programs, such as the Acid Rain Program: annual SO 2 emissions from power plants participating in CSAPR were 1.2 million tons in 2016, an 87% reduction from 2005 levels. CSAPR power plants also emitted 420,000 tons of NO x in the 2016 ozone season, roughly an 80% reduction from the 1990 ozone season NO x emissions. Emissions reduction progress notwithstanding, some areas of the country do not meet federal air quality standards for pollutants like ozone and particulate matter. In 2018, EPA designated 52 areas with approximately 200 counties or partial counties as "nonattainment" with respect to the 2015 ozone standard. Members of Congress representing both downwind and upwind states may have an interest in how EPA and states implement the CAA's Good Neighbor provision, particularly as states begin to develop plans for nonattainment areas to come into compliance with the 2015 ozone standards. Some downwind states with nonattainment areas have attributed their ozone violations—at least in part—to emission sources from upwind states. Downwind states have also expressed concerns that transported air pollution contributes to harmful human health impacts and adversely affects economic growth. For example, a Maryland state agency reported that transport of emissions from upwind states has required Maryland's sources to compensate with "deeper in-state emissions reductions," thereby adding economic costs to the state's business community. Upwind states have disagreed with the approach used by EPA to determine whether emissions from upwind sources contribute to downwind air quality problems. For instance, Ohio's state environmental agency described EPA's transport approach as "deeply flawed," concluding that it would place "an unfair amount of responsibility" on upwind power plants to reduce emissions. To assist Members and staff in understanding interstate transport issues, this report presents background information about the CAA's interstate transport provision, provides a brief history of regional programs leading up to CSAPR, discusses key aspects of the CSAPR program and program results, summarizes the status of Good Neighbor determinations with respect to ozone standards, and concludes with issues for congressional consideration. Background The CAA requires EPA to establish national standards for air pollutants that meet the criteria in Section 108(a)(1). These pollutants—the "criteria pollutants"—are those that EPA has determined "may reasonably be anticipated to endanger public health or welfare" and whose presence in "ambient air results from numerous or diverse mobile or stationary sources." EPA must design two types of National Ambient Air Quality Standards (NAAQS) for the criteria pollutants. Primary NAAQS must protect public health with an "adequate margin of safety," and secondary NAAQS must "protect public welfare from any known or anticipated adverse effects." The NAAQS are concentration standards measured in parts per million (ppm) by volume, parts per billion (ppb) by volume, and micrograms per cubic meter of air (µg/m 3 ). The NAAQS do not set direct limits on emissions but rather define what EPA considers to be clean air for the pollutant in question. Section 109(d) of the act requires periodic NAAQS reviews. Every five years, EPA must review the NAAQS and the science upon which the NAAQS are based and then revise the NAAQS if necessary. This multi-step process is rarely completed within the five-year review cycle and is often the subject of litigation that results in court-ordered deadlines for completion of NAAQS reviews. Since January 1997, EPA has completed at least one review for each of the six criteria pollutants (carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter, and sulfur dioxide), with standards being made more stringent for five of the six. Most of the revisions finalized in this time period were for the ozone and particulate matter standards. The CAA assigns responsibility to states to establish procedures to attain and maintain the NAAQS within their borders. In particular, the act requires each state to submit a new or revised state implementation plan (SIP) to EPA within three years of a NAAQS promulgation or revision. This SIP submission, also known as an "infrastructure SIP," outlines how the state will implement, maintain, and enforce the NAAQS . The infrastructure SIP allows EPA to "review the basic structural requirements of [a state's] air quality management program in light of each new or revised NAAQS." Examples of the basic structural requirements include enforceable emission limits, an air monitoring program, an enforcement program, air quality modeling capabilities, and "adequate personnel, resources, and legal authority." The state's SIP must also address its interstate transport obligations under the CCAA. EPA refers to this section of the SIP submission as the "Good Neighbor SIP." The Good Neighbor SIP must prohibit "certain emissions of air pollutants because of the impact they would have on air quality in other states." Specifically, the state's Good Neighbor SIP must prohibit sources in that state from "emitting any air pollutant in amounts which will … contribute significantly to nonattainment in, or interfere with maintenance" of a NAAQS in another state. EPA reviews SIPs to ensure they meet statutory requirements. The agency also has authority to require states to revise their SIPs. Furthermore, the act requires EPA, under certain conditions, to impose sanctions and to issue a Federal Implementation Plan (FIP) if a state fails or declines to submit or implement an adequate SIP. Recognizing ongoing challenges with ozone transport, the 1990 CAA Amendments established regional planning provisions specific to ozone. For example, CAA Section 184 created a multi-state ozone transport region, known as the Ozone Transport Region (OTR), and established the northeast Ozone Transport Commission (OTC) to advise EPA about ozone controls in the OTR. The OTR is comprised of 12 Northeastern and Mid-Atlantic states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, certain counties in Northern Virginia) and Washington, DC. The CAA required states in the OTR to impose controls on sources in all specified areas, regardless of attainment status. Such controls included enhanced vehicle inspection and maintenance programs and reasonably available control technology for sources of VOCs. In addition, CAA Section 176A allows EPA to establish transport regions to address regional pollution problems contributing to violations of a primary NAAQS. The agency must establish a commission, comprised of EPA and state officials, for each transport region that makes recommendations to EPA on appropriate mitigation strategies. Implementing the Good Neighbor Provision The CAA provides two independent statutory authorities to facilitate compliance with the Good Neighbor provision: (1) the SIPs process under Section 110 and (2) a petition process under Section 126(b). While these authorities are separate, they each address the same objective—that is, the Good Neighbor provision in Section 110(a)(2)(D)(i). The remainder of this section describes how these authorities may be used to enforce the Good Neighbor provision. SIPs Process As previously noted, a state's SIP must prohibit sources in that state from "emitting any air pollutant in amounts which will … contribute significantly to nonattainment in, or interfere with maintenance" of a NAAQS in another state. If EPA finds an existing SIP inadequate, it must require the state to revise the SIP. This procedure is known as a "SIP call" and it can be issued to multiple states at the same time. Specifically, EPA must issue a SIP call whenever the agency determines that the SIP is "substantially inadequate to attain or maintain" a particular NAAQS, to ensure that the state's sources do not contribute significantly to a downwind state's nonattainment, or if it is otherwise inadequate to meet any CAA requirement. EPA can also issue a SIP call if states do not meet the CAA Section 184 requirements of the OTR. Section 126(b) Petitions Under CAA Section 126(b), any state or political subdivision can petition EPA to issue a "finding that any major source or group of stationary sources emits or would emit any air pollutant in violation" of the Good Neighbor provision. Section 126(b) requires EPA to make a decision within 60 days. If EPA grants the petition, the sources identified in the petition must cease operations within three months unless they comply with emission controls and compliance schedules set by EPA. While Section 126(b) and a SIP call each enforce the Good Neighbor provision, they differ in their implementation. First, a state or political subdivision must initiate the 126(b) petition, whereas EPA initiates the SIP call. Second, unlike a SIP call, the 126(b) petition is limited to a "major source or group of stationary sources" and cannot be used to address minor or mobile sources. Third, EPA may directly regulate upwind sources when it grants a 126(b) petition, whereas a SIP call results in direct EPA regulation only if EPA issues a FIP in response to a state's failure to respond adequately to the SIP call. EPA's review of 126(b) petitions has sometimes coincided with the agency's SIP call process. For example, in 1998, EPA coordinated its review of eight 126(b) petitions when it promulgated a SIP call. EPA acknowledged the distinction between the CAA authorities for the 126(b) petition process and the SIP call but coordinated the two actions because they were both designed to reduce ozone transport in the eastern United States. States have also submitted 126(b) petitions ahead of the deadlines for Good Neighbor SIPs. For example, in 2011, EPA granted a 126(b) petition from New Jersey, finding that a coal-fired generating station in Pennsylvania contributed significantly to nonattainment with the SO 2 NAAQS in New Jersey. Some considered EPA's approval of this petition to reflect a more expansive interpretation of Section 126 in which 126(b) petitions are not necessarily limited to the time frame of Good Neighbor SIP updates. Whereas EPA had previously considered 126(b) petitions several years after revising a NAAQS—and after making attainment and nonattainment designations for revised standards—EPA approved New Jersey's 126(b) petition before Pennsylvania was required to complete its Good Neighbor SIP for the 2010 revision to the SO 2 NAAQS. EPA promulgated an emissions limit for the generating station that would reduce its SO 2 emissions by 81% and set a compliance deadline of three years. In 2013, the U.S. Court of Appeals for the Third Circuit upheld EPA's interpretation of Section 126, concluding that the CAA allows EPA to make a Section 126 finding independently of the Section 110 SIP process. States have continued to submit Section 126(b) petitions related to ozone interstate transport. For example, Connecticut, Delaware, Maryland, and New York have submitted 126(b) petitions related to compliance with the 2008 and/or 2015 ozone NAAQS. As of July 2018, EPA has denied the petition from Connecticut and has proposed to deny petitions from Delaware and Maryland. Among the various reasons for denying Connecticut's petition, EPA found that the petition did not reflect current operations at the named source—a power plant located in Pennsylvania. In particular, EPA stated that the air quality modeling in Connecticut's petition was based on 2011 emissions data and therefore did not account for subsequent NO x reductions, noting that the named source "primarily burned natural gas with a low NO x emission rate in the 2017 ozone season." In addition, EPA conducted its own analysis using the agency's current multi-step framework for determining what constitutes a significant contribution. The agency's analysis did not identify additional "highly cost-effective controls available at the source and thus no basis to determine that [the named source] emits or would emit in violation of the good neighbor provision with respect to the 2008 ozone NAAQS." While EPA "expects the facility to continue operating primarily by burning natural gas in future ozone seasons," others have expressed concern that there is no "enforceable requirement prohibiting" the named source from switching back to coal. Similarly, in June 2018, EPA proposed to deny petitions from Delaware and Maryland, in part because EPA found "several elements of the states' analyses … insufficient to support the states' conclusions." For example, EPA said that Delaware's petitions did "not provide any analysis indicating that Delaware may be violating or have difficulty maintaining the 2008 or 2015 ozone NAAQS in a future year associated with the relevant attainment dates." EPA also noted that Delaware used 2011 emissions data, which EPA characterized as "generally higher than, and therefore not representative of, current and future projected emissions levels at these [named sources] and in the rest of the region." Delaware has disagreed with EPA's proposed denial on various grounds. Among other things, Delaware stated that EPA has not "shown valid modeling or justification that Delaware will attain the 2015 ozone standard by its 2021 Marginal nonattainment deadline." In particular, EPA's projections analyzed the year 2023, which is the attainment deadline for areas designated as moderate nonattainment with respect to the 2015 ozone standard. Finally, EPA proposed to deny Maryland's petition, in part because the agency disagreed with Maryland that NO x limits for 36 named sources should be based on the respective units' lowest observed emissions rates. Specifically, Maryland's petition concluded that the 36 named sources were operating pollution controls "sub-optimally based on a comparison of their lowest observed NO x emissions rates between 2005 and 2008, which Maryland describes as the 'best' observed emissions rates, to emissions rates from the 2015 and 2016 ozone seasons." EPA disagreed that the lowest historical NO x emissions rate is representative of "ongoing achievable NO x rates" in part because over time, some NO x controls (e.g., selective catalytic reduction [SCR] systems) "may have some broken-in components and routine maintenance schedules entailing replacement of individual components." EPA stated that in a 2016 rulemaking addressing regional ozone transport, the agency determined that the "third lowest fleetwide average coal-fired [power plant] NO x rate" for power plants using SCR to be "most representative of ongoing, achievable emission rates." Maryland has disagreed with EPA's proposed denial, noting that it will "testify in opposition to the proposal and use all available tools, including litigation." Interpreting "Significant Contribution" Enforcement of the CAA's interstate transport provisions hinges on a key test in Section 110(a)(2)(D)(i)—whether one state "significantly contributes" to a violation of the NAAQS in another state. The CAA does not, however, define what constitutes a significant contribution. Instead, this phrase has been interpreted through EPA rulemakings addressing interstate air pollution. The agency's interpretation has been contentious at times, given that it "inherently involves a decision on how much emissions control responsibility should be assigned to upwind states, and how much responsibility should be left to downwind states." Stakeholders have challenged the legality of EPA's interpretations over the years. The regulatory actions and litigation have led to EPA's establishment of the current framework to address the Good Neighbor provision for ozone and particulate matter. The framework establishes a screening threshold—interstate pollution that exceeds 1% of the NAAQS—to identify states with sources that may contribute significantly to air quality problems in downwind states. Upwind states that exceed this threshold for interstate pollution are evaluated further—considering cost and air quality factors—to determine whether emission reductions are needed. EPA has clarified that it generally uses this framework to determine what constitutes a significant contribution when evaluating Good Neighbor SIPs and when evaluating a 126(b) petition. See " Framework to Assess Good Neighbor Provision " for detailed discussion of the framework. Programs Addressing Interstate Pollution Pursuant to the CAA, EPA and states have implemented various market-based programs that target regional emissions of SO 2 and NO x from power plants. One type of market-based program, known as emissions trading, sets a limit (or "cap") on total emissions within a defined geographic area or economic sector and requires covered entities to surrender an allowance for each unit—typically a ton—of emissions. Such programs are also known as "cap-and-trade." Under an emissions cap, covered entities with relatively low emission-reduction costs have a financial incentive to reduce emissions because they can sell unused allowances to entities that face higher costs to reduce their facility emissions. The requirements vary by each program. For example, policymakers may decide to distribute the emission allowances to covered entities at no cost (based on, for example, previous years' emissions), sell the allowances (e.g., through an auction), or use some combination of these strategies. In addition, some programs may permit covered entities to "bank" or save surplus allowances for future use while others may not. The remainder of this section presents a brief history of the interstate transport programs implemented prior to 2015, given their cumulative impact on regional emission reductions. The " Cross State Air Pollution Rule " section then provides more detail about CSAPR, the current emissions trading program intended to limit interstate transport of power sector SO 2 and NO x emissions. Figure 1 summarizes the timeline of the regional programs for ozone and particulate matter control. Acid Rain Program EPA established the Acid Rain Program (ARP) under Title IV of the 1990 CAA Amendments to reduce power sector emissions that cause acid rain. Specifically, the ARP targets SO 2 emissions through cap-and-trade and addressed NO x emissions through an emissions-rate-based program. Since its inception over two decades ago, the ARP has achieved notable reductions in these regional pollutants at lower-than-predicted costs. The market-based program also served as the basis for subsequent programs addressing interstate pollution. Under Title IV of the CAA, EPA implemented the ARP in two phases. The first phase—1995 to 1999—included 110 high-emitting coal-fired power plants, which had been identified in the statute and spanned 21 eastern and midwestern states. The second phase began in 2000 and included more coal-fired power plants as well as those firing oil and natural gas, accounting for nearly all fossil-fueled power plants in the lower 48 states. EPA set the annual SO 2 emissions cap at 9.97 million allowances in 2000 and decreased it in subsequent years. The ARP remains in effect today. The annual SO 2 cap—8.95 million tons of SO 2 per year—has not changed since 2010. The annual cap is roughly half of the SO 2 emitted by the power sector in 1980. EPA distributed SO 2 allowances based on statutory formulas and accounted for historical emission rates and fuel consumption. The "existing" power plant units—those in operation prior to November 15, 1990—received allowances for free. The "new" power plant units—those commencing operations after November 15, 1990—generally did not receive free allowances and had to purchase them on the market. At the end of each year, covered power plants have to surrender one allowance for each ton of SO 2 emitted. Unused allowances can either be sold or banked for use in later years. The market value of unused allowances, therefore, serves as an incentive for power plants to "reduce emissions at the lowest cost." The NO x portion of the ARP does not involve cap-and-trade but follows a more traditional regulatory approach. It is implemented through boiler-specific NO x emission rates. This program has provided power plants with some compliance flexibility, for example, by allowing the use of emissions rate averaging plans for units under common control, provided they meet certain conditions. According to one analysis of the ARP, the NO x portion "helped demonstrate the cost-effectiveness of NO x controls," and by 2000, it "encouraged the installation of advanced NO x combustion controls, such as low-NO x burners, and the development of new power plant designs with lower NO x emission rates." While the ARP reduced SO 2 and NO x emissions from the power sector, additional reductions were needed to meet ambient air quality standards under the CAA and to address the statute's Good Neighbor provision. For example, in 1997, EPA revised the NAAQS for ozone and particulate matter—which are formed by SO 2 and NO x —to be more stringent. The next sections summarize some of the programs designed to achieve these reductions. Ozone Control: Regional NOx Programs Ozone control strategies had focused on VOC emissions until the mid-1990s, when market-based programs began targeting another ozone precursor, NO x , given its "important role … in ozone formation and transport." Specifically, two regional trading programs were implemented between 1999 and 2009 to address ozone by reducing NO x emissions. The first one, the "Ozone Transport Commission NO x Budget Program," was in effect between 1999 and 2002. It was then replaced by the second program, the "NO x Budget Trading Program," which ran until 2009. Ozone Transport Commission NOx Budget Program The OTC—a multistate organization established under the 1990 CAA Amendments to advise EPA on ozone transport issues—developed the NO x Budget Program and implemented it through a Memorandum of Understanding (MOU) with nearly all of the OTC states. The OTC NO x Budget Program set a regional budget (i.e., cap) on NO x emissions from electric utilities and large industrial boilers during the "ozone season" (May through September), which is the time of year weather conditions are most favorable for ozone formation. Under the MOU, states "were responsible for adopting regulations, identifying sources, allocating NO x allowances, and ensuring compliance," while EPA was "responsible for approving the states' regulations and tracking allowances and emissions." Before emissions trading began under the OTC NO x Budget Program, sources under the ARP were required to meet CAA emission rate standards that were in effect at that time. Sources could not emit above the NO x level expected if using Reasonably Available Control Technology. Next, the cap-and-trade program began in 1999 and ran until 2002, at which point the OTC NO x Budget Program was effectively replaced by the NO x Budget Trading Program (see next section). In 2002, the sources participating in the OTC NO x Budget Program reduced ozone season NO x emissions 60% below 1990 baseline levels. Despite the NO x reductions in the Northeast, many northeastern and mid-Atlantic states were unable to meet a statutory deadline to attain the one-hour ozone NAAQS. EPA concluded that these areas had not met this statutory deadline largely because of ozone transport from upwind areas. NOx Budget Trading Program The NO x Budget Trading Program (NBP) effectively replaced the OTC NO x Budget Program and was implemented between 2003 and 2009. The NBP encompassed a wider geographic area than the OTC NO x Budget Program and targeted NO x reductions from electric utilities and nonutility sources (e.g., large industrial boilers). EPA established the NBP under the NO x SIP Call, which required a number of eastern and midwestern states, plus the District of Columbia, to revise their SIPs to address regional ozone transport. The NO x SIP Call set a NO x ozone season budget for each state and required upwind states to adopt SIPs that would reduce NO x emissions to a level that would meet the budgets. In the NO x SIP Call, EPA observed that "virtually every nonattainment problem is caused by numerous sources over a wide geographic area," leading the agency to conclude that "the solution to the problem is the implementation over a wide area of controls on many sources, each of which may have a small or unmeasurable ambient impact by itself." Ultimately, EPA expected that this would "eliminat[e] the emissions that significantly contribute to nonattainment or interference with maintenance of the ozone NAAQS in downwind states." EPA based the NOx SIP Call in part on recommendations from the Ozone Transport Assessment Group (OTAG), a group created by EPA and the 37 easternmost states. Of most relevance, OTAG recommended strategies to reduce NO x emissions from utilities as well as large and medium nonutility sources in a trading program. EPA accounted for the cost of NO x controls when establishing the NO x budgets. EPA identified cost-effective reductions in the electric utility and nonutility source sectors. These control strategies informed the establishment of the NO x emission budgets. EPA did not identify cost-effective controls in other sectors—namely, area sources (i.e., nonmobile sources that emit less than 100 tons of NO x per year), nonroad engines (i.e., mobile sources that do not operate on roads and highways, such as engines used to power snowmobiles, chainsaws, or lawnmowers), or highway vehicles. Under the NO x SIP Call, states could require their sources to comply with the emissions budget or participate in a regional cap-and-trade program. EPA developed a model rule for a regional emissions trading program—known as the NO x Budget Trading Program—to assist states interested in the trading option. All of the jurisdictions—20 states and the District of Columbia—adopted the NBP into their SIPs and participated in the NBP. In 2008, NBP emissions were 9% below the 2008 cap, representing a 75% reduction compared to 1990 baseline levels. This also represented a 62% reduction below a 2000 baseline, which accounted for emission reductions that occurred under the 1990 CAA Amendments before implementation of the NBP. EPA observed that ozone season NO x emissions decreased each year between 2003 and 2008 and attributed these reductions in part to the installation of NO x controls. The agency noted that emissions vary year-to-year due to variables such as weather, electricity demand, and fuel costs. For example, EPA attributed the NO x reductions between 2007 and 2008 primarily to lower electricity demand. However, analysis of the entire NBP period—2003 to 2008—shows a reduction in ozone season NO x emissions despite a slight increase in demand for electricity. EPA reported that the average NO x emission rate for the 10 highest electricity demand days (i.e., hot days when use of air conditioning is high) decreased in each year of the NBP. This metric for peak electricity days was 44% lower in 2008 compared to 2003. EPA reported that ozone concentrations decreased by 10% between the years 2002 and 2007 across all states participating in the NBP. EPA also observed a "strong association between areas with the greatest NO x emission reductions from NBP sources and downwind monitoring sites measuring the greatest improvements in ozone." Progress notwithstanding, some NBP areas remained in nonattainment status with the ozone NAAQS as the NBP program concluded by the end of 2008. Ozone and PM Control: Regional SO2 and NOx Trading Programs In 2005, EPA determined that interstate transport of SO 2 and NO x contributed significantly to ozone and PM 2.5 nonattainment. Specifically, EPA found that (1) interstate transport of NO x from 25 states and the District of Columbia contributed significantly to nonattainment, or interfered with maintenance, of the 1997 eight-hour ozone NAAQS; and (2) interstate transport of SO 2 and NO x from 23 states and the District of Columbia contributed significantly to nonattainment, or interfered with maintenance, of the 1997 PM 2.5 NAAQS. To address these findings, EPA promulgated a rule that applied to 28 eastern states and the District of Columbia. This rulemaking is known as the Clean Air Interstate Rule (CAIR). A legal challenge, however, vacated and remanded CAIR to EPA. CAIR remained in effect while EPA responded to the court decision and developed a new regional program addressing air transport, known as CSAPR. CSAPR replaced CAIR on January 1, 2015, and remains in effect today. The remainder of this section discusses each program in turn. Clean Air Interstate Rule CAIR established a regional cap-and-trade program to reduce power sector SO 2 and NO x emissions. Specifically, CAIR established emission budgets for each of the 28 states as well as a model rule for a multi-state cap-and-trade program in the power sector. Under CAIR, states could achieve their emission budgets by requiring their sources to participate in the cap-and-trade program. CAIR set three emissions caps: Two were annual emissions caps to limit SO 2 and NO x as precursor emissions to PM 2.5 , and the third was an ozone season cap limiting NO x as a precursor emission to ozone. The annual NO x and seasonal NO x caps were implemented as the "CAIR NO x annual" and "CAIR ozone season NO x " programs, respectively, in 2009. The SO 2 emissions cap was implemented as the "CAIR SO 2 annual" program in 2010. The scope of CAIR differed from prior NO x trading programs. Whereas the NBP had included both electric generators and nonutility industrial sources (e.g., boilers and turbines), CAIR focused only on electric generators. As previously noted, OTAG's recommendations for the NO x SIP Call included NO x controls for medium and large nonutility stationary sources as well as electric generating units. While nonutility sources emit both NO x and SO 2 , EPA did not require NO x and SO 2 reductions from these sources under CAIR. EPA concluded that it needed more reliable emissions data and better information about control costs to require reductions from nonutility sources in CAIR. Specifically, EPA stated that it lacked information about the costs to integrate NO x and SO 2 controls at nonutility sources and therefore could not determine whether such controls would qualify as "highly cost-effective" under CAIR. Some stakeholders disagreed with this conclusion, noting that EPA had cost information from the NO x SIP Call. EPA responded that the geographic scope of the NO x SIP Call differed somewhat from CAIR, and therefore it had limited emissions data about nonutility sources in CAIR states that were outside of the NOx SIP Call. In addition, EPA expected that projected NO x and SO 2 emissions from nonutility sources were "significantly lower than projected" emissions from electric generators. EPA concluded that states would be better positioned to "make decisions regarding any additional control requirements for [non-utility] sources." CAIR was challenged in court. The U.S. Court of Appeals for the District of Columbia concluded that CAIR was flawed, finding among other things that the CAIR trading program did not assure some "measurable" emission reduction in each upwind state. The court reasoned that the "[e]missions reduction by the upwind states collectively was not enough to satisfy Section 110(a)(2)(D)." The court ultimately remanded CAIR to EPA in December 2008, allowing CAIR to remain in effect while EPA developed a replacement rule. The CAIR programs for NO x (annual and ozone season) began in 2009 and the CAIR SO 2 program began in 2010. The programs continued through the end of 2014. Cross State Air Pollution Rule In 2011, EPA promulgated CSAPR to address the court's concerns regarding CAIR. CSAPR implementation began in 2015—replacing CAIR—and it remains in effect today. Similar to CAIR, CSAPR aims to reduce ozone and PM 2.5 interstate transport. As shown in Figure 2 , CSAPR requires 27 states to reduce SO 2 emissions, annual NO X emissions, and/or ozone season NO X emissions from the power sector. Specifically, CSAPR sets annual SO 2 , annual NO x , and ozone-season NO x budgets for the covered states and allows states to determine how they will achieve those budgets, including the option of emissions trading. CSAPR differs from CAIR in other ways, though, and introduced a new approach to measuring a significant contribution under Section 110(a)(2)(D). EPA had previously relied on a regional analysis of significant contributions (e.g., in CAIR and the NO x SIP Call). As previously noted, the D.C. Circuit found the regional approach flawed in a ruling on CAIR. As a result, EPA used state-specific information under CSAPR to determine significant contributions at the state level. After various legal challenges, the approach used in CSAPR remains in effect today. EPA has determined that it can use this framework to assess the Good Neighbor provision each time it revises the relevant NAAQS. Framework to Assess Good Neighbor Provision EPA developed a multi-step framework to assess states' Good Neighbor obligations and determine each state's significant contribution in CSAPR. First, EPA conducted air quality modeling to project "downwind air quality problems"—that is, it identified downwind monitoring receptors expected to have difficulty attaining or maintaining the NAAQS. Next, EPA identified the links between upwind states and the downwind air quality monitoring sites with projected attainment or maintenance difficulties. EPA then identified which of these linked upwind states "contribute at least one percent of the relevant NAAQS" at the downwind sites. The agency next assessed the cost-effectiveness of emission control measures and air quality factors to determine whether states exceeding this threshold made significant contributions or interfered with maintenance of a NAAQS in a downwind state. That is, EPA determined that an upwind state contributes significantly to a nonattainment or interference with maintenance of a NAAQS if it produced more than 1% of NAAQS concentration in at least one downwind state and if this pollution could be mitigated using cost-effective measures. EPA modified the way it considered costs under CSAPR. Whereas EPA had previously based "significant contribution" on the emissions that "could be removed using 'highly cost effective' controls," the agency accounted for both cost and air quality improvement to measure significant contributions under CSAPR. In CSAPR, EPA (1) quantified each state's emission reductions available at increasing costs per ton ("cost thresholds"), (2) evaluated the impact of upwind reductions on downwind air quality, and (3) identified the cost thresholds providing "effective emission reductions and downwind air quality improvement." The last step of the Good Neighbor assessment framework requires the adoption of "permanent and enforceable measures needed to achieve" the emission reductions. EPA implemented this step through its promulgation of FIPs, giving states the option to replace the FIP with a SIP. The FIPs specified the emission budgets for each state, reflecting the required SO 2 and NO x reductions from power plants in the state, and established the trading programs as each state's remedy to meet the emissions budgets. Legal challenges, which eventually reached the Supreme Court, delayed CSAPR implementation. The Court largely upheld EPA's approach, holding that EPA's consideration of cost in establishing states' emission budgets was a "permissible construction of the statute." CSAPR Emissions Trading Programs In response to the CAIR litigation, EPA designed "air quality-assured interstate emission trading programs" to implement CSAPR. The CSAPR trading programs allow for interstate trading but include provisions meant to ensure that all of the necessary reductions would occur in each individual state. Specifically, EPA stated that the CSAPR assurance provisions "ensure that no state's emissions … exceed that specific state's budget plus the variability limit (i.e., the state's assurance level)." EPA established four interstate trading programs for affected power plants under CSAPR: two for annual SO 2 , one for annual NO X , and one for ozone-season NO X . These trading programs aim to help downwind areas attain the 1997 and 2006 annual PM 2.5 NAAQS and the 1997 and 2008 ozone NAAQS. The first phase of CSAPR, which began in 2015, sought to address the 1997 and 2006 PM 2.5 NAAQS as well as the 1997 ozone NAAQS. The second phase of CSAPR, referred to as the CSAPR Update, began in 2017 and has sought to address the 2008 ozone NAAQS. The total emissions budget for each CSAPR trading program equals the sum of the individual state budgets covered by that program. Affected power plants receive an allocation of allowances based on the emission budget for that trading program in the state. Each affected power plant must have an allowance to emit each ton of the relevant pollutant. It may comply with its allowance allocation by using control technologies to reduce emissions—and sell or bank any surplus allowances—or buy more allowances on the market. EPA's "CSAPR Update" rulemaking updated the ozone season NO x program with respect to the 2008 ozone NAAQS. Specifically, the CSAPR Update promulgated new FIPs for 22 states; 21 of these states were covered in the original CSAPR ozone season NO x trading program. The updated ozone season NO x trading began in 2017 and largely replaced the original CSAPR ozone season NO x trading program. EPA concluded based on its modeling analysis that emissions from 10 of the states covered in the original CSAPR ozone season NO x trading program "no longer significantly contribute to downwind nonattainment or interference with maintenance" of either the 1997 ozone NAAQS or the 2008 ozone NAAQS. Various states and stakeholders have filed a petition for review of the CSPAR Update to the D.C. Circuit. CSAPR does not address the Good Neighbor provision with respect to either the 2012 revision to the PM 2.5 NAAQS or the 2015 revision to the ozone NAAQS. As of July 2018, states and EPA are in the process of evaluating interstate ozone transport with respect to the 2015 ozone NAAQS (see discussion under " Good Neighbor Determinations and the 2015 Ozone Standard "). Regarding the 2012 PM 2.5 standard, a 2016 EPA analysis determined that "few areas in the United States" would "have problems attaining and maintaining the 2012 PM 2.5 NAAQS due to the relatively small number and limited geographic scope of projected nonattainment and maintenance receptors." EPA concluded that "most states will be able to develop good neighbor SIPs that demonstrate that they do not contribute significantly to nonattainment or interfere with maintenance of the 2012 PM 2.5 NAAQS in any downwind state." Currently, nine areas are designated nonattainment with the 2012 PM 2.5 standard, four of which are located in two CSAPR states (Ohio and Pennsylvania). No areas are currently designated as maintenance with that standard. Results of Regional SO2 and NOx Trading Programs Power sector SO 2 and NO x emissions have declined since 2005. EPA has attributed most of these reductions to CAIR, which was in effect through the end of 2014. The agency noted that other programs, such as state NO x emission control programs, also contributed to the reductions in annual and ozone season NO x achieved by 2016. Figure 3 illustrates the trend of declining emissions, showing that annual SO 2 , annual NO x , and ozone season NO x decreased between 2009 (the first year of CAIR) and 2016 (the latest year for which the EPA Air Markets Program Data website reports emissions for all three programs). EPA attributed the SO 2 reductions under CAIR/CSAPR and the ARP largely to the greater use of pollution control technologies on coal-fired power plant units and "increased generation at natural gas-fired units that emit very little SO 2 emissions." As noted by the U.S. Energy Information Administration (EIA), nearly all SO 2 emissions from the electricity sector are associated with coal-fired generation. EPA reported that the average SO 2 emissions rate for units subject to either the CSAPR or ARP decreased 81% compared to 2005 rates. Most of the reductions were from coal-fired units. Analysis from EIA reveals a similar trend at the national level, suggesting that a combination of market and regulatory factors have contributed to SO 2 reductions. EIA reported a 73% reduction in national power sector SO 2 emissions from 2006 to 2015, which it described as "much larger" than the 32% reduction in coal-fired generation in that same period. EIA attributed the national SO 2 reductions to (1) changes in the electricity generation mix (e.g., less coal-fired generation and more natural-gas-fired generation), (2) the installation of pollution control technologies at coal- and oil-fired plants (in particular, to comply with the Mercury and Air Toxics rule), and (3) lower use of the most-polluting power plants (e.g., retirements of coal-fired units). Another EIA analysis reported that the eastern region of the United States—which includes all of the CSAPR states except Texas—had the largest share of capacity retirements between 2008 and 2017 compared to the rest of the continental United States. In addition, emissions in 2016 were below the total emission budgets for each CSAPR trading program (see Figure 4 ). EPA observed that this resulted in CSAPR allowance prices at the end of 2016 that "were well below the marginal cost for reductions projected at the time of the final rule [and that such prices] are subject, in part, to downward pressure from the available banks of allowances." EPA reported that preliminary data from the 2017 ozone season—the first CSAPR Update compliance period—show that ozone season NO x emissions were below the total emission budget. Emission allowance prices are generally affected by a number of factors, including supply and demand, program design elements that influence supply and demand, and legal and regulatory uncertainty. Analyses of ozone season NO x highlight summer weather as a key factor (e.g., higher than average temperatures could lead to greater demand for electricity). Power sector compliance strategies (e.g., use of installed control technologies, switching to lower emitting fuels, or retiring higher emitting units) are also relevant to ozone season allowance prices. Recent allowance prices in the CSAPR Update trading program appear to be lower than the marginal cost to reduce ozone season NO x emission. One brokerage firm reported that by May 2018—the start of the 2018 ozone season—NO x allowance prices ranged from $150 to $175 per ton, suggesting that the availability of allowance prices at such low prices "could lead to some decisions not to run some pollution controls at maximum output. This would, in turn, lead to higher emissions." The brokerage firm reported the marginal cost of ozone season NO x reductions to be about $300 per ton, though EPA considered higher marginal costs to develop the CSPAR Update emission budgets. Specifically, EPA considered several cost thresholds—ranging from $800 per ton to $6,400 per ton—and based the CSAPR Update emission budgets on reductions that could be achieved at $1,400 per ton. EPA concluded that a $1,400 per ton threshold would maximize the incremental benefits—the emission reductions and corresponding downwind air quality improvements—compared to other marginal cost thresholds. EPA identified NO x control strategies at this cost threshold to include optimizing use of existing operational Selective Catalytic Reduction (SCR) controls, turning on existing but idled controls—for example, SCR that had not been used for several seasons—and installing advanced combustion controls, such as low-NO x burners. EPA has reported improvements in air quality, attributing progress in part to the regional SO 2 and NO x transport programs. For example, 34 of the 36 areas in the eastern United States that were designated as nonattainment for the 1997 PM 2.5 NAAQS now show concentrations below that standard based on 2014-2016 data. In terms of ozone, all 92 of the eastern areas originally identified as nonattainment under the 1997 ozone standard now show concentrations below that standard based on 2014-2016 data. The 2014-2016 monitoring data also showed that 17 of the 22 areas in the eastern United States that were originally designated as nonattainment with the 2008 ozone standard now have concentrations below that standard. Status of Good Neighbor Determinations for Ozone Standards As previously noted, revisions to the NAAQS trigger the SIPs review process, through which EPA determines whether states have met their Good Neighbor obligations. EPA has not yet finalized its Good Neighbor determinations for either the 2008 revision or the 2015 revision to the ozone standards. The remainder of this section summarizes the status of EPA's Good Neighbor determinations under each standard. Good Neighbor Determinations and the 2008 Ozone Standard EPA first sought to address ozone transport with respect to the 2008 ozone standard in the 2016 CSAPR Update. Specifically, the CSAPR Update covered 22 states and promulgated FIPs with ozone season NO x budgets for power plants. EPA concluded at the time, however, that it could not determine whether the CSAPR Update fully addressed the Good Neighbor provision with respect to the 2008 ozone standard for 21 of the 22 covered states. In other words, the 2016 CSAPR Update "did not fully satisfy the EPA's obligation to address the good neighbor provision requirements" for those 21 states. EPA based its 2016 conclusion in part on the agency's projection of air quality problems at downwind monitors in 2017, even with implementation of the CSAPR Update. EPA found that 21 of the 22 CSAPR Update states would contribute "equal to or greater than 1 percent of the 2008 ozone NAAQS" to at least one nonattainment or maintenance monitor in 2017. Since then, EPA has updated its air quality modeling and, on June 29, 2018, proposed to determine that the CSAPR Update fully addresses 20 of the 21 remaining Good Neighbor obligations for the 2008 ozone standards. As such, the agency has "proposed to determine that it has no outstanding, unfulfilled obligation under Clean Air Act Section 110(c)(1) to establish additional requirements for sources in these states to further reduce transported ozone pollution under" the CAA's Good Neighbor provision with respect to the 2008 ozone NAAQS. EPA based its proposed determination on the updated air quality modeling, which projected air quality in 2023—a longer analytical time frame than it used in the CSAPR Update. The updated projections showed that in 2023, there would not be any nonattainment or maintenance monitors with respect to the 2008 ozone standard in the eastern United States. EPA's selection of a future analytic year is an important factor in the Good Neighbor determination. The agency based its selection of 2023 on two primary factors: (1) the downwind attainment deadlines and (2) the time frame required to implement emission reductions as "expeditiously as possible." As of August 2018, the next attainment dates for the 2008 ozone standard are July 20, 2021 (for areas classified as "Serious" nonattainment) and July 20, 2027 (for areas classified as "Severe" nonattainment). The potential to "over-control" emissions was another factor that EPA identified as relevant to the selection of the analytic year. EPA described it as relevant given the agency's expectation that future emissions will decline through implementation of existing local, state, and federal programs and in light of holdings from the U.S. Supreme Court. EPA stated that it considered both downwind states' obligation to attain the ozone standards "as expeditiously as possible" and EPA's "obligation to avoid unnecessary over-control of upwind state emissions." EPA did not specify whether it expected separate agency actions that may affect ozone precursor emissions—such as changes in the mobile source program—to affect its projections for 2023. EPA acknowledged that the year it chose—2023—is later than the attainment date for areas classified as "Serious" nonattainment (2008 ozone standard) but concluded that "it is unlikely that emissions control requirements could be promulgated and implemented by the Serious area attainment date." The timing of EPA's proposed determination was driven in part by a court order. A federal district court in New York ordered EPA to propose determinations for five states by June 30, 2018, and finalize them by December 6, 2018. EPA is under additional court-ordered and statutory deadlines to fully address the Good Neighbor provision with respect to the 2008 ozone standard. For example, another federal district court in California ordered EPA to address the Good Neighbor provision for Kentucky by June 30, 2018. EPA is subject to statutory deadlines in 2018 and 2019 to address requirements for eight CSAPR Update states. Good Neighbor Determinations and the 2015 Ozone Standard Evaluation of interstate ozone transport with respect to the 2015 ozone NAAQS is underway. EPA has conducted air quality modeling to inform the development and review of the Good Neighbor SIPs and issued the results in a memorandum in March 2018. States have the option to use these modeling results—for example, projections of potential nonattainment and maintenance monitoring sites with respect to the 2015 ozone NAAQS in the year 2023—to develop their Good Neighbor SIPs. States are required to submit Good Neighbor SIPs with respect to the 2015 ozone standard to EPA by October 1, 2018. EPA will then evaluate the adequacy of the SIPs and determine whether additional steps are necessary to address ozone transport. EPA's March 2018 memorandum also identified "potential flexibilities" or "concepts" for developing the Good Neighbor SIPs, describing considerations for each step of the transport framework. One of these considerations centered on international ozone contributions. Specifically, EPA seeks feedback on the evaluation of international ozone contributions when determining whether a state significantly contributes to or interferes with maintenance of a NAAQS. This "potential flexibility" might involve developing a "consensus on evaluation of the magnitude of international ozone contributions relative to domestic, anthropogenic ozone contributions" to nonattainment or maintenance receptors and consider whether to weigh the "air quality, cost, or emission reduction factors" differently in areas with relatively high contributions from international sources. EPA also invited stakeholders to suggest additional concepts—"including potential EPA actions that could serve as a model"—for the way Good Neighbor obligations are translated to enforceable emissions limits. Issues for Congressional Consideration SO 2 and NO x emissions have declined in recent decades, with SO 2 , annual NO x , and ozone season NO x emissions well below the 2016 CSAPR budgets (see Figure 3 and Figure 4 ). EPA's analysis suggests that its regional SO 2 and NO x programs have reduced interstate transport of PM 2.5 and ozone in the eastern United States. EIA's national-scale analysis also points to a combination of broader market and regulatory factors contributing to emission reductions, in particular for SO 2 . Going forward, it is not clear whether emissions will remain well below CSAPR budgets given recent low allowance prices for ozone season NO x and the supply of banked allowances that can be used in future years. In addition, EPA has not yet issued a determination about whether ozone transport contributes to air quality problems with respect to the 2015 ozone standard. The agency has, therefore, not yet determined whether and how it will update the CSAPR budgets with respect to the 2015 ozone standard. Stakeholder views on interstate air pollution transport vary, generally reflecting disagreements about the level of emissions that should be reduced and which sources—and states—bear responsibility for doing so. Some stakeholders have expressed concern that interstate transport continues to harm air quality. For example, some stakeholders have expressed concern about transport of ozone and ozone precursor emissions to downwind states—and the health impacts associated with ozone exposure—and stated that some coal-fired power plants do not make full use of "already-installed pollution controls" to reduce ozone precursor emissions. As discussed earlier in this report, EPA has recently denied a 126(b) petition and proposed to deny others from states seeking additional upwind reductions in ozone precursors, in part because the agency disagreed with each state's technical analysis (see " Section 126(b) Petitions "). Among the stakeholders disagreeing with the agency's rejection of Connecticut's 126(b) petition was a regional organization that raised concern that EPA has not used existing CAA tools to "adequately address interstate ozone transport in a timely manner." On the other hand, emissions are below CSAPR budgets, and other stakeholders have questioned the feasibility of additional reductions in ozone precursors. These stakeholders have raised concerns about the extent to which international or natural sources contribute to ambient ozone concentrations. The following issues may inform deliberations about interstate air transport, particularly as EPA continues its assessment of Good Neighbor obligations with respect to the 2015 ozone standard. NOx Emission Trends Major sources of NO x emissions include power plants, industrial facilities, and mobile sources such as cars and trucks. EPA reported that NO x emissions are expected to decline in the future through a "combination of the implementation of existing local, state, and federal emissions reduction programs and changing market conditions for [power] generation technologies and fuels." EIA's projections, however, suggest that while coal-fired power generation declines in the reference scenario, power sector NO x emissions remain relatively flat between 2017 and 2050, showing a total decline of 0.2%. EPA noted that nonpower-sector sources may be "well-positioned to cost-effectively reduce NO x " emissions compared to the power sector, but the agency also concluded that it has less certainty about nonpower-sector NO x control strategies. The extent to which the current collection of federal and state programs—such as CSAPR and EPA mobile source programs that set tailpipe emission standards—improve air quality in areas not meeting the 2015 ozone standard is to be determined. In 2015, EPA projected that existing rules (e.g., those addressing automobile emission and fuel economy standards and rules affecting power plants) would reduce ozone precursor emissions, regardless of whether EPA revised the ozone NAAQS. EPA has subsequently proposed changes to some of these existing rules—specifically, greenhouse gas emission (GHG) standards for passenger cars and light trucks and existing coal-fired power plants. In particular, the proposal for passenger cars and light trucks would freeze fuel economy and GHG standards at model year 2020 levels through model year 2026. The current GHG standards would decrease between model years 2020 and 2025 and were projected to decrease carbon dioxide as well as ozone precursor emissions. In terms of power plants, EPA concluded that its Affordable Clean Energy proposal to replace the Clean Power Plan would increase carbon dioxide, SO 2 , and NO x emissions from the power sector relative to a scenario with implementation of the Clean Power Plan. While the agency has not yet finalized these changes, they may have implications for levels of ozone precursor emissions. That is, regulatory changes affecting emissions in one sector—such as automobiles—may affect ozone NAAQS implementation as states seek to ensure the necessary emission reductions are achieved across all sources—mobile and stationary—in the state. Incentives for NOx Reductions A recent market report concluded that current NO x allowance prices—which are lower than the marginal cost of NO x reductions—may ultimately lead to higher emissions. While EPA has set state-specific emission budgets for CSAPR states intended to address interstate ozone transport with respect to the 2008 ozone standard, it is not clear whether these budgets will be sufficient to address Good Neighbor obligations under the more stringent 2015 ozone standard. In light of this trend in NO x allowance prices, some have questioned whether additional regulatory incentives may be necessary for states to fulfill Good Neighbor obligations. Some states have urged EPA to implement additional regulatory requirements through 126(b) petitions. For example, Delaware's 126(b) submission to EPA concluded that "[a]dditional regulatory incentive is required to ensure that the existing [Electric Generating Unit] NO x controls are consistently operated in accordance with good pollution control practices." Related EPA Air Quality Initiatives Current Trump Administration air quality initiatives may indirectly affect consideration of states' Good Neighbor obligations. The Administration has established a "NAAQS Reform" initiative that, among other things, seeks to streamline the NAAQS review process and obtain Clean Air Scientific Advisory Committee advice regarding background pollution and potential adverse effects from NAAQS compliance strategies. EPA has also created an Ozone Cooperative Compliance Task Force in response to some stakeholders' concerns about international and long-range ozone transport as well as monitoring and modeling issues. Limited information is available about the Ozone Cooperative Compliance Task Force and what actions it may undertake. In March 2018, EPA reiterated its interest in these particular ozone issues when it published air quality projections meant to inform Good Neighbor evaluations with respect to the 2015 ozone standard. Specifically, EPA's memorandum sought comment on "potential flexibilities" for developing the Good Neighbor SIPs, describing considerations for each step of the transport framework, including assessment of international ozone transport.

Notwithstanding air quality progress since 1970, challenges remain to reduce pollution in areas exceeding federal standards and to ensure continued compliance elsewhere. The movement of air pollutants across state lines, known as interstate transport, has made it difficult for some downwind states to attain federal ozone and fine particulate matter (PM2.5) standards, partly because states lack authority to limit emissions from other states. The Clean Air Act's "Good Neighbor" provision (Section 110(a)(2)(D)) seeks to address this issue and requires states to prohibit emissions that significantly contribute to another state's air quality problems. It requires each state's implementation plan (SIP)—a collection of air quality regulations and documents—to prohibit emissions that either "significantly contribute" to nonattainment or "interfere with maintenance" of federal air quality standards in another state. The act also authorizes states to petition EPA to issue a finding that emissions from "any major source or group of stationary sources" violate the Good Neighbor provision (Section 126(b)). EPA and the states have implemented regional programs to address interstate ozone and PM2.5 transport and comply with the Good Neighbor provision. These programs set emission "budgets" for ozone and PM2.5 precursor emissions—specifically, sulfur dioxide (SO2) and nitrogen oxide (NOx) as PM2.5 precursors and seasonal NOx emissions as an ozone precursor. The current program—the Cross State Air Pollution Rule (CSAPR)—focuses on limiting interstate transport of power sector SO2 and NOx emissions to eastern states. Power sector emissions in CSAPR states are below emission budgets as a result of regulatory and market factors (see figure). Annual SO2, annual NOx, and ozone season NOx emissions from CSAPR sources decreased 77%, 41%, and 15%, respectively, between 2009 and 2016. EPA has concluded that regional SO2 and NOx programs have reduced interstate transport of PM2.5 and ozone. The Energy Information Administration's national-scale analysis identifies market and regulatory factors contributing to emission reductions. It is unclear whether emissions will remain well below budgets, given recent prices of ozone season NOx allowances (i.e., authorization for each ton emitted) and the supply of banked allowances for future use in lieu of emission reductions. Research indicates that ozone transport harms air quality in downwind states. However, stakeholder views vary regarding the extent to which interstate transport impacts air quality. Some note that some coal-fired power plants do not fully use already-installed pollution controls. Several states have sought additional upwind reductions in ozone precursors through Section 126(b) petitions. Others have questioned the feasibility of achieving additional reductions in ozone precursors, raising concerns about emissions from international or natural sources. EPA recently proposed to determine that CSAPR fully addresses Good Neighbor obligations for the 2008 ozone standard but has not yet made a "Good Neighbor" determination for the more stringent 2015 ozone standard. The agency has therefore not yet determined whether and how it will update the CSAPR budgets with respect to the 2015 ozone standard. Members of Congress may have an interest in better understanding how EPA and states implement the Clean Air Act's Good Neighbor provision, particularly as EPA continues its assessment of Good Neighbor obligations under the 2015 ozone standard. The following issues, among others, may inform deliberations about interstate air transport. First, the extent to which existing programs will improve air quality in areas not meeting the 2015 ozone standard is to be determined. CSAPR has not addressed NOx emissions from nonpower sector sources, such as large industrial boilers. EPA concluded that industrial sources have potential to cost-effectively reduce NOx emissions but is less certain about the structure of potential NOx control strategies. Second, some have questioned whether additional regulatory incentives are necessary to fulfill Good Neighbor obligations, particularly given current NOx allowance prices. These prices are below the marginal abatement cost, which may result in higher emissions. Third, EPA's current air quality initiatives may indirectly affect its Good Neighbor assessments. EPA recently sought comment on potential flexibilities for the development of Good Neighbor SIPs.

Introduction to Preemption in TSCA Preemption Under the Constitution Preemption raises complex issues of law, policy, and federalism. Under the Supremacy Clause of the U.S. Constitution, state law and policy (or law and policy of local subdivisions of states, acting under state law) that conflicts with federal law must yield to the exercise of Congress's powers. Whether a certain state action is preempted by federal law is a question of congressional intent. When it acts, Congress can preempt state action within a field entirely, allow for states to act freely, or permit state action to any intermediate degree. Federal statutes relating to protection of the environment and public health have taken a diverse range of approaches to preemption ranging between these two extremes of field preemption and no preemption. The Toxic Substances Control Act (TSCA), which defines the authority of the Environmental Protection Agency (EPA) to assess and regulate chemical substances in U.S. commerce, takes an intermediate approach. Overview of TSCA An overview of TSCA as a whole is necessary to place TSCA's preemption provisions in context. For more information, see CRS Report RL31905, The Toxic Substances Control Act (TSCA): A Summary of the Act and Its Major Requirements , by [author name scrubbed]. TSCA establishes a chemical regulatory program allowing EPA to review new chemical substances before they enter U.S. commerce, as well as significant new uses of chemical substances as designated by EPA (§5); to regulate chemicals in commerce that EPA determines to present unreasonable risks of injury to human health or the environment, using the least burdensome requirements that adequately protect against such risks (§6); and to require testing on chemicals that may present an unreasonable risk, or that merit testing by virtue of certain high production volume or high exposure potential criteria (§4). TSCA also authorizes and mandates that EPA require reporting of certain information on chemicals by manufacturers (including importers), processors, and sometimes distributors, and to maintain an inventory of chemicals and substances that have commenced non-exempt manufacture or import in the United States (§8). In addition, among other provisions, TSCA requires EPA to maintain confidentiality of trade secrets and privileged or confidential business information in a particular manner (§14), coordinate with other federal agencies and EPA offices (§9), and respond to citizens' petitions (§21). TSCA's core provisions (Title I) have not been significantly amended since the law's enactment in 1976. It is also important to note that TSCA applies to "chemical substances" (defined in §3). To avoid overlapping with other federal statutes, TSCA defines this term to exclude certain categories of materials and substances from its scope. Substances when used in pesticides, foods (including ingredients and additives), food contact substances (such as containers), personal care products, tobacco, nuclear materials, firearms, and shells and cartridges are not within the scope of TSCA—or consequently, within the scope of TSCA preemption. Preemption Under TSCA TSCA's preemption provisions (§18) base preemption on certain actions taken by EPA under a handful of specified statutory provisions. So long as EPA has not specifically addressed a chemical under TSCA, there is no preemption of state regulation of that same chemical. When EPA does take certain actions regarding a chemical, TSCA provides for preemption of duplicative testing requirements and of non-identical state regulations, other than total bans or disposal regulations, unless the state regulations are adopted under other federal laws or an exemption is granted. Specifically, TSCA Section 18(a) provides the following: If EPA promulgates a rule under TSCA Section 4 requiring manufacturers or processors of a chemical substance to conduct testing on that substance to develop data on its health and environmental effects, then a state or political subdivision cannot establish or continue its own testing requirement rule for that chemical substance "for purposes similar to those for which testing is required" by EPA. EPA has issued testing rules for several hundred chemicals under Section 4. These would preempt similar testing requirements by states, but research has uncovered no cases finding preemption of state testing requirements by EPA testing rules. If EPA prescribes a rule or order under TSCA Section 5 (new chemicals) or Section 6 (existing chemicals), which is designed to protect against a risk of injury to health or the environment associated with a chemical substance, then a state or political subdivision cannot establish or continue any non-identical requirement applicable to the same chemical substance (or article containing such chemical substance) that is designed to protect against the same risk. Since 1976, EPA has promulgated rules imposing restrictions to protect against risk of injury to health or the environment from six existing chemicals under Section 6 of TSCA and four new chemicals under Section 5(f). These few EPA rules have not preempted many state or local requirements. Because these are the only bases for preemption, EPA information-gathering rules under Section 8, or actions under any other section of TSCA, do not preempt state or local actions. Pursuant to exceptions, any preemption by EPA rules or orders under Sections 5 or 6 would not extend to the following: State regulations on the manner or method of disposal of chemicals; an EPA rule pertaining to disposal has no preemptive effect. State requirements that are identical to federal requirements, enabling states to provide additional enforcement (co-enforcement) of those requirements. State requirements that are adopted under the authority of any other federal law. Complete prohibitions on the use of particular chemicals within a state's jurisdiction. However, a state cannot prohibit the chemical's use in manufacturing or processing of other substances. TSCA Section 18(b) allows a state to apply to EPA for an exemption to allow a more stringent state chemical risk management regulation that would otherwise be preempted. EPA may, by rule, grant such an exemption so long as compliance with the state requirement would not cause a violation of the federal requirements for the chemical; would provide a significantly higher degree of protection from risk; and would not "unduly burden interstate commerce." It appears that no exemption rule has ever been issued. Section 18 of TSCA does not expressly preempt or affect lawsuits regarding chemical exposures under common law. Nonetheless, courts would generally interpret preempted "requirements" to include state common law. Thus, it is possible, for example, that a defendant's compliance with TSCA could provide a viable preemption defense to a lawsuit, if the common law or statutory requirement forming the basis for the lawsuit were designed to protect against the same risk as an EPA rule or order under TSCA Sections 5 or 6. The division of federal and state authority over chemicals is also affected by the lack of express authority, in Section 18 or elsewhere, for EPA to share with states any trade secret information that it collects that is confidential under TSCA Section 14. TSCA Amendment Proposals in the 114th Congress Legislative Background and Status Legislative efforts to revise TSCA's chemical regulatory framework date back at least to 2005. The legislative proposals that have been discussed over this time generally would preserve the basic organization of TSCA Title I; for example, provisions related to testing would remain in Section 4, new chemicals and new uses in Section 5, regulation of existing chemicals in Section 6, and preemption in Section 18. They would also generally continue TSCA's exclusion of specified categories of substances regulated under other laws. Yet the proposals would make significant changes to the operation of TSCA. The proposals differ in various respects from one another, however, including with respect to preemption. In the 114 th Congress, S. 697 , the Frank R. Lautenberg Chemical Safety for the 21 st Century Act, was introduced on March 10, 2015. A hearing on the bill was held before the Senate Environment and Public Works Committee on March 18, 2015. Following a markup, an amended version of S. 697 was ordered to be reported out of the committee on April 28, 2015, on a 15-5 vote with bipartisan support. S. 697 was reported with an amendment in the nature of a substitute on June 17, 2015, and placed on the Senate legislative calendar. An alternate proposal, S. 725 , the Alan Reinstein and Trevor Schaefer Toxic Chemical Protection Act, has not been ordered to be reported out of committee. S. 725 would eliminate express preemption from TSCA entirely, and is not included in this report's comparison. In the House of Representatives, a discussion draft entitled the TSCA Modernization Act of 2015 was released in early April, and a hearing was held in the Subcommittee on Environment and the Economy of the Committee on Energy and Commerce on April 14, 2015. After some revisions, the House discussion draft was approved by the subcommittee on May 14, 2015, on a 21-0 voice vote, also on a bipartisan basis. The TSCA Modernization Act of 2015 was formally introduced, with some amendments, on May 26, 2015, as H.R. 2576 and referred to the full committee on Energy and Commerce. The committee ordered the bill to be reported on June 3, 2015, on a 47-0 vote, with one abstaining, and the bill was reported on June 23, 2015. The bill, as amended, was debated on the House floor and passed the House on June 23, 2015, on a 398-1 vote. Comparison S. 697 and H.R. 2576 address many of the same topics and provisions of TSCA, with important similarities and differences in their approaches. For additional discussion of select issues addressed by the bills, see CRS Report R44434, Proposed Amendments to the Toxic Substances Control Act (TSCA) in the 114th Congress: H.R. 2576 Compared with the Senate Substitute Amendment , by [author name scrubbed] and [author name scrubbed]. S. 697 generally takes a more comprehensive and detailed approach to amending TSCA. It would add, among other new definitions, a definition of the term "safety standard" to mean a standard that ensures, without taking into consideration cost or other nonrisk factors, that no unreasonable risk of injury to health or the environment, including to any relevant "potentially exposed or susceptible population," will result from exposure to a chemical substance under the conditions of use. EPA would be required to establish a risk-based screening process to identify chemicals as high or low priorities for assessment, and then to conduct assessments on the high priority chemicals, with at least 25 assessments initiated by five years after enactment (along with other deadlines). Chemicals found not to meet the safety standard would have to be regulated; EPA would not be limited to the "least burdensome requirements" as under current TSCA, although it would have to take into account costs, benefits, and alternatives. S. 697 would make changes to the new chemical provisions, including imposing new duties on EPA to review such chemicals against the safety standard. New provisions on policies and guidance, including pertaining to use of science, would also impose duties on EPA. Based on amended reporting requirements, EPA would be required to identify chemicals that have not recently been in U.S. commerce as "inactive." H.R. 2576 would make fewer changes to TSCA. Unlike S. 697 , it would not change TSCA's new chemical provisions. Nor would it add a detailed new prioritization scheme for evaluating chemicals (although EPA could likely continue its existing prioritization efforts, the TSCA Work Plan for Chemical Assessments). Similar to S. 697 , H.R. 2576 would prohibit EPA from taking into account information on cost and other factors not directly related to health or the environment in conducting risk evaluations, give EPA a mandate and framework to conduct such risk evaluations, and remove the "least burdensome requirements" language from TSCA's risk management provisions for chemicals found to present an unreasonable risk. H.R. 2576 would instead require that chemical rules be cost-effective, unless EPA determines that additional or different requirements are necessary to protect against the identified risk. EPA would have to initiate at least 10 risk evaluations per year, subject to the availability of appropriations. While doing so in different ways, both bills would also generally expand EPA's testing authority; impose certain requirements pertaining to scientific standards; modify TSCA's confidentiality provisions; expand TSCA's fee provisions; and make certain other changes and additions to other sections of the law—although as noted above, S. 697 would make substantially more changes and additions. Table 1 below provides a side-by-side comparison of the preemption provisions and other provisions related to the state-federal relationship in these two bills. Table 1 first describes limits on the universe of state or local rules that would potentially be subject to preemption by EPA actions by comparing the bills' overall preemption scope, exceptions, and savings clauses. These are broadly similar, with some differences at the margins; most notably, both would retain TSCA's chemical-by-chemical preemption approach. Table 1 then compares the scope and timing of preemption (subject to the exceptions) based on various EPA actions under each proposal. Here, there are somewhat larger structural differences between the bills: for example, S. 697 preempts new state restrictions while a chemical is undergoing assessment by EPA, while H.R. 2576 has somewhat broader preemption on the basis of EPA actions on new chemicals and significant new uses of chemicals. Both bills would preempt state requirements after EPA either imposed requirements on a chemical found to present an unreasonable risk, or after EPA determined that a chemical did not present an unreasonable risk. Table 1 then compares S. 697 's new waiver provisions with those of H.R. 2576 , which are retained from current TSCA. Finally, Table 1 notes several other provisions not pertaining to preemption that nonetheless relate to the federal-state relationship under TSCA.

The Toxic Substances Control Act (TSCA) was enacted in 1976 to govern the regulation of chemical substances in U.S. commerce. Its core provisions have not been significantly amended since that time. Under TSCA, the Environmental Protection Agency (EPA) has implemented a chemicals management program over the past four decades. EPA has issued a very limited number of risk management rules under TSCA to restrict chemicals it has found to present unreasonable risks of injury to human health or the environment. Meanwhile, states and, in a few cases, local subdivisions of states have enacted an increasing number of their own chemical programs and restrictions. The federal preemption doctrine derives from the Supremacy Clause of the U.S. Constitution, which provides that federal laws "shall be the supreme Law of the Land." Congress can expressly preempt state and local laws by statute, and the scope of preemption is determined by Congress's intent. Because TSCA preemption is based on EPA's issuance of certain types of rules and orders targeting particular chemicals (subject to exceptions), state and local chemical programs and restrictions—for the most part targeting chemicals not subject to EPA risk management rules—generally have not faced preemption under TSCA. As legislative proposals to amend TSCA have been discussed in recent years, one major topic of debate has been the extent to which the scope of TSCA's preemption of state chemical regulations should be preserved, expanded, or reduced. This report provides a brief background on preemption in current TSCA. The report then provides a side-by-side comparison of the preemption provisions of House and Senate bills in the 114th Congress to amend TSCA. S. 697, the Frank R. Lautenberg Chemical Safety for the 21st Century Act, was ordered to be reported out of the Senate Environment and Public Works Committee on April 28, 2015, on a 15-5 vote. It was reported, as amended, on June 17, 2015, and placed on the Senate Legislative Calendar. H.R. 2576, the TSCA Modernization Act of 2015, was first released as a discussion draft on April 7, 2015. It was introduced as H.R. 2576 on May 26, 2015, and passed the House as amended on June 23, 2015, on a 398-1 vote. Both bills would expand EPA's authority to regulate chemicals in a number of ways, similar in some respects, although S. 697 is a longer and more detailed bill that would make more changes to TSCA's language than H.R. 2576. The preemption provisions of the two bills have many similarities as well, including in their overall structure, which retains TSCA's approach of only preempting state and local laws on a chemical-by-chemical basis after EPA action on a chemical. Both bills would also exclude from preemption state and some local chemical requirements in effect as of August 1, 2015, and any state or local requirements arising from long-standing state chemical laws such as California's Proposition 65. However, the bills have a number of differences with respect to preemption. For example, S. 697 would preempt new restrictions on a chemical while EPA prepared a safety assessment on that chemical, a period of up to several years; H.R. 2576 may impose somewhat broader preemption on the basis of EPA actions for new chemicals and new uses than S. 697. Various other similarities and differences between the two bills regarding preemptive EPA actions, exceptions, exemptions, and waivers are also compared. A third proposal to amend TSCA, S. 725, the Alan Reinstein and Trevor Schaefer Toxic Chemical Protection Act, would eliminate express TSCA preemption entirely. S. 725 is not included in this report's comparison.

Challenge to the Boeing-Airbus Duopoly in Civil Aircraft: Issues for Competitiveness The importance of a successful aerospace industry to the United States economy has been repeatedly acknowledged by President Obama and members of his Cabinet, many Members of Congress, and by all concerned with the competitive fortunes of the U.S. aircraft manufacturing industry. The U.S. aerospace industry is highly competitive and global in scope. Numerous U.S. firms manufacture a wide range of products for civil and defense purposes. In 2010, the value of aerospace industry shipments was estimated at $171 billion, of which civil aircraft and aircraft parts accounted for approximately half ($85 billion) of all U.S. aerospace shipments. In 2010, the U.S. aerospace industry exported nearly $78 billion in products, of which $67 billion (or 86% of total exports) were civil aircraft, engines, equipment, and parts. The only U.S. manufacturer of large civil aircraft is Boeing. Civil aircraft engines are manufactured by General Electric (GE) in partnership with Safran (of France) and by Pratt & Whitney. Numerous firms manufacture sections and parts of the airframe, as well as original equipment for both domestic and foreign airframe manufacturers. The U.S. trade surplus (net exports) in aerospace products in 2010 was $43.6 billion—higher than for any other manufacturing industry. In 2010, the aerospace sector employed 477,000 workers, of which 228,400 were engaged in the manufacture of aircraft, 76,400 in the manufacture of engines and engine parts, and 97,600 in the manufacture of other parts and equipment. According to the International Trade Administration (ITA), "more jobs in the United States were supported by exports of U.S. aerospace products than of any other manufacturing or service industry." A major issue for policymakers is whether the United States can sustain its preeminent position in aerospace, given the intentions of numerous foreign manufacturers to enter the small commercial jet aircraft segment by 2016. That segment accounts for nearly half of commercial aircraft revenues and for more than 60% of commercial aircraft deliveries. Some industry participants and analysts have recently suggested that the two dominant manufacturers of large civil aircraft, Boeing and Airbus, now face a new and significant group of competitors that are ready to challenge the incumbents for a potentially significant share of the market for small commercial jets. Currently that market is almost wholly owned by the Boeing 737 and Airbus A320 families of jets. In Boeing's 2010 Annual Report , W. James McNerny, Jr., chairman, president, and CEO of Boeing, writes: At Boeing Commercial Airplanes, we must prepare now for increasing global competition. Aircraft manufacturers in several countries are poised to challenge us for a share of the market where we have been competing solely against EADS/Airbus. These emerging competitors see the same massive economic opportunity in commercial airplanes and related services that we do over the next 20 to 30 years. On June 20, 2011, the opening day of the 2011 Paris Air Show, the president of Boeing Commercial Airplanes, Jim Albaugh, announced "the days of the duopoly with Airbus are over." Albaugh was referring to long-standing dominance that Boeing and Airbus have held over the commercial jet aircraft business and, in particular, to the 90-220 seat aircraft segment that has seemingly come into play with the entry of competitors from Brazil, Canada, China, Russia, and Japan. Tom Enders, the chief executive officer of Airbus, agreed in part, saying "the duopoly is over in the 100 to 150 seat aircraft segment because that is where the new entrants ... want to be—so that doesn't mean the duopoly is over in the entire range of products." Enders also mentioned that he doubted that there was room for six competitors and that "we think sooner or later there will be some consolidation." If the small commercial jet segment is about to enter a new competitive phase, there is no evidence that the dominance of Airbus and Boeing over large (or wide-body) aircraft or very large (or super-jumbo) aircraft will face a similar challenge anytime soon. The small commercial jet segment represents a significant share of U.S. aerospace manufacturing sector output (see text box above for a discussion of aircraft types). In 2010, Boeing delivered 462 aircraft, of which 376 (81%) were Boeing 737s. Boeing also reported that it booked 486 net 737 orders in 2010, and had a firm order book of 2,186 737s as of December 31, 2010. Boeing's rival, Airbus, delivered 510 aircraft, of which 401 (79%) were A320s. Airbus booked 416 net orders for the A320 Family and had an order backlog of 2,418 A320 airplanes. Boeing and Airbus will likely face intense and determined competitors that see an opportunity to manufacture large civil aircraft in the 90–220 seat range. However, with the exception of Embraer's 190 and 195 E-Jets, none of the new competitors have yet to build any of the planes that they claim will be superior to Boeing and Airbus products. Both Boeing and Airbus recognize the possibility that one or more aircraft manufacturers may succeed in building planes that will compete with the Boeing 737 and the Airbus A320 families. Boeing's Jim McNerny has to do little more than look at Airbus—a company formed in 1970 by three European governments to ensure that a previously fragmented European aerospace industry would survive—to recognize that additional competitors have the potential to fundamentally change the global aircraft manufacturing industry. But history has not been kind to a market crowded with suppliers of commercial jet aircraft. Boeing and Airbus are the dominant producers of narrow-body commercial transport aircraft 90-220 seats). Two other aircraft manufacturers, Bombardier and Embraer, are the dominant producers of regional jets (RJs, which are defined as having fewer than 90 seats) and also manufacture narrow-body aircraft. The entry of new competitors into both the RJ and narrow-body markets could result in a much higher level of competition for both the dominant RJ manufacturers (Bombardier and Embraer) and the dominant narrow-body manufacturers (Airbus and Boeing). All of the new entrants are almost certain to face a number of hurdles that will determine whether they succeed, go back to the drawing board, or exit large commercial aircraft manufacturing. Chinese, Russian, and Japanese manufacturers have not previously built commercially competitive large civil aircraft, and Canada's Bombardier and Brazil's Embraer have primarily manufactured regional jets, albeit with considerable success. The complexities that aircraft integrators, such as Boeing and Airbus, have faced with various aircraft development programs (including recent programs such as the Airbus A380 and A350 and the Boeing 787) would be sufficient to sink all but the strongest aerospace companies. However, because some of the new entrants into the large civil aircraft sector are state-owned and -controlled companies (i.e., Russia's United Aircraft Corporation and China's Commercial Aircraft Corporation of China) that are funded by the government, commercial considerations may be less important during the development phase of the Russian and Chinese commercial aerospace projects. Growing Demand for Narrow-Body Aircraft: A Market Signal to New Entrants? One of the major market drivers for new narrow-body and RJ aircraft is projected high demand for efficient narrow-body aircraft in markets that are expected to grow rapidly during the next 20 years, especially in Asia and Latin America. The other major driver is the anticipated retirement of many of the airplanes in the current narrow-body fleet. Expected high demand for aircraft has attracted additional manufacturers, especially those that have the technical capacity to build such planes or those who possess a rapidly growing market for these, such as China and potentially India. Some of the new entrants have programs to build RJs that seat 70-90 passengers, but they could reasonably be expected to build larger aircraft in the not too distant future. Others are developing narrow-body aircraft that their manufacturers expect will compete head-to-head with the Boeing 737 and Airbus A320 families of narrow-body jets. The manufacturers of the new aircraft claim their planes will deliver substantially greater fuel efficiency than current versions of the 737 or A320 families, although it remains to be seen if the new planes will actually do so. Several of the entrants to the narrow-body and RJ markets are well established aircraft manufacturers or are producers of major sections of airframes for others. The established firms include Bombardier (Canada), Embraer (Brazil), and Mitsubishi Heavy Industries (MHI)(Japan). Others, such as United Aircraft Corporation (UAC)(Russia) and Commercial Aircraft Corporation of China (COMAC)(China), are new firms that reflect a reorganization of existing state-owned aerospace (defense and commercial) manufacturing resources by Russia and China. Their intent is to create industries that are viable international competitors. Both UAC and COMAC will produce RJs and narrow-body aircraft in cooperative partnerships with Western suppliers (see Table 1 ). With the entry of additional competitors, the major producers of narrow-body airplanes (Boeing/Airbus) and RJs (Bombardier/Embraer) will potentially face disruptive competition. All of the newcomers will have to build market share quickly if their airplanes are to achieve viability. Bombardier and COMAC have signed a partnership agreement and are developing complementary, but non-overlapping, narrow-body airplanes that will seat 100-149 passengers (Bombardier) and 156-190 passengers (COMAC). This partnership may pose the most serious challenge to the Boeing/Airbus narrow-body franchise if COMAC and Bombardier are able to gain a significant share of the fast-growing Chinese market—a market that both Boeing and Airbus intend to contest. Embraer, which had considered and rejected stretching its 190/195 E-jet (98-122 seats), may also decide to build a larger narrow-body airplane, especially if China, Russia, and Japan move into Embraer's core RJ market. Embraer is considering the development of a new larger airplane, but has not yet announced whether it will proceed, a decision that may ultimately depend on Boeing's plans and schedule for developing a replacement aircraft for the 737. Boeing and Airbus are, at present, the premier manufacturers of large civil aircraft of all sizes, but the importance of narrow-body aircraft to both companies cannot be overstated. According to Boeing's forecast for 2011-2030, narrow-body jets are expected to account for about 60% of all sales and about 47% of all revenues during the period. Although the two companies have, in recent years, sold roughly equivalent numbers of narrow-body planes, the projected demand for 23,330 narrow-body airplanes through 2030 suggests that the market may be theirs to lose if they do not keep ahead of the competition or if they are not capable of producing enough airplanes to meet their customers' demands. Airbus has announced that it will upgrade the A320 family by 2015, offering two new models of high efficiency engines. Airbus has announced that it does not intend to develop a replacement for the A320 until the mid-2020s. On July 20, 2011, Boeing followed Airbus' lead and announced that it would re-engine the 737 rather than replace it with a new small aircraft by 2020. Neither company appears to take competition (with each other or with newcomers) for granted, but both companies appear to believe the risks that the newcomers are willing to assume will be greater than those that should taken by market leaders with strong reputations for building commercial aircraft. Boeing and Airbus, with complete access to the latest aerospace technologies, may believe that they can learn from the experience of the newcomers without compromising safety, their overall competitiveness, or their ability to deliver a plane within a time-frame necessary to remain competitive. Aircraft Development: A High Stakes Venture The decision to develop (or "launch") a new airplane exposes commercial aircraft builders, jet engine manufacturers, and a host of other suppliers to very high levels of risk. Throughout the twentieth century, most firms made losing bets on aircraft and exited the commercial market entirely. Various types of risk are associated with aircraft development, including a manufacturer's ability to access capital markets to bring a plane to market; to deliver a plane that meets the performance requirements that were promised to launch customers; to deliver the plane in a timely manner; to attract sufficient customer demand to recover launch costs and earn a profit; and to anticipate the response of competitors. Investment Risk Large capital investments are required to bring a new plane to market. For publicly traded, shareholder-owned (as opposed to state-owned) corporations that manufacture commercial aircraft, the inability to raise launch capital would be sufficient to doom most projects. For commercial aircraft manufacturers, the overall risks associated with the launch of a new airplane is high enough that the term "betting the company" is frequently used to describe it. According to the U.S. International Trade Commission (USITC), "the development costs incurred by Boeing in 1966 for its 747 program are estimated to have been $1.2 billion—more than triple Boeing's total capitalization at that time." In other words, Boeing's level of risk was sufficiently high that failure could have brought the company down. Airlines and aircraft leasing corporations also bear similar risks: the purchase of a new airplane requires an airline to either borrow to finance the new airplanes or, as many airlines do, lease the new aircraft from one of the many companies that offer planes for lease. However, in the event that a particular aircraft does not generate enough sales to justify its place in the market, a launch customer (whether it be an airline or an aircraft leasing company) does not want to be the largest or only operator/owner of an airplane that is deemed a commercial failure. Fleet Complexity For airlines, who are the main customers of large civil aircraft manufacturers, fleet complexity provides flexibility but increases costs because of the need to support additional and different parts inventories and multiple training programs for aircraft crews and maintenance personnel. Fleet complexity emerges by design or by merger. It has been common for airlines to map out (or expand) a network and then acquire aircraft that best fit the needs of that network, or to outsource parts of the network to regional carriers that use RJs to feed the major airlines at their hubs. This was the strategy favored by legacy carriers (most of the airlines that predate airline deregulation in 1978). Bankruptcies and numerous airline mergers have also contributed significantly to fleet complexity, as large numbers of very different aircraft types were integrated into the merged enterprise. Fleet complexity is frequently necessary to support a varying mix of short- and medium-haul domestic and long-haul international operations. The major weakness of fleet complexity is the impact of changing business conditions on airlines. Rapidly fluctuating fuel costs or a sharp drop in the number of passengers (due, for instance, to a recession or economic downturn) have potentially greater negative effects on airlines that purchased aircraft to fit a network than on airlines that built a network on the basis of a specific type of aircraft. After airline deregulation, many airlines sought to compete for the same high density routes. This competition frequently created overcapacity, and resulted in low passenger yields and low fares on high density routes—a business model that practically guaranteed poor financial results. Deregulation also resulted in the abandonment by airlines of many routes that generated too few passengers to be profitable—leaving some communities with limited service and few direct flights other than to the nearest hub or with no service at all. Many of the flights to "thin" markets use smaller turboprops or RJs flown by regional carriers under contract to legacy carriers. In contrast, numerous low-cost carriers constructed networks based on a fleet of only one or two types of aircraft, including Southwest (737); AirTran (717, 737), JetBlue (Airbus A320, Embraer 190), and Ryan Air (737) of Ireland, among many others. This strategy has proved effective for growth and has allowed airlines like Southwest to move into territories that were once controlled by large legacy carriers. Fleet complexity has direct and indirect effects on aircraft manufacturers. Aircraft manufacturers have found it easier to compete against one another for an airline's business if the airline owns various models of airplanes made by multiple aircraft manufacturers. Aircraft manufacturers typically work closely with launch customers to create an airplane that meets customer requirements. This has frequently led to bidding wars among major aircraft makers, which sometimes offer airplanes to launch customers at unrealistically low prices, which then requires the manufacturer to sell many more planes to reach a breakeven point. Conversely, an airline that builds its network around one manufacturer/one type of aircraft creates a network effect that results in "lock-in." A low-cost carrier with a network based on one aircraft model has little incentive to purchase a comparable airplane from another manufacturer, even if the upfront price of the alternative airliner is attractive. In the case of Southwest Airlines, this strategy works well for Boeing, but effectively locks-out other competitors as long as they do not produce a competing product that is so recognizably superior to the Boeing 737 that Southwest has little choice but to switch. On the other hand, the current generation of 737s appears to be moving toward the end of its product life cycle in terms of the technological improvements and efficiency gains that can be made to it. For a number of months, Boeing engaged in a lively debate with its customers and itself about building a newer, more technologically advanced plane to replace the 737 by the end of the current decade. Southwest, Boeing's largest customer, has said that the replacement for the 737 is needed sooner rather than later. Against this customer pressure to replace the 737, the immediate success of the A320neo (new engine option) increased pressure on Boeing to put new, more efficient engines onto the 737, thus prolonging the life of one of the best known planes flying today. However, American Airlines, an all-Boeing customer, announced on July 20, 2011 a massive order for 430 narrow-body jets. In splitting its order between the A320 and 737, American announced that given its need to acquire the planes rapidly, no one company could deliver the all of the planes quickly enough. For those manufacturers that do not currently control a significant share of the 90-200 seat aircraft market, whether Canadian, Brazilian, Chinese, Russian, or Japanese, the larger challenge will be to produce and sell a commercial product that is superior to the planes currently on offer by Airbus and Boeing. The prospect that Airbus and Boeing may deliver more efficient planes in a timeframe that approximates the challengers' schedules further complicates their ability to claim existing market share from Boeing and Airbus. The difficulties, however, are more complex than building a more efficient airplane. Jet aircraft require a significant support network that is capable of supplying parts and assistance on a 24/7 basis with next-day delivery anywhere those planes fly. A plane that cannot fly because a part is not available cannot earn revenue, and airlines cannot afford to have a $50–$250 million piece of equipment sitting on the tarmac waiting on a part for very long. Bombardier and Embraer have both demonstrated that they can support the airlines that operate their aircraft. Russian aircraft manufacturers have traditionally had a poor reputation for service and parts supply. Russian and Chinese aircraft companies have announced that support services will be accomplished via joint ventures with European or North American partners. A proposed link between Bombardier and COMAC may help the Chinese manufacturer sell planes in some foreign markets. Reputational Risk, Uncertainty, and Inefficiency Reputational risk could be a significant problem for some manufacturers. This type of risk stems from many sources, but primarily affects the willingness of airlines and airline leasing companies to make large financial commitments to aircraft manufacturers that have not previously achieved success in competitive markets or who are new to the aircraft market segment they are entering. It seems highly unlikely that a major U.S. or European airline would commit to purchase a large number of expensive aircraft built by companies that have a limited track record and a poor reputation for after-sales support and quick parts delivery. Even if the airplanes are certificated in Europe or the United States, passenger airlines that purchase Russian-built airplanes could alienate their customers. From a competitive perspective, it will probably take years of solid service (including maintenance and parts support), possibly in the fleet of a reputable European air cargo operator, to convince passenger airlines and their customers that the airplane can deliver a level of service equivalent to that of Boeing and Airbus aircraft. One reason for concern is that the major aircraft manufacturers in the Soviet Union (Ilyushin, Sukhoi, Antonov, and Yakovlev) were protected from competition and market forces for decades prior to the collapse of the Soviet Union. With the breakup of the Soviet Union, none of the Russian companies could produce a commercial airplane that was competitive against products by Boeing or Airbus. By 2005, the entire Russian aircraft manufacturing industry was producing an average of 10 commercial aircraft a year. A widely held view is that the major problem with Russian commercial aircraft was poor after-sales support and poor maintenance by the airlines that operated the airplanes. The collapse of the Russian aircraft industry led to its reorganization by the Russian government in 2006. The new umbrella company, United Aircraft Corporation (UAC), is more than 92% owned by the Russian Federation and the Russian Development Bank ( Vnesheconombank ). With government support, Sukhoi has launched the SuperJet 100, a regional jet, and Irkut is developing the MS-21, a narrow-body (150–210 seat) airplane that will compete directly with Airbus A320 and Boeing 737 aircraft. The outlook for the Russian civil air transport sector, however, is problematic. In a 2008 study, the U.S. Commerce Department, citing the Russian Transport Ministry, reported that "by 2005, of the 2,528 total civil aircraft currently in service, more than one-half had passed their legal operational limits and needed replacing ... [and] ... industry experts forecast that Russian airlines would need at least 620 ... aircraft in the next 20 years." Boeing's 2010 forecast for the Commonwealth of Independent States (C.I.S.), a group comprising Russia and eight former Soviet republics, projects that the region will acquire 960 new commercial airplanes between 2010 and 2029, with a market value of $90 billion (in 2009 dollars). The new aircraft will have an average value of $90 million each (in 2009 dollars). The number of commercial airplanes in the C.I.S. in 2009 was 1,150 and is projected to rise to 1,300 in 2029—an annual rate of 0.6%. Most of the new deliveries will replace older equipment. With limited future demand for new commercial airplanes in Russia and the rest of the C.I.S., Russian manufacturers will have to compete against both new and used Boeing and Airbus airplanes in non-C.I.S. markets where high demand is anticipated or where demand for replacement aircraft is high. In contrast to Russia and the other C.I.S. countries, the outlook for China is highly positive. Boeing projects that Chinese demand for new aircraft between 2009 and 2029 will be 4,330 new airplanes, with a market value of $480 billion (in 2009 dollars), with an average airplane value of $110 million (in 2009 dollars). Of new deliveries, 71% are projected to be narrow-body airplanes and only 6% are expected to be regional jets. To overcome the reputation issue, both Russian-owned UAC and Chinese-owned COMAC have sought well established international joint venture partners that will be involved in the design, manufacture, marketing, and maintenance of commercial aircraft manufactured by those state-owned companies. Their expectation is that such partnerships will increase credibility and reduce the risk to airlines that purchase or lease such planes—especially if the partnerships help those companies establish a reputation for product safety, performance, quality, comfort, and price competitiveness. Such partnerships may benefit the various partners in the short-run, but as the new aircraft firms gain confidence and market share, both Russian and Chinese companies are likely to seek higher levels of national (or indigenous) competency and competitiveness across the range of advanced technologies (e.g., engines, wing, and avionics and other systems) and after-sale support. COMAC, the state-owned Chinese commercial aircraft company, has set out a number of basic principles for the development of a narrow-body aircraft that includes bringing into "full play the political superiority of the socialist system," competitiveness with Western products, commercial independence, and "independent intellectual property rights." These raise the possibility of a captive domestic market in which Chinese airlines will buy COMAC airplanes—even if they prove to be inferior to competing products (see text box below). The Chinese commercial aircraft industry is currently at a stage of developing domestic capabilities that require complex cooperative partnerships with foreign (chiefly European and American) suppliers. But COMAC's principles suggest an agenda that envisions a national policy of economic independence for its aircraft industry and possibly its aircraft market—a more autarkic vision that appears to differ from those of companies that are pursuing market opportunities within a free trade context in China and elsewhere. In markets where the state owns or controls both the aircraft manufacturing industry and airlines (China, in particular), governments can apply pressure to ensure that airlines purchase domestically produced aircraft. In combination with industrial policies that could potentially hinder market access by foreign aircraft manufacturers, a protected market for aircraft sales could easily guarantee sufficient local demand to allow a domestic producer to achieve scale economies. Of course, the Chinese market is sufficiently large that it should be capable of supporting domestic production and imports. The question is whether China will protect the market for its own narrow-body and regional jet aircraft while continuing to purchase aircraft that it cannot yet produce (i.e. wide-body medium and large aircraft). Whether Airbus or Boeing could challenge such an approach without fear of retaliation (loss of sales of large airliners to large state-owned airlines) remains to be seen. The Changing Economics of Small Commercial Jets The Boeing 737 and Airbus A320 families of airplanes (see Figure 1 for an illustration of the various models in the Airbus A320 family) overwhelmingly define the narrow-body, single-aisle market. Sales of 737s and A320s provide the bulk of orders and earnings for both Boeing Commercial Airplanes (BCA), based in Renton, WA, and Airbus SAS, based in Toulouse, France. These companies have been the sole competitors for the large commercial aircraft market since Boeing and McDonnell Douglas merged in 1997. Boeing is the sole U.S. producer of large commercial aircraft. Unlike many other manufacturers of aircraft, Boeing and Airbus are the only companies that produce a complete range of mainline commercial aircraft (small narrow-body to very large aircraft). The Boeing Company and EADS, Airbus' parent company, are also major international defense aerospace contractors. The Brazilian aerospace company, Embraer, produces the 190 and 195 E-Jets, which competes with smaller narrow-body planes by Airbus (the A318) and Boeing (the 737-600 series). Large civil aircraft are typically used for 25 years or more before being sold to cargo fleets, non-scheduled carriers, or to foreign airlines that lack the resources to buy newer equipment. Some narrow-body passenger aircraft, including the DC-9, have flown in U.S. airline fleets for up to 40 years. The first Boeing 737s (the 100 and 200 series) were delivered in December 1967—or 43 years ago. Because of the longevity of commercial aircraft, manufacturer's must consider the entire life-cycle of the plane and the likelihood that there will continue to be a market for the jet for more than enough years to cover the development costs of the plane. Airlines use aircraft intensively for many years and incur various operating costs that play a critical role in measuring aircraft performance. Costs include salaries, wages, and benefits; fuel and oil; maintenance materials and repairs; landing fees and other rentals; depreciation and amortization; aircraft rentals; and other expenses. According to Southwest Airlines' most recent annual report, "except for changes in the price of fuel, changes in operating expenses for airlines are largely driven by changes in capacity, or [available seat miles] ASMs." The demand for commercial aircraft changed in significant ways during the last decade in response to a number of exogenous events, including 9/11 and the shock experienced by the aerospace industry as a whole; the deep recession of 2008-2009; and fuel costs that have generally been rising since 2004. Since 2008, the volatility of fuel prices have caused significant problems for the airline industry (see Figure 2 ). During a five-month period in 2008, airlines were buffeted by crude oil spot prices that peaked at $147/barrel (bbl.) before falling below $35/bbl. Again in April 2011, the refiner acquisition cost of a barrel of crude oil rose to approximately $112, or nearly $28 higher per barrel than the year before. The 2008 and 2011 spikes in fuel costs, associated with oil prices greater than $100 per barrel, is part of what spurred airlines to increase load factors by reducing the number of available seats miles (i.e., retiring or parking aircraft); reduce excess network capacity by reducing the number of scheduled flights and discontinuing service to some cities; eliminate formerly profitable 50-seat regional jets from many routes; increase ticket prices and impose "ancillary fees" for baggage and numerous other services; and retire many older aircraft and demand more fuel-efficient replacements. Airlines have constrained capacity by grounding many older planes and reducing the number of flights from 11.6 million per year in 2005 to 10.1 million per year in 2010. For the period between 1978, the year airlines were deregulated, and 2002, system-wide (domestic and international) load factors for all U.S. airlines averaged 64.5%. Between 2003 and 2010, load factors rose dramatically from 73.5% to 82.1%—the highest levels ever achieved. Together with the consolidation that has occurred within the airline industry and the numerous fees that airlines are using to boost revenues, the outlook for the industry has improved. Although maintenance, repair, and overhaul (MRO) spending generally amounts to less than 10% of total annual operating expenses, long lasting assets, such as airframes and engines, require ongoing maintenance and repairs, as well as overhauls as planes age. Over the course of an aircraft's lifespan, engines account for 46% of maintenance, repair, and overhaul (MRO) spending, while airframes account for the rest. Total global MRO spending was $42.6 billion in 2010. Many older airliners are being retired, including the Boeing 737-300/400/500 series (also called the "737 Classic" series) that seats 122-159 passengers depending on the specific model and seating configuration), the MD-80/90 series, the DC-9, and older model Airbus A320s. At the same time, the economics of regional jets have also changed. With high fuel prices, once profitable 50-seat RJs have become money-losers and airlines have shifted to larger aircraft. Figure 3 provides a chart that shows the average stage length (left axis of chart) of narrow-body mainline jets and wide-body jets and operating cost per ASM (CASM)(right axis of chart). In Figure 3 , the single-aisle narrow-body planes with the shortest average stage length usually have higher operating costs per available seat mile (CASM). The age of the plane also plays a role. The DC-9s, some of the oldest planes, have the highest cost per available seat mile, followed by the "737 Classic" series. Aircraft Investments and Forecasting The Federal Aviation Administration (FAA) and major aircraft companies produce an annual 20-year forecast for the aviation industry and markets. These forecasts consider numerous factors that weigh on the market for commercial aircraft, including carrier schedules, passenger load factors, average aircraft size, the average length of flights (or stages, which involve one take-off and one landing), airspace and airport capacities, fuel costs, and different rates of growth of various regions of the world economy, among many other variables. The various segments of the industry interact in a complex manner and there are many unknowns that can quickly undercut the accuracy of any forecast. Nevertheless, forecasts guide planners as they make very large investment decisions about the production and purchase of aircraft, infrastructure development, air traffic control modernization, and regulation. The forecasts provide guidance both to the private sector and to policymakers. The range of narrow-body models produced by both Boeing and Airbus are designed to complement almost any fleet and, in some cases, comprise the entire fleet (e.g., Southwest: 737s; Virgin America: A319s and A320s; Ryanair: 737s). During the 2000-2010 period, more than 11,000 narrow-body units were delivered or on backlog. Because demand for narrow-body airplanes was so strong, production at Boeing and Airbus did not slump during the 2008-2009 recession. From 2000 through 2010, Boeing 737 orders averaged 395 per year. In 2010, Boeing 737 deliveries numbered a record 376 planes. According to Boeing, "The 737 program currently produces 31.5 airplanes per month and expects to go to 35 per month in early 2012, 38 per month in second quarter 2013 and then to 42 per month in the first half of 2014." With Boeing 737 backorders of 2,101 airplanes as of May 31, 2011, it would take Boeing nearly 5.6 years (until the end of 2016) to deliver the current backlog of orders at current rates. At the end of May 2011, Airbus had backorders of 2,420 of the A320 family of aircraft and had also announced that it would gradually increase production of the A320 to 42 per month. The most recent order from American Airlines and an anticipated order from Delta Air Lines may raise production levels at both companies by as much as 20 additional planes a month. In most forecasts, increased demand for new planes is expected to be boosted by the continued growth of low cost carriers (LCCs), by the rapid growth of emerging markets, and by continued market liberalization (access and deregulation). Through 2029, new airplane demand is expected to double, with 56% of deliveries supporting the expansion of air service in growing markets, and 44% of new airplanes replacing older, less efficient airplanes. Boeing projects that replacement of existing aircraft will result in 85% of the fleet having been delivered after 2010. Boeing, Airbus, and Embraer forecasts vary significantly. Airbus projects a rosier outlook for very large jets (A380s and 747s) than does Boeing: 1,740 deliveries versus 720. At a 2011 list price of US$375.3 million per A380 and about US$201 million per Boeing 747-8/9, the additional sales by Airbus and Boeing for very large aircraft could amount to about $300 billion (at current's prices) if each aircraft maker each sold half of the additional 1,020 large jets forecast by Airbus ; Boeing projects that large aircraft sales will amount to $220 million. Airbus, Boeing, Embraer, and Bombardier all project strong demand in the single-aisle, narrow-body category (see Figure 4 ). According to Boeing 2010–2030 forecast, the number of narrow-body aircraft will more than double, rising from 12,100 to 27,750, or from 62% of the total airplane fleet in 2010 to 70% in 2029 (see Figure 5 ). Boeing estimates that the market value of narrow-body aircraft sales will amount to $1.95 trillion, or 48% of the $4.0 trillion market for commercial aircraft in 2030. Has the Boeing/Airbus Rivalry Left the Narrow-Body Market Open to New Competitors? The single-aisle, narrow-body aircraft segment of the market is directly affected by larger and smaller aircraft programs, which influence investment decisions and competition among aircraft manufacturers. Manufacturers carefully consider their use of capital, labor, and engineering and manufacturing resources, and prioritize their projects accordingly. The ongoing or potential programs of competitors also receive scrutiny. A manufacturer that is developing a new plane will probably not take on additional projects that cannot be handled with available resources unless it believes it must do so to gain a competitive edge or to protect its market. In the case of the Boeing/Airbus rivalry, there has been a willingness by both companies to pursue strategic goals that have involved attempts to outflank or pre-empt market segments. This has frequently led both companies to take on multiple projects to maintain parity or gain a competitive edge, with the two companies frequently producing similar families of planes. This strategy is not new: Douglas Aircraft, Lockheed, and Boeing earlier fought similar battles in the commercial sphere. One of the consequences of the three-way competition was oversupply of "me too" aircraft, especially large aircraft, and, with the arrival of Airbus, the exit of Lockheed from commercial production and Douglas Aircraft's merger with McDonnell, which effectively eliminated Boeing's U.S. commercial rivals, but left it with a single, stronger European challenger that had strong political and financial support from the governments of France, Germany, the UK, and Spain. An intense competition between Boeing and Airbus in large wide-body aircraft (A380/747-8 and 787/A350) absorbed significant resources during most of the last decade. But competition in the very large, large, and medium aircraft market segments has been a normal pattern for companies that manufacture advanced commercial aircraft. The drivers of these programs are rising fuel prices, strong demand for more efficient, quieter, and less polluting aircraft, and growing demand for air travel. Whether the Boeing/Airbus competition in the wide-body market has had any overall effect on their narrow-body aircraft programs is arguable. Some airlines have pressed Boeing to develop a replacement for the 737 that incorporates the technologies that are used on the Boeing 787 (composite materials, newer flight deck technologies, new wing designs, and improved engines, among other features). However, Boeing's experience with production delays, supplier delays, cost overruns, and technical problems in the 787 program has resulted in estimated cost overruns of at least $12 billion more than Boeing's initial target development cost of $5 billion. Whether these technologies can be adapted to smaller planes at a cost that airlines could absorb is a significant part of debate over the futures of both the 737 and A320 programs. Can Boeing and Airbus Stay Ahead of New Competitors? The most recent additions to the 737 and A320 families are relatively fuel efficient, operate over longer distances, and carry more passengers than earlier models. Boeing and Airbus will each probably spend more than $10 billion to develop replacement planes, but both appear to be somewhat hesitant to rush into full-scale replacement programs while their current jets remain popular. Airbus, in particular, has raised a concern that the technologies needed for a significantly improved narrow-body aircraft may not be available until the mid-2020s; instead, it has announced that it will re-engine the A319, A320, and A321 by the end of 2015, at an estimated cost of $3 billion. Boeing had been reluctant to pursue the new engine approach because it would cost several billion dollars without providing Boeing with a new replacement airplane that would deliver the greater efficiencies that customers want. In defending a replacement for the 737 over re-engining the current generation 737, James McNerny, Boeing's CEO, said in February 2011, "Putting our backlog at risk twice, once with re-engining, not to mention the cost, and then with the new airplane, only makes sense if it's required in the 2025 timeframe. We are preserving the option if we're wrong - but I don't think so." However, after sales momentum shifted heavily in favor of the re-engined Airbus A320neo during the first half of 2011 (with an order backlog of 1,029 aircraft, including 667 orders announced during the Paris Air Show in June), Boeing came under pressure to provide customers with a re-engined 737 (dubbed the "737RE"). American Airlines (AA), with an all-Boeing fleet, reportedly entered into negotiations with Airbus in March 2011 for the replacement of its fleet of 271 aging MD-80s and 124 Boeing 757s. On July 20, 2011, at a press conference held jointly with Boeing and Airbus, AA announced that it was splitting its order between Airbus and Boeing after Boeing agreed to deliver a re-engined 737, using the CFM International (GE/Safran) LEAP-X engine—one of the two available options for the Airbus 320neo. The 460-aircraft order, the largest ever, is valued at $40 billion. AA will buy or lease 130 A320s, 130 A320neos, 100 737NGs, and 100 737REs, with deliveries of current generation models beginning in 2013. Airbus will begin deliveries of A320neos in 2017 with final deliveries expected in 2022. A decision on Boeing's schedule for delivering its re-engined 737 has not yet been determined. One major benefit that AA gained was "approximately $13 billion of committed financing provided by the manufacturers through lease transactions that will help maximize balance sheet flexibility and reduce risk. The financing fully covers the first 230 deliveries." Although AA's purchase of A320s could be viewed as a defeat for Boeing, Gerald Arpey, the president and CEO of American, said that such a large number of aircraft could not reasonably have been delivered by a single manufacturer in the timeframe required by American. Splitting the order between Airbus and Boeing provided AA with some earlier delivery slots that will presumably be created by expanding A320 and 737 production capacity. The negotiations with American Airlines also forced Boeing to make a decision in favor of re-engining rather than building a new replacement plane by the end of the decade—a win for Washington state (with its Boeing 737 production lines), and Kansas (where Spirit AeroSystems builds the 737 fuselage). Delta Air Lines, which is also expected to place a large order for narrow-body jets, reportedly also put pressure on Boeing to re-engine its 737 in response to the A320neo. Delta, formerly an all-Boeing airline, began flying Airbus A320s and A330s as a result of its merger with Northwest Airlines in 2008. Like American, Delta could also split its order between Boeing and Airbus. The result for Boeing and Airbus is overflowing order books that may carry 737 and A320 production into the 2020s. Although the new entrants into narrow-body production believe their products will have distinct advantages over the re-engined Boeing/Airbus products, high demand for the A320neo at the Paris Air Show by numerous international air carriers, the American Airlines order, and the expected large order by Delta Air Lines in the near future, suggest that many air carriers may be taking a wait-and-see approach toward the new competitors. Is There Really a Market Opening for New Competitors? The most significant effect of the two-way Boeing/Airbus competition may be that it has created a perception that the current narrow-body offerings by Boeing and Airbus are outdated. In contrast to this perception, the 737-700/800/900 series and the Airbus A320/A321 models are significantly larger capacity planes that can fly greater distances than earlier models (see Figure 6 , which shows the transcontinental reach of the 737NG family). The additional range, greater number of seats, and history of continuous incremental improvements, as well as major upgrades to engines, wings, cockpits, and interiors have allowed Boeing and Airbus to continue to reduce the cost per available seat mile (see Figure 3 ) on its 737s and A320s. The 737-800, for instance can carry 162 to 189 passengers, while the 737-900ER can carry 180 to 215 passengers. The Airbus A320 can carry 150 to 180 passengers, while the larger A321 can carry 185 to 220 passengers. There is also perception that the market for 100-149-seat jet aircraft has been all but abandoned by Boeing and Airbus, thus leaving an opening for new entrants. As to the supposed 100-149-seat "gap," there are several issues that cast the entire "gap" debate into question: Is there a need for such a new jet aircraft in emerging markets? If so, Bombardier, Embraer, Boeing, and Airbus all appear to be the companies best positioned to exploit the 100-149 seat gap. The Chinese appear to be more interested in using its C919 as an entry point to build larger, wide-body civil aircraft. Whether new, smaller (100-150 seat) narrow-body aircraft can profitably provide the increased fuel efficiency necessary to serve short-haul markets in many of the countries where air travel is expected to grow fastest may depend on jet fuel prices. Additionally, a new generation of larger, quieter (70-90 seat) turbo prop airplanes, such as the Bombardier Q Series and the ATR 72, can operate more efficiently on short-haul flights than the most efficient small jets—especially where passenger volumes are thin. The larger, more efficient turboprops are equally capable of replacing some smaller jets on short-haul U.S. and European routes. The 100-150-seat jet aircraft currently being sold or marketed are capable of flying greater distances (2,000–6,400 miles) with increased passenger capacity (up to 150 seats). But the larger 737-800/900s and A320/A321 are capable of carrying more than 150 passengers at a lower cost per available seat mile than jets in the 100-150-seat range. Demand for the smaller Boeing and Airbus narrow-body jets has declined as airlines have shifted toward the more efficient Boeing 737-800 and 737-900ER models and Airbus A320s and A321s. Embraer, traditionally a manufacturer of small regional jet aircraft, move into the lower end of the small narrow-body space in 2005/2006, with the E-190 and E-195. These airplanes seat 94-114 and 108-122 passengers, respectively. Embraer's E-Jet series has sold well and is flown by low-cost carriers, some legacy carriers, and a number of foreign airlines. Bombardier plans to deliver its CSeries jet in 2013, with two variants that will have 100-125 seats and 125-145 seats. Significantly, the Chinese and Russian narrow-body jets will not compete in the 100-150 seat market. Instead, they will compete directly against the largest narrow-body jets in the 737 and A320 series. The Chinese COMAC C919 will have 156-190 seats and the Russian UAC/Irkut MS-21 will have 150-212 seats. The entry of Chinese, Russian, Canadian, and Brazilian competitors into the narrow-body segment has already forced both Airbus and Boeing to respond to increased competition. The Airbus A320 re-engining program is expected to provide an interim solution that allows it to sell a more fuel-efficient airplane beginning in late 2015—just before COMAC and UAC/Irkut deliver their first narrow-body jets. However, it appears that the Airbus decision was more directly aimed at Boeing. Its decision to re-engine the A320 was pragmatic because the A320 series (with the exception of the A318) was designed to be re-engined, whereas the 737 can only be re-engined by lengthening the landing gear or by using a smaller CFM LEAP-X engine. Because re-engining the A320 can be accomplished in five years, Airbus took the lead and airlines, desperate for greater fuel efficiency, responded quickly. While Airbus and Boeing landed billions of dollars in new orders at the Paris Air Show, the Chinese, Russian, Canadian, and Brazilian aircraft manufacturers apparently gained little. Bombardier announced a 30-order deal for the CSeries, but apparently could not conclude a deal with Qatar. Six customers have placed a total of 113 firm orders for the CSeries planes. The Russian-built Sukhoi Superjet gained one order for 12 planes, and China's COMAC reportedly signed an agreement with Ryanair to be a development partner, although it is unclear whether Ryanair will eventually buy the C919. Embraer's chief executive officer, Frederico Curado, said, "Going up against Boeing and Airbus in head-to-head competition is really tough, not only because of their size, but because of their existing product line and industrial capacity. They can have a very quick response and literally flood the market." While anticipated demand for narrow-body aircraft is high, there is also the larger question of whether the market can accommodate four-to-six firms competing to sell narrow-body aircraft. The decision by Airbus and Boeing to re-engine their A320/737 families appears to have prevented any erosion of sales and has created a cushion against the challengers. With the combined experience that both Boeing and Airbus have in building mainline narrow-body, wide-body, and very large jet aircraft, neither appears ready to take risks that the newcomers have apparently embraced; that is, manufacturing a more efficient aircraft than the 737 or A320. Boeing and Airbus appear to have protected and extended their franchises from an untested group of competitors. Will China's Market for Aircraft Remain Open to Competition? The Chinese market is projected to be one of the major drivers for all civil aircraft manufacturers through 2029. Boeing's Commercial Market Outlook 201 0 -20 29 forecasts that demand for new planes could total 4,330 units worth $480 billion (in 2009 dollars). Single-aisle, narrow-body jets are projected to account for 71% of new deliveries (or 3,090 planes). In contrast, regional jet deliveries are projected to total 280, or 6% of new deliveries—a relatively small number. The Chinese fleet of civil aircraft is expected to increase from 1,570 planes in 2009 to 5,180 planes in 2029, with single-aisle mainline jets increasing from 1,170 to 3,770 between 2009 and 2029 (See Figure 7 for more detail). The Asia Pacific region is forecast to account for a third of all new plane deliveries during the next 20 years. Although this figure is below total deliveries to slower-growing North America and Europe (which together will account for 13,390 deliveries, or 47% of new plane deliveries), the fleet growth rate for the Asia Pacific region is projected at 5.6% (including China at 6.2%), compared to North America at 1.6% and Europe at 2.3%. So rapidly growing markets are likely to be a major focus for aircraft manufacturers and suppliers, even as slower growth in mature markets continues to produce a significant number of aircraft replacement sales. One major issue for Western aircraft manufacturers and suppliers in the future is their access to the Chinese aircraft market. To date, Western aircraft manufacturers and suppliers have expressed concerns about the protection of their intellectual property and their ability to sell commercial jets in sectors with competing domestic products. Some Western aircraft manufacturers and suppliers, however, take the view that participation in a Chinese-backed joint venture may boost sales, especially if they expect government-owned airlines to purchase what the central or provincial governments tell them to buy. However, this strategy has not always worked: Embraer, for instance, established a joint venture with Harbin, a subsidiary of state-owned China Aviation Industry Corporation (AVIC), to manufacture ERJ-145 regional jets in China. The ERJ-145 program produced an average of only 5 planes a year (a disappointingly small number). With the conclusion of the ERJ-145 program in April 2011, Embraer had hoped to manufacture and sell its larger Embraer 190 E-Jet in China. However, the company was blocked by AVIC, which viewed a Chinese-built Brazilian jet as a competitor to the AVIC-designed 90-seat ARJ21 regional jet. Whether the ARJ21 will be accepted by consumers is unknown. Unlike Embraer's difficulty with regional jets, Bombardier and COMAC have signed an agreement to cooperate on future plane development, marketing, and customer support. The agreement includes sharing of parts between the CSeries and the C919. Additionally, Bombardier has outsourced production of the CSeries fuselage to a subsidiary of AVIC. According to a recent press release announcing the agreement, "This long-term strategic cooperation agreement is based on both COMAC's and Bombardier's desire to build on the potential complementary nature of their products and respective expertise. This includes exploring collaboration in their marketing, customer relationship and customer support strategies to help each other increase overall market share in emerging and mature markets." The resulting planes may share many commonalities, with a view to achieving interoperability among CSeries/C919 aircraft. The 100-200-seat span of the Bombardier/COMAC planes also offers the potential for a credible challenge to the Boeing/Airbus duopoly and may reduce Boeing and Airbus sales in the China market. New Single-Aisle, Narrow-Body Market Entrants: A Brief Profile Bombardier CSeries . The Bombardier CSeries jet is the only mainline plane currently in development that specifically targets the 100-149 seat market. It will come in two versions that cover the alleged gap (or current lack of demand): the CS100 will seat between 100 and 125 passengers and the CS300 will seat between 125 and 145 passengers. Bombardier claims that the CS100 enter into service in 2013 and the CS300 will enter service in 2014. Bombardier's 2011-2030 forecast for the 100-149 seat commercial jet market calls for 7,000 deliveries over the next 20 years, with the retirement of 3,000 (57%) of the current 100-149-seat fleet. The total fleet of 100-149 seat jets is projected to grow from 5,200 units in 2010 to 9,200 by 2030. Bombardier's competitors in the CS100 (100-125 seats) segment include the Airbus A318 and A319 and Embraer's 190 and 195 aircraft. At a future date, it may also include a stretched Russian-built Sukhoi Superjet 100. COMAC C919 . The COMAC C919 is frequently compared to the Airbus A320, possibly because Airbus has been assembling A320s and A319s in China since 2008, in partnership with AVIC. COMAC, which was spun off from AVIC in 2008, has signed agreements with a number of U.S. and European suppliers of airframe parts, engines, and various systems that will be critical to the success of the program. CFM International will assemble LEAP-X engines for the C919 in China. GE is also participating in a joint venture with AVIC to develop avionics for the C919. Whether the plane will achieve the efficiencies that COMAC has promised is an open question: reports that designers have had trouble with the plane's weight have apparently caused some of the major Chinese airlines to hold back on orders. The big three Chinese-owned airlines—China Southern, Air China, and China Eastern—apparently limited their exposure to 20 aircraft each. According to a recent study by the RAND Corporation, "the 'big three' each committed only to purchasing five C919s," with soft options for the other 45 planes. The apparent hesitation of central-government owned airlines to purchase aircraft built by a state-owned company is due, according to RAND, to an unwillingness to "take on more exposure to a program they regard as risky." General Electric's leasing arm, General Electric Commercial Aviation Services (GECAS) has ordered 10 planes, as has the leasing subsidiary of the China Development Bank. UAC/ Irkut MS-21 . The three-version (150, 180, and 210 seats) MS-21 aircraft has been described as "Russia's great hope for the revival of its civil aircraft industry." The MS-21, which the company expects to cost $6.3 billion to develop, is scheduled to enter service in 2016. The Russian government is funding 40% of the MS-21's development costs, with the remainder coming through loans, and from Irkut's parent company, the government-owned UAC. According to the MS-21 chief designer and project director, Andrei Matveyev, the aircraft will include 40% composite content (including a composite wing), weigh 15% less, and achieve 25% improved fuel efficiency over current comparable Boeing or Airbus aircraft. Pratt & Whitney will supply engines, which will also power the A320neo (as one of two available engine options for that plane), the Bombardier CSeries, and the Mitsubishi Regional Jet. Irkut also has numerous U.S. partners supplying various systems for the MS-21. To date, 146 firm orders and 39 options have been placed for the MS-21, with 50 orders from Aeroflot, 50 orders from a Malaysian leasing company, and 46 orders from Russian leasing companies. Embraer . The Embraer 190 E-Jet has 98-114 seats, while the larger Embraer 195 E-Jet has 108-122 seats. The first delivery of the E-190 was made in 2005 and the E-195 in 2006. Both planes are comparable to small mainline jets and, together with the Embraer 170/175 E-Jets, were designed specifically to fill what Embraer executives believed to be a gap in the 70-120 seat jet market. The Embraer E-Jets represented a sharp departure from the RJs on which Embraer had built its reputation. Embraer used the E190 and E195 to beat Bombardier to market with a product that upstaged regional jets of comparable size. By the end of 2010, 266 E-190s had been delivered to low-cost carriers, U.S. legacy airlines, and foreign airlines, with a firm order backlog of 157 planes. During the same period, 61 E-195s were delivered, with a firm backlog of 41 planes. Embraer's chief competitor, Bombardier, delivered its first 100-seat CRJ-1000 regional jet (a stretched CRJ-900) in December 2010. As of January 2011, Bombardier had delivered 9 CRJ-1000s and had firm orders for another 40. Whether the Bombardier CSeries will lead Embraer to develop a larger plane is uncertain at this point. Nevertheless, some have speculated that Embraer could develop a new plane in response to Bombardier's challenge to Embraer's E-Jet series. Sukhoi Superjet 100 . The first Sukhoi SJ100 was delivered to Armavia, an Armenian airline, on April 19, 2011, and was almost immediately placed in service. The Superjet 100 has a capacity of 86-103 passengers, depending on its seating configuration. After-sales support for the SJ100 will be provided by SuperJet International, a joint venture formed by Sukhoi and the Italian firm Alenia Aeronautica. Alenia owns 51% and Sukhoi 49% of the joint venture. Alenia also has a 25% stake in Sukhoi Civil Aircraft Co., the manufacturer of the SJ1000. The purpose of SJI is to provide the all important in-service support that airlines depend on. SJI provides pilot training, technical training for maintenance staffs, and operates spare parts warehouses for the SJ100 program. According to Aviation Week and Space Technology , "Commercial services also will test whether the program can deliver the promised in-service support, of which many customers are skeptical, given the poor reputation of Russia's aerospace industry in this regard." COMAC ARJ21 . A new Chinese regional jet, the ARJ21 (a 90-seat RJ), which is being manufactured by COMAC in partnership with Bombardier, is based on the McDonnell-Douglas MD-90. All of the COMAC ARJ21's major subsystems were sourced to North American and European suppliers. The project has experienced a number of delays and delivery slipped from 2010 to 2011. The ARJ21 was originally an AVIC project, but was transferred to COMAC when the latter assumed responsibility for commercial aircraft development. It is not clear whether regional jets will remain a focus for COMAC, because most forecasts do not anticipate much growth in the Chinese RJ market. Large Regional Jet . One regional aircraft, the Japanese Mitsubishi Regional Jet (dubbed the "MRJ")(a 70-90 seat plane), appears to be primarily aimed at the Bombardier/Embraer RJ duopoly. Boeing and Airbus: Response to Competition The decision by Airbus and Boeing to put new high efficiency engines on their planes will provide airlines with upgraded products that have a reputation for dependability. Although Bombardier, COMAC, and Irkut are building narrow-bodies that represent a more radical departure from the 737 and A320, their programs are inherently riskier and have not yet demonstrated that the promised benefits can be delivered. Many airlines may decide to stay with aircraft that they know. It is too soon to know whether the newcomers will succeed. Bombardier and Embraer have established themselves as successful aircraft manufacturers and the Chinese appear to be determined to build a civil aviation industry that competes directly with Boeing and Airbus. Whether the Russians will succeed in building civil aircraft capable of competing in international markets remains to be seen. For now, the real competition is between Boeing and Airbus. Neither company appears likely to walk away from the segment of the commercial aviation industry that accounts for almost half of revenues. Although the Boeing/Airbus duopoly in small commercial jets is clearly under challenge, it is not obvious that the civil aircraft market is large enough to sustain as many as five additional competitors. Nevertheless, all of the challengers to the Boeing/Airbus duopoly believe that their ability to compete in the narrow-body segment will be critical to the creation of successful domestic aerospace industries. It is clear that the United States, the European Union, Russia, China, Japan, Brazil, and Canada all consider the aerospace to be commercially and militarily strategic.

The importance of a successful aerospace industry to the United States economy has been repeatedly acknowledged by President Obama and members of his Cabinet, many Members of Congress, and by all concerned with the competitive fortunes of the U.S. aircraft manufacturing industry. The U.S. aerospace industry is highly competitive and global in scope. U.S. firms manufacture a wide range of products for civil and defense purposes and, in 2010, the value of aerospace industry shipments was estimated at $171 billion, of which civil aircraft and aircraft parts accounted for over half of all U.S. aerospace shipments. In 2010, the U.S. aerospace industry exported nearly $78 billion in products, of which $67 billion (or 86% of total exports) were civil aircraft, engines, equipment, and parts. The U.S. trade surplus (net exports) in aerospace products in 2010 was $43.6 billion—higher than for any other manufacturing industry. Aerospace employment totaled 477,000 workers, of which 228,400 were engaged in the manufacture of aircraft, 76,400 in the manufacture of engines and engine parts, and 97,600 in the manufacture of other parts and equipment. According to the International Trade Administration, "more jobs in the United States were supported by exports of U.S. aerospace products than of any other manufacturing or service industry." Boeing is the only U.S. manufacturer of large civil aircraft. Civil aircraft engines are manufactured by General Electric (GE), in partnership with Safran (of France), and by Pratt & Whitney. Numerous firms manufacture sections and parts of the airframe, as well as original equipment for both domestic and foreign airframe manufacturers. The civil and military aerospace sectors are complementary in that many firms manufacture products for both. Although the products tend to be dissimilar, workforce skills are transferable, so a decline in military aerospace budgets or private sector spending on civil aircraft have significant economic and competitive effects for the United States. A major issue for policymakers is whether the United States can sustain its preeminent position in aerospace, given the intentions of numerous foreign manufacturers to enter the small commercial jet aircraft segment by 2016. That segment accounts for nearly half of all commercial aircraft revenues and for more than 60% of commercial aircraft deliveries. It is also the gateway to building larger commercial aircraft. Boeing and Airbus are the sole rivals across all segments of large commercial aircraft manufacturing, but during the next decade both will confront a potentially serious challenge in one of the most important segments of their business, small commercial jets (which are also referred to as narrow-body or single-aisle aircraft). The CEOs of Boeing and Airbus have both agreed that their duopoly over small commercial jets is nearly at an end. Boeing and Airbus will face competition from government-owned and subsidized firms in Russia and China, as well as companies in Canada, Brazil, and Japan. Several factors will determine the outcome of the coming competition in small commercial jets, including the openness of markets to foreign commercial aircraft and aircraft engines and parts; whether state-owned aircraft manufacturers continue to receive substantial government subsidies; whether the challengers to Boeing and Airbus achieve their goal of building innovative, efficient aircraft that establish excellent safety and service records; whether airlines will buy aircraft from companies that have no track record; and the effect of collaborative partnerships with other aircraft manufacturers and suppliers as a strategy for success. Boeing and Airbus are engaged in a struggle to be the world's preeminent manufacturer of civil aircraft and both have a depth of resources unmatched elsewhere. The competitive stakes for both companies will be very high during the next decade.

U.S.-Africa Leaders Summit Summit: Background1 What is the U.S.-Africa Leaders Summit? In mid-2013, during a speech at the University of Cape Town, South Africa, President Obama announced that he would invite African heads of state to a summit in the United States "to help launch a new chapter in U.S.-African relations." The leaders' summit, to be held all day on August 6, 2014, will be preceded by two days of official summit-related events and followed by one heads-of-state post-summit event, alongside many unofficial events. For an overview of official events, see Appendix A . The summit is being organized around the theme "Investing in the Next Generation." It will consist of discourse between President Obama, attending African heads of state, and the chairperson of the African Union (AU) Commission. The theme pays heed to an increasing U.S. policy focus on expanding trade and investment ties with Africa, and the political, economic, and security-related opportunities and challenges associated with Africa's development, particularly those related to its overwhelmingly youthful population. The importance of Africa's newest generations and their potential was also underlined by a separate summit of Young African Leaders Initiative (YALI) Fellows, which occurred in late July. During the summit, according to comments by Administration officials in public and unattributed forums, President Obama is expected to orient discussion toward the issues addressed in his 2012 U.S. Strategy Toward Sub-Saharan Africa (henceforth, "Africa Strategy"). The summit program will be divided into three topical sessions— Investing in Africa's Future , Peace and Regional Stability , and Governing for the Next Generation —and is to be followed by a "presidential press conference." The Administration has characterized the summit format as being designed to enable a frank, mutual exchange of ideas on which to base U.S.-Africa cooperative relations, rather than to cap a pre-negotiated set of communiques. Administration officials have also stated that no bilateral meetings between President Obama and any African heads of state are planned, due to a desire to give all the African leaders an equal voice. Cabinet members and other top officials, however, will hold bilateral meetings with some countries' leaders. Summit side meetings on selected issues (e.g., the threat of the Ebola viral disease in West Africa and the Nigerian terrorist group Boko Haram and other armed Islamist groups in the Sahel) are also planned. Why is the Administration holding the summit? The Administration has said that it decided to hold the summit, in part, to help define shared U.S.-African views on how to achieve common goals. Such objectives include more accountable, transparent, democratic governance; stronger rule of law; greater mutual economic growth, and trade and investment; greater peace and security; and enhanced socioeconomic opportunity and development outcomes. These goals are set out in President Obama's 2012 Africa Strategy. The summit will be the first such event hosted by the United States. The summit signals both continuity in long-standing U.S.-African cooperation and increasing U.S. engagement with Africa on numerous fronts—particularly with regard to trade and investment, following strong economic growth on the continent and a marked rise in U.S. development assistance to Africa since 2000. It may also be interpreted as a U.S. response to the increased pace of African economic and political engagement with a wide range of major or rising economic powers, including China, Japan, the European Union, France, India, Brazil, and Malaysia. Are all African heads of state attending the summit? The Administration invited the chairperson of the AU Commission and all African heads of state to the summit, except those whose governments are suspended from the AU or are "not in good standing with the United States" because they are subject to U.S. or U.N. sanctions. The countries whose heads of state were not invited include Central African Republic (CAR), due to its suspension from the AU, and Eritrea, Sudan, and Zimbabwe, due to sanctions. As of July 22, 2014, 45 heads of state were expected to attend the summit, according to a Commerce Department spokesperson. How will Congress be involved in the summit? There are some indications of bipartisan Hill support for the summit, as indicated, for instance, by the introduction of S.Res. 522 , A resolution expressing the sense of the Senate supporting the U.S.-Africa Leaders Summit to be held in Washington, DC, from August 4 through 6, 2014, by Senator Coons, joined by co-sponsors Senator Menendez, Senator Corker, and Senator Flake, on July 24. Included among the official events is a White House-coordinated, congressionally hosted bicameral Congressional Reception for African Leaders on August 4. Some bills currently before Congress may also be discussed at the summit or other events (see Appendix B for a list of bills of potential interest). Some Members of Congress are slated to participate in other summit events, and several related congressionally hosted events are scheduled on the Hill during the three-day summit period. In addition to the Congressional Reception, unofficial events scheduled to take place on the Hill include: On August 6, senior civil society leaders will present the recommendations, goals, and demands of a series of African civil society thematic working groups. Issues, including freedom of assembly, freedom of speech and thought, human rights, and conflict and elections, will be discussed at a day-long, National Endowment for Democracy (NED)-led public meeting in the Cannon House Office Building. Multi-stakeholder discussions and debate will follow. Resulting feedback is to be incorporated into an "Action Program for Democracy in Africa" that will be shared with African governments, the international community, and civil society and citizens. Representative Karen Bass and Representative Chris Smith are expected to present remarks. On August 6, Representative Gregory W. Meeks, in his capacity as co-chair of the Congressional Black Caucus (CBC) Africa Task Force, will host a multi-part "Ask the Ministers" and "Dialogue with African CEOs" event in the Capitol. Representative Karen Bass, Task Force co-chair, and Representative Steny Hoyer, U.S. House Democratic Whip, are slated to deliver remarks. What other official and unofficial events are being held in conjunction with the summit?12 In addition to the three days of official events to be held in conjunction with the summit—described in this report's Appendix A —over 50 deliberation, learning, and advocacy-based forums on a wide variety of topics are scheduled to be held during or after the summit. Predominant themes and topics include: business, trade, and investment opportunities in Africa (e.g., infrastructure, supply chains, and prospects for the African Growth and Opportunity Act, AGOA, Title I, P.L. 106-200 , as amended); public policy and development issues (e.g., health, science and technology, agriculture, financing for development); and civil society group advocacy (e.g., good governance, natural resource transparency, human and civil rights, youth development, and gender equity). There will also be two U.S. Trade and Development Agency (USTDA)-sponsored "reverse" trade missions by African delegations to Houston (focusing on the energy sector, in coordination with the Energy Department) and Chicago (focusing on transport, in coordination with the Transportation Department). A number of unofficial events in Washington are expected to include Members of Congress, and many will feature contributions by African heads of state. Vice President Joe Biden and potentially three African heads of state are expected to deliver remarks at a Georgetown University/Coca Cola Company event titled The Future of Business and Development in Africa. Will the Summit be used to launch any major new U.S. initiatives in Africa? The Obama Administration has launched several large development initiatives in Africa, such as Feed the Future, and the Global Climate Change and the Global Health initiatives. The latter incorporates President's Emergency Plan for AIDS Relief (PEPFAR), a signature initiative of former President George W. Bush's Administration. In 2013, the President also announced two new Africa-specific initiatives, Power Africa and Trade Africa, and expanded his 2010 Young African Leaders Initiative (YALI). All initiatives are discussed further below. President Obama may well use the occasion of the summit to announce new U.S. commitments to Africa, but unattributed remarks by State Department officials and press reports suggest that the Administration does not plan to announce any new large-scale initiatives in relation to the summit. Factors that may have contributed to this decision include U.S. budget constraints and an Administration desire to use the summit to redefine jointly with African leaders the focus of and manner in which U.S.-African cooperation takes place—with an eye toward greater mutual contributions toward shared goals. Such an approach is reflected in the design and implementation of several Administration initiatives in Africa (e.g., Feed the Future, discussed below), and informs the Millennium Challenge Corporation's (MCC's) country-centered design and program execution paradigm, which was established during the Bush Administration. Will the U.S.-Africa summit differ from summits held by other countries? China, Japan, the European Union, France, and India have all held heads of state and other high-level ministerial summits with African leaders in recent years, and all have long had or are rapidly increasing their trade and investment relations with Africa. These foreign countries' summit styles and objectives have varied, but typically they culminate in mutually agreed announcements regarding multiple pledges of security, development, and trade and investment cooperation and assistance. China, in particular, has held repeated heads of state summits with Africa that have drawn substantial attention in recent years, during which it rolls out diverse, explicit policy pledges, multi-billion dollar trade, credit, and other financial commitments, along with some aid initiatives, and reports exhaustively on how it has met past pledges. Top Chinese leaders also personally visit Africa every year. These approaches, according to some observers, have helped advance Chinese interests in Africa, potentially at the expense of U.S. gains—although others do not view Chinese, U.S., and others' growing engagement with Africa as a zero-sum game. Are there any criticisms of the summit? The Administration's reported plan to refrain from offering a concrete set of "deliverables" has drawn questions from some observers who suggest that reported plans not to issue a formal declaration, or communiques describing the summit's outcomes, or a roadmap for future engagement might diminish the summit's potential achievements. Similarly, despite a substantial focus on trade and investment—in the form of the all-day U.S.-Africa Business Forum, the AGOA Forum, and many unofficial business events involving African leaders—some have questioned whether the summit will adequately facilitate business-focused deal-making with African leaders. Comparisons to China on this count are likely. On July 22, a Commerce Department spokesperson announced that $900 million or more in business deals would be announced at the U.S.-Africa Business Forum summit event (see Appendix A ). Some observers also see the Administration's decision not to pursue U.S. presidential one-on-one bilateral meetings with African heads of state as a missed opportunity for positive engagement. Other foci of criticism have included the summit's timing; putatively outdated Administration views of Africa informing the summit; and what some observers—citing the kinds of observations noted above—view as conceptual framing of and planning for the summit (at least as publicly announced) that they maintain has been less effective than it could have been. Some critics have asserted that some African leaders who have been invited to attend the summit are responsible for grave human rights abuses, or for abuses of democratic governance and rule of law norms, and should therefore not have been invited. Some activists are pushing for a special focus on the rights of particular social groups, such as African women, whose rights President Obama addressed in a July 28 speech; and lesbian, gay, bisexual, and transgender (LGBT) persons, whose rights the Administration has sought to advocate. The Administration has responded that the United States must deal with "the governments that Africans have" and asserts that U.S. officials will forthrightly address human rights concerns in discussions with visiting leadership delegations. Other observers contend that such U.S. emphasis on democracy and human rights may, in fact, decrease the U.S. business facilitation prospects arising from the summit, when contrasted with summits held by China. China invites all African leaders to its leadership summits and, in line with a long-standing, stated policy of not interfering in the affairs of other sovereign governments, rarely addresses African countries' governance and rule of law records. Key Policy Matters at Stake in the Summit and Summit-Related Events23 Development and Economic Challenges What are Africa's key development challenges? In recent years, many sub-Saharan African countries have achieved rapid economic growth, albeit starting from a low base by global standards. This has spurred middle class expansion, massive increases in access to digital communications—notably economic activity boosting cell phone networks, and infrastructure construction. African economies nevertheless face many structural challenges, and poverty alleviation has been more limited than in other developing country regions with similar growth rates. Rising national incomes have often not been equally distributed or translated into regionally or sectorally balanced "inclusive" growth. Nor has growth always been effectively marshalled to address the region's extensive development challenges. Income growth has also not been as significant in real terms as it is in percentage terms: only a few sub-Saharan African countries (Angola, Botswana, Gabon, Mauritius, Namibia, Seychelles, and South Africa) qualify as "upper-middle-income" economies as defined by the World Bank. All others are either "lower-middle-income" or "low-income." Africa also has a proportionally very large youth population. These youth hold significant socioeconomic promise, but they also present governments with profound challenges related to the education, job creation, and socio-political enfranchisement necessary for younger generations' potential to be realized. On a per capita basis and by many other measures, Africa remains among the poorest global regions, and many African countries have achieved only limited progress toward attaining the U.N. Millennium Development Goals (MDGs), which closely mirror Africa's most pressing development challenges. The eight MDGs (each made up of further sub-components) seek to: eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria, and other diseases; ensure environmental sustainability; and create global partnerships for development. Many countries lack the institutional capacity necessary for the delivery of effective public services (e.g., health and education) and goods (e.g., electricity and other infrastructure) widely seen as necessary for sustained economic growth. Corruption, weak democratic institutions, and lack of adherence to the rule of law are also major problems in much of Africa. Key additional democracy, governance, and security challenges are discussed below. Trade, Investment, and Economic Cooperation What is the nature and focus of U.S.-Africa trade and economic relations? U.S. trade and investment policy toward Africa is focused on economic development goals and encouraging African trade with the United States in order to promote economic growth, as well as enabling U.S. firms to tap emergent opportunities and invest in the region. There are indications that a number of Members support expanded efforts to pursue such goals. The Africa subcommittees of the House and Senate foreign affairs committees each have held multiple hearings addressing these topics in recent years. In addition, companion bills supportive of such ends— H.R. 1777 (Smith, Christopher) and S. 718 (Durbin), both entitled Increasing American Jobs Through Greater Exports to Africa Act of 2013—were introduced in the two chambers. The region is a key supplier of some U.S. natural resource imports. Improvements in some African countries' economic and political climates in recent years have led to increasing interest in the region as a destination for U.S. goods, services, and investment. Despite these trends, many U.S. businesses remain skeptical of the region's investment and trade potential. Many avoid engaging in business in the region, both for sometimes outdated perceptual reasons and because a number of African countries continue to confront many daunting economic governance challenges. New and ongoing security crises in parts of the continent may have also dampened investor interest. In 2013, the United States ran a trade deficit with sub-Saharan Africa, importing $39 billion worth of goods, and exporting $24 billion. Major U.S. exports to Africa are diverse. They include machinery, vehicles, refined fuel products, aircraft, and wheat. U.S. imports are largely concentrated in oil (nearly 60%, although U.S. energy imports from Africa have declined as U.S. energy production has grown). Major non-energy U.S. imports are metals, vehicles, and cocoa. Nigeria and South Africa have the largest economies in the region and are sub-Saharan Africa's largest U.S. trade partners, accounting for roughly half of all such trade. Nigeria is also a major oil exporter to the United States. The stock of U.S. foreign direct investment (FDI) in the region is also concentrated in a few countries, including Nigeria ($8.2 billion), Mauritius ($7.1 billion), South Africa ($5.5 billion), and Ghana ($3.6 billion). The stock of sub-Saharan African FDI in the United States is $5.3 billion, with South Africa ($1.5 billion) and Mauritius ($3.4 billion) accounting for virtually all such investment. What factors may hinder business interest in the region? Despite the impressive economic growth in many African countries in recent years, multiple factors continue to make many countries in the region difficult places to do business. Such challenges may limit investment in the region, despite new and emergent economic opportunities, and ultimately prevent sub-Saharan African countries from maximizing their economic growth potential. Some key factors include: Infrastructure . Africa, a vast region, has very poor land transport, maritime transport, and electrical infrastructure. Roads in the region are often poorly maintained and unpaved; rail networks are unreliable and limited; ports are inefficient and lack capacity; and electricity infrastructure is poorly developed. This increases production and transportation costs, adversely affects product quality, and leads to shipment delays. Market size . Often low per capita incomes mean that market demand is smaller than other global regions. It is also highly fragmented. There are ongoing efforts to improve regional integration, but most foreign business interest in the region continues to focus on major economies such as South Africa, Nigeria, and Kenya. Labor force . Much of the region suffers from a lack of skilled labor necessary to support advanced economic activity, often due to high illiteracy rates and under-investment in education. Population majorities in many countries remain employed in low-skill agriculture production. Economic diversification. Dependence on unrefined commodity production (especially in the energy, mining, and agricultural sectors) and many countries' inability to pursue value-added production processes limits the growth of an experienced skilled work force, resulting in lost potential income. Many African economies also remain highly dependent on labor-intensive, small-scale, and often low-profit and highly variable rain-fed agricultural production. Access to inputs . Capital markets, as well as those for other goods and services used in production processes, are limited compared to other regions, which often increases production costs. Such deficits also inhibit the growth of integrated manufacturing sectors and cross-sectoral linkages. Intra-regional trade, albeit growing, is also low by global standards. Regulatory and legal environments . Governments have often provided an inadequate enabling environment for private sector activity, including contract enforcement and protections for property rights. Corruption also remains a challenge. Duplicative and inefficient trade procedures may also impose high costs for import and export flows, both within and outside the region. Political instability and security . Despite improvements, many countries continue to be beset by political instability and conflict, undermining business confidence in the region. What key strategic goals and programs support expanded U.S.-Africa trade and economic relations? In the areas of trade and investment, the President's 2012 Africa Strategy seeks to enhance: legal, regulatory, and institutional frameworks to enable trade and investment; economic governance and greater regional economic and trade integration; and African capacity to participate in global markets. The strategy also seeks to increase U.S. firms' knowledge of the realities of sub-Saharan African business environments and markets, and provide more assistance to help the U.S. private sector to take advantage of trade and investment opportunities in the region. The African Growth and Opportunity Act (AGOA, discussed below) has been the cornerstone of U.S.-Africa trade policy since it was established by Congress in 2000. The Administration is seeking congressional reauthorization of AGOA, which expires in 2015, potentially in an amended form that might incorporate additional trade capacity building and related policy or program measures. To advance its strategic goals for African trade and investment, the Administration has also launched the Doing Business in Africa campaign and the Trade Africa Initiative (see below, under initiatives). Ongoing efforts initiated prior to the Obama presidency also include three African Trade Hubs, which work to increase African producers' export competitiveness and increase utilization of AGOA. Additional funding to improve trade capacity in the region is incorporated into USAID and MCC programs. Other U.S. trade and investment policy tools in place with African countries include Trade and Investment Framework Agreements (TIFAs)—forums for dialogue between governments on trade and investment issues—and bilateral investment treaties, which advance rules to facilitate and protect foreign investment. The United States has a U.S. Free Trade Agreement (FTA) with Morocco, in North Africa, but there are no existing U.S. FTAs with sub-Saharan African countries. Negotiations on a potential U.S.-Southern African Customs Union (SACU) FTA were initiated in 2003 but eventually suspended in 2006. What is AGOA? What is the AGOA Forum?27 AGOA is a non-reciprocal U.S. trade preference program that provides duty-free tariff treatment on certain imports from eligible sub-Saharan African countries. Congress first passed AGOA in 2000 as part of an ongoing U.S. effort to promote African development, deepen economic integration within the region, and strengthen U.S.-African trade and investment ties. AGOA has been amended five times since initial passage, most recently in 2012, when the special "third country fabric provision" was extended. AGOA is currently authorized until September 30, 2015. Crude oil is the top U.S. AGOA import (making up more than 75% of AGOA imports in 2013). Other key imports include vehicles (from South Africa), metals, refined petroleum products, and apparel. Among these top imports, apparel has the most widespread origins, coming primarily from Kenya, Lesotho, and Mauritius. Unlike other U.S. preference programs, AGOA directs the President to provide U.S. government technical and trade capacity building (TCB) assistance to AGOA beneficiary countries. This aid is intended to help African governments to: liberalize trade policy and harmonize laws and regulations with World Trade Organization (WTO) membership commitments; engage in financial and fiscal restructuring; and promote greater agribusiness linkages. AGOA also requires the President, in consultation with Congress and AGOA beneficiary governments, to hold an annual U.S.-Africa Trade and Economic Cooperation Forum. The original AGOA legislation states that the purpose of the Forum, which is held in alternate years in the United States and Africa, is to "discuss expanding [U.S.-Africa] trade and investment relations" and to encourage "joint ventures between small and large businesses," as well as to foster the broader goals of AGOA. Civil society and private sector events are typically held in conjunction with the Forum. The 13 th AGOA Forum will take place in Washington, DC, on August 4, 2014, in the form of a summit-linked AGOA ministerial meeting, and will likely focus on the potential renewal and expansion of AGOA. What are some key issues surrounding AGOA's potential reauthorization? Generally, AGOA enjoys broad bipartisan support. One issue that reportedly may decrease support for AGOA's renewal is the reticence of some African countries to fully implement the World Trade Organization trade facilitation agreement reached in December 2013 at the WTO Bali Ministerial meeting. Statements by U.S. officials, however, suggest that this concern may relate only to a few countries. Despite general support for AGOA renewal, there is ongoing debate regarding potential changes to the program, including potential measures to advance its stated trade and development goals more effectively. Key reauthorization issues include: Country eligibility and reauthorization duration. Some argue that changes to the AGOA eligibility requirements—the President can and has terminated AGOA benefits for countries failing to meet these requirements—and a longer or indefinite reauthorization period for the program would induce more businesses to take advantage of AGOA by reducing uncertainty in investment projections (e.g., protection against a sudden withdrawal of AGOA eligibility). However, such changes could also reduce U.S. use of AGOA to advance non-economic foreign policy goals, such as democracy and human rights promotion. Indeed, some critics argue that successive Administrations have been overly hesitant to suspend or terminate AGOA benefits over human rights or governance concerns. Trade capacity building (TCB). Many argue that AGOA may be underutilized due to beneficiary countries' inability to take advantage of AGOA benefits. Although AGOA mandates that TCB assistance be provided to increase use of the program, there is debate over whether appropriate types and levels of TCB are provided, as well as over the effectiveness of TCB overall. Use of Benefits. Nearly 75% of U.S. non-energy imports under AGOA come from South Africa alone, and in 2013, over half of AGOA beneficiaries' exports to the United States were worth less than $1 million. Creation of AGOA country export strategies and greater targeting of TCB toward potentially competitive sectors is viewed by some commentators as an important way to increase use of the program. Product coverage. AGOA covers most products, but some, mostly agricultural products, remain excluded. Including more products under AGOA could increase use of AGOA benefits, but might be opposed by U.S. producers of such products. Duty-free quota-free beyond Africa. Some argue that all least-developed countries, including non-African ones, should receive AGOA preferences, but others are concerned that this could erode the competitiveness of African exports to the United States, as they might face greater competition. Reciprocal access and two-way trade . Like most other U.S. preference programs, AGOA provides preferential access to the U.S. market with no reciprocal preferential U.S. access to beneficiary African country markets. Given recent economic growth in Africa, some observers are now calling for a greater focus on two-way trade in AGOA and potentially reciprocal trade requirements with some AGOA-eligible countries, especially since some countries, such as South Africa, have negotiated reciprocal agreements with other parties, notably the European Union, which could conceivably disadvantage U.S. exports to Africa. U.S. Aid to Africa How does U.S. assistance help address Africa's development challenges? U.S. support for African development targets the challenges described above, among many others. Aid is primarily administered by USAID, the State Department, and the MCC. The vast majority of this aid is administered by USAID, typically under country development strategies that target each country's specific development needs and, often, under multiple global and Africa-specific presidential development initiatives (discussed below). The MCC supports a limited number of compacts, typically five-year aid programs targeting a few crucial development goals (e.g., roads or agricultural production) that the recipient country itself carries out under MCC oversight. The State Department administers many rule-of-law, anti-trafficking, military training, counterterrorism, law enforcement, and other programs, often in coordination with other executive branch agencies. The Department of Defense (DOD) implements some State Department-funded assistance programs and in certain circumstances is also authorized to provide its own assistance to foreign militaries, including in Africa. DOD also carries out military-to-military cooperation activities in many African countries (see below) How much aid does the United States provide to Africa? Sub-Saharan Africa receives over a quarter of all U.S. bilateral aid, the bulk of which supports health programs in the region. The United States also channels substantial aid to Africa through international financial institutions and United Nations (U.N.) entities. North African countries also receive substantial U.S. bilateral and regional aid, much of it focused on security programs. Egypt, Libya, Tunisia, Algeria, and Morocco were allocated an aggregate total of $1.59 billion in bilateral foreign aid in FY2013. Egypt is a top global recipient of U.S. assistance, and was appropriated $1.3 billion in Foreign Military Financing and $250 million in Economic Support Funds in FY2014, though Congress has restricted or placed conditions on certain types of assistance. Tunisia and, to a lesser extent, Libya have been provided additional aid to help support their ongoing political transitions. Aid for Tunisia has topped $450 million since early 2011. Morocco has also received assistance in support of a recently completed, roughly $700 million MCC compact. What global presidential development initiatives channel U.S. aid to Africa? Much U.S. bilateral aid to African countries is provided under these presidential initiatives: Global Health Initiative. The Global Health Initiative (GHI) was created in 2009 to better coordinate and integrate the implementation of three global health initiatives launched during the Bush Administration: the President's Emergency Plan for AIDS Relief (PEPFAR), the President's Malaria Initiative, and the Neglected Tropical Diseases Program. GHI also seeks to strengthen domestic health systems in developing countries, and promotes increased country "ownership" and financing of health assistance programs that U.S. assistance has supported. Key GHI program areas include maternal and child health; family planning and reproductive health; nutrition; social services for vulnerable children; HIV/AIDS prevention, care, and treatment programs; and a range of disease-specific and other pandemic outbreak efforts. Feed the Future (FtF)/New Alliance. FtF, a government-wide, USAID-led initiative, was launched in 2009 to fulfill U.S. commitments as a member of the Group of Eight (G-8). It seeks to reduce poverty and malnutrition, among other ends, by helping countries to boost agricultural production and expand related market value chains. It focuses such support on 19 so-called "focus countries," 12 of which are in Africa, and selected regions. FtF also supports the New Alliance for Food Security and Nutrition, which promotes the formation of public-private partnerships in Africa that foster agricultural policy reforms by African governments, marshal related private sector investments, and increase aid by G-8 countries. Global Climate Change Initiative (GCCI). Africa is widely viewed as among the global regions most likely to experience negative social and environmental impacts attributable to global climate change. The Administration's GCCI seeks to respond to anticipated climate shocks by: building social resilience and adaptation to extreme weather and climate events to reduce associated risk of damage, loss of life, and instability; promoting clean energy technologies, supportive regulatory environments, and low-emission development strategies in selected countries; and supporting environmental conservation and sustainable land and forest uses to reduce carbon emissions, preserve species, and protect biodiversity. What Africa-specific presidential initiatives provide aid to Africa? In 2013, President Obama initiated or expanded several Africa-specific initiatives. They include: Power Africa , a five-year, USAID-led, multi-agency initiative to double access to electricity in energy-poor Africa. It is channeling up to $7.8 billion worth of varied U.S. technical and financial support, much of it in the form of loans or financial service products, toward Africa to help spur the expansion and efficacy of power generation, transmission, and distribution infrastructure. A key goal is to use public resources to help reform investment constraining regulations so as to attract and facilitate private power sector investments. There are six initial Power Africa "focus countries": Ethiopia, Ghana, Kenya, Liberia, Nigeria, and Tanzania; and selected regional economic community beneficiaries. Two bills, S. 2508 , Energize Africa Act of 2014, and H.R. 2548 , Electrify Africa Act of 2014 have been introduced that lay out goals very similar to those set out under Power Africa, among others. Both envision continuing U.S. support for electrification in Africa beyond the period covered by Power Africa. Trade Africa , intended to expand U.S. trade and investment activities in Africa and boost levels of trade among African countries, with an initial focus on the East African Community (EAC, i.e., Kenya, Tanzania, Uganda, Rwanda, and Burundi). Trade Africa is a multi-agency, multi-faceted effort with two main goals: to deepen the U.S.-EAC Trade and Investment Partnership, begun in 2012, and to establish a USAID-led East Africa Trade and Investment Hub , an expansion and extension of an existing "trade hub" (one of three in Africa). Focal activities include expanding intra-EAC trade, especially of staple foods, and increasing U.S. imports of selected AGOA-eligible EAC products. Other goals are to reduce trade barriers and enhance the regional business climate through policy and regulatory reform, to build public and private trade institution capacity, and to foster U.S. investment in and expanded trade with the region. Young African Leaders Initiative (YALI) , begun in 2010 and expanded in 2013. YALI fosters the development of young African business, civic, and public management leaders through exchange-based fellowships. These support academic study, leadership training, and networking, first in the United States and then in Africa. YALI is administered by the State Department, which recruits Fellows and administers U.S. activities and USAID. The latter helps Fellows in Africa by facilitating access to networking resources and sources of seed funding for Fellows; and by helping Fellows access business, public service, and non-profit internships and professional opportunities. The Administration plans to expand the number of fellows from 500 to 1,000 in 2015. At a YALI summit in late July President Obama also announced that: the program is being renamed the Mandela Washington Fellowship for Young African Leaders; the 2015 program summit will be held in sub-Saharan Africa; and that YALI is providing a new set of online courses, mentoring, and networking resources for program fellows, and that the Administration will launch four regional Leadership Centers to house such resources and foster public and private sector management and leadership development through training, interpersonal networking forums, and related activities. Governance, Democracy, and Human Rights What is the state of democracy and human rights in Africa? Types of government and the degree of democratic accountability vary widely among Africa's 54 countries. Democracy, rule of law, and human rights trends have long been and remain a prominent focus of U.S. policy toward Africa, in part due to congressional interest and legislation. Democratic Progress. Since the early 1990s, nearly all African countries have transitioned from military or single-party rule to at least nominally multiparty political systems in which elections are regularly held. Countries such as Senegal, Cabo Verde, and Ghana have had multiple peaceful, democratic transfers of power. Southern African states, such as South Africa, Botswana, and Namibia, have developed strong and accountable institutions, though their political systems remain dominated by single parties that, in the case of South Africa and Namibia, were born of those countries' liberation struggles. Tunisia is in the midst of a widely heralded transition to democracy from authoritarianism. Challenges to Democracy. Despite this progress, the development of accountable, functional democratic institutions remains limited in much of Africa. While most countries hold regular elections, many are marred by fraud, violence, or irregularities. For example, disputed elections in Kenya in 2007 led to widespread violence; national elections in the Democratic Republic of Congo in 2011 were widely seen by international observers as lacking credibility; and analysts have expressed concerns about the potential for abuses in Nigeria's 2015 presidential vote. In countries such as Equatorial Guinea, Ethiopia, Eritrea, The Gambia, and Sudan, viable democratic competition or independent civil society activism are very limited. In several other countries, elected governments have been ousted by military coups in recent years. Governance Hurdles. State institutions in Africa often inadequately respond to citizens' needs because they lack sufficient human and financial capacities to do so, or are beset by problems such as corruption and mismanagement. The corrosive impacts of transnational drug trafficking have also impaired institutional capacity in some countries, notably in West Africa. Countries such as Guinea-Bissau, Equatorial Guinea, Chad, and Burundi are ranked near the bottom of Transparency International's Corruption Perceptions Index. Endemic corruption also continues to corrode state effectiveness in Nigeria and has challenged or dimmed the reputation of purportedly reform-oriented leaders in countries such as Liberia, Malawi, and Mali. Conflict and State Collapse. In Somalia, the Central African Republic, Libya, and South Sudan, among other countries, state weakness and violent conflict impede the provision of even the most basic state social and public safety services. How does the United States support democracy and human rights in Africa? The first "pillar" of the 2012 Africa Strategy seeks to achieve the long-standing U.S. goal of strengthening democratic institutions. Several key tools are used by U.S. policy makers to promote democracy and human rights in Africa, including: Diplomacy and Reports. U.S. diplomats often publicly criticize or condemn undemocratic actions and human rights violations in Africa, and reportedly regularly raise human rights concerns in private meetings with African leaders. The State Department publishes annual, congressionally mandated reports on human rights conditions globally, and on other issues of concern, such as international religious freedom and trafficking in persons. The State Department and USAID also finance international election observer missions in Africa. Foreign Aid. Multiple U.S. aid programs support African electoral institutions; train African political parties, civil society organizations, and journalists; assist local government officials in improving service-delivery; or provide expert advice to African governments considering legal changes pertaining to more accountable governance. Some U.S. security aid programs are also designed to improve the human rights records of African security forces and/or advance the rule of law by building the capacity of judicial and law enforcement bodies. Foreign Aid Restrictions. Congress has imposed country-specific human rights-related aid restrictions or conditions on aid to the governments of Chad, Cote d'Ivoire, Egypt, Equatorial Guinea, Ethiopia, South Sudan, and Zimbabwe, among others. Aid to multiple African governments is also restricted due to legislation curtailing or denying aid to any country that fails to observe a range of human rights norms—regarding, for instance, religious freedom (e.g., Eritrea and Sudan); the use of child soldiers (e.g., CAR, Chad, DRC, Rwanda, South Sudan, Sudan, and Somalia); and trafficking in persons (e.g., Algeria, CAR, DRC, Equatorial Guinea, Eritrea, Gambia, Guinea-Bissau, Libya, Mauritania, and Zimbabwe). Sanctions. Executive orders authorize U.S. sanctions targeting individuals implicated in human rights violations in the Central African Republic, the Democratic Republic of Congo, Liberia, Somalia, Sudan, South Sudan, and Zimbabwe. Prosecutions. The United States has helped fund a special tribunal that investigated and prosecuted human rights violations in Sierra Leone and Liberia, as well as a special tribunal for Rwanda. The United States is not a state party to the International Criminal Court (ICC) but has provided diplomatic, informational, and logistical aid in support of some ICC prosecutions. U.S. courts have also tried some individuals accused of serious human rights abuses in African countries, notably Rwanda and Liberia. Peace and Security Issues What are the major challenges to peace and security in Africa? Armed conflict and instability in parts of Africa continue to threaten regional security, impede development and investment, and contribute to widespread human suffering. This is underscored by the fact that multiple African countries rank as being among the most fragile states globally, according to the Fund for Peace/Foreign Policy magazine 2014 Fragile States Index. A majority of the United Nations' (U.N.'s) peacekeeping operations are located in Africa, with nine missions currently authorized in the region. The U.N.-authorized African Union Mission in Somalia (AMISOM) also carries out peacekeeping activities, as well as broader stabilization and counter-terrorist operations, primarily against the Al Qaeda-linked group Al Shabaab. The advisory U.N. Support Mission in Libya withdrew its staff from the country in July 2014 amid ongoing intense fighting among militia groups there. In addition to intrastate conflicts and localized instability, the continent faces diverse transnational and maritime threats, which are in many cases enabled by domestic state weakness. Across Africa, porous borders, weak government institutions, and corruption have created permissive environments for transnational threats, including operations by terrorist groups, illicit trafficking (e.g., of narcotics and people), and maritime piracy, which continue to pose a threat to both African and U.S. interests. Violent Extremism. Violent Islamist extremist groups in Northwest and East Africa—including Al Qaeda in the Lands of the Islamic Maghreb (AQIM, active in the North and West Africa), Al Shabaab (Somalia), Boko Haram (Nigeria), and several groups known as Ansar al Sharia in Libya and Tunisia—threaten state stability, regional security, and U.S. national security interests. Across North Africa and the Sahel region of West Africa, armed Islamist groups have grown in influence since 2011, amid political upheaval in the Arab world, governance and security crises in Libya and Mali, and a growing Islamist insurgency in northern Nigeria. These violent Islamist extremist groups are reportedly increasingly sharing training, tactics, and weapons, including those from former Libyan stockpiles. Other Transnational threats. In some parts of the continent, weak governing and justice mechanisms have allowed transnational crime networks to operate with relative impunity. In some countries these syndicates may threaten state stability. U.S. concern has grown over potential links between terrorist groups, like AQIM, and other rising transnational threats, including the increasing use of the region as a transshipment point for illicit drugs (notably Latin American cocaine bound to Europe); and other international drug trafficking networks. Reported links between armed extremist or insurgent groups and wildlife trafficking networks are another growing security concern, as is a rise in illegal poaching and wildlife trafficking generally. Maritime Security. Africa's coastal waters, particularly along the Gulf of Guinea, the Gulf of Aden, and the western Indian Ocean, have been highly susceptible to illegal fishing, trafficking, and piracy in recent years. African governments have generally been unable to adequately police the region's waters. Criminal elements exploiting this absence of state controls smuggle people, drugs, and weapons, and dump hazardous waste. Maritime commerce and off-shore oil production facilities in some regions have faced high rates of maritime piracy and sabotage. While the waters off the Somali coast have seen a marked reduction in pirate attacks in the past two years as a result of international anti-piracy efforts, Nigerian waters and the broader Gulf of Guinea rank as the most dangerous in the world for acts of piracy and armed robbery at sea. What are the major armed conflicts on the African continent today? While several countries—including Sierra Leone, Liberia, and Angola, as well as Algeria in North Africa—continue to rebuild after years of civil wars in the 1990s and early 2000s, parts of the Democratic Republic of Congo (DRC), Somalia, and Sudan remain afflicted by long-running patterns of instability. Newer conflicts, some influenced by communal tensions and political grievances, have broken out in recent years in the Central African Republic (CAR), Libya, Mali, and South Sudan. Other African countries, such as Ethiopia, Kenya, and Nigeria, struggle to advance ambitious economic and development goals amid armed insurgent and/or extremist threats. These threats, combined with existing demographic, social, economic, and political pressures, could pose broader challenges to the domestic cohesion of these countries. Extremist groups and restive communities also pose potential threats to political stability in the fragile Sahel states. Major conflicts in Africa include the ones below: East Africa. The conflict in South Sudan , which erupted in late 2013, is of significant concern for U.S. and African policy makers. By some estimates, more than 10,000 people have been killed in ethnic and politically fueled violence, and more than 1.5 million people have been displaced. Some 4 million people now face alarming levels of food insecurity. Parts of South Sudan, which was already the world's largest recipient of humanitarian aid prior to the outbreak of the current conflict, may experience famine conditions in 2014. U.N. experts warn that parts of neighboring Sudan , notably the border state of Southern Kordofan, could also experience famine as a result of ongoing fighting between insurgents, the Sudanese military, and allied militias. The conflict in Sudan's western Darfur region also continues to elude resolution, and violence in the past year has resulted in population displacement at a level not seen since the early years of the conflict. By some estimates, more than 6 million people have been displaced or severely affected by the fighting in Sudan's conflict zones. The threat posed by the insurgent and terrorist group Al Shabaab in war-torn Somalia remains serious, despite some progress toward retaking territory from the group and rebuilding parts of the Somali state. Drought conditions, combined with security restrictions on humanitarian access, appear set to worsen the food security situation. More than 1 million people remain displaced in Somalia, and another 1 million live as refugees in neighboring countries and Yemen. Al Shabaab has demonstrated its intent and ability to conduct terrorist attacks against targets in the broader East Africa region, most notably Kenya , which has had a significant increase in attacks in the past three years. Uganda and Djibouti, along with Kenya, Ethiopia, and Sierra Leone, have also been targets of terrorist attacks in retaliation for their role in the AU Mission in Somalia (AMISOM), which has led the military offensive against Al Shabaab. Central Africa. The March 2013 overthrow of CAR 's central government triggered a crisis that led to the collapse of an already fragile state. Widespread violence has followed, much of it playing out along ethno-religious lines, and has resulted in massive displacement and human suffering, sparking fears of further regional destabilization. Ongoing insecurity in eastern DRC continues to pose a threat to the broader Great Lakes region, despite the achievement of a regional peace framework agreement in early 2013 and a U.N. peacekeeping operation with a robust mandate to disarm militias that prey on civilians. The Lord's Resistance Army (LRA) , a small, armed group of Ugandan origin, has been somewhat contained through a combination of U.S. and multilateral efforts, but it continues to terrorize civilian populations in remote parts of Central Africa. West Africa. In Nigeria , a violent extremist group based in the northeast, Boko Haram, has grown increasingly active and deadly in its attacks against state and civilian targets since 2010. Thousands have been killed in Boko Haram attacks, and more than 300,000 have been displaced. Beyond the threat posed by Boko Haram, deadly, localized clashes between communities in central Nigeria have fueled massive displacement. Mali continues to emerge from its 2011-2013 political, humanitarian, and security crisis, with assistance from the French military and a U.N. peacekeeping operation. Prospects for a peace accord with northern rebels remain uncertain, and Malian and international troops continue to face asymmetric attacks from Islamist extremist groups. North Africa. The post-conflict transition in Libya has been disrupted by armed non-state groups and threatened by the indecision and infighting of interim leaders. U.S. officials now describe Libya as a terrorist safe haven and have issued warnings about threats posed by Libya-based extremists and flows of weaponry from Libya into surrounding countries. June 2014 elections appear unlikely to resolve the differences among Libya's warring militia groups, and some Libyans have begun to call for unspecified international intervention to help restore order. In Egypt , Islamist groups have been attacking state security targets, particularly in the volatile Sinai Peninsula, claiming that they are retaliating for government suppression of Muslim Brotherhood sympathizers. Tunisia and Algeria are also attempting to counter armed Islamist militants, including from AQIM and related groups, and are particularly concerned about border security. How does the United States respond to African security challenges? The United States has invested significant resources in promoting peace and security in Africa and countering threats to U.S. interests, such as those posed by drug traffickers, pirates, and violent extremist groups. The United States plays a key role in U.N. Security Council deliberations on African conflicts, notably, in recent years, on CAR, the DRC, Mali, Somalia, Libya, and the two Sudans. The United States is also a major funder of peacekeeping missions in the region, and has provided significant bilateral training, equipment, and logistical support to African militaries contributing troops to these missions. Much of this bilateral aid is provided under the State-Department run African Contingency Operations Training and Assistance (ACOTA) program. ACOTA is part of the broader Global Peace Operations Initiative (GPOI), which trains peacekeeping troops around the world. U.S. efforts have also sought to bolster the role of the AU and sub-regional entities in conflict mediation and peacekeeping efforts. U.S. security assistance in Africa also aims broadly to build more professional security forces, including through security sector reform efforts in countries, such as Liberia, the DRC, Somalia, and, until 2014, South Sudan. Among other security assistance programs, the State Department provides Foreign Military Financing to help selected countries buy or maintain U.S. military equipment. Additionally, the United States helps train police and other security force officials through a variety of programs, including through the International Law Enforcement Academy in Botswana. The State Department funds and oversees implementation of these programs, which commonly include human rights components and, in many cases, require human rights vetting of units being trained. U.S. military advisors are also periodically deployed to work with African countries and regional organizations. What roles does the U.S. military play in Africa? The Obama Administration's National Security Strategy, issued in 2010, focuses on advancing "effective partnerships" in Africa. Toward that end, the Departments of State and Defense (DOD) support efforts to build African security forces' capacity to deter and respond to crises. Both departments have had a long-standing role in U.S. security cooperation efforts in Africa, but in recent years, Congress has authorized increasing DOD funding for capacity-building programs, largely focused on counterterrorism, and DOD spending in Africa has increased. The DOD view of Africa is set out in the DOD 2014 Quadrennial Defense Review 2014 (QDR): In Africa, terrorists, criminal organizations, militias, corrupt officials, and pirates continue to exploit ungoverned and under-governed territory on the continent and its surrounding waters. The potential for rapidly developing threats, particularly in fragile states, including violent public protests and terrorist attacks, could pose acute challenges to U.S. interests. […T]here is also significant opportunity to develop stronger governance institutions and to help build professional, capable military forces that can partner with the United States… [In addition, U.N. and African regional] multilateral peace operations… are playing an increasingly prominent role in maintaining and restoring international security, including through prevention and mitigation of mass atrocities in threat environments that previously would have deterred multilateral action. U.S. Africa Command (AFRICOM), established in 2008, leads U.S. military efforts in Africa, formerly shared among three regional commands. AFRICOM implements ongoing efforts to strengthen African peacekeeping, maritime security, counterterrorism and counter-narcotics capacities, among other activities to further U.S. security goals in the region. It also periodically conducts military operations. Planning for the rapid deployment of crisis response forces, particularly in the aftermath of the 2012 attacks on U.S. facilities in Benghazi, Libya, has become an increasing focus for AFRICOM. U.S. forces routinely conduct joint exercises with African militaries, and share disaster response, humanitarian assistance, maritime security, anti-piracy, and counterterrorism skills, among others. What is the U.S. response to terrorist threats in Africa? The Obama Administration's strategy for countering terrorism in Africa focuses on dismantling Al Qaeda elements in the region and empowering local partners "to serve as countervailing forces to the supporters of al-Qa'ida and the purveyors of instability that enable the transnational terrorist threat to persist." Under this strategy, State Department and USAID-managed programs, with some contributions from other agencies, seek to build regional intelligence, military, law enforcement, and judicial capacities; strengthen aviation, port, and border security; stem the flow of terrorist financing; and counter the spread of extremist ideologies. The State Department also leads two regional, interagency counterterrorism programs: the Trans-Sahara Counterterrorism Partnership (TSCTP) and the Partnership for Regional East Africa Counterterrorism (PREACT). The QDR asserts that "our ability to project forces to combat terrorism in places as far away as Yemen, Afghanistan, and Mali—and to build capacity to help partners counter terrorism ... reduces the likelihood that these threats could find their way to U.S. shores." It also outlines DOD's intent to rebalance its counterterrorism (CT) efforts globally "toward greater emphasis on building partnership capacity, especially in fragile states, while retaining robust capability for direct action." AFRICOM works primarily indirectly, by training, equipping, and sustaining partner forces such as AMISOM to degrade extremist capabilities. U.S. intelligence, surveillance, and reconnaissance (ISR) assets are also deployed in Africa to support counterterrorism operations in the region. Direct U.S. military action against terrorist targets in Africa has been limited. Appendix A. Summit: Overview of Official Events Appendix B. Legislation of Potential Summit Interest Many of the subjects addressed by the proposed or prospective legislation below—and a range of additional resolutions pertaining to the same and other topics, not all of which are listed below—may be of interest to summit and summit-related event participants. While there are not yet any AGOA reauthorization bills, potential AGOA reauthorization legislation may be discussed. Other proposed legislation or bills include: Foreign assistance and defense appropriations and authorizations H.R. 5013 (Granger)/ S. 2499 (Leahy), Department of State, Foreign Operations, and Related Programs Appropriations Act, 2015 H.R. 4435 (McKeon), Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 H.R. 4870 (Frelinghuysen), Department of Defense Appropriations Act, 2015 S.Rept. 113-211 on H.R. 4879 (Durbin), Department of Defense Appropriations Act, 2015 Sub-Saharan Africa-Related H.R. 2548 (Royce), Electrify Africa Act of 2014 and S. 2508 (Menendez), Energize Africa Act of 2014 H.R. 1777 (Smith, Christopher), Increasing American Jobs Through Greater Exports to Africa Act of 2013 and S. 718 (Durbin), Increasing American Jobs Through Greater Exports to Africa Act of 2013 H.R. 4386 (Ellison) and S. 2208 (Kirk), Money Remittances Improvement Act of 2014 H.R. 3526 (Smith), Humanitarian Assistance Facilitation Act of 2013 H.R. 4434 (Nunes), Africa Counter Terrorism Initiative Act S.Res. 413 (Coons), A resolution recognizing 20 years since the genocide in Rwanda, and affirming it is in the national interest of the United States to work in close coordination with international partners to help prevent and mitigate acts of genocide and mass atrocities. S.Res. 288 (Flake), A resolution supporting enhanced maritime security in the Gulf of Guinea and encouraging increased cooperation between the United States and West and Central African countries to fight armed robbery at sea, piracy, and other maritime threats. S. 1545 (Menendez) and H.R. 3177 (Engel), PEPFAR Stewardship and Oversight Act of 2013 ( P.L. 113-56 ) H.R. 1793 (Connolly), Global Partnerships Act of 2013 H.R. 4997 (DeLauro), United States Leadership to Eradicate Obstetric Fistula Act of 2014 H.R. 1515 (Sires) and S. 2407 (Murray), 21 st Century Global Health Technology Act H.R. 3117 (Lee), Ending the HIV/AIDS Epidemic Act of 2013 S.Res. 426 (Coons), A resolution supporting the goals and ideals of World Malaria Day, H.Res. 570 (Crenshaw), Supporting the goals and ideals of World Malaria Day S.Res. 393 (Brown), A resolution supporting the goals of World Tuberculosis Day to raise awareness about tuberculosis. S.Res. 314 (Coons), A resolution commemorating and supporting the goals of World AIDS Day. H.R. 1087 (Ellison), Liberian Refugee Immigration Fairness Act of 2013 and S. 527 (Reed), Liberian Refugee Immigration Fairness Act of 2013 H.R. 1692 (McGovern), Sudan Peace, Security, and Accountability Act of 2013 H.R. 3827 (Grayson), To prohibit the United States from providing financial assistance to Benin until Mr. Mojaidou Soumanou is released from prison H.R. 4112 (Jackson Lee), Equal Rights and Access for the Women of South Sudan Act H.Res. 503 (Smith, Christopher), Expressing the sense of the House of Representatives regarding the need to bring the South Sudan conflict to a sustainable and lasting end and to promote reconciliation of longstanding and recent grievances to allow for a peaceful society with good governance. H.Res. 588 (Peterson)/ S.Res. 502 (Portman), Concerning the suspension of exit permit issuance by the Government of the Democratic Republic of the Congo for adopted Congolese children seeking to depart the country with their adoptive parents S. 1745 (Coons), Somalia Stabilization Act of 2013 H.Res. 573 and H.Res. 617 (Wilson), Condemning the abduction of female students by armed militants from the terrorist group known as Boko Haram in northeastern provinces of the Federal Republic of Nigeria; and S.Res. 433 (Landrieu) A resolution condemning the abduction of female students by armed militants from the Government Girls Secondary School in the northeastern province of Borno in the Federal Republic of Nigeria. H.Res. 601 (Franks) and S.Res. 453 (Rubio), Condemning the death sentence against Meriam Yahia Ibrahim Ishag, a Sudanese Christian woman accused of apostasy. S.Res. 375 (Coons), A resolution concerning the crisis in the Central African Republic and supporting United States and international efforts to end the violence, protect civilians, and address root causes of the conflict. North Africa-Related H.R. 301 (Wolf), To provide for the establishment of the Special Envoy to Promote Religious Freedom of Religious Minorities in the Near East and South Central Asia H.R. 4530 (Burgess)/ S. 1661 (Cruz), To require the Secretary of State to offer rewards of up to $5,000,000 for information regarding the attacks on the United States diplomatic mission at Benghazi, Libya, that began on September 11, 2012 H.R. 4599 (Duncan), To authorize the use of force against those nations, organizations, or persons responsible for the attack against United States personnel in Benghazi, Libya. H.Res. 567 (Sessions), Providing for the Establishment of the Select Committee on the Events Surrounding the 2012 Terrorist Attack in Benghazi. S. 1386 (Menendez), Chris Stevens, Sean Smith, Tyrone Woods, and Glen Doherty Embassy Security, Threat Mitigation, and Personnel Protection Act of 2013 H.R. 276 (Buchanan), To prohibit United States assistance to the country of Egypt H.R. 416 (Ros-Lehtinen), Egypt Accountability and Democracy Promotion Act H.R. 939 (Bentivolio), Support Democracy in Egypt Act H.R. 1039 (Fitzpatrick), To rescind unobligated amounts for foreign assistance to Egypt, and to appropriate funds for the Department of Defense tuition assistance program H.R. 1302 (Scott), To prohibit foreign military financing to Egypt H.R. 1922 (Gosar), Foreign Assistance Under Limitation and Transparency Act or the FAULT Act H.R. 2544 (Schweikert), Conditioning Economic Assistance and Support to Egypt Act or CEASE Act H.Res. 87 (Griffin), Expressing the sense of the House of Representatives that the President should suspend the delivery of F-16 fighter aircraft, M1 tanks, and other defense articles and defense services to the Government of Egypt S. 201 (Paul), A bill to prohibit the sale, lease, transfer, retransfer, or delivery of F-16 aircraft, M1 tanks, or certain other defense articles or services to the Government of Egypt S. 207 (Inhofe), A bill to restrict the sale, lease, transfer, retransfer, or delivery of F-16 aircraft, M1 tanks, or certain other defense articles or services to the Government of Egypt S. 984 (Toomey), Conditioning United States-Egypt Military Exercises Act of 2013 S. 1857 (Menendez), Egypt Assistance Reform Act of 2013 S. 2477 (Paul), Egyptian Military Coup Act of 2014 H.Res. 329 (Franks), Calling for the support of the fundamental rights of all Egyptian citizens, equal access to justice and due process of law, and transparent and accountable governance in Egypt Appendix C. Related CRS Products Selected Countries or Territories CRS Report RS21532, Algeria: Current Issues , by [author name scrubbed]. CRS Report R43166, Democratic Republic of Congo: Background and U.S. Policy , by [author name scrubbed]. CRS Report RL33003, Egypt: Background and U.S. Relations , by [author name scrubbed]. CRS Report R42967, U.S.-Kenya Relations: Current Political and Security Issues , by [author name scrubbed]. CRS Report RL33142, Libya: Transition and U.S. Policy , by [author name scrubbed]. CRS In Focus IF00031, Mali: Current Issues (In Focus), by [author name scrubbed]. CRS Report RS21579, Morocco: Current Issues , by [author name scrubbed]. CRS In Focus IF00030, Nigeria: Current Issues (In Focus), by [author name scrubbed]. CRS Report RL33964, Nigeria: Current Issues and U.S. Policy , by [author name scrubbed]. CRS In Focus IF00038, Rwanda: Current Issues (In Focus), by [author name scrubbed]. CRS Report R41369, Senegal: Background and U.S. Relations , by [author name scrubbed]. CRS Report R43130, South Africa: Politics, Economy, and U.S. Relations , by [author name scrubbed]. CRS In Focus IF00032, South Sudan: Current Issues (In Focus), by [author name scrubbed]. CRS In Focus IF00034, Sudan: Issues for Congress (In Focus), by [author name scrubbed]. CRS Report RS21666, Political Transition in Tunisia , by [author name scrubbed] and [author name scrubbed]. CRS Report RS20962, Western Sahara , by [author name scrubbed]. Peace, Security, and Human Rights CRS In Focus IF00029, U.S. Africa Command (AFRICOM) (In Focus), by [author name scrubbed]. CRS Report R43245, The September 2013 Terrorist Attack in Kenya: In Brief , by [author name scrubbed]. CRS Report R43558, Nigeria's Boko Haram: Frequently Asked Questions , by [author name scrubbed]. CRS Report R43377, Crisis in the Central African Republic , by [author name scrubbed]. CRS Report R43344, The Crisis in South Sudan , by [author name scrubbed]. CRS Video WVB00023, Conflict and Humanitarian Crisis in Africa: Central African Republic and South Sudan, by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report R42094, The Lord's Resistance Army: The U.S. Response , by [author name scrubbed] and [author name scrubbed]. CRS Report RL34395, International Illegal Trade in Wildlife: Threats and U.S. Policy , by Liana Rosen and [author name scrubbed]. CRS Report R42497, Trafficking in Persons: International Dimensions and Foreign Policy Issues for Congress , by Liana Rosen. Trade and Investment CRS In Focus IF00041, African Growth and Opportunity Act (AGOA) (In Focus), by [author name scrubbed]. CRS Report R43173, African Growth and Opportunity Act (AGOA): Background and Reauthorization , by [author name scrubbed]. CRS Insight IN10015, Trade Africa Initiative, by [author name scrubbed] and [author name scrubbed]. CRS Report R43593, Powering Africa: Challenges of and U.S. Aid for Electrification in Africa , by [author name scrubbed] et al. Global Health, Humanitarian, and Social Issues and U.S. Foreign Aid CRS Report R43115, U.S. Global Health Assistance: FY2001-FY2015 Funding and Issues for Congress , by [author name scrubbed]. CRS Report R42776, The President's Emergency Plan for AIDS Relief (PEPFAR): Funding Issues After a Decade of Implementation, FY2004-FY2013 , by [author name scrubbed]. CRS Report R42717, Global Access to Clean Drinking Water and Sanitation: U.S. and International Programs , by [author name scrubbed]. CRS Report R40213, Foreign Aid: An Introduction to U.S. Programs and Policy , by [author name scrubbed] and [author name scrubbed]. CRS Report R43569, State, Foreign Operations, and Related Programs: FY2015 Budget and Appropriations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report R43043, State, Foreign Operations, and Related Programs: FY2014 Budget and Appropriations , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report R42827, Does Foreign Aid Work? Efforts to Evaluate U.S. Foreign Assistance , by [author name scrubbed]. CRS Report R41185, Foreign Aid: International Donor Coordination of Development Assistance , by [author name scrubbed]. CRS Report R41880, Foreign Assistance: Public-Private Partnerships (PPPs) , by [author name scrubbed]. CRS Report R41072, International Food Aid Programs: Background and Issues , by [author name scrubbed]. CRS Report RS21168, The Peace Corps: Current Issues , by [author name scrubbed]. CRS Report RL32427, Millennium Challenge Corporation , by [author name scrubbed]. CRS Report R41845, The Global Climate Change Initiative (GCCI): Budget Authority and Request, FY2010-FY2015 , by [author name scrubbed].

This report provides information about the early August 2014 U.S.-Africa Leaders Summit in Washington, DC, and policy issues likely to be addressed by participants in the summit and other events being held in conjunction with it. In providing background on key U.S.-Africa policy issues, the report addresses: Africa's development and economic challenges; U.S.-Africa trade, investment, and economic cooperation; U.S. aid to Africa; Governance, democracy, and human rights issues; and Peace and security issues, including selected U.S. responses. The summit is organized around the theme "Investing in the Next Generation." Summit participants—President Obama, the chairperson of the African Union, and an anticipated majority of African heads of state—will discuss investment issues, peace and security, governance, and other topics. No U.S.-African bilateral presidential meetings are planned, although Cabinet officials will hold bilateral meetings with some countries' leaders and summit side meetings on selected issues (e.g., the West African Ebola viral disease outbreak and regional terrorism challenges) are planned. All African heads of state, apart from four, were invited to the summit. The summit is designed to enable frank exchanges of ideas on which to base U.S.-African ties, rather than to formulate a set of pre-negotiated outcomes. The summit and associated events will highlight key goals in the Administration's 2012 Africa Strategy, which focuses on U.S. efforts to help African countries to foster: good governance; increased economic growth, trade, and investment, in partnership with U.S. firms; durable peace and security; and greater socioeconomic opportunity and development. There are some indications of bipartisan congressional support for the summit, as reflected by the introduction of S.Res. 522 (Coons, co-sponsored by Menendez, Corker, and Flake) on July 24. There will be one official congressional summit event, a reception, and several unofficial Capitol Hill discussion forums, in addition to dozens of other unofficial events, sponsored mostly by major firms, think tanks, non-profit advocacy groups, universities, and others. Key event topics include trade and investment, development, governance, and human rights. The summit focuses on the continent as a whole, both sub-Saharan Africa and North Africa, although the Administration's 2012 Africa Strategy focuses on sub-Saharan Africa alone. Likewise, sub-Saharan Africa is the main focus of this report, although some coverage of North Africa is included. The summit, the first such U.S.-hosted event, follows similar Africa summits hosted by China, France, the European Union, and others, and may be seen, in part, as a response to such events. No major new U.S. initiatives have been publicly announced ahead of the summit. The style of the U.S. summit distinguishes it from those held in other countries to date, which often culminate in pledges of large host financial commitments. This is notably the case for China, which has rapidly expanded economic and political ties with Africa in recent years. The summit has drawn some criticism focused on the lack of both "deliverables" and bilateral presidential engagement, resulting from the belief of some that inadequate attention will be focused on business deal-making, among other reasons. The report discusses some key social and economic issues in the region. This includes key development challenges—a need for health, education, and other social indicator improvements, especially catering to Africa's youthful population, and a need to address climatic and environmental shocks, among other ends. It also briefly addresses the recent positive shift in Africa's economic environment, including rapid economic growth and growing discretionary spending by consumers, while considering factors that may continue to limit business interest in the region. U.S. trade and investment aid programs, especially trade preferences and trade capacity building efforts under the African Growth and Opportunity Act, which expires in 2015 and may be reauthorized (as the report discusses), are also addressed, as is the nature of U.S. development aid. U.S. bilateral aid to Africa, funded at about $7 billion in FY2014 and supplemented by additional types of aid, including emergency humanitarian assistance, focuses on health, education, agriculture and food security, and, more recently, electrification. U.S. security assistance supports the professionalization of African militaries and the deployment of African peacekeeping troops. U.S. assistance to Africa is delivered largely under six major presidential initiatives, which the report discusses.

The Terrorist Screening Database The Terrorist Screening Database (TSDB, commonly referred to as the terrorist watchlist) lies at the heart of federal efforts to collect and share information with U.S. law enforcement and security agencies about identified people who may pose terrorism-related threats to the United States. It is managed by the Terrorist Screening Center (TSC) and includes biographic identifiers for those known either to have or be suspected of having ties to terrorism. In some instances it also includes biometric information on such people. It stores hundreds of thousands of unique identities. Portions of the TSDB are exported to data systems in federal agencies that perform screening activities such as background checks, reviewing the records of passport and visa applicants, and official encounters with travelers at U.S. border crossings. The Terrorist Screening Center, the Hub of Watchlisting The TSC, a multi-agency organization administered by the Federal Bureau of Investigation (FBI), maintains the TSDB. The TSC was created by presidential directive in 2003 in response to the terrorist attacks of September 11, 2001. Before the TSC consolidated federal watchlisting efforts, numerous separate watchlists were maintained by different federal agencies. The information in these lists was not necessarily shared or compared. The efforts that surround the federal watchlisting regimen can be divided into three broad processes centered on the TSDB: Nomination, which involves the identification of known or suspected terrorists via intelligence collection or law enforcement investigations. The U.S. government has a formal watchlist nomination process. Verification of identities for the TSDB and export of data to screening systems, which involves managing records in the TSDB, as well as the compiling and export of special TSDB subsets for various intelligence or law enforcement end users (screeners). Screening, which involves end users—screeners—checking individuals or identities they encounter against information from the TSDB that is exported to screening databases. These databases include the No Fly List and the Selectee and Expanded Selectee lists for airline passenger screening; the Department of State's Consular Lookout and Support System (CLASS); the FBI's National Crime Information Center (NCIC); the TECS (not an acronym) system for border and port of entry screening; and the military base access and screening system. (In FY2011, there were "more than 1.2 billion queries against [the TSDB].") The screening and vetting processes can yield more information on particular subjects that may be fed back into the TSDB. (See Figure 1 for a visual depiction of the federal agencies involved in watchlisting.) Nominations The first step toward adding identities to the TSDB is the nomination process. In their daily work poring over raw information or case files, staff at U.S. government agencies—dubbed "originators" in the watchlisting process—uncover the possible identities of people suspected of involvement in terrorist activity. Such identities can be nominated for addition to the TSDB. Originators can work in places such as intelligence and law enforcement agencies or U.S embassies and consulates. The nominations they initiate include people who are classed together in the watchlisting regimen as "known or suspected terrorists" (KSTs). For the federal government's watchlisting regimen, a "known terrorist" is an individual whom the U.S. government knows is engaged, has been engaged, or who intends to engage in terrorism and/or terrorist activity, including an individual (a) who has been charged, arrested, indicted, or convicted for a crime related to terrorism by U.S. government or foreign government authorities; or (b) identified as a terrorist or member of a designated foreign terrorist organization pursuant to statute, Executive Order, or international legal obligation pursuant to a United Nations Security Council Resolution. A "suspected terrorist" is an individual who is reasonably suspected to be, or has been, engaged in conduct constituting, in preparation for, in aid of, or related to terrorism and/or terrorist activities based on an articulable and reasonable suspicion. Verification of Identities for the TSDB and Export to Federal Data Systems All nominated identities of known or suspected terrorists for the TSDB are vetted by analysts at either the National Counterterrorism Center (NCTC) or the FBI and then undergo verification at the TSC. NCTC handles the nominations of all known or suspected international terrorists (including purely international suspects submitted by the FBI). In this process, NCTC maintains a classified database known as the Terrorist Identities Datamart Environment (TIDE). TIDE is the U.S. government's "central repository of information on international terrorist identities." TIDE includes: to the extent permitted by law, all information the [U.S. government] possesses related to the identities of individuals known or appropriately suspected to be or to have been involved in activities constituting, in preparation for, in aid of, or related to terrorism (with the exception of purely domestic terrorism information). In late 2013, TIDE contained the identities of approximately 1.1 million people. Of this number, about 25,000 were U.S. citizens and lawful permanent residents linked to international terrorist organizations. Not all of the entries in TIDE get into the TSDB, which according to the FBI held approximately 800,000 identities in November 2014. NCTC analysts constantly work on updating identities in TIDE, and NCTC exports a subset of its TIDE data holdings for the TSDB. TSC analysts perform a final verification of identities before they become a part of the TSDB. (For more about the concepts involved, see " Making the TSDB Cut .") TIDE is also an important resource on its own, used by counterterrorism professionals throughout the U.S. intelligence community in daily counterterrorism analytical work. FBI analysts in its Terrorist Review and Examination Unit process FBI nominations to the TSDB. These nominations often spring from FBI investigative work. The unit forwards international nominations to NCTC for inclusion in TIDE, where the data in the nomination is reviewed before release to the TSC. The FBI also forwards nominations of purely domestic terrorists and "domestic terrorists that may have connections to international terrorism" directly to the TSC for review. Making the TSDB Cut To make it into the TSDB, a nomination vetted by either NCTC or the FBI has to (1) meet the "reasonable suspicion watchlisting standard" and (2) have sufficient identifiers. TSC personnel verify that each nomination that makes it into the TSDB meets both of these criteria. The TSDB is a sensitive but unclassified dataset, and each record created by TSC personnel for the TSDB includes only an individual's identifiers and no "substantive derogatory information or classified national security" material. Reasonable Suspicion Articulable facts form the building blocks of the reasonable suspicion standard undergirding the nomination of suspected terrorists. Sometimes the facts involved in identifying an individual as a possible terrorist are not enough on their own to develop a solid foundation for a nomination. In such cases, investigators and intelligence analysts make rational inferences regarding potential nominees. The TSC vets all nominations, and when it concludes that the facts, bound with rational inferences, hold together to form a reasonable determination that the person is suspected of having ties to terrorist activity, the person is included in the TSDB. In the nomination process, guesses or hunches alone are not supposed to lead to reasonable suspicion. Likewise, one is not supposed to be designated a known or suspected terrorist based solely on activity protected by the First Amendment or race, ethnicity, national origin, and religious affiliation. Identifiers Once the reasonable suspicion standard is met, analysts must have the ability to distinguish a specific terrorist's identity from others. Thus, minimum biographic crite ria must exist. At the very least, for inclusion in the TSDB a record must have a last name "and at least one additional piece of identifying information (for example a first name or date of birth)." Most nominations appear to make the TSDB cut. From FY2009 to FY2013, approximately 1.6 million individuals were nominated and only about 1% (just over 14,000) were rejected. (See Figure 2 .) Export The TSC routinely exports watchlist information to federal agencies authorized to conduct terrorist screening. According to the TSC, this occurs as the information is processed: "seconds later, it shows up with our partners so they can do near-real-time screening." According to the TSC, those partners consist of "five major U.S. Government agencies" that receive TSDB exports, which are subsets of the entire watchlist. Each of the agencies gets a different portion of the TSDB that is "tailored to [its] mission, legal authorities, and information technology requirements." Among the agencies whose screening systems make use of TSDB information are the following: The Department of State 's (DOS's) consular officers draw on TSDB information in the Consular Lookout and Support System (CLASS) used for passport and visa screening. The Transportation Security Administration (TSA) uses information from the TSDB for aviation security screening. The No Fly List, the Selectee List, and the Expanded Selectee List are compared to passenger records using a program known as Secure Flight. The No Fly List includes identities of individuals who may present a threat to civil aviation and national security. Listed individuals are not allowed to board a commercial aircraft "flying into, out of, over, or within United States airspace; this also includes point-to-point international flights operated by U.S. carriers." (As discussed below, Customs and Border Protection [CBP] screens the passenger manifest before any international flight is allowed to depart to the United States.) The Selectee List includes individuals who must undergo additional security screening before being allowed to board a commercial aircraft. The minimum derogatory information requirements that form the basis for including an identity in the No Fly List and the Selectee List are "more stringent than the TSDB's known or reasonably suspected standard," although the specific criteria for inclusion on these lists are not publicly disclosed. The stricter criteria make these lists much smaller than the TSDB. In 2014, there were approximately 800,000 identities in the TSDB according to the FBI, roughly double the figure reported in 2008. By comparison, in 2014 only about 8% of the TSDB identities—around 64,000—were on the No Fly List, and about 3%—roughly 24,000—were on the Selectee List. The Expanded Selectee List, an extra security measure developed in response to a failed attempt to trigger an explosive by a foreign terrorist onboard a U.S.-bound flight on December 25, 2009, screens against all TSDB records that include a person's first and last name and date of birth that are not already on the No Fly or Selectee lists. This may be used at times of heightened terrorism threats, although TSA has not publicly explained when it relies on the Expanded Selectee List as opposed to the standard Selectee List to identify passengers for enhanced airport checkpoint screening. Customs and Border Protection (CBP) owns and uses TECS (not an acronym), the main system that CBP officers employ at the border and elsewhere to screen arriving travelers and determine their admissibility. TECS accepts "nearly all" records from the TSDB. CBP also uses the Automated Targeting System (ATS), which is "a decision support tool that compares traveler, cargo, and conveyance information against law enforcement, intelligence, and other enforcement data using risk-based targeting scenarios and assessments." As one of its functions, ATS "compares information about travelers and cargo arriving in, transiting through, or exiting the country, against law enforcement and intelligence databases" including information from the TSDB. As its name suggests, Automated Targeting System-Passenger (ATS-P) is the portion of ATS focused on passengers, "for the identification of potential terrorists, transnational criminals, and, in some cases, other persons who pose a higher risk of violating U.S. law" and is used by CBP personnel at the border, ports of entry, and elsewhere, including screening the passenger manifests of all U.S. bound international flights. The FBI runs the National Crime Information Center's (NCIC's) database, which it has described as "an electronic clearinghouse of crime data that can be tapped into by virtually every criminal justice agency nationwide, 24 hours a day, 365 days a year." The NCIC includes 21 files. One of them, the "Known or Appropriately Suspected Terrorist File" includes TSDB records. The NCIC database is used for domestic law enforcement screening. The Department of Defense uses TSDB information to help screen people trying to enter military bases. Screening Employees from U.S. federal, state, and local law enforcement agencies who perform screening activities (screeners) check the identities of individuals they encounter in their daily work against specific subsets of the TSDB. Such queries happen either in-person or via submitted official (electronic or paper) forms. Examples include instances when foreign visitors and returning U.S. citizens enter the United States at a port of entry and are screened by CBP officers; state or local police pull over vehicles for moving violations and interact with drivers and passengers; and foreign applicants submit visa applications that are reviewed by Department of State officials. Every year, more than 1 billion queries are likely made against information in the TSDB. Queries that yield possible matches between the identifying information provided by individuals and TSDB holdings are known as "encounters." Screeners receive notification of possible matches via their specific screening databases. When a query produces an encounter, screeners are directed to contact the TSC. Employees in the TSC's 24-hour operations center perform additional research to track down any information that "may assist in making a conclusive identification." (Screeners have access only to the identifying information available in the TSDB, while TSC analysts can search through additional datasets and intelligence to clarify a possible match.) If a positive match is made or if the TSC analysis is inconclusive, the FBI's Terrorist Screening Operations Unit coordinates how the government responds; "For example, [the unit] may deploy agents to interview and possibly apprehend the subject." Any new information collected from an encounter is forwarded to the TSC to enhance any related existing TSDB entry. Visa and Air Traveler Screening The use of TSDB information by federal agencies to thwart the international movement of terrorists is highlighted in efforts to screen foreigners who apply for U.S. visas and those who enter via the Visa Waiver Program (VWP), and in the general screening of air travelers. In these instances, information from the TSDB helps to keep terrorists from using legitimate means of visitation and travel to find harbor in the United States. Overview of the Visa Screening Process Immigration Law and Terrorism Engaging in specified terrorist activity, as well as a broad range of activities in support of terrorism, generally bars the entry of a foreign national into the United States. The Immigration and Nationality Act (INA) expressly provides that aliens who have engaged or intend to engage in terrorist activity—either as an individual or as a member of a terrorist organization—are inadmissible. The INA allows the categorizations of individuals and groups as terrorists in a process that is distinct from diplomatic, foreign policy, or military policy considerations. The terror-related activities that would prevent someone from immigrating to the United States are applicable whether or not they are directed against the United States, and whether or not the foreign national's admission would pose a threat to U.S. security. The statutory language permitting the exclusion of aliens on the basis of membership in organizations deemed subversive to national security dates back to the Immigration Act of March 3, 1903. The Alien Registration Act of 1940 made past and current membership in proscribed organizations and subversive classes of aliens additional grounds for exclusion. When the various immigration and citizenship laws were unified and codified as the Immigration and Nationality Act of 1952 (INA), the result was three separate grounds for exclusion that pertained to national security or political subversives. The Immigration Amendments Act of 1990 streamlined and modernized the security, foreign policy, and political grounds for exclusion, and added a terrorism-related ground of exclusion to the INA. In part as a response to the 1993 World Trade Center bombing, Congress strengthened the anti-terrorism provisions in the INA through the Illegal Immigration Reform and Immigrant Responsibility Act and the Antiterrorism and Effective Death Penalty Act. The USA PATRIOT Act of 2001 and the REAL ID Act of 2005 continued the trend to expand the national security-related grounds for exclusion. There are two broad classes of foreign nationals that are issued visas: I mmigrants , foreign nationals who wish to come to live permanently in the United States and are issued immigrant visas, and N onimmigrants , foreign nationals who seek to come to the United States temporarily and are issued nonimmigrant visas. A visa applicant is required to submit his or her photograph and fingerprints, as well as full name (and any other name used or by which he or she has been known), age, gender, and the date and place of birth. Depending on the visa category, certain documents must be certified by the proper government authorities (e.g., birth certificates and marriage licenses). All prospective lawful permanent residents must submit to physical and mental examinations, and prospective nonimmigrants also may be required to have physical and mental examinations. These reviews are intended to ensure that aliens are not ineligible for visas or admission under the INA Section 212(a) grounds for inadmissibility. Many visitors, however, enter the United States without nonimmigrant visas through the VWP. This provision of the INA allows the Attorney General to waive the visa documentary requirements for aliens coming as visitors from 38 countries. Aliens entering through the VWP have been vetted through a system, known as the Electronic System for Travel Authorization (ESTA), that checks them against the TSDB. (See " National Security and Public Safety Reviews " below.) As with all foreign nationals, CBP inspectors at the port of entry perform background checks and admissibility reviews that draw on information from the TSDB. (See " Export " and " Screening " above.) National Security and Public Safety Reviews For some years, consular officers have been required to check the background of all visa applicants in the "lookout" databases and part of that process involves screening against information from the TSDB. The Department of State (DOS) specifically uses the Consular Lookout and Support System (CLASS) database, which surpassed 42.5 million records in 2012 and contains a subset of the TSDB. (See " Export " and " Screening " above.) Consular officers use name-searching algorithms to ensure matches between names of visa applicants and any derogatory information contained in CLASS. DOS reports that about 70% of the records in CLASS come from other agencies, including the Department of Homeland Security (DHS), the FBI, and the Drug Enforcement Administration. DOS also employs an automated CLASS search algorithm that runs the names of all visa applicants against the Consular Consolidated Database (CCD) to check for any prior visa applications, refusals, or issuances. The CCD is a biometric and biographic database encompassing all visa applicants. Since February 2001, the CCD has stored photographs of all visa applicants in electronic form; since 2007, the CCD has stored 10-finger scans. The digital photograph and the 10-finger electronic scan are the standard for biometric data collected by U.S. embassies and consulates. DOS has relied on the Security Advisory Opinion (SAO) system, which requires a consular officer abroad to refer selected visa cases for greater review by intelligence and law enforcement agencies. The current interagency procedures for alerting officials about foreign nationals who may be suspected terrorists, referred to in DOS nomenclature as Visa Viper, began after the 1993 World Trade Center bombing and were institutionalized by enactment of the Enhanced Border Security and Visa Entry Reform Act of 2002. If consular officials receive information about a foreign national that causes concern, they send a Visa Viper cable (which is a dedicated and secure communication) to the National Counterterrorism Center (NCTC). In a similar set of SAO procedures, consular officers send suspect names, identified by law enforcement and intelligence information, to the FBI for a name check program called Visa Condor. There is also the "Terrorist Exclusion List," which lists organizations designated as terrorist-supporting and includes the names of individuals associated with these organizations. In June 2013, DOS launched an initiative known as "Kingfisher Expansion" (KFE) in partnership with the NCTC for conducting interagency counterterrorism screening of all visa applicants. Under KFE protocols, the consular official submits the visa applicants' electronic visa applications as a "vetting package" to the NCTC. In turn, the NCTC uses an automated process to compare the vetting package with its holdings, most notably the Terrorist Identities Datamart Environment (TIDE) on known and suspected terrorists and terrorist groups. (For a brief discussion of TIDE, see " Verification of Identities for the TSDB and Export to Federal Data Systems " above.) A hit in KFE triggers a Washington-based interagency review of the visa application. KFE also conducts post-issuance reviews of valid visas to check for new information on emerging threats. Despite dipping somewhat in FY2013, the number of aliens denied nonimmigrant visas under terrorist grounds of inadmissibility has increased since the 1990s and mid-2000s. FY2012 was the peak year for immigrant denials based on national security grounds. As Figure 3 shows, the general trends hold for immigrant and nonimmigrant exclusions. What about travelers from Visa Waiver Program (VWP) countries where their citizens do not need visas to travel to the United States? In implementing the VWP, CBP uses the Electronic System for Travel Authorization (ESTA), a security vetting tool, to review prospective travelers from visa waiver countries "to determine if they pose a law enforcement or security risk before they board aircraft destined for the United States." ESTA draws on records from the TSBD. In November 2014, DHS responded to concerns regarding terrorists entering the United States from VWP countries by expanding the information collected from VWP travelers through ESTA. DHS has stated that ESTA has been a "highly effective security and vetting tool" enabling "DHS to deny travel under the VWP to thousands of prospective travelers who may pose a risk to the United States [presumably endangering national security or public safety], prior to those individuals boarding a U.S. bound aircraft." However, since ESTA is a biographic and not a biometric security check and there is no interview by a consular officer, some contend that ESTA does not provide the same level of screening as a visa application. In addition to the enhancements of ESTA data elements discussed above, in 2015 DHS boosted the security criteria that countries "must meet to participate in the VWP." Also, in December 2015 Congress passed legislation requiring changes to the VWP. Among other changes, the legislation established new eligibility requirements for the VWP which, as implemented, modified what data were to be collected from travelers via ESTA. Furthermore, as of April 2016 all foreign travelers participating in the VWP have to use e-Passports. Air Passenger Risk-Based Screening TSA has initiated a number of risk-based passenger screening initiatives to focus its resources and apply directed measures based on intelligence-driven assessments of security risk. These efforts involve identifying known threats to aviation by comparing passenger names and birthdates to the No Fly and Selectee lists, and potentially the Expanded Selectee List, to deny boarding to No Fly matches and apply enhanced screening processes to Selectees. It also involves identifying low-risk travelers who can be routinely granted expedited physical screening so that TSA screening resources can be focused on passengers of unknown risk that TSA has no information about and on passengers that pose an elevated risk (i.e., Selectees). Identifying Low-Risk Travelers In 2001, the Aviation and Transportation Security Act ( P.L. 107-71 ) authorized TSA to "establish requirements to implement trusted passenger programs and use available technologies to expedite the security screening of passengers who participate in such programs, thereby allowing security screening personnel to focus on those passengers who should be subject to more extensive screening." A cornerstone of TSA's risk-based initiatives created under this authority is the PreCheck program. PreCheck is TSA's latest version of a trusted traveler program. Under PreCheck, participants vetted through a background check process (including screening against terrorist watchlist information) are processed through expedited screening lanes where they can keep shoes on and keep liquids and laptops inside carry-on bags. As of May 2016, PreCheck expedited screening lanes were available at more than 150 airports. The cost of background checks under the PreCheck program is recovered through application fees of $85 per passenger for a five-year membership. TSA's goal is to process 50% of passengers through PreCheck expedited screening lanes, thus reducing the need for standard security screening lanes. A predecessor test program called the Registered Traveler program, which involved private vendors that issued and scanned participants' biometric credentials, was scrapped by TSA in 2009 because it failed to show a demonstrable security benefit. However, PreCheck has demonstrated improved screening efficiency, resulting in cost savings for TSA. TSA estimates annual savings in screener workforce costs totaling $110 million as a result of risk-based screening efficiencies. Provisions in the FAA Extension, Safety, and Security Act of 2016 ( P.L. 114-190 ) included language to expand the PreCheck program by involving private-sector entities in marketing and enrollment. Language in the bill would mandate that PreCheck screening lanes be open and available during peak and high-volume travel times. One concern raised about PreCheck and the passenger screening process is the posting of instructions on publicly accessible Internet sites detailing how to decipher boarding passes to determine whether a passenger is a PreCheck participant, or a Selectee who must undergo thorough secondary screening. The lack of encryption and the limited capability TSA has to authenticate boarding passes and travel documents could be exploited to attempt to avoid detection of threat items by more extensive security measures. To address this concern, the DHS Office of Inspector General recommended in 2015 that TSA explore the feasibility of encrypting boarding passes and work to deploy functional credential authentication technologies at airport screening checkpoints. Other concerns raised over the PreCheck program include the lack of biometric identity authentication and the extensive use of a program called "managed inclusion" to route selected travelers not enrolled in the PreCheck program through designated PreCheck expedited screening lanes. In 2014, the Government Accountability Office (GAO) found that TSA had not fully tested its managed inclusion practices, and recommended that TSA take steps to ensure and document that testing of the program adheres to established evaluation design practices. TSA phased out the managed inclusion program in the fall of 2015. Since September 2015, TSA behavior detection officers and explosives trace detection personnel no longer direct passengers not enrolled in PreCheck to expedited screening lanes. Selections based on evaluations by canine explosives detection teams continue, but TSA is moving toward offering expedited screening only to PreCheck program enrollees. In addition to passenger screening, TSA, in coordination with participating airlines and labor organizations representing airline pilots, has developed a known-crewmember program to expedite security screening of airline flight crews. In July 2012, TSA expanded the program to include flight attendants. The program is currently available at several airports in the United States, but is not available to foreign aircrews or at foreign airports. Behavioral Detection Approaches TSA has developed a passenger behavior detection program to identify potential threats based on observed behavioral characteristics. TSA initiated early tests of its Screening Passengers by Observational Techniques program in 2003. By FY2012, the program deployed almost 3,000 Behavior Detection Officers at 176 airports, at an annual cost of about $200 million. Despite its significant expansion, questions remain regarding the effectiveness of the behavioral detection program, and privacy advocates have cautioned that it could devolve into racial or ethnic profiling of passengers despite concerted efforts to focus solely on behaviors rather than individual passenger traits or characteristics. While some Members of Congress have sought to shutter the program, Congress has not approved legislation to do so. For example, H.Amdt. 127 , an amendment to the FY2014 DHS appropriations measure that sought to eliminate funding for the program, failed to pass a floor vote in the 113 th Congress. Congress also has not taken specific action to revamp the program, despite concerns raised by GAO and the DHS Office of Inspector General. Congress has, however, repeatedly directed TSA to provide justification for the program and evidence of its utility and effectiveness, mostly through appropriations report language. Terrorist Watchlists in Aviation After the failed bombing attempt of Northwest Airlines flight 253 on December 25, 2009, TSA modified security directives to require airlines to check passenger names against the No Fly List within two hours of being electronically notified of an urgent update, instead of allowing 24 hours to recheck the list. The event also accelerated the transfer of watchlist checks from the airlines to TSA under the Secure Flight program, the mechanism for vetting passenger name records against the No Fly and Selectee lists. In November 2010, DHS announced that 100% of passengers flying to or from U.S. airports were being vetted using Secure Flight. On international flights, Secure Flight operates in coordination with the use of watchlists maintained by CBP's National Targeting Center-Passenger, which relies on the Advance Passenger Information System, the ATS-P, and other tools to vet both inbound and outbound passenger manifests. In addition to these systems, TSA conducts risk-based analysis of passenger data carried out by the airlines through use of the Computer-Assisted Passenger Prescreening System (CAPPS). In January 2015, TSA gave notification that it would start incorporating the results of CAPPS assessments, but not the underlying data used to make such assessments, into Secure Flight along with each passenger's full name, date of birth, and PreCheck traveler number (if applicable). These data were used within the Secure Flight program to perform risk-based analyses to determine whether passengers receive expedited, standard, or enhanced screening at airport checkpoints. Use of Secure Flight to select passengers for expedited screening has been discontinued following concerns that the practice created security vulnerabilities and recommendations that it be discontinued by the DHS Office of Inspector General following an incident in which a convicted domestic terrorist was selected to receive expedited airport screening based on results of the TSA Secure Flight risk-based analysis. Passenger Redress The Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ) required TSA and DHS to establish appeals procedures by which persons who are identified as security threats based on records in the TSDB may appeal such determinations and have such records modified, if warranted, to avoid recurrence. Also, provisions in the Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 ) required DHS to establish an Office of Appeals and Redress to establish a timely and fair process for individuals who believe they have been delayed or prohibited from boarding a commercial aircraft because they were wrongly identified as a threat. DHS must maintain records of passengers and individuals who have been misidentified and have erroneous information corrected. To meet these statutory requirements, DHS established the DHS Traveler Redress Inquiry Program (DHS TRIP) as a mechanism for addressing situations in which individuals claim to have been inappropriately singled out. The DHS TRIP program allows passengers seeking redress, or their representatives, to file complaints online or by mail. After receiving the completed online questionnaire or the complaint form, DHS is to request supporting information within 30 days. Filers are given a control number that allows them to track the status of their inquiry using the Internet. If the investigation finds that the traveler was delayed due to a misidentification or name-matching issue, DHS is to describe the steps required to resolve the issue. For example, the traveler may be required to retain a copy of the DHS response letter and present it during the check-in process when traveling on airline flights. If a passenger disagrees with the resolution decision made by DHS, he or she may take further steps to appeal the decision. DHS has revised the manner in which redress cases are handled after a number of courts determined that the procedures for seeking redress violated individuals' rights to due process under the Constitution. Under the revised redress process now in place, a U.S. person who applies for redress from an allegedly erroneous inclusion on the No Fly List would receive an initial response letter indicating whether he or she is in fact on the No Fly List. If so, this letter would also notify the individual that he or she may elect to receive or submit additional information. These processes generally do not apply to foreign citizens as such individuals have no specific legal rights to redress under current law. If the individual requests further information, DHS TRIP will forward the details of the case to the TSC Redress Office, which in turn would notify NCTC and the relevant nominating agencies that a redress submittal has included a request for additional information concerning an individual's placement on the No Fly List. The TSC Redress Office would then request an unclassified summary of information supporting an individual's placement on the No Fly List. Upon receipt of this information, the TSC would forward it to DHS TRIP, which would typically provide a second response to the redress seeker that would include details of the unclassified summary provided by the TSC. This second letter informs recipients that they may seek further review of their status and that they may submit any information supporting the position that their placement on the No Fly List is not warranted. The TSC Redress Office will review the relevant materials provided by federal agencies and the redress seeker and provide a recommendation to the TSA Administrator regarding whether or not the individual should remain on the No Fly List. The TSA Administrator would review that recommendation and issue a final decision to remove the individual from the No Fly List, maintain the individual on the list, or remand the case to TSC for further information. This final order would be sent to the individual petitioner and TSC. If the order removes the individual from the No Fly List, the TSC would update the relevant information in the TSDB. Appendix. List of Abbreviations

After the terrorist attacks of September 11, 2001, the federal government developed a unified regimen to identify and list known or suspected terrorists. The regimen has received repeated congressional attention, and this report briefly discusses for congressional policymakers how the U.S. government fashions and uses the Terrorist Screening Database (TSDB) to achieve such an end. It also discusses how the federal government engages in two travel-related screening processes—visa screening and air passenger screening. Both processes involve subsets of the Terrorist Screening Database. The Terrorist Screening Database (TSDB) The TSDB lies at the heart of federal efforts to identify and share information among U.S. law enforcement about identified people who may pose terrorism-related threats to the United States. It is managed by the Terrorist Screening Center (TSC), a multi-agency organization created by presidential directive in 2003 and administered by the Federal Bureau of Investigation (FBI). The TSDB includes biographic identifiers for those known either to have or be suspected of having ties to terrorism. In some instances it also includes biometric information on such people. It stores hundreds of thousands of unique identities. Portions of the TSDB are exported to data systems in federal agencies that perform screening activities such as background checks, reviewing the records of passport and visa applicants, official encounters with travelers at U.S. border crossings, and air passenger screening. Foreign Nationals Traveling to the United States Two broad classes of foreign nationals are issued visas under the Immigration and Nationality Act (INA): immigrants and nonimmigrants. Many visitors, however, enter the United States without visas through the Visa Waiver Program (VWP). Under the VWP, foreign nationals from 38 countries with agreements with the United States—including most countries in the European Union—do not need visas to enter the United States for short-term business or tourism and are instead vetted using biographic information to authenticate and screen individuals. Screening Aliens Department of State (DOS) consular officers check the background of all visa applicants in "lookout" databases that draw on TSDB information and other counterterrorism information such as the material housed in the National Counterterrorism Center's Terrorist Identities Datamart Environment. DOS specifically uses the Consular Lookout and Support System (CLASS) database, which surpassed 42.5 million records in 2012. Aliens entering through the VWP have been vetted through the Electronic System for Travel Authorization (ESTA), which checks them against the TSDB. In addition, before an international flight bound for the United States departs from a foreign airport, Customs and Border Protection (CBP) officers screen the passenger manifest. CBP inspectors also perform background checks and admissibility reviews at the ports of entry that draw on information from the TSDB. Screening at the Transportation Security Administration The Transportation Security Administration (TSA) has initiated a number of risk-based screening initiatives to focus its resources and apply directed measures based on intelligence-driven assessments of security risk. A cornerstone of TSA's risk-based initiatives is the PreCheck program. PreCheck is TSA's latest version of a trusted traveler program that has been modeled after CBP programs. Under the PreCheck regimen, participants are vetted through a background check process (including screening against terrorist watchlist information). At selected airports, they are processed through expedited screening lanes, where they can keep shoes on and keep liquids and laptops inside carry-on bags. All passengers flying to or from U.S. airports are vetted using the TSA's Secure Flight program. Secure Flight involves information from the TSDB housed in the No Fly List, Selectee List, and Expanded Selectee List to vet passenger name records. The No Fly List includes identities of individuals who may present a threat to civil aviation and national security. Listed individuals are not allowed to board a commercial aircraft flying into, out of, over, or within U.S. airspace; this also includes point-to-point international flights operated by U.S. carriers. The Selectee List includes individuals who must undergo additional security screening before being allowed to board a commercial aircraft. The Expanded Selectee List was created as an extra security measure in response to a failed attempt to trigger an explosive by a foreign terrorist onboard a U.S.-bound flight on December 25, 2009. It screens against all TSDB records that include a person's first and last name and date of birth that are not already on the No Fly or Selectee lists.

Introduction As U.S. natural gas production increased and the possibility of liquefied natural gas (LNG) exports from the continental United States became more likely, interest grew in sending U.S. natural gas to the Caribbean (see Figure 1 ). During the Obama Administration, Vice President Biden was a proponent of helping the Caribbean use more clean energy, including natural gas, and in 2014 the Obama Administration created the Caribbean Energy Security Initiative. Additionally, U.S. LNG exports to the Caribbean were a recommendation of the first Quadrennial Energy Review undertaken by the Obama Administration. The Trump Administration has promoted increased LNG exports, and on September 1, 2017, the U.S. Department of Energy (DOE) announced a proposed rule intended to speed up the approval process for small-scale LNG exports from U.S. facilities. The Caribbean is a relatively small natural gas market (see Table 1 ). Cumulatively, the Caribbean consumed approximately 792 billion cubic feet (bcf) of natural gas in 2016, about 3% of U.S. consumption. Nevertheless, there has been interest from many in providing U.S. LNG exports to the region for mainly economic, geopolitical, and environmental reasons. This report focuses on the economic reasons U.S. companies would like to send U.S. natural gas to the Caribbean. Other topics, although important, are not addressed beyond introductory comments. Some small-scale U.S. LNG export projects have targeted Caribbean countries as the relative size of the imports makes the export projects economical. The United States also has a geopolitical reason for wanting to displace fuel oil in the region, especially Venezuelan fuel oil. Venezuela has used subsidized exports of fuel oil to gain influence in the region. Environmentally, the United States has supported greater natural gas use in the region to curb carbon dioxide emissions, as well. Under DOE's proposed rule, a small-scale natural gas export facility may qualify for the expedited approval process if it meets two criteria: (1) it would export no more than 0.14 bcfd or 51.10 bcf per year, and (2) it qualifies for a categorical exclusion under DOE's National Environmental Policy Act (NEPA) regulations. If these two criteria are met, then the project, under the proposed rule, would be assumed to be in the public interest per the Natural Gas Act (NGA). Congressional Interest On October 18, 2017, S. 1981 was introduced by Senator Bill Cassidy to amend the NGA to provide an expedited DOE approval process for small-scale LNG projects. (See " Selected Federal Approvals and Review for Natural Gas Exports " for additional regulatory discussion.) Similarly to the DOE's proposed rule, projects with a capacity of 0.14 bcfd or 51.1 bcf per year would be "deemed to be consistent with the public interest," and the permit would be "granted without modification or delay." As defined by the proposed legislation and rule, there is currently one project within the capacity requirement and awaiting a non-free trade agreement (non-FTA) approval, Eagle LNG Partners Jacksonville LLC. However, under DOE's proposed rule, the project would not be granted the expedited process, as it does not qualify for a categorical exclusion under NEPA. The project has submitted its application to the Federal Energy Regulatory Commission (FERC), which is still evaluating it. Under S. 1981 , the project would qualify for the expedited process. U.S. Natural Gas Market Trends In the beginning of the 21 st century, U.S. natural gas prices were generally on the rise (see Figure 2 ), and the United States was viewed as a growing natural gas importer. Multiple LNG import terminals were built during this time in preparation for increased demand. However, the market conditions also drove domestic producers to innovate. As prices reached their peak in 2008, domestic shale gas was brought to market. Improvements in technologies such as hydraulic fracturing and horizontal drilling made the development of unconventional natural gas resources such as shale and other lower-permeability rock formations possible. Improved efficiency has lowered production costs, making shale gas economically competitive at almost any market price and enabling large-scale U.S. LNG exports from the contiguous states. As U.S. production increased, primarily from 2005 onward, and prices fell, U.S. consumption of natural gas during the same time period grew by over 24%. The rise in consumption, though, did not keep pace with production, so companies turned to exports of natural gas, first by pipeline to Mexico and then as LNG to other parts of the world. As shown in Figure 3 , supply and imports of natural gas were still greater than consumption and exports in 2016, in part because of growing use of storage. The first large-scale LNG shipments from the continental United States occurred in February 2016 from the Sabine Pass LNG Terminal in Louisiana to Brazil, India, and the United Arab Emirates. Some in related industries believe that instead of exporting U.S. natural gas, the United States should increase its use of natural gas in the electric power sector to displace coal, as an alternative transportation fuel to displace oil, and to provide fuel and feedstock to domestic industries such as petrochemicals. Natural gas producers counter that there is enough natural gas for both domestic growth and exports. Nevertheless, some transition to natural gas is already occurring, particularly in the electric power sector, and according to the U.S. Energy Information Administration's (EIA's) latest annual average projections (which assume no changes in U.S. policy), prices are not expected to reach the price peak of 2008 until 2042. Between 2000 and 2008, the United States prepared to increase imports of LNG based on forecasts of growing consumption, and companies began constructing LNG import terminals. However, the rise in prices gave the industry incentive to bring more domestic gas to market, reducing the need for import terminals. The result, as mentioned above, was the development of shale gas. Imports in 2016 were 35% below their peak in 2007; consequently, there has been a push for modification and expansion of existing LNG terminals to add liquefaction capability, as well as construction of new terminals, in order to expand U.S. export capacity. As of September 2017, DOE's Office of Fossil Energy approved 20.56 bcf per day of export capacity to non-FTA countries. Of those non-FTA approved, 0.11 bcfd were small-scale projects within the capacity limits of DOE's proposed rule and S. 1981 , and an additional 0.39 bcfd to FTA countries was also approved (see Table 2 ). U.S. Interest in the Caribbean Natural Gas Market To date, DOE has received 13 applications (four to export exclusively to FTA countries, two exclusively to non-FTA countries, and seven to either FTA or non-FTA countries) from companies seeking approval to export relatively small quantities of LNG primarily to destinations in the Caribbean, Central America, and South America. Of the 13, 11 applications are to export natural gas to FTA countries, and all have been approved. Seven of the nine applications to export to non-FTA countries have been approved, with two non-FTA applications under review. DOE has received approximately 66 applications in total to export LNG from the United States. Unlike large export projects shipping LNG on bulk tankers from new marine terminals, most of these 13 applications involve shipments from existing, small-scale LNG liquefaction plants using International Standards Organization (ISO) certified tank containers (see Figure 4 ). The use of ISO containers allows the LNG to be transported using existing container shipping infrastructure via rail, truck, and conventional container ship—and delivered to any port facility capable of receiving containerized cargo. Most of the companies also offer comprehensive services to deliver LNG to the customer facility, as needed. A few proposed projects (e.g., American LNG Marketing LLC) would construct small new LNG liquefaction plants. One proposed project (Eagle LNG Partners Jacksonville LLC) would construct custom-built tankers to deliver LNG. The relatively small LNG exporters have been targeting a variety of customers in the Caribbean basin, but appear focused primarily on industrial and electric power customers. For example, Carib Energy delivers LNG to Coca-Cola Puerto Rico Bottlers, where it is used both as a fuel for on-site power generation and also in the company's refrigeration operations. Advanced Energy Solutions LLC has targeted primarily a group of co-generation power plants that supply industrial and commercial customers in Honduras. Selected Federal Approvals and Review for Natural Gas Exports Pursuant to provisions in Section 3(a) of the NGA, both the export of LNG, regardless of the amount, and the construction or expansion of LNG terminals require federal agency authorization. According to the NGA, parties seeking to enter into natural gas transactions with foreign buyers must file for an export authorization under the rules and procedures established by DOE. If the United States has an FTA in effect with the nation to which the LNG would be exported, that application will be automatically deemed consistent with the "public interest." Exports to non-FTA countries are presumed to be in the public interest, unless, after opportunity for a hearing, DOE finds that the authorization would not be consistent with the public interest. The NGA does not detail what DOE must evaluate to make a public interest determination. The NGA also does not specify an amount threshold for requiring a public interest determination, so projects, whether exporting small or large amounts of natural gas, undergo the same process. Also, pursuant to Section 3(e) of the NGA, FERC is required to approve the siting, construction, expansion, or operation of an LNG export terminal, onshore or in state waters. Depending on the details of the commodity to be exported or terminal facility, compliance with additional requirements established under state, tribal, or federal law may also apply to the export or to the terminal project. The approvals required by DOE and FERC are separate federal actions subject to environmental review under the National Environmental Policy Act (NEPA, 42 U.S.C. 4321 et seq.). Under NEPA, federal agencies must identify and consider the environmental impacts of an action and inform the public of the impacts of that action before a final agency decision is made. Project information gathered during the NEPA process is used, in part, to inform an agency's decision on a given proposal. For DOE, this means that it must consider the impacts associated with a request to export natural gas, as required under NEPA, and then must use that NEPA analysis, with other relevant information, to inform its determination of whether that export would be in the public interest, as required under the NGA. FERC does a separate NEPA analysis to identify the impacts related to the construction or modification of the terminal that would be used for the proposed exports. The level of NEPA review required of DOE or FERC is entirely project-specific. A detailed environmental impact statement (EIS) must be prepared if the project will have significant environmental impacts. If impacts are uncertain, an agency may prepare an environmental assessment (EA) to determine whether an EIS is needed or if a finding of no significant impact (FONSI) may be issued. Projects that are known to have no significant impacts are categorically excluded from the requirement to prepare an EA or EIS (referred to as categorical exclusions, or CEs). In their agency-specific regulations implementing NEPA, both DOE and FERC identify the types of projects they are authorized to approve and the level of review generally required for those actions. For each level of NEPA review, following are examples of projects that DOE is authorized to approve under Section 3 of the NGA: a ctions that require an EIS —proposals that would require construction of major new natural gas pipelines/related facilities, significant expansions and modifications of existing pipelines/related facilities, or major operational changes; a ctions that require EA and result in a FONSI —proposals that would require minor new construction (e.g., adding new connections to an existing LNG pipeline); actions approved as a CE —proposals that would require minor operational changes (e.g., changes in natural gas throughput or storage operations), but not new construction. If a DOE export approval involves a project subject to FERC approval, FERC typically serves as the lead agency in the NEPA review process, and DOE serves as the cooperating agency. That is, FERC would generally be the agency responsible for determining whether or not the proposal may have significant environmental impacts (i.e., requires an EIS or can be approved with an EA/FONSI or CE) and for preparing the necessary analysis. DOE and any other agency with legal jurisdiction or special expertise with respect to any impact associated with the proposal would assist FERC with its NEPA review. After FERC completes that review, rather than prepare a separate analysis, DOE typically adopts FERC's NEPA document . FERC's decision regarding the level of NEPA review required for a terminal project may affect DOE's decision to apply its expedited approval process to export approvals. As proposed, DOE expedited approval of an export would be conditioned on the proposal qualifying as a categorical exclusion (i.e., a project determined to have no significant impacts on the environment, under NEPA). If FERC determines that a terminal project cannot be approved using a CE, DOE may similarly determine that the export approval associated with that terminal does not qualify as a CE. The Global LNG Market If all the U.S. LNG export projects that received DOE final approval (20.6 bcfd) were operational today, the United States would rank first in the world, by far, for global export capacity. In 2016, Qatar exported the most LNG, 3,687 bcf, or 10.1 bcfd, while U.S. LNG exports were 184 bcf, or 0.5 bcfd. Expanded U.S. LNG exports will face competition in the global LNG market. According to one study, global liquefaction capacity is projected to rise by almost 43% by 2025 ( Figure 5 ). Many non-U.S. projects are further along than the U.S. projects. In 2016, LNG trade accounted for 32% of all natural gas traded internationally. Trinidad and Tobago's decline, starting around 2008, is mostly because the United States is no longer a big importer of LNG. Most LNG sold in th e world is under long-term contracts indexed to oil prices. Long-term contracts are needed to finance the liquefaction facilities, usually the most expensive part of the LNG supply chain, which also includes LNG tankers, storage, and LNG import terminals. U.S. natural gas prices are market-based, which can give U.S. LNG export projects an advantage because the differential with oil-indexed natural gas prices can be wide compared to the U.S. price. (See Figure 6 .) U.S. LNG exports could add to the pressure for other countries to delink their natural gas exports—either as LNG or by pipeline—from oil-indexed prices. Japanese companies, for example, have been vocal about their interest in a natural gas-based pricing mechanism to reduce costs and exposure to oil prices. However, recent declines in global oil prices have reduced the oil-indexed versus gas-indexed price differential. Many of the projected projects in Figure 5 are targeting the Asian LNG demand centers. Although the locations of most of the proposed U.S. export terminals are on the U.S. Gulf Coast and the East Coast, Asia may be the target market for U.S. LNG, as it tends to pay higher prices for its natural gas imports. The widening of the Panama Canal has contributed to U.S. competitiveness in Asia. Europe has significant LNG import capacity, but needs to continue to improve its infrastructure connections to transport gas to markets. Russia, the main supplier of natural gas to Europe by pipeline, may be put under increasing pressure by U.S. export projects to further delink its natural gas prices from oil. U.S. LNG exports could also provide options for some countries that are highly dependent on one supplier. Trade Issues and Considerations Most companies seeking permits to export LNG have applied to export LNG to countries with which the United States does not have an FTA in addition to those with an FTA. As noted above, exports to FTA countries are presumptively considered "in the public interest" under the NGA, as amended. Of the 51.59 bcfd non-FTA applications, about 40% have received final approval from DOE. South Korea is the only major importer of LNG of the countries with which the United States has an FTA. Of the other FTA countries, in 2016, seven have LNG import terminals, while the rest either export natural gas, receive natural gas via pipeline, or do not import natural gas. In order for LNG export projects to be financially viable, they will likely need the ability to export to non-FTA countries. In the Caribbean, only the Dominican Republic has signed an FTA with the United States; it is also one of the countries that has an LNG import terminal. During the Obama Administration, the United States negotiated the Trans-Pacific Partnership (TPP) FTA with 11 countries of the Asia-Pacific and engaged the European Union in negotiations for a Transatlantic Trade and Investment Partnership (T-TIP) FTA. Both these agreements would have given the signatories free trade status when it comes to U.S. natural gas exports, including Japan, the largest LNG importer in the world. However, the Trump Administration withdrew from the TPP upon taking office in January 2017, and the future of T-TIP is uncertain. The prospect of the United States limiting or restricting LNG exports has raised questions by industry analysts, particularly as a member of the World Trade Organization (WTO). In previous Congresses, legislation was introduced that would have given certain countries, like NATO members, priority in receiving U.S. LNG exports. The General Agreement on Tariffs and Trade's (GATT's) Article XI, General Prohibition Against Quantitative Restraints, states the following: No prohibition or restrictions other than duties, taxes or other charges made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party. There are exceptions to Article XI based on the conservation of exhaustible natural resources or the necessity to protect human health, which may apply if the United States restricts LNG exports. However, these exceptions may be dependent on a country restricting its own production. Additionally, restricting LNG exports may put the United States in a contradictory position vis-à-vis cases it has brought to the WTO, specifically its successful case against China for limiting the export of rare earth elements and other metals. To some, the position of the United States as a promoter of free trade may also be challenged. Since the start-up of the Sabine Pass Liquefaction project in Louisiana, exports of LNG have gone to approximately 26 countries, with 21 being non-FTA countries. In 2016, continental U.S. exports were 184 bcf, while so far in 2017 the volumes have increased to 410 bcf. Similarly, small-scale exports rose from 0.10 bcf in 2016 to 0.13 bcf so far in 2017. Caribbean Trade In 2016, three Caribbean countries—Barbados (0.10 bcf), Dominican Republic (41.32 bcf), and Jamaica (0.35 bcf)—imported LNG. Puerto Rico was the largest importer of LNG in the region, with 57.56 bcf in 2016. Most Caribbean LNG imports come from Trinidad and Tobago (see Figure 7 ). Barbados and Dominican Republic imported LNG from the United States. Puerto Rico, in part because of the Jones Act, is not able to import LNG on LNG tankers. The Jones Act requires that vessels transporting cargo between two U.S. points be built in the United States, crewed by U.S. citizens, and at least 75% owned by U.S. citizens. There are no Jones Act-qualified LNG tankers available to carry U.S. natural gas to Puerto Rico; the United States has not built an LNG tanker since 1980. Puerto Rico has imported LNG from the continental United States in cryogenic containers. Since September 2014, approximately 0.50 bcf of natural gas has gone to Puerto Rico from the contiguous United States.

With the advent of shale gas, the United States has transformed from a growing importer of natural gas to a burgeoning exporter. Exports by pipeline and ship have grown in the last couple of years. Liquefied natural gas (LNG) exports in 2013 were about 13 billion cubic feet (bcf), while in 2016 that figure jumped to almost 184 bcf. This increase can mostly be attributed to the opening of the Sabine Pass Liquefaction facility in Louisiana in February 2016. Despite the large volumes associated with the large-scale U.S. LNG export terminals, like Sabine Pass Liquefaction, there has also been a growing interest in small-scale LNG exports, mainly in cryogenic containers, to the Caribbean. Currently, the U.S. Department of Energy (DOE), which permits the export of natural gas as a commodity, has received 13 applications (four to export exclusively to free trade agreement (FTA) countries, two exclusively to non-FTA countries, and seven to either FTA or non-FTA countries) from companies seeking approval to export relatively small quantities of LNG primarily to destinations in the Caribbean, Central America, and South America. Of the 13, 11 applications are to export natural gas to FTA countries, and all have been approved. Seven of the nine applications to export to non-FTA countries have been approved, with two non-FTA applications under review. Globally, large quantities of LNG liquefaction capacity are projected to come into operation within the next decade. Most of those projected projects, including those in the United States, are large-capacity facilities targeting the biggest LNG importers, like Japan and South Korea. However, there is a subset of the U.S. projects that are small-scale in capacity and targeting a small market—the Caribbean. In 2016, three Caribbean countries—Barbados (0.10 bcf), the Dominican Republic (41.32 bcf), and Jamaica (0.35 bcf)—imported LNG. Puerto Rico was the largest importer of LNG in the region, with 57.56 bcf in 2016, predominantly on tankers. Barbados and Dominican Republic imported LNG from the United States. Puerto Rico, in part because of the Jones Act, is not able to import LNG on LNG tankers, but has imported LNG from the continental United States in cryogenic containers. The United States has not made an LNG tanker in almost 40 years. On September 1, 2017, the DOE announced a proposed rule intended to speed up the approval process for small-scale exports of LNG from U.S. export facilities. To obtain the DOE expedited process for small-scale natural gas exports under the proposed rule, projects must meet two criteria: (1) the proposed facility cannot export more than 0.14 bcf per day (bcfd) or 51.10 bcf per year, and (2) the proposed facility must qualify for a categorical exclusion under DOE's National Environmental Policy Act (NEPA) regulations. On October 18, 2017, S. 1981 was introduced to amend the Natural Gas Act (NGA) to provide an expedited approval process for small-scale LNG projects. Similar to the DOE's proposed rule, projects with a capacity of 0.14 bcfd or 51.1 bcf per year would be "deemed to be consistent with the public interest," and the permit would be "granted without modification or delay."

Introduction The operation of an airport involves many activities that can affect the environment. In addition to potential impacts to local air and water quality, aircraft noise levels may affect property values or the quality of life of residents in nearby communities. Certain activities or projects to address airport environmental impacts may qualify for federal funding. For example, in its FY2008 budget, the Federal Aviation Administration (FAA) requested $354 million to meet the agency's "Environmental Stewardship" goals. Among other uses, those funds may be spent on projects to abate airport noise impacts (e.g., soundproofing of residential homes, purchases of noise barriers and monitors, and relocation of persons or businesses); to minimize water quality impacts (e.g., funding of projects that would control the discharge of deicing chemicals); and to reduce airport-controllable air emissions (e.g., purchases of alternative fuel vehicles). Funds also are authorized for research into new aircraft technology that would reduce noise and air emissions. Funding authorization for FAA programs set forth in Vision 100—Century of Aviation Reauthorization Act ( P.L. 108 - 176 , hereinafter referred to as "Vision 100") expired at the end of FY2007. On February 14, 2007, the FAA's reauthorization proposal, entitled the Next Generation Air Transportation System Financing Reform Act of 2007 ( H.R. 1356 and S. 1076 , hereinafter referred to as "the FAA proposal"), was introduced by request. Subsequently, reauthorization proposals have been passed by the House ( H.R. 2881 , the FAA Reauthorization Act of 2007) and reported by the Senate ( S. 1300 ; S.Rept. 110 - 144 , the Aviation Investment and Modernization Act of 2007). Each bill includes environment-related provisions that would fund projects intended to minimize environmental impacts or help airports comply with regulatory obligations; fund research, such as new technology that would produce quieter, more fuel-efficient aircraft; and amend existing environmental regulatory requirements. To illustrate why airports may need these funds and how they could potentially utilize them, this report provides an overview of the main environmental impacts associated with airport operations: noise, water quality, and air quality. Also discussed are the environmental review requirements of the National Environmental Policy Act of 1969 (NEPA, 42 U.S.C. §§ 4321-4347) and an overview of environmental provisions in proposed legislation to reauthorize FAA programs. This report does not discuss the national or international environmental impacts of aviation in general. Therefore, a discussion of the aviation industry's potential contribution to global warming is not discussed. However, information about this issue is included in the "For Additional Information" section below. Overview of Airport Environmental Issues In the next 15 years, air travel is projected to grow significantly. As a result, airport development and expansion projects will likely become increasingly important. A potential challenge to the completion of these projects is community concern regarding airport environmental impacts. Airport operations involve a range of activities that affect the environment, including the operation of aircraft; the operation of airport and passenger vehicles, and airport ground service equipment (GSE); cleaning and maintenance of aircraft, GSE, and motor vehicles; deicing and anti-icing of aircraft and airfields; fueling and fuel storage of aircraft and vehicles; airport facility operations and maintenance; and construction. The environmental impacts of these activities may intensify if an airport is undergoing expansion. In some cases, before a state or local agency will allow an airport to move forward with an expansion project, the airport authority must agree to implement certain environmental mitigation projects. Community concern regarding environmental impacts has caused projects to be delayed or cancelled. All airports, regardless of size or location, are regulated to some degree under local, state, tribal, or federal environmental requirements. Many of the environmental regulatory requirements applicable to noise, water, and air quality have been in effect for years—airport managers are accustomed to their compliance requirements. However, the anticipated growth in air travel has heightened the significance and complexity of some environmental regulatory issues. Also, several new requirements are expected to result in potentially significant changes to airport operations (in terms of procedural changes and potential investment in infrastructure). The most significant issues include continuing community concern about noise, changes to Environmental Protection Agency (EPA) regulations applicable to aircraft and airfield deicing operations, changes to EPA regulations applicable to oil spill prevention planning, and state and local agency directives to monitor and control air pollution, particularly toxic air pollutants. Each of these issues is discussed below within the context of requirements applicable to noise, water quality, and air quality issues. Primarily, the issues discussed in this report involve activities that are unique to airport operations (e.g., deicing and aircraft noise). Environmental compliance requirements commonly applicable to all industrial operations (e.g., waste management, pesticide use, chemical use reporting) are not discussed in this report. Noise Issues Aviation noise may have a negative impact on the quality of life and property values of members of a surrounding community. (Direct health impacts of noise are more difficult to determine.) Although the percentage of people affected by aircraft noise has been significantly reduced during the past 35 years by advancements in aircraft technology and noise abatement efforts, aircraft noise is often the principal focus for community groups and larger non-governmental organizations that oppose runway expansion. Despite improvements, noise continues to be a significant problem because the amount of air traffic is growing, the number of airliners and corporate jets is increasing, and airline traffic and noise is concentrated at a small number of airports that are also likely to be among the largest airports. An airport may use various approaches to address airport noise issues. Selected approaches, and challenges to implementing them, are summarized in Table 1 . Each approach is potentially eligible for federal funding. Ultimately, decisions regarding mitigation measures and operational changes are made by the airport authority in accordance with requirements of the state or local government; land use restrictions can be suggested by the airport authority, but are implemented entirely at the discretion of local government. The federal role is primarily to fund those efforts, establish aircraft noise limits, and fund research. Interested stakeholders have debated for a long time how funding dollars should be allocated. Airports are likely to prefer funding short-term operational and mitigation strategies to address immediate needs. Others argue that an increased proportion of federal funding should be directed toward research. For example, according to the NAS, the National Aeronautical and Space Administration (NASA) has set technically feasible noise reduction goals, but the level of funding for its research programs is too low to achieve the current goals on schedule or to remove noise as an impediment to the growth of aviation. For more information on airport noise requirements, see the "Mitigating Aircraft Noise Through Policy and Technology" section of CRS Report RL33698, Reauthorization of the Federal Aviation Administration: Background and Issues for Congress , by [author name scrubbed] et al., and CRS Report RS20531, Noise Abatement and Control: The Federal Role , by [author name scrubbed]. Water Quality Issues Airport operations include many activities likely to result in the discharge of pollutants to adjacent water bodies. Those activities include aircraft and airfield deicing and anti-icing, fuel storage and refueling, aircraft and vehicle cleaning and maintenance, and construction. These activities are regulated under provisions of the Clean Water Act (CWA). The CWA prohibits any "point source" (a discrete conveyance such as a drainage ditch, pipe, or other outfall) from discharging pollutants into waters of the United States. The primary mechanism for controlling pollutant discharges is through the administration of the National Pollutant Discharge Elimination System (NPDES) permit program, which is implemented, in most cases, by individual states. The NPDES permit program regulates discharges of stormwater and wastewater. Due to the nature of their outdoor operations and because airports are included in one of the industrial categories regulated under the NPDES stormwater permitting program (under the Standard Industrial Classification code "Transportation by Air"), all airports are required to have a stormwater permit. Airports that discharge other wastewater, such as from equipment maintenance and cleaning operations, require an additional NPDES wastewater permit. Discharges associated with stormwater often pose the greatest challenge to airport managers, because airports may be spread out over a wide surface area, with a majority of operations exposed to the elements. For example, the Dallas Forth Worth International Airport encompasses 18,000 square acres and has 62 stormwater outfalls. Controlling or monitoring every outfall is difficult. The primary method for controlling stormwater discharges is the implementation of best management practices (BMPs) that prevent or minimize the discharge of pollutants into a water body (e.g., construction of a stormwater retention pond to prevent stormwater drainage directly into receiving waters). BMPs appropriate for one airport are not necessarily appropriate for another. Factors that may affect permit requirements (i.e., appropriate BMPs), include the local climate (dry versus rainy/wet, cold versus warm); the type or size of adjacent water bodies—pollutants are diluted depending on the size of the water body receiving the discharge (e.g., a creek or stream versus a river or ocean); the water quality of adjacent water bodies—local permitting authorities consider existing pollutant levels when controlling airport discharges; and airport size. To comply with the Clean Water Act, most airport operators are particularly concerned about managing deicing chemicals and preventing oil spills. Deicing and Anti-icing Activities With regard to water quality compliance issues, the management of deicing and anti-icing chemicals poses the greatest challenge to many airport operators. The deicing and anti-icing of aircraft and airfield surfaces is required by the FAA to ensure the safety of passengers. However, when performed without discharge controls in place, airport deicing operations can result in environmental impacts. Discharges from deicing operations have the potential to cause fish kills, algae blooms, and contamination to surface or ground waters. In addition to potential aquatic life and human health impacts from the toxicity of deicing and anti-icing chemicals, the biodegradation of propylene glycol or ethylene glycol (i.e., the base chemical of deicing fluid) in surface waters (e.g., lakes, rivers) can greatly affect water quality, including significant reduction in dissolved oxygen levels. Studies have also shown toxicological effects of deicer solutions that cannot be attributed to either propylene glycol or ethylene glycol. This has led to concern that these effects are attributable to unknown, proprietary additives. The environmental route and impact of these additives is not yet understood. Typically, airlines are responsible for aircraft deicing and anti-icing operations, and airports are responsible for the deicing and anti-icing of airfield pavement. The airport is ultimately responsible for managing the resulting wastewater. This responsibility is typically outlined in the airport's stormwater permit. As discussed above, significant differences exist among airport NPDES permits. For example, a local permitting authority may impose specific requirements, such as restrictions as to where deicing operations may occur, a requirement to use deicing collection units to vacuum deicing fluid prior to entering the storm water system, or requirements to use monitoring equipment to ensure compliance with the permit. Other permits may simply allow the airport to discharge deicing fluids directly into an adjacent water body. According to the EPA, the disparity in airport permitting requirements has led the agency to consider implementing national standards in the form of effluent limitation guidelines (ELGs) for airport deicing and anti-icing operations. ELGs are national regulations for controlling wastewater discharges to surface waters. ELGs are technology-based and specific to an industry. ELGs applicable to airport deicing would be designed to provide uniform guidance for NPDES permit writers across the country, thereby establishing a baseline standard for all airports. In 2004, the EPA began to develop ELGs for airport deicing operations. Initial estimates from the EPA indicate that treatment technology and pollution prevention practices could potentially reduce deicing discharges from the current level of 21 million gallons a year to 4 million gallons a year. As stated previously, many airports have strict permit provisions that specify the management of deicing chemicals. Others have few controls. Those with few controls may be required to make capital improvements to comply with new permitting requirements. At this stage, cost estimates for the aviation industry as a whole are not available. The EPA is currently collecting survey data from airports and air carriers and conducting detailed sampling programs. The current work will be used to identify the best available technology that is economically achievable for treatment and discharge of spent deicing liquids. The EPA currently plans to publish a proposed rule in December 2007 and to take final action by September 2009. Fuel Storage Because airports need to store fuel onsite to refuel aircraft and airport ground service equipment, most airports are required to develop a Spill Prevention, Control, and Countermeasure (SPCC) plan. These requirements are designed to ensure that facilities that store oil have planned for and taken measures to prevent environmental damage resulting from oil spills. An SPCC plan is required to include operating procedures intended to prevent oil spills, such as procedures to inspect tanks and associated piping for leaks; control measures installed to prevent a spill from reaching navigable waters, such as the construction of a dike, containment curb, or pit around a tank or tank farm; and countermeasures to contain, clean up, and mitigate the effects of an oil spill that reaches navigable waters, such as the presence of a spill clean-up kit with sorbent booms or wipes. As listed above, one of the primary control measures required under the SPCC requirements is the use of a secondary containment system for oil storage containers. Such a system must be large enough to temporarily hold the entire contents of the largest oil tank in the oil storage area, in the event of a breach in the system. For example, if a tank farm had four 12,000-gallon tanks and two 5,000-gallon tanks, and was the storage location for 10 mobile refueling trucks with 500-gallon tanks, the tank farm would be required to have secondary containment sufficient to hold the contents of the largest tank—12,000 gallons. When the EPA proposed new SPCC requirements in 2002, airport operators and the EPA disagreed about the secondary containment requirements applicable to mobile airport refueling trucks. In particular, airport operators argued that it was impractical to require mobile refuelers to provide secondary containment equal to the size of the tank because, during refueling operations, they would be expected to move to various areas of the airfield that could not be fitted with secondary containment systems. To address these concerns, the EPA amended the SPCC Rule to exempt mobile refuelers from specifically sized containment requirements. However, mobile refuelers remained subject to the general secondary containment requirements of the SPCC Rule (e.g., periodic testing of the container and piping). The EPA has extended the compliance date applicable to mobile refuelers (and for other new SPCC requirements) to October 31, 2009. This pending regulation may require airport operators to install necessary secondary containment mechanisms to comply with the regulation, in addition to meeting other SPCC requirements applicable to that facility. Air Quality Issues Airport emissions affecting local air quality come from both mobile and stationary sources, including the following: Aircraft. Motor vehicles (e.g., cars and buses for airport operations, and passenger, employee, and rental agency vehicles). Ground service equipment (GSE) (e.g., aircraft tugs, baggage and belt loaders, generators, lawn mowers, snow plows, loaders, tractors, air-conditioning units, and cargo moving equipment). Stationary sources (e.g., boilers, space heaters, emergency generators, incinerators, fire training facilities, aircraft engine testing facilities, painting operations, and solvent degreasers). Airport operations may produce various regulated pollutants, including volatile organic compounds (VOCs), carbon monoxide (CO), particulate matter (PM), lead, sulphur oxides (SOx), and nitrogen oxides (NOx), known collectively as "criteria" pollutants. They also may produce a complex array of toxic or hazardous air pollutants (HAPs). Emissions of Criteria Pollutants The Clean Air Act (CAA) directs the EPA to regulate emissions of air pollutants. Under the CAA, the EPA is authorized to establish emission standards, based on certain health and environmental criteria, for NOx (the primary pollutant associated with aircraft emissions), ozone, CO, SOx, lead, and particulates. The National Ambient Air Quality Standards (NAAQS), subsequently established by the EPA, specify allowable concentrations and exposure limits for each of these criteria pollutants. A geographic area that meets the standard is considered to be in "attainment" for a particular NAAQS; areas that do not meet a standard are in "nonattainment." A "maintenance" area is one that was previously in nonattainment but is currently attaining the NAAQS subject to a maintenance plan. The CAA requires states to develop a State Implementation Plan (SIP) to demonstrate how they will implement, maintain, and enforce the NAAQS. According to the Government Accountability Office (GAO), the aviation industry as a whole makes a limited contribution to all criteria pollutant emissions nationwide. However, individual airports (particularly large airports in urban areas) may contribute significantly to local criteria pollutant levels. If an airport is located in a nonattainment or maintenance area, it may be required to change its infrastructure or operations to conform with provisions of the SIP, particularly if the airport is undergoing an expansion that requires approval from a state or local agency. Because aircraft emissions are a significant source of emissions at an airport, and largely outside the control of the airport, emission reductions will likely have to be made in operations or processes that the airport does control. For example, the airport ground vehicles may be changed to alternative fuel vehicles, some GSE may be converted to electrified systems, or older boilers and chillers may be replaced with more energy-efficient systems. Vision 100 included several provisions intended to reduce airport ground emissions at commercial service airports located in air quality nonattainment and maintenance areas. The FAA is implementing the Vision 100 airport emission provisions in a single program called the Voluntary Airport Low Emission program (VALE). The VALE program allows airport sponsors to use Airport Improvement Program (AIP) and the Passenger Facility Charges (PFCs) to finance low-emission vehicles, refueling and recharging stations, gate electrification, and other air quality improvements. Participation in the VALE program is voluntary for airport sponsors and state air quality agencies. Emissions of Toxic Air Pollutants Increasingly, airports and the FAA are asked by various agencies and communities surrounding airports to analyze the health impacts of aircraft and other airport-related sources of air toxics, also known as hazardous air pollutants (HAPs). This information is needed primarily when conducting an environmental review pursuant to National Environmental Policy Act (NEPA; see discussion below) and at the request of local or state agencies. Ten HAPs comprise the majority reported to occur in aircraft and/or GSE exhaust: lead (also a criteria pollutant), formaldehyde, 1,3-butadiene, acetaldehyde, xylene, benzene, toluene, naphthalene, acrolein, and propionaldehyde. Unlike information on criteria air pollutants, information on emission levels, transformation, and transport of aircraft and other airport-related HAPs and their health impacts is not currently well-developed. Environmental Reviews Under NEPA If an airport project receives federal funding or requires some federal decision (e.g., permit or approval), an environmental review of that project is required before it can move forward. The term "environmental review" is used broadly, but usually refers to the requirement that a federal agency review or consider the environmental impacts of its actions pursuant to the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. § 4321 et seq). A review under NEPA results in one of the following: Preparation of an environmental assessment (EA) if the significance of environmental impacts is uncertain , followed by the issuance of a Finding of No Significant Impact (FONSI) if the impacts are not found to be significant. Preparation of an Environmental Impact Statement (EIS) if it is certain that a project's environmental impacts are significant . A determination that a project is categorically excluded from the requirement to prepare an EIS or an EA, if it has no significant environmental impact. As the proponent of the airport project or improvement, the airport authority is responsible for identifying all environmental issues that must be addressed in the NEPA documentation. Part of that effort includes analyzing all reasonable alternatives that would meet a project's purpose and need. For projects requiring an EIS, the FAA documents the final project decision by issuing a public Record of Decision (ROD). In addition to documenting the final decision, the ROD documents any mitigation efforts that the airport operator is required to implement as a condition for moving the project forward. The mitigation actions may be stipulated be provisions of local, state, tribal or federal requirements. Although the ROD may specify mitigation measures, mitigation is not required under NEPA . NEPA specifies a process that the agency must complete to analyze a project's environmental impacts, but it does not dictate the outcome. That is, NEPA does not require an airport to chose the project alternative with the least environmental impacts. However, within the context of the NEPA process, the environmental review may identify environmental compliance requirements that would dictate a certain outcome (e.g., it may identify Clean Water Act requirements that specify that the least environmentally harmful alternative be selected). Further, the ROD may specify mitigation measures that an airport authority agreed to implement as a condition of gaining local agency or community acceptance of a project—not necessarily a measure required by local, state, tribal, or federal law. To streamline the NEPA process, Vision 100 directed the FAA to develop an "expedited, coordinated environmental review process" applicable to the aviation project review process for airport capacity enhancement projects at congested airports, aviation safety projects, and aviation security projects. The coordinated process provides that any environmental review, analysis, opinion, permit, license, or approval issued or made by a federal agency or airport sponsor for such a project must be completed within a time period established by the Secretary of Transportation, in cooperation with the agencies that participate in the process. The coordinated process may be delineated in a memorandum of understanding between the Secretary and the heads of other federal and state agencies who participate in the process. Further, the act authorizes the FAA to define the scope and content of a project's EIS and requires all participating agencies to be bound by the purpose and need and project alternatives analysis determined by the Secretary of Transportation. On April 28, 2006, FAA issued Order 5050.4B, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Actions . The order delineates the agency's new NEPA policies and procedures, including the streamlining requirements specified in Vision 100. Environmental Provisions in FAA Funding Proposals To address issues associated with air quality, water quality, and community noise impacts, and to assist airport operators with complying with local, state, and federal requirements related to those impacts, the FAA proposal and the bills under consideration in the Senate ( S. 1300 ) and passed in the House ( H.R. 2881 ) include similar proposals that would provide funding for research into technology or processes that would reduce noise, air emissions, water quality impacts, and energy use; provide grants for programs or projects intended to mitigate or minimize regulated environmental impacts; and provide grants or specify regulatory procedures to assist airports in complying with environmental requirements. S. 1300 and H.R. 2881 also include provisions that would establish certain requirements to reduce noise. H.R. 2881 includes two unique provisions. The first (§ 509) would require FAA, to the maximum extent possible, implement "sustainable practices" in the construction and major renovation of air traffic control facilities in order to reduce energy use and improve environmental performance at those facilities. Finally, each proposal includes provisions seeking to modify the Air Tour Management Program, a program designed to regulate commercial air tours over national park units primarily in an effort to mitigate noise and other adverse impacts. These provisions seek to narrow the scope of this program to park service units where noise or other adverse impacts from air tours have been identified or could become a more substantial issue. The second (§ 512) specifies the sense of the Congress with respect to the European Union (EU) directive extending the EU's emission trading proposal to international civil aviation. The bill specifies that, by not working through the International Civil Aviation Organization in a consensus-based fashion, the EU directive is inconsistent with the Convention on International Civil Aviation, and that it is antithetical to building international cooperation to address greenhouse gas emissions from aircraft. Research Funding FAA Proposal Section 601 would permanently authorize the Airport Cooperative Research Program (ACRP). Under § 601, the FAA proposes to increase funding from $10 million to $15 million for FY2008-FY2010 (specified under § 102). Five million dollars per year of the ACRP funds would be set aside for research activities related to the airport environment, including reductions in noise and air emissions and addressing water quality issues. The FAA proposal would also create a consortium to research aircraft technologies that would produce lower energy, air emissions, and noise. The FAA proposal (§ 606, "Research Consortium for Lower Energy , Emissions, and Noise Technology Partnership") would create the consortium by requiring FAA to work with the existing Partnership for Air Transportation Noise and Emissions Reduction (PARTNER) to develop Continuous Low Energy, Emissions and Noise (CLEEN) engine and airframe technology. The proposal would establish the following performance objectives for the consortium: a 25% increase in aircraft fuel efficiency, compared to 1997 subsonic jet aircraft technology; a 50% reduction in nitrogen oxide emissions associated with aircraft landings and takeoffs, relative to the International Civil Aviation Organization standard adopted in 2004; a 10 decibel (dB) reduction, compared to 1997 subsonic jet aircraft technology; a feasability determination regarding the use of alternative fuels in aircraft systems; and a determination regarding the ability to retrofit or re-engine aircraft to use new engine technologies. Under the FAA proposal, funding would be authorized under the Next Generation Air Transportation System program at "sums as necessary to carry out [the program]." Senate Proposal Provisions regarding the ACRP (§ 601) are essentially identical to the FAA proposal, except that S. 1300 would also include $15 million in funding for FY2011 (§ 601(b)). The bill also includes a proposal similar to FAA's that would create a research consortium (§ 602, "Reduction of Noise, Emissions, and Energy Consumption from Civilian Aircraft"). Funding for the research consortium would be made available from the Airport and Airway Trust Fund Authorizations for research and development. The bill directs the Administrator to designate an institution as a "Consortium for Aviation Noise, Emissions, and Energy Technology Research" to conduct research with NASA and other relevant industries. The performance objectives the consortium is directed to accomplish are the same as those in the FAA proposal. Unique to S. 1300 is a provision regarding clean coal fuel technology. Section 603 would require the Department of Transportation to establish a research grant program to develop synthetic jet fuel from clean coal. (However, the bill does not provide a definition of "clean coal.") Funds would be authorized from the Airport and Airway Trust Fund. Section 603 would also require the FAA Administrator to designate an institution as a "Center of Excellence for Coal-to-Jet Research." House Proposal Under § 104 ("Research, Engineering, and Development"), H.R. 2881 would amend the Airport and Airway Trust Fund Authorizations for research and development for FY2008 through FY2011 by authorizing a total of approximately $125 million for "environment and energy" projects and $20 million for ACRP "environment" projects (as in the Senate and FAA proposals, H.R. 2881 would permanently authorize the ACRP (§ 907)). H.R. 2881 includes a provision (§ 505, "CLEEN Research, Development, and Implementation Partnership") that is similar to the FAA proposal that would create a consortium to develop Continuous Low Energy, Emissions, and Noise (CLEEN) engine and airframe technology. H.R. 2881 does not specify that the FAA must work with PARTNER to achieve the established performance goals. However, the goals are the same as those specified in the FAA proposal and S. 1300 . H.R. 2881 specifies that from FY2008 through FY2011, not more than $111 million may be appropriated from the Airport and Airway Trust Fund Authorizations for this program. H.R. 2881 also specifies certain environmental-related responsibilities of the Next Generation Air Transportation System Joint Planning and Development Office. Included is a directive to establish specific quantitative goals for, among other factors, the environmental impacts of each phase of Next Generation Air Transportation System. Those goals are required to take into account noise pollution reduction concerns of affected communities to the greatest extent practicable in establishing the environmental goals (§ 202). Under Title IX, "Federal Aviation Research and Development," H.R. 2881 includes the following additional environmentally related research and development requirements (except where noted, the bill does not specifically authorize funds for this research): Interagency research initiative on the impact of aviation on the climate (§ 903)— directs the FAA Administrator, in coordination with NASA and the U.S. Global Climate Change Science Program, to establish a research initiative to assess the impact of aviation on climate and to evaluate approaches to mitigate that impact. Research program on space weather and aviation (§ 910) —would require the FAA Administrator, in coordination with the National Science Foundation (NSF), NASA, and National Oceanic and Atmospheric Administration (NOAA), to initiate a research program on the impacts of space weather to aviation. To conduct this research, the Administrator may use grants or cooperative agreements. Further, the bill would authorize $1 million to be appropriated for each of FY2008 through FY2011. Aviation gas research and development program (§ 911) —would require the FAA to study technologies that would allow the use of unleaded gasoline in piston-engine aircraft (currently, piston-engine aircraft—mostly general aviation aircraft—use leaded gasoline). The bill would authorize $750,000 to be appropriated for each of FY2008 through FY2010. Research reviews and assessments (§ 912) —would require FAA to contract with the National Research Council (NRC) to assess the adequacy of FAA's energy- and environment-related research programs, and the impact of space weather on aviation. Research program on alternative jet fuel technology for civil aircraft (§ 914) —this section is similar to the proposal in S. 1300 (§ 603) that would support coal research, except that the House proposal would also require research into the development of alternative fuels from additional sources, including natural gas, biomass, ethanol, butanol, and hydrogen. Funds for the program would be authorized from the Airport and Airway Trust Fund. Mitigation Grants FAA Proposal Section 604 would provide grants for up to six environmental mitigation demonstration pilot projects. Eligible projects would include those that would reduce or mitigate aviation impacts on noise, air quality, or water quality in the vicinity of the airport. The federal share of the projects would be 50% of the project costs, up to $2.5 million, and would be apportioned under the AIP. Senate Proposal Section 215 of S. 1300 includes provisions that are essentially identical to the FAA proposal providing grants for environmental mitigation pilot programs. House Proposal Section 507 of H.R. 2881 includes provisions that are essentially identical to the FAA proposal and those in S. 1300 providing grants for environmental mitigation pilot programs. Grants and Procedural Changes to Assist with Environmental Compliance The FAA proposal and provisions in S. 1300 include almost identical proposals that would amend the state block program, address methods of implementing and/or expediting requirements of the National Environmental Protection Act (NEPA), and amend certain noise compatibility program requirements. FAA Proposal Section 602 would amend the state block grant program by specifying that federal environmental requirements would apply to the program. Both proposals also specify that any federal agency that must grant any approval (i.e., permit or license) to a state must consult with that state during the approval process. Further, the federal agency would be required to use any state-prepared environmental analysis associated with that approval. Sections 603 and 605 address methods of implementing and/or expediting requirements of the National Environmental Protection Act (NEPA) and airport noise compatibility planning requirements (Title 14 Code of Federal Regulations (CFR), Part 150, commonly referred to as Part 150 requirements). Section 603 would amend current requirements that allow FAA to accept funds from an airport sponsor to hire additional staff or obtain the services of consultants to expedite the processing, review, and completion of environmental activities associated with an airport development project. The proposal would allow FAA to accept funds to hire additional staff to: conduct "special environmental studies" related to a federally funded airport project; conduct studies or reviews to support noise compatibility measures approved under the Part 150 requirements; or implement environmental mitigation efforts specified in a project's final decision and delineated at the completion of the NEPA process. Section 605 would amend the existing noise compatibility program requirements to allow grants to airport operators to assist them with meeting environmental review requirements applicable to proposals to implement flight procedures. Further, the proposal would allow a project sponsor to provide FAA with funds to hire additional staff as necessary to expedite completion of the environmental review necessary to implement flight procedures. Senate Proposal Section 210 of S. 1300 is essentially identical to § 602 of FAA's proposal regarding the state block grant program. Unique to S. 1300 is a provision that would establish a pilot program for up to three states that do not already participate in the block grant program. Sections 211 and 212 of S. 1300 are essentially identical to §§ 603 and 605 of FAA's proposal regarding methods of implementing and/or expediting requirements of NEPA. House Proposal Section 502 of H.R. 2881 is essentially identical to the FAA proposal and S. 1300 (except for pilot program proposal in S. 1300 ) regarding the state block grant program. Sections 503 and 504 of H.R. 2881 are similar to the FAA proposal and S. 1300 provisions regarding methods of implementing and/or expediting NEPA requirements. Unique to H.R. 2881 is a requirement to fund an "aircraft departure queue management pilot program" (§ 508) at five public-use airports. The programs would be required to develop and test new air traffic flow management technologies to better manage the flow of aircraft on the ground and reduce ground holds and idling times for aircraft to decrease emissions and increase fuel savings. Also unique to H.R. 2881 is a directive to review the current regulatory responsibilities of FAA and EPA with regard to establishing engine noise and emission standards (§ 510). The review would be required to consider, among other factors, the degree to which those standards could be evaluated and addressed in an integrated manner. Requirements to Address Noise Issues In 1990, Congress mandated a phase out of non-Stage 3 aircraft over 75,000 pounds by December 31, 1999. This has allowed Stage 1 and Stage 2 aircraft under 75,000 pounds, primarily corporate and private-use aircraft, to continue to operate. In 2006, such aircraft represented a relatively small number of all operational turbojet aircraft under 75,000 pounds (approximately 1,330 or 13%). However, at some airports, particularly smaller commercial and general aviation airports, their use makes a disproportionate contribution to noise exposure contours. For example, the Massachusetts Port Authority (Massport) reported that at the L.G. Hanscom Field in Bedford, MA, non-Stage 3 aircraft accounted for less than 1% of the airport's annual traffic in 2005, yet were responsible for 23% of the noise energy produced by civil aircraft. Also, some airport operators have reported that between 50% and 80% of noise complaints lodged with the airport have been related to non-Stage 3 aircraft. As a result, several airports have sought to ban or restrict access to such aircraft. Those efforts have generally been prohibited by FAA. Senate Proposal Section 711 of S. 1300 would address this issue by prohibiting the operation of aircraft under 75,000 pounds, with certain exceptions, unless it complies with Stage 3 noise levels. The prohibition would take effect five years after the bill's enactment. Section 714 of the bill proposes the creation of an exploratory program for the redevelopment of property purchased with noise mitigation funds or passenger facility charge funds, to encourage airport-compatible land uses. The trial program would involve up to four airport operators that have submitted a noise compatibility program to FAA. Provisions in this section would also amend the list of allowable noise compatibility measures to include land use planning that will prevent the introduction of additional incompatible land uses. Section 214 of the bill would expand passenger facility fee eligibility for noise compatibility projects at Los Angeles International Airport (LAX). The section specifies that the funds may be used for a project for the Lennox School District, adjacent to LAX, pursuant to a settlement agreement reached between the airport and the school district in February 2005. House Proposal Like the Senate bill (§ 711), § 506 of H.R. 2881 would prohibit the operation of aircraft under 75,000 pounds, unless it complies with Stage 3 noise levels. The prohibition would take effect, with generally the same exceptions specified in S. 1300 , after January 1, 2013. Also, § 513 of H.R. 2881 specifies the sense of the House that the Port Authority of New York and New Jersey should undertake an airport noise compatibility planning study —with particular attention given to the impact of noise on affected neighborhoods, including homes, businesses, and places of worship surrounding LaGuardia Airport and JFK Airport. For Additional Information Federal Aviation Administration, Workshop on the Impacts of Aviation on Climate: A Report of Findings and Recommendations , August 2006, at http://www.faa.gov/ regulations_policies/ policy_guidance/ envir_policy/ . General Accounting Office (now the Government Accountability Office), Aviation and the Environment: Airport Operations and Future Growth Present Environmental Challenges , GAO/RCED-00-153, August 2000. General Accounting Office, Report to the Subcommittee on Aviation, House Committee on Transportation and Infrastructure, Aviation Infrastructure: Challenges Related to Building Runways and Actions to Address Them , GAO-03-164, January 2003. Minnesota Pollution Control Agency, "Minneapolis/St. Paul International Airport Environmental Activities and the MPCA," at http://www.pca.state.mn.us/ hot/ airport.html . (For general information about the environmental compliance process at a specific airport.) National Academy of Sciences, National Research Council, Committee on Aeronautics Research and Technology for Environmental Compatibility, For Greener Skies: Reducing Environmental Impacts of Aviation , 2002, at http://books.nap.edu/ openbook.php? record_id= 1 0353&page=R1. Partnership for Air Transportation Noise and Emissions Reduction (PARTNER), Massachusetts Institute of Technology, Report to the United States Congress, Aviation and the Environment: A National Vision Statement, Framework for Goals and Recommended Actions , December 2004, at http://web.mit.edu/ aeroastro/ partner/ reports/ congrept_aviation_envirn.pdf . Transportation Research Board, "Special Report 272—Airport Research Needs: Cooperative Solutions," 2003, http://www.trb.org/ news/ blurb_detail.asp? ID= 1266 . CRS Report RL33891, Airport Improvement Program: Issues for Congress , by [author name scrubbed]. CRS Report RL32707, Avoiding Gridlock in the Skies: Issues and Options for Addressing Growth in Air Traffic , by [author name scrubbed] (pdf). CRS Report RL33920, Federal Aviation Administration Reauthorization: An Overview of Selected Provisions in Proposed Legislation , by [author name scrubbed] et al.

Funding authorization for Federal Aviation Administration (FAA) programs set forth in the Vision 100—Century of Aviation Reauthorization Act (P.L. 108-176, hereinafter referred to as "Vision 100") expired at the end of FY2007. During the current reauthorization process, methods to address the environmental impacts associated with airport operations and expansion are being debated. This issue is important to various stakeholders, particularly those whose health, property values, and quality of life may be affected by such impacts. The concerns of community members and local, state, and tribal agencies regarding environmental impacts have led to the delay and cancellation of some airport expansion projects. To address these concerns, airports may be required to implement projects that would minimize the environmental impacts of their operations. Some of these projects qualify for federal funding. For example, in its FY2008 budget, the FAA requested $354 million to meet its "Environmental Stewardship" goals. Projects funded under this category address the environmental impacts of airports, primarily to abate airport noise (e.g., soundproofing homes or purchasing noise barriers). Among other uses, funds may be spent on projects to minimize water quality impacts (e.g., funding projects that would control the discharge of deicing chemicals) and to reduce airport-controllable air emissions (e.g., purchasing alternative fuel vehicles to replace the airport's ground services equipment). Funds also are authorized for researching new aircraft technology that would reduce noise and air emissions. The anticipated growth in air travel has heightened the significance and complexity of some environmental regulatory issues. Also, several new requirements are expected to affect airport operations (in terms of procedural changes and potential investment in infrastructure). The most significant issues include changes to Environmental Protection Agency (EPA) standards applicable to deicing operations and oil spill prevention procedures, as well as state and local agency directives to monitor and control air pollution, particularly toxic air pollutants. The FAA has proposed legislation to reauthorize FAA funding (H.R. 1356 and S. 1076, the Next Generation Air Transportation System Financing Reform Act of 2007, introduced by request). On May 3, 2007, the Senate reported its own bill (S. 1300, the Aviation Investment and Modernization Act of 2007). On September 20, 2007, the House passed its version (H.R. 2881, the FAA Reauthorization Act of 2007). The bills include provisions that would fund environment-related research; fund grant programs to mitigate environmental impacts; fund grant programs to help airports with environmental regulatory compliance; and amend existing noise requirements. To better understand the need for funding for environment-related airport projects, this report provides an overview of noise, water quality, and air quality issues associated with airport operations. Also discussed are the environmental review requirements of the National Environmental Policy Act of 1969 (NEPA) and the environmental provisions in proposed legislation to reauthorize FAA programs.

Introduction Federal policy makers have a long-standing interest in science, technology, engineering, and mathematics (STEM) education. This interest is largely driven by concerns about the national science and engineering workforce, which is widely believed to play a central role in U.S. global economic competitiveness and national security. The U.S. STEM education system is a primary source of scientists and engineers in the United States. Approximately 6% of the U.S. workforce was employed in a STEM field in 2011. About 70% of those workers had at least a bachelor's degree. Further, of college graduates who were employed in a STEM field, 73% had a science or engineering major. Given the oft-cited connection between STEM education and key national priorities, federal policy makers have historically paid close attention to the U.S. STEM education system. The federal STEM education effort is wide-ranging. Analysts have identified between 105 and 252 STEM education programs and activities at 13 to 15 federal agencies. Annual federal appropriations for STEM education are typically in the range of $2.8 billion to $3.4 billion. Published inventories of the federal STEM education effort identify the Department of Education (ED), National Science Foundation (NSF), and Department of Health and Human Services (HHS) as key agencies in the federal effort. Of these, the NSF has the most STEM education funding and largest number of programs (typically). The foundation is also the only federal agency whose primary mission includes supporting education across all fields of science and engineering. As such, the NSF is a key component of the federal STEM education portfolio. Funding for STEM education decreased as a percentage of the total NSF budget between FY2003 and FY2012. Further, funding levels for the foundation's main education account were lower than the previous year in both FY2011 and FY2012. FY2013 current plan funding for the main education account appears to be close to FY2012 levels. The significance of these funding trends for NSF's education and research missions, as well as for the federal STEM education effort overall, depends in part on how these changes fit within historical funding trends at the NSF. This report analyzes those trends—and addresses selected STEM education policy issues—in order to place the conversation about federal funding for STEM education at NSF in broader fiscal and policy context. Methodology, Sources, Data, and Notes This report examines actual funding for the NSF from FY2003 to FY2012 in current and constant (2005) dollars. Congress provides appropriations in current dollars, so current dollar funding data align with annual appropriations measures and congressional actions, while constant dollar data adjust for the effects of inflation and provide insight into purchasing power. This report also analyzes the distribution of total NSF funding by appropriations account and by character class. The character class analysis adjusts for programs that draw from more than one appropriations account but serve the same program or activity. Over time, changes in the distribution of funding may reflect changing policy priorities. Several other introductory points should be noted. This report uses the following terms for the major appropriations accounts at NSF: "R&RA" or "main research account" for Research and Related Activities, "E&HR" or "main education account" for Education and Human Resources, "MREFC" or "main construction account" for Major Research Equipment and Facilities Construction, "AOAM" for Agency Operations and Awards Management, "NSB" for National Science Board, and "OIG" for Office of the Inspector General. This report uses the following terms for major activities: "R&D" or "research activities" for research and development-related activities, "E&T" or "education activities" for education and training-related activities, and "NIA" for non-investment activities. Non-investment activities are primarily administrative activities (e.g., travel and compensation costs for proposal review panelists). The analysis in this report is based on budgetary data from the NSF's annual budget requests to Congress from FY2005 to FY2014 and from information provided to CRS by NSF. Appropriations account data come from the "Overview" sections of the NSF budget requests; funding data by character class come from the "Quantitative Data Table" sections. CRS adjusted the appropriations account data for FY2003 to FY2005 to reflect the transfer of the Experimental Program to Stimulate Competitive Research (EPSCoR) between major accounts. This analysis treats EPSCoR as a research account program for all years in the data set. NSF adopted its current appropriations account structure in 2003. FY2003-FY2012 are the most recent years for which actual funding data are available and comparable. NSF programs are often co-funded (e.g., funded by two or more appropriations accounts). Budgetary data that are broken down by character class adjust for co-funding and provide insight into what NSF actually spends on a given activity. Funding levels for FY2009 and FY2010 do not include funding from the American Recovery and Reinvestment Act (AR&RA, P.L. 111-5 ) because NSF treated these funds as supplemental in its budget calculations. To generate constant dollar (e.g., inflation-adjusted) data in FY2005 dollars CRS used the Office of Management and Budget (OMB) deflator published in Table 10.1 of the OMB's Historical Tables and accessed on December 23, 2013. Data used in this report may be found in Appendix A and Appendix B . Historical Funding Trends at NSF By Character Class The NSF's budget can be broken down by character class. According to the NSF, its two primary activities are research and development (R&D) and education and training (E&T). The NSF also has a category for what it calls "non-investment activities," or NIA, which pays for items such as proposal review panel travel and compensation costs, invitational travel, and other administrative activities. Unlike appropriations accounts, which show how Congress provides funding to the foundation, the character class perspective adjusts for co-funding (i.e., when programs are supported by more than one appropriations account) and provides insight into total funding for the foundation's two primary missions (e.g., research and STEM education). Figure 1 shows how NSF current dollar funding for E&T and R&D activities changed between FY2003 and FY2012. (See Appendix A for data.) The total current dollar increase in NSF funding between FY2003 and FY2012 was $1.735 billion, or 32% more than the FY2003 baseline of $5.369 billion. During this period, current dollar funding for R&D increased by $1.762 billion while current dollar funding for E&T decreased by $95 million. Funding for R&D increased more or less steadily, while funding for E&T fluctuated. E&T funding levels ranged from a high of $941 million in FY2004 to a low of $783 million in FY2006. The median funding level for E&T during the observed period was $840 million. FY2012 funding for E&T was below the FY2003 level. When expressed in constant (2005) dollars, funding for R&D experienced a relatively flat period from FY2005 through FY2008. (See Figure 2 .) The sharp increase in constant dollar R&D funding between FY2009 and FY2010 coincides with the second year of funding under the America COMPETES Act ( P.L. 110-69 ). R&D funding levels have stayed about the same since then. Constant dollar funding for E&T generally trended downward between FY2003 and FY2012—ranging from a high of $972 million in FY2004 to a low of $696 million in FY2012. Median constant dollar funding for E&T activities during the observed period was $797 million. In constant (2005) dollars, total NSF funding increased by $447 million—from $5.684 billion to $6.131 billion—between FY2003 and FY2012. Funding for R&D increased by $748 million while funding for E&T decreased by $258 million during this same period. (See Figure 3 .) Given that funding for R&D grew in excess of the total NSF increase, and that funding for E&T experienced negative growth, at least some of the growth in funding for R&D between FY2003 and FY2012 appears to have come from E&T. The distribution of NSF funding by character class also changed between FY2003 and FY2012. As Table 1 shows, the percentage of the NSF budget dedicated to E&T activities generally decreased while the percentage dedicated to R&D activities generally increased. This is consistent with the previous finding that most of the total increase in NSF funding during the observed period went to R&D. Some of the increase in the percentage of the NSF budget dedicated to R&D may have come from NIA. (See "Note," Table 1 .) By Appropriations Account Congress provides funding to the NSF via appropriations accounts, not by character class. Analysis of appropriations account trends, therefore, aligns more closely with congressional action than analysis by character class. This section focuses on changes in congressional appropriations for the R&RA and E&HR accounts because these accounts are the primary sources of support for NSF mission activities. As with the previous analysis of character class trends, this section examines both current and constant (2005) trends in funding for these accounts. Total current dollar appropriations to NSF increased from $5.369 billion to $7.105 billion between FY2003 and FY2012. Of this $1.735 billion increase, 93.0% or $1.615 billion went to R&RA. Current dollar appropriations for E&HR decreased by $15.2 million (-1.8%) during the same period. Figure 4 shows the current dollar trends in R&RA and E&HR from FY2003 to FY2012. (See Appendix B for data.) Both R&RA and E&HR experienced current dollar reductions from the prior year in FY2005 and FY2011. However, other than in these years, R&RA funding levels increased over the prior year for each year in the observed period. E&HR funding varied. It received four year-over-year increases and five year-over-year reductions between FY2003 and FY2012. Further, reductions to the E&HR account appeared to be steeper, and took longer to return to pre-reduction levels, than did reductions to R&RA. In constant (2005) dollars, NSF funding increased by $447 million between FY2003 and FY2012. As shown in Figure 5 , constant dollar funding for R&RA increased by $583 million (13%) while constant dollar funding for E&HR decreased by $179 million (-20%). These trends suggest that most of the total constant dollar growth at the NSF—and at least some of the constant dollar value of E&HR—accrued to R&RA during the observed period. As Table 2 shows, the percentage of the NSF budget dedicated to R&RA activities has generally increased and the percentage of the budget dedicated to E&HR has generally decreased since FY2003. Policy Issues and Observations As the previous section's analysis of historical funding trends at NSF shows, Congress reduced funding for NSF's main education account in both FY2011 and FY2012. Those year-over-year reductions followed several years of fluctuating funding for E&HR. In addition, changes in the distribution of the foundation budget reduced funding for the main education account as a percentage of the total NSF budget. These changes generally appear to result from a combination of holding the main education account more or less constant while applying most of the foundation's FY2003-FY2012 budget growth to R&RA. However, in constant (2005) dollars, at least some of the growth in NSF research funding appears to come from the foundation's education-related activities. It is not clear if these funding changes reflect evolving congressional and Administration policy priorities and an intentional prioritization of research over educational activities at the NSF. They may simply reflect the cumulative impact of funding decisions made in response to specific conditions in specific fiscal years. Further, methodological and research limitations can impede the types of economic analyses that might otherwise be used to assess optimal funding levels for NSF accounts. The period of time for which comparable budgetary account data exist, for example, is limited to 10 years. It can also be difficult to definitively link federal investments in research and education writ large with social, scientific, or economic outcomes. However, historical funding trends at the NSF raise several questions for Congress as it considers funding for the foundation, as well as for the federal STEM education effort overall. These questions include What is the policy rationale behind funding for STEM education at NSF? What are NSF's STEM education activities? What is NSF's role within the federal STEM education portfolio? What impact might changes in the NSF STEM education account have on research activities at NSF? What are the policy options for Congress as it considers future NSF budgets? What Policy Rationale Drives Funding for STEM Education at NSF? One of the main reasons that advocates support increased funding for STEM education programs at NSF is because of their perceived contribution to the U.S. science and engineering (S&E) workforce. A broad consensus of business, academic, and policy leaders holds that U.S. STEM education weaknesses have or will soon contribute to national S&E workforce shortages and that this labor supply problem has or will diminish U.S. global economic competitiveness and threaten national security. Analysts who hold this view typically contend that the federal government should increase funding across, or within specific parts of, the so-called STEM education "pipeline" (pre-kindergarten to post-graduate education). These investments, advocates assert, will improve U.S. student performance in STEM subjects and increase both the quantity and quality of U.S. students graduating with degrees in STEM fields. Programs designed to improve teaching and learning in STEM fields or to attract and retain students in STEM degree programs through scholarships and financial aid are examples of this policy approach. Other observers counter that U.S. students are not underperforming in mathematics and science; that shortage claims are overstated, misunderstood, or do not call for supply side interventions; and that demand, not supply, may be the bigger policy challenge. These analysts assert that the United States graduates more science and engineering students than there are science and engineering jobs and that classic signs of labor shortages (e.g., rapidly increasing wages) are not broadly evident in the U.S. STEM labor supply. These analysts typically acknowledge that there may be reasons to seek improved student STEM performance, but they argue that the current policy debate is based on misperceptions, obscures root causes of poor performance (e.g., poverty effects in education), and results in ineffective policy responses. Analysts who hold this view suggest demand-side policies (e.g., increased funding for R&D, tax credits for privately funded research, or more and better jobs for scientists), improved labor market signaling, and addressing the root problems of low-performing students (e.g., poverty) as possible policy alternatives. A third view of the shortage issue asserts that the disagreement about the adequacy of the supply of STEM workers "can be resolved by the fact that large numbers of people with STEM talent or degrees divert from STEM occupations either in school or later in their careers." Analysts who hold this view contend that the economy increasingly values and demands STEM competencies—for example, the knowledge, skills, and abilities typically associated with education in STEM fields—even in non-STEM occupations. These analysts assert that workforce shortages become more evident if demand from both STEM and non-STEM fields is compared to the supply of STEM-educated workers. (In other words, they assert that analysts who argue that there are no shortages are missing part of the equation.) Those who hold this view typically agree that a supply response is appropriate, and recommend paying more attention to the role of personal interest in career choices, nurturing students with a personal interest in STEM "even if they do not look like traditional STEM workers," and integrating STEM competencies into a broader array of academic disciplines. What Are NSF's STEM Education Activities? Funding for STEM education at NSF serves a variety of objectives. However, a 2011 report found that 66% of NSF's STEM education budget provided for programs designed either to support postsecondary students (primarily through scholarships and other forms of financial support) or for research on teaching and learning in STEM fields. Most of the postsecondary student funding went to the Graduate Research Fellowship (GRF) and Integrative Graduate Education and Research Traineeship (IGERT) programs, which provide stipends and support to STEM graduate students. Most of the funding for research in STEM education went to the Discovery Research K-12 and Mathematics and Science Partnership programs, which seek to improve kindergarten-through-Grade 12 (K-12) STEM education. Smaller portions of NSF's STEM education budget provided for a number of other objectives. (See Figure 6 .) Several reports on the federal STEM education effort have noted a general dearth of STEM education program evaluations and have recommended that federal agencies increase their program evaluation rates. This challenge is not broadly applicable to the NSF, which has conducted evaluations of many of its STEM education programs. However, in a January 2012 Government Accountability Office (GAO) review of federal STEM education programs, GAO found that federal STEM education program evaluations—including NSF evaluations—could be improved. In particular, GAO recommended improved survey response rates, better alignment of methods with other components of the evaluation, and robust use of criteria to measure outcomes. What Is NSF's Role in the Federal STEM Education Portfolio? The NSF plays a key role in the federal STEM education portfolio. For example, the National Science and Technology Council (NSTC) estimates that total federal STEM education investments were $3.4 billion in FY2010. The NSF portion of that total was $1.2 billion (rounded). The NSF is also the only federal agency whose primary mission includes education across all fields of science and engineering. This key position means changes at the NSF may disproportionally affect the entire federal STEM education effort (both funding and character). In terms of the character of its contribution to the federal STEM education portfolio, NSF highlights its STEM education research and development (R&D) functions. The foundation states that it focuses on identifying effective STEM education practices through research and small-scale testing, but that it is not well-positioned to bring these practices to scale. NSF is also an important source of scholarships, fellowships, and financial support to STEM students as well as institutions of higher education. For example, since the establishment of the Graduate Research Fellowship (GRF) program in 1952—two years after NSF's own founding in 1950—NSF has supported researchers and students in STEM fields. This funding serves integrated research and education purposes. It seeks to support the national research effort through support of the STEM workforce and it seeks to support the national STEM education effort by providing financial and educational incentives for students to go into STEM and STEM-related fields (such as K-12 science teaching). NSF estimates that it provides financial support to about 5% of the science and engineering graduate students in the United States. In addition to NSF's role as a funder of STEM education R&D and STEM student support, the foundation also operates smaller (measured by funding levels) programs that seek to advance other federal STEM education policy priorities. These include programs designed to increase the participation of historically under-represented groups in STEM fields and programs that provide funding for out-of-school or informal STEM education. Some NSF STEM education programs are also integrated with similar programs at other agencies, such as the Mathematics and Science Partnership program, which has a sister program at ED. Although NSF is a major contributor to the federal STEM education portfolio, some analysts may argue that national STEM education objectives could be met without some (or all) NSF STEM education programs. The Federal STEM Education Portfolio: Selected Governance Concerns The specific debate about funding for STEM education programs at the NSF is taking place within a broader conversation about governance of the federal STEM education portfolio. This conversation has focused on the potential for duplication in the federal effort and on the perception that the federal effort lacks both coordination and an overarching strategy. The Obama Administration proposed a reorganization of the federal STEM education portfolio as part of the FY2014 budget request. The proposed reorganization envisions a prominent role for NSF in the federal STEM education portfolio. Policy makers have also expressed ongoing concern about the dissemination of NSF-funded STEM education research. These issues are discussed in greater detail in the following sections. Duplication and Consolidation The scope, scale, and perceived lack of coordination in the federal STEM education portfolio have some analysts concerned that federal agencies are duplicating effort. In response to these concerns, some policy makers have proposed consolidating or eliminating some or all of NSF's STEM education programs. Published assessments of duplication in the federal STEM education portfolio are somewhat contradictory. Preliminary findings from an April 2011 GAO report appeared to suggest the potential for duplication in federal teacher quality programs, including teacher quality programs at the NSF. However, the December 2011 NSTC comprehensive inventory of federal STEM education programs specifically examined the duplication question within the federal STEM education portfolio and found "little overlap and no duplication." A January 2012 GAO report on the federal STEM education effort concluded that 83% of federal STEM education programs overlapped "to some degree," but stated that this overlap would "not necessarily be duplicative." Federal program consolidation is a widely debated option that policy makers may employ to reduce duplication and potentially affect savings. Some policy makers see program consolidation as a means to increase program flexibility and improve program responsiveness, because federal program managers would have greater authority to shift priorities without having to modify federal law. However, other policy makers may object to this change, because it can transfer program control from the legislative to the executive branch, potentially shifting the balance of power between the branches. Consolidation (particularly in the form of block grants) has also been proposed as a strategy to transfer control to the states and as a means to reduce program costs. Such a shift could increase the ability of states to respond to local conditions and needs, but might make it more difficult for federal policy makers to implement a national STEM education agenda, or to leverage the unique assets that federal science agencies bring to the STEM education effort. On the issue of cost and consolidation, the GAO has found that program consolidation can be more expensive in the short term and may not result in long-term savings if program workloads are not reduced. Consolidation opponents raise general concerns about the potential impact of merging programs, arguing that certain programs (such as STEM education programs) need specified funding streams to avoid being passed over in favor of competing educational priorities. The impact of federal STEM education program consolidation efforts on STEM education at the NSF will depend on what programs are consolidated, how the consolidation is accomplished, how funding streams are affected, and the degree to which NSF programs are strictly duplicative of other federal STEM education efforts. Congress could, for example, seek either a full or partial consolidation of STEM education programs at either the NSF or across the entire federal STEM education portfolio. Savings and program impacts would vary, depending on which of these strategies policy makers pursue. A Federal STEM Education Strategy A second policy issue raised in the current federal STEM education governance debate relates to the perceived lack of coordination or an overarching strategy in the portfolio. Until recently, the federal STEM education effort was largely unknown and primarily undertaken in a distributed fashion that responded to the specific needs of agencies and STEM constituencies. Programs were typically not part of a defined, overarching federal STEM education strategy or well-coordinated approach across federal agencies. Although some analysts may view the distributed method as particularly responsive to the unique workforce needs or STEM education assets of federal science agencies, other observers have suggested that an overarching cross-agency strategy may improve the efficiency of federal STEM education investments. Both Congress and the Administration have moved to develop a federal STEM education strategy. Section 101 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) directed the NSTC to develop and implement a five-year federal STEM education strategy. (NSF co-chairs the NTSC subcommittee on STEM education, colloquially known as "CoSTEM," that was formed in response to Section 101.) The NSTC issued a report on the status of the strategy in February 2012 (hereinafter referred to as the "status report"). The status report identified two STEM education goals—STEM workforce development and STEM literacy—as well as policy and administrative strategies designed to accomplish these goals. Further, the status report identified four priority policy areas for the federal effort: "effective K-12 teacher education, engagement, undergraduate STEM education, and serving groups traditionally underrepresented in STEM fields." Noting that strong arguments can be made for other STEM education policy areas, the report states that these priority areas were chosen because they represent the convergence of "national needs, Presidential priorities, and federal assets." Agencies would retain the authority to establish their own STEM education priorities as well. The NSTC published its five-year strategic plan for federal STEM education investments (hereinafter referred to as the "strategic plan") in May 2013. The strategic plan envisions a future where The United States has a well-qualified and increasingly diverse STEM workforce able to lead innovation in STEM-related industries and to fulfill CoSTEM agency workforce needs; American students have access to excellent P-12, postsecondary, and informal STEM education and learning opportunities; and Federal STEM education programs are based on evidence and coordinated for maximum impact in priority areas. To achieve this vision, the strategic plan identifies five priority areas for federal STEM education investment: improve STEM instruction, increase and sustain youth and public engagement in STEM, enhance STEM experiences of undergraduate students, better serve groups historically underrepresented in STEM fields, and design graduate education for tomorrow's STEM workforce. Within each of these priority areas, the strategic plan identifies specific goals, such as preparing 100,000 excellent new K-12 teachers by 2020 and supporting a 50% increase in the number of U.S. youth who have a STEM experience each year. The strategic plan includes an outline for implementation, but notes that "detailed roadmaps" would need to be developed. Congressional response to the strategic plan has, to some degree, become part of a broader conversation about the FY2014 Administration budget request. In April 2013, prior to the publication of the strategic plan, the Obama Administration released its FY2014 budget request. Integrated into the request was a proposal to reorganize the federal STEM education effort. The Administration asserts that the proposed reorganization was informed by drafts of the strategic plan. However, some policy makers assert that the strategic plan "appears to have been modified at the last minute to bring it into conformance with the Administration's STEM education budget proposal," and argue that in so doing, "key elements of the progress report were lost or diluted." On the other hand, some policy makers who object to the proposed reorganization offered the strategic plan as "a new starting point for discussion" about any potential changes to the federal STEM education effort. The adoption and implementation of an overarching federal STEM education strategy could have many implications for STEM education at the NSF, depending on the type of strategy policy makers adopt and the STEM education goals they pursue. The America COMPETES Reauthorization Act of 2010 gave the executive branch the authority to both develop and implement a federal STEM education strategy. However, implementation depends on appropriations and related congressional decisions. If the 113 th Congress adopts the NSTC strategy or proposed FY2014 reorganization in its appropriations and authorization actions, NSF will likely continue its large role in the national STEM education strategy. If legislators pursue similar goals, but undertake a different strategy—such as increasing funding for Advanced Placement course-taking or providing more funding for early childhood education at ED—then the NSF may play a different role. Alternatively, legislators may adopt different national STEM education goals or strategies. Obama Administration Proposal to Reorganize the Federal STEM Education Effort in FY2014 The Obama Administration's FY2014 budget request includes a proposal to reduce the number of federal STEM education investments by about half while increasing total funding for federal STEM education activities by about 6% over FY2012 funding levels (hereinafter referred to as the "proposed reorganization"). Under the proposed reorganization, approximately 78 programs at nine federal agencies would lose funding for certain STEM education activities. Some STEM education activities within agencies would also be consolidated. Funding for certain priority programs at three "lead" agencies (NSF, ED, and the Smithsonian Institution) would increase. Under the proposal, NSF would focus on improving undergraduate STEM education as well as creating a more coherent system of federal graduate fellowships. The Administration asserts that the proposed reorganization would "cut back lower-priority or narrow-purpose programs to make room for targeted increases." The Administration further argues that the proposed reorganization would decrease fragmentation in the federal STEM education effort, "allowing potential for easier coordination and strong evaluations of what's working." Some policy makers share the Administration's broad concerns about fragmentation—and perceive a similar lack of coordination—in the federal STEM education effort. Other policy makers also express support for consolidation, generally, as a response to perceived duplication in the federal STEM education effort. The proposed reorganization, which includes both a coordinated approach and a program consolidation, potentially addresses those concerns for some policy makers. The proposed reorganization has received a mixed response from Congress—some policy makers accept certain proposed changes, while others seek to prevent implementation. Objection to the proposed reorganization stems from a variety of factors, most of which relate to the process by which the proposal was developed (or perceived to have been developed) and its timing. For example, some policy makers assert that the proposed reorganization was developed outside of, or with insufficient insight from, the process for coordinating federal STEM education programs that Congress established in Section 101 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ). In a June 2013 House Committee on Science, Space, and Technology hearing, several legislators expressed concern about the release of the proposed reorganization prior to the publication of the strategic plan for federal STEM education as mandated by Section 101. Similarly, the Senate Appropriations Committee report on FY2014 funding for Commerce, Justice, Science, and Related Agencies defers action on the [proposed reorganization] until such time that [the Office of Science and Technology Policy] … finalizes the STEM program assessments as required by America COMPETES. Other stakeholders argue that the Administration's process for developing the proposed reorganization was insufficiently transparent—the proposal is reported to have surprised many in the scientific community—and that too few stakeholders were consulted in its development. Further, although the Administration asserts that the proposed reorganization will facilitate better program evaluation, news reports state that that "previous evaluations of STEM programs were not the driving force in selecting winners and losers." Additionally, some policy makers question the capacity of lead agencies to take on their new roles or express support for programs at ceding agencies, like the National Aeronautics and Space Administration. The effect of the Administration's proposed reorganization of federal STEM education activities on STEM education programs at the NSF is unclear. A change of this magnitude—approximately half the federal effort—could result in a wide range of intended and unintended consequences. The Administration has not provided Congress with a detailed implementation plan or impact analysis. Further, many of the proposed changes require either tacit or specific approval from multiple congressional committees, as well as from Congress as a whole. Dissemination The dissemination of NSF's STEM education research—including research evaluating the effectiveness of NSF STEM education programs—to other federal agencies and education stakeholders is an ongoing policy challenge. Some policy makers have responded to the dissemination challenge by seeking improved collaboration between federal agencies at both the portfolio and program levels. At the portfolio level, for example, the NSTC's federal STEM education strategy proposes sharing evidence-based approaches (e.g., established by research) as a primary strategy toward accomplishing federal STEM education goals. At the program level, the Administration's FY2014 budget request seeks funding for at least two STEM education collaborations between NSF and ED. Whether these collaborations (if funded) will prove successful depends on program managers' willingness to collaborate, on executive branch leadership support for collaboration, and on the institutional cultures of the respective agencies, among other things. Other strategies to address the dissemination challenge include policies directing NSF to independently distribute STEM education research to stakeholders. For example, the House Appropriations Committee report on Commerce, Justice, Science, and Related Agencies Bill, 2012 ( H.Rept. 112-169 ) directed NSF to independently distribute research on best practices in STEM education to stakeholders. H.Rept. 112-169 also directed the NSF to develop methods to track and evaluate stakeholders' implementation of that research and to report to Congress on progress. In response to these and related congressional directives, NSF funded a National Research Council study on successful STEM education and held a series of workshops around the country on promising practices in STEM education. What Impact Might Changes in the NSF STEM Education Account Have on Research Activities at NSF? Although this report focuses on NSF STEM education programs, many of those programs are co-funded (e.g., they receive funding from other foundation accounts, principally R&RA). As such, changes in the main NSF education account may impact the main research account. For example, the R&RA contribution to E&T activities increased by 85% (from $143 million to $264 million) between FY2003 and FY2012. Some of this increase may be attributable to policy changes made by Congress and the President. Section 510 of the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) requires NSF to fund the GRF program with equal contributions from both R&RA and E&HR. NSF has increased the R&RA contribution to the GRF program in accordance with Section 510. Further, because the GRF program is typically classified as an E&T activity, this change may account for some of the increase in R&RA funding for E&T activities. However, R&RA funding for E&T activities was increasing prior to the enactment of Section 510. The impact of these funding dynamics on NSF's research capacity is unclear. FY2012 R&RA funding for E&T was $264 million, which was high compared to the historic average for E&T funding in the R&RA account, but was still less than 5% of the total R&RA budget that year ($5.758 billion). One interpretation of these changes in R&RA is that they represent a deeper integration of the foundation's complementary research and education missions. The research experience is sometimes perceived as serving educational purposes, just as support for education may ultimately benefit the research enterprise. However, an alternative explanation might be that budgetary fluctuations or stagnation in the main education account put pressure on the main research account. Congress may wish to consider whether and to what extent the R&RA account should serve education and training purposes and whether the main education account is sufficient for congressional priorities in these areas. Options for Congress Among the several options available to Congress are the following. Maintain NSF budget as it is . If Congress seeks to preserve NSF's budgetary autonomy, it could maintain the NSF budget as it is, making no significant increases or reductions and without directing the agency to change the distribution of funding between its main research and education accounts. This would provide the foundation its historical discretion, while Congress could continue to guide its activities through the oversight process. Increase funding for STEM education at NSF. If Congress seeks to increase NSF's STEM education capacity and its role in the federal portfolio, it could provide additional funding for NSF's STEM education activities. It could Increase funding for E&HR —Congress could do this by either shifting funding from other appropriations accounts to E&HR or by providing additional funding directly to the main education account. A shift in funding from other accounts to E&HR would not necessarily result in a real increase to NSF's STEM education programs (particularly if the reductions were to R&RA, which could presumably offset such reductions by limiting its contributions to co-funded programs). Further, reductions to other accounts may limit NSF's ability to meet Congress's non-STEM education priorities. Increase the R&RA contribution to E&T —Another way to increase overall funding for education at the NSF would be to increase the R&RA contribution to E&T activities through increased contributions to co-funded activities. Congress could do this with or without overall increases to the NSF and R&RA; however, if R&D funding does not also increase at the rate of inflation, purchasing power may be lost. Increasing R&RA contributions to E&T activities may deepen the integration of these complementary NSF missions or may put pressure on research activities. Decrease funding for STEM education at NSF . If Congress seeks to capture savings from the NSF budget or prioritize STEM education activities at other federal agencies, it could reduce funding for NSF STEM education programs. To this end, Congress has at least two options. It could prioritize certain programs—for example, by either portfolio role or performance—and reduce others. Alternatively, it could reduce topline support for E&HR and limit the percentage of R&RA that may be used for E&T. Prioritization —In general, prioritization of certain programs might result in savings, depending on the choices policy makers make about reductions and support for the programs it preserves. However, congressional prioritization of NSF's STEM education programs may challenge the foundation's historical autonomy, which many analysts see as essential to its scientific mission. Congress has at least two options for prioritizing NSF's STEM education programs: portfolio role and performance. By Portfolio Role —Instead of treating NSF's education activities as a single function, Congress could separate NSF's STEM education R&D programs from its student and institutional aid programs. Congress could then establish differential funding rates for NSF's STEM education R&D and aid programs. For example, some analysts suggest that research funding is most efficient when provided in predictable incremental increases (as opposed to wide variations, which impose adjustment costs). However, demand for student and institutional aid tends to be affected by factors that vary—such as population size, general economic conditions, and state education budgets, among others. By Performance —Congress could direct NSF to develop a framework for evaluating its STEM education programs. That framework could incorporate factors that reflect the importance of the program to NSF's mission, to the federal STEM education portfolio, to the constituencies served, to the field (e.g., intellectual merit), and to other congressional criteria. Policy makers at NSF and Congress could use this information to prioritize funding for NSF's STEM education programs. A performance approach to reductions could increase the effectiveness of NSF's STEM education programs. However, one of the challenges of the performance approach is that the criteria by which decisions are made may not reflect the full value of the programs and as a result, effective programs may be unintentionally terminated. Decrease topline funding for E&HR and limit the percentage of R&RA that may be used for E&T . Given the important role played by federal funding for fundamental research—most of NSF-funded research is basic research—Congress could prioritize NSF's research activities over its education activities and continue assigning most of the foundation's funding growth to the research account. To the extent that NSF's STEM education programs are unique to the federal effort, this may affect the portfolio. Use mechanisms other than the NSF to achieve federal STEM education goals . Congress could meet federal STEM education goals in any number of ways, depending on what those goals are and the policy strategies policy makers pursue. For example, Congress could increase the number of students who are interested in and prepared to study STEM subjects in college by increasing funding for Advanced Placement or other gifted student programs at ED. Other analysts may seek to increase general federal student aid (e.g., Pell program), which also serves STEM students (along with all others) but does not create incentives for students to pursue degrees in certain fields. Some policy makers may prefer to leave such matters to state and local governments to decide. Decrease funding for STEM education across the portfolio . If Congress seeks to prioritize other national concerns (e.g., national debt, defense, health care), it may choose to reduce funding for STEM education across the federal enterprise. Federal agencies may respond to reduced funding levels by limiting STEM education activities. Congress may wish to consider providing guidance to federal agencies to ensure that legislative priorities are maintained. As Congress weighs these various options, it may be useful to consider the short-, medium-, and long-term impact of congressional funding choices on the entire federal STEM education portfolio, on the respective research and education missions of the NSF, and on the general policy purposes (e.g., advancement of the national STEM labor supply) these investments seek to serve. Appendix A. Character Class Data Appendix B. Appropriations Data

Federal policy makers have a long-standing interest in science, technology, engineering, and mathematics (STEM) education that dates to at least the 1st Congress. This interest is largely driven by concerns about the national science and engineering workforce, which is widely believed to play a central role in U.S. global economic competitiveness and national security. The National Science Foundation (NSF) is a key component of the federal STEM education effort. Several inventories of the federal STEM education portfolio have highlighted NSF's important role—both in terms of funding and in the number and breadth of NSF programs. The NSF is also the only federal agency whose primary mission includes supporting education across all fields of science and engineering. As such, funding for STEM education at the NSF impacts not only the agency, but also the entire federal STEM education effort. Congress reduced enacted funding levels (from the prior year) for NSF's main education account in both FY2011 and FY2012. Those year-over-year reductions followed several years of varying funding, as well as changes in the overall distribution of the foundation budget that reduced funding for the main education account as a percentage of the total NSF budget. For the most part, these changes appear to result from a combination of holding the main education account more or less constant while applying most of the foundation's FY2003-FY2012 budget growth to the main research account. However, in constant dollar terms, it appears at least some of the increase in funding for research activities during the observed period may have come at the expense of education activities. It is not clear if these funding changes reflect evolving congressional and Administration policy priorities and an intentional prioritization of research over educational activities at the NSF, or if they reflect the cumulative impact of funding decisions made in response to specific conditions in specific fiscal years that happen to have had this effect. Further, the significance of these changes for NSF's STEM education and research missions—and for the overall federal STEM effort—depends, in part, on how they fit within the broader policy context. In particular, it depends (among other things) on how policy makers perceive and assess the policy rationale behind STEM education funding at the NSF; the character of NSF's STEM education activities; the foundation's role in the federal STEM education portfolio; and the impact of changes in NSF's education account on the foundation's other primary mission, research. This report analyzes NSF funding trends and selected closely related STEM education policy issues in order to place conversations about NSF's budget in a broader fiscal and policy context. It concludes with an analysis of potential policy options.

Definition of "Educational" There is no statutory definition of the term "educational" in the IRC. Rather, the term is defined by a Treasury regulation. It defines "educational" to encompass both (1) individual instruction "for the purpose of improving or developing his capabilities," and (2) "[t]he instruction of the public on subjects useful to the individual and beneficial to the community." The regulation goes on to address the heart of the matter about the term's scope: An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion. On the other hand, an organization is not educational if its principal function is the mere presentation of unsupported opinion. The regulation also provides examples of educational organizations, including schools of every educational level; groups that hold public forums and lectures; and museums and zoos. In 1986, the Internal Revenue Service (IRS) developed the "methodology test" to supplement the regulation's "full and fair exposition" standard. The test assists in determining whether the method used by an organization to communicate a particular viewpoint or position is educational. Under the test, a method is not educational if it fails to provide a "factual foundation" for the position or viewpoint or "a development from the relevant facts that would materially aid a listener or reader in a learning process." The IRS has identified four factors that lead to the conclusion the method is not educational: a significant portion of the group's communications consists of the presentation of viewpoints or positions that are unsupported by facts; facts that purport to support the viewpoints or positions are distorted; the group's presentations make substantial use of inflammatory and disparaging terms and express conclusions based more on strong emotional feelings rather than objective evaluation; and the presentation's approach is not aimed at developing the audience's understanding of the subject matter because it does not consider their background or training. Absent exceptional circumstances, the presence of any one of these factors indicates the organization's method of communicating its views does not meet the criteria to be "educational." There is relatively little case law or IRS rulings on the "full and fair exposition" test. A group advocating for the use of alternative schools was found to have met the test when it (1) made publicly available copies of all the briefs, including those of the opposing parties, filed in relevant legal actions; (2) encouraged those with different viewpoints to submit articles to its newsletter; and (3) provided information on a subject that was useful and beneficial to the public. A group that advocated for the use of one method of childbirth was found to have met the standard when it carried out its purpose by (1) hosting film presentations followed by discussions with doctors and its members; (2) conducting presentations on local radio stations; (3) hosting meetings between medical professionals and expectant parents; and (4) preparing pamphlets, manuals, and books that it distributed to libraries, hospitals, and obstetricians. Similarly, a group that was formed to "educate the public about homosexuality in order to foster an understanding and tolerance of homosexuals and their problems" was found to be educational. The group hosted public seminars, forums, and discussion groups, as well as distributed materials that included copies of surveys and opinion polls; scholarly statements; government publications; and policy resolutions adopted by educational, medical, scientific, and religious organizations. The group was described as "accumulat[ing] factual information through the use of opinion polls and independently compiled statistical data from research groups and clinical organizations," and all of its materials contained "a full documentation of the facts" to support its conclusions. In ruling that the group qualified as educational, the IRS explained: The presentation of seminars, forums, and discussion groups is a recognized method of educating the public.... By disseminating information relating to the role of homosexuals in society, the organization is furthering educational purposes by instructing the public on subjects useful to the individual and beneficial to the community. The method used by the organization in disseminating materials is designed to present a full and fair exposition of the facts to enable the public to form an independent opinion or conclusion. The fact that the organization's materials concern possibly controversial topics relating to homosexuality does not bar exemption under section 501(c)(3) of the Code, so long as the organization adheres to the educational methodology guidelines of section 1.501(c)(3)-1(d)(3). It also appears that a group that presents information prepared by others may qualify to be educational if it subjects those others to the full and fair exposition test. On the other hand, in seemingly the only case applying the methodology test, the Tax Court held that a group purportedly "dedicated to advancing American freedom, American democracy and American nationalism" did not qualify as educational when its newsletters were filled with inflammatory language and unsupported conclusions. The court found the newsletters failed the first, third, and fourth factors in the methodology test. They failed the first factor because a significant portion presented viewpoints that were clearly not supported by facts. These included the "common sense" standards for Supreme Court Justices of "No odd or foreign name" and "No beard"; listing of "Boat people, wetbacks and aliens who are incompatible with American nationality and character, such as Nicaraguan refugees or Refusnik immigrants" as people who should be denied U.S. Citizenship; and the statement regarding Black History Month that "No such thing. Nary a wheel, building or useful tool ever emanated from non-white Africa. Africanization aims to set up a tyranny of minorities over Americans." The court had no trouble finding the third factor was met, as the newsletters were filled with inflammatory and disparaging terms for gays and African Americans, among others. Finally, the court found that the fourth factor was met because a significant portion of the newsletters' intended readership were young people who would likely have little knowledge about the historical events presented in the newsletters, and the newsletters' negative treatment of these events would not assist in the readers' understanding of them. An example of an organization that failed to meet the "full and fair exposition" standard was one formed to "promote the education of the public on patriotic, political, and civic matters, and to inform and alert the American citizenry to the dangers of an extreme political doctrine." The group distributed written materials (e.g., books, pamphlets, and newsletters) and operated a speakers' bureau. The materials included substantial data about the doctrine's activities. The problem was they also included many allegations and charges that certain individuals and institutions are of questionable national loyalty. Such charges are primarily developed by the use of disparaging terms, insinuations, and innuendoes and the suggested implications to be drawn from incomplete facts. For instance, the organization bases many of its conclusions on incomplete listings of an individual's organizational affiliations without stating the extent or the nature of the affiliations or attempting to present a full and fair exposition of the pertinent facts about those organizations. The IRS ruled that these types of activities were a substantial part of the organization's overall activities, and therefore the group failed to be classified as educational. Similarly, a white supremacist group was held not to meet the criteria to be an educational organization. The court in this case did not base its holding on the regulation, but rather found there was simply no way in which the organization's materials could fall within the term "educational" as Congress intended. Important to the court was that there was "no reasoned development" from the purported facts presented in the organization's publications (e.g., the occurrence of violent acts by African Americans or the presence of Jews in important positions) to the positions it advocated (e.g., removing these groups from society), and therefore the publications "cannot reasonably be considered intellectual exposition." Constitutional Implications of Definition There are constitutional implications as to how the term "educational" is defined. In particular, the denial of tax-exempt status to an organization on the basis of its speech could raise issues under the First Amendment. On the one hand, the Supreme Court has made clear that the government may choose to not subsidize taxpayers' speech through the provision of a tax incentive. Thus, there appears to be no constitutional requirement that the term "educational" encompass every communication protected by the First Amendment. At the same time, courts will examine the IRS's denial of a tax exemption or other benefit when it is based on the content of the taxpayer's speech in order to ensure the denial was not done for an impermissible reason. Groups that promote controversial positions may be particularly vulnerable to an interpretation of "educational" that permits a subjective determination by the IRS as to whether a group's methods of presenting its views are educational. As one court has explained in this context, "the government must shun being the arbiter of 'truth.'" The IRS recognizes the potential issues here, emphasizing that "[i]t has been, and it remains, the policy of the Service to maintain a position of disinterested neutrality with respect to the beliefs advocated by an organization." The government reportedly believes the methodology test "leads to the minimum of official inquiry into, and hence potential censorship of, the content of expression, because it focuses on the method of presentation rather than the ideas presented" and is therefore "the least intrusive standard available." On the other hand, some have questioned if the methodology test can be fairly categorized as objective or content neutral when it requires looking into such things as whether the organization uses "particularly inflammatory" language or distorts facts. Concern over these issues has led to questions about whether the "educational" standard is unconstitutionally vague. Not only does a vague law that affects First Amendment rights "inhibit the exercise of those freedoms," but vagueness may also lead to arbitrary and discriminatory application of the law in violation of the Fifth Amendment's due process protections. In Big Mama Rag, Inc. v. United States , the D.C. Circuit Court of Appeals held that the definition of "educational" in the Treasury regulation was unconstitutionally vague. Note that this case predates the methodology test. The court found that it was not clear which organizations were subject to the "full and fair exposition" test and what the standard required. For example, the court found the distinction between facts and opinions to be "not so clear-cut" that the organization or the IRS "will be able to judge when any given statement must be bolstered by another supporting statement." The same court had the opportunity to look at the regulation several years later in National Alliance v. United States , where it held that a white supremacist group did not meet the criteria to be an educational organization. Notably, the court did not decide the case based on the regulation or methodology test. Rather, as discussed above, the court's holding was based on its determination that there was simply no way in which the organization's materials could fall within the term "educational" as Congress intended. The court did state in dicta that the IRS's methodology test reduced the vagueness concerns by tending to limit the meaning of "educational" to "material which substantially helps a reader or listener in a learning process." The court noted with approval that the "IRS has attempted to test the method by which the advocate proceeds from the premises he furnishes to the conclusion he advocates rather than the truth or accuracy or general acceptance of the conclusion." While the court did not overrule Big Mama Rag , its decision in National Alliance is commonly understood to represent the court moving away from its reasoning in that case. As a result, the court's approval of the methodology test, while in dicta, is often seen as reducing any precedential value of Big Mama Rag . It appears the only court to address the vagueness issue since National Alliance is the Tax Court. In Nationalist Movement v. Commissioner , the court rejected the argument that the methodology test was overly vague. The court found the test was "sufficiently understandable, specific, and objective both to preclude chilling of expression protected under the First Amendment and to minimize arbitrary or discriminatory application by the IRS." Further, the court did not find the test's purpose or effect to be the suppression of "disfavored ideas." Other cases, both prior to and after Big Mama Rag/National Alliance , have involved application of the regulation, without addressing the issue of its constitutionality.

Concern is sometimes expressed that certain entities which qualify for tax-exempt 501(c)(3) status as "educational" organizations have abused their exemption by advocating a policy viewpoint. The argument is that these entities should have to present information on both sides of an issue equally and neutrally, without opinion. The term "educational" is not defined in the Internal Revenue Code (IRC). It is defined by regulation to encompass individual instruction, as well as public instruction "on subjects useful to the individual and beneficial to the community." The question here is how far can the term "educational" be extended? Can a group espousing a viewpoint (i.e., only one side of an issue) be characterized as educational? If so, does the group have to provide factual information to support its statements? Is there some standard for truthfulness and accuracy? The answers are rooted in a Treasury regulation, which provides that an organization that advocates a position or viewpoint can qualify as educational if it presents "a sufficiently full and fair exposition of the pertinent facts" so that people can form their own opinions or conclusions. To supplement the regulation's "full and fair exposition" standard, the Internal Revenue Service (IRS) has developed the "methodology test." Under it, a method is not "educational" if it fails to provide a "factual foundation" for the position or viewpoint or "a development from the relevant facts that would materially aid a listener or reader in a learning process." There are constitutional implications in how the term "educational" is defined. In particular, the denial of tax-exempt status on the basis of an organization's speech could raise issues under the First Amendment. While there is no constitutional requirement that the term "educational" encompass every communication protected by the First Amendment, courts will examine the IRS's denial of a tax exemption or other benefit when it is based on the content of the taxpayer's speech in order to ensure the denial was not done for an impermissible reason. Groups that promote controversial positions may be particularly vulnerable to an interpretation of "educational" that permits a subjective determination by the IRS as to whether a group's methods of presenting its views are educational. Concern over these issues has led to questions about whether the "educational" standard is unconstitutionally vague. While the IRS's methodology test was held to be unconstitutionally vague by a federal appellate court, subsequent court decisions have suggested that the test passes constitutional muster.

Introduction Hunting and fishing, often referred to as sportsmen and sportswomen (sportsperson) activities, on federal lands is a perennial issue for Congress. Members of Congress routinely introduce legislation and debate issues pertaining to recreational opportunities and access, federal land use, and the federal government's regulatory roles related to sportsperson activities. Hunting and fishing are also regularly addressed in the executive branch through executive and secretarial orders and federal rulemakings. These issues cut across all of the federal land management agencies—including Department of the Interior (DOI) agencies and the U.S. Forest Service (FS) in the Department of Agriculture (USDA) and other land management agencies and departments such as the Department of Defense (DOD) and U.S. Army Corps of Engineers (USACE). This report addresses hunting and fishing activities on federal lands. It includes background information on the status of hunting and fishing activities in the United States (including related statistics), as well as major federal statutes that address hunting and fishing. It also discusses administrative actions relating to hunting and fishing and concludes with a section on potential hunting and fishing issues facing Congress, including a discussion of selected legislative proposals. This report focuses on recreational hunting and freshwater fishing activities on federal lands and freshwaters; it generally does not address hunting and fishing activities on state or private property, commercial activities, or ocean/marine recreational fishing. Similarly, although policy debates related to firearms are central to hunting issues, this report does not address in detail issues and legislation pertaining specifically to firearms and firearm-tax-related topics. Hunting and Fishing Activities: Background and Statistics Hunting and fishing are considered by many to be traditional American pastimes and are frequently cited as being integral to conservation and wildlife management. Sportsperson activities are further put forth as a means to connect participants to the land, promote conservation activities, and generate revenue. Proponents of this view often contend that throughout history, conservation leaders—such as President Theodore Roosevelt or Aldo Leopold—were avid sportspersons and supported land conservation needed for hunting and fishing. However, some have raised concerns that conservation interests and sportsperson activities can potentially conflict. For example, some have noted that unless closely regulated using sound science, hunting and fishing can become unsustainable and negatively affect some ecosystems and species. Identifying an appropriate balance among multiple authorized uses for federal lands is seen by some as a role for Congress. Hunting and fishing activities are included in the management plans for many federally owned areas, and are authorized under law for some federal lands (see " Hunting and Fishing on Federal Lands " section below). The extent to which sportsperson activities should be allowed or prioritized on federal lands is often debated by Congress and stakeholders. Although hunting and fishing occur on federal, state, and private properties, some stakeholders claim that federal lands offer many participants their only or best opportunity to conduct sportsperson activities. Proponents of greater access to sportsperson activities on federal lands cite the importance of federal lands for these activities and contend that federal lands should be managed in a way that benefits and provides opportunities for all Americans, including hunters and anglers. Others have expressed concerns that prioritizing sportsperson activities can marginalize other users and negatively affect conservation efforts. Hunting and fishing are also drivers of local and regional economies and contribute to the multibillion-dollar outdoor economy, which includes other outdoor activities such as wildlife viewing, hiking, and camping. Since 1955, the U.S. Fish and Wildlife Service (FWS) has conducted a national survey of hunting, fishing, and wildlife-associated recreation (i.e., wildlife-watching and other related activities) every five years. As part of the survey, the FWS estimates both the number of participants taking part in these activities and expenditures arising from them. Figure 1 displays data on hunting and fishing participation between 1996 and 2016 as well as wildlife watching over the same period. Between 1996 and 2016, participation in hunting ranged from 11.5 million to 14.0 million sportspersons. Participation in fishing has been similarly variable, with a range between 30.0 million and 35.8 million individuals. For both hunting and fishing, there has not been a consistent trend across the 20-year period. During the same time period, however, participation in wildlife watching was estimated to have increased, from 62.9 million individuals in 1996 to 86.0 million in 2016. For 2016, FWS found that over 101 million Americans, or approximately 40% of the population, participated in one or more wildlife-related activity, which resulted in an estimated $156 billion in expenditures, or approximately 1% of U.S. gross domestic product (GDP); see Figure 2 . Within that total, nearly 40 million people were estimated to have participated in hunting and fishing, each spending an average of over $2,000. However, the 2016 survey estimated that there were 2.2 million fewer hunters in the United States in 2016 than in 2011, a fact highlighted by DOI in subsequent administrative actions. Wildlife watching accounted for 86.0 million participants, who spent an average of $882 per participant. Overall, the survey results consistently indicate that a large portion of the U.S. population participates in hunting and fishing activities and that these activities contribute to both local and national economies. Supporters of hunting and fishing point to the wide base of participants in these activities and use these data to support arguments for providing greater access to federal lands and waters for hunting and fishing. Others have highlighted that, in light of the increase in wildlife watching, land management agencies may need to shift management plans to support nonconsumptive wildlife-related activities, such as bird watching. Still others have highlighted the importance of hunting and fishing for conservation and have suggested that wildlife watchers could disturb habitats. Hunting and Fishing on Federal Lands Federal lands and waters are a significant provider of opportunities for sportspeople to participate in hunting and fishing. The federal government owns approximately 640 million acres of land, accounting for about 28% of land within the United States. In 2011, 36% of hunters (4.9 million of 13.7 million hunters total) used public lands, which include federal lands as well as state, local, and municipal lands, although the percentage of hunters using public lands varied across U.S. regions. For example, in the western United States, nearly 1.5 million hunters (71% of hunters in this region) utilized public lands; in the eastern United States, 1.3 million hunters (33% of hunters in this region) used public lands. Within the public lands utilized by hunters and anglers, the federal lands and waters are managed by a number of different agencies, including agencies within the DOI and USDA as well as the DOD. However, states maintain ownership over some of the submerged lands (e.g., lakebeds) within some federal land units (e.g., certain national wildlife refuges and Bureau of Land Management [BLM] lands). Four agencies—BLM, National Park Service (NPS), and FWS in DOI and FS in USDA—account for roughly 95% of all federal acreage; DOD and USACE manage about 2% each; and the remainder is managed by a variety of other agencies. Each land management agency has its own established mission and purpose, which can lead to different approaches to managing specific activities on lands they oversee. Policies related to hunting and fishing on federal lands and waters are variable and reflect overall agency missions and the specified unit or installation purposes. For example, although a land management agency may have a policy to allow hunting and fishing, an individual unit within the agency may not allow hunting and fishing in parts of the unit because of a specific purpose or need at the unit level. Furthermore, many federal and state laws can influence how hunting and fishing is regulated in agency units (see " Federal Statutes Related to Hunting, Fishing, and Recreational Shooting " for more information). In particular, states are responsible for managing wildlife within their borders, and hunters and anglers are, almost always, required to have relevant state licenses. Hunting and fishing management on federal lands and waters can be roughly divided into two categories based on agency policy. Land can be managed for hunting and fishing as open unless closed (e.g., BLM lands), or, conversely, as closed unless open (e.g., hunting on NPS lands). These two management conditions reflect the default status of the land management agency under its authorities, and whether the responsible agency head is tasked with justifying closing or opening of lands to hunting and fishing. This justification is typically derived as a result of whether these sportsperson activities are deemed compatible or consistent with the mission of the agency and the purpose of an individual unit. Implementation of these laws is outlined in agency policies, service manuals, and the Code of Federal Regulations . Overall, there appears to be a wide variation in the portion of lands that are open to hunting and fishing. Among open unless closed lands, over 246 million acres (99%) of BLM lands are open to hunting and fishing, while the FS reports that 99% of the 193 million acres it administers are open to hunting and at least 99% of FS administered rivers, streams, and lakes are open to fishing. Among closed unless opened lands, 374 (66%) of the 566 FWS-administered wildlife refuges offer some form of hunting and/or fishing (hunting is allowed on 336, and fishing is allowed on 277), and 37 of 38 wetland management districts allow hunting and 34 permit fishing. In total, FWS administers about 86 million acres that allow hunting. Within the National Park System, 70 (17%) of 417 units managed by the NPS are statutorily mandated to allow hunting, and 6 units (1%) are authorized but not mandated to allow it. Although it is not possible to determine the precise percentage of federal acres open to hunting and/or fishing, based on these data, more than 80% of federal lands and waters appear to be open to hunting in some capacity. The below sections provide an overview of hunting and fishing policy for several of the major land management agencies and departments. Not all agencies managing federal lands and waters are included in this report (e.g., U.S. Postal Service). Bureau of Land Management BLM currently administers more acreage of federal lands in the United States than any other federal agency—248 million acres. BLM lands are largely (99.4%) located in the 11 contiguous western states and Alaska. In general, pursuant to the Federal Land Policy and Management Act of 1976 (FLPMA), BLM manages public lands according to multiple use and sustained yield principles. FLPMA defines m ultiple use to be a combination of uses that best meets present and future needs, including recreation, grazing, timber, energy and mineral development, wildlife and fish, conservation, and others. Sustained yield is defined as ensuring the land is productive in perpetuity for an output of renewable resources in a manner consistent with multiple use. In addition, FLPMA defines princip al or major use of BLM lands to include "grazing, fish and wildlife development and utilization, mineral exploration and production, rights-of-way, outdoor recreation, and timber production." In line with BLM's guiding principles and the major uses outlined in FLPMA, over 99% of BLM lands are open to hunting and/or fishing pursuant to federal and state laws. In the case where states own submerged lands within water resources on BLM lands, BLM generally provides access for fishing, with the exception of certain seasonal closures. BLM lands are open to hunting and fishing "unless specifically prohibited." BLM is authorized to close or restrict uses of lands under certain circumstances. For instance, BLM has the authority to identify lands and periods that are off limits to hunting and fishing for reasons including public safety, administration, or compliance with law. These lands may include areas adjacent to improved areas, like campgrounds. Except in emergencies, BLM regulations related to hunting and fishing require consultation with the state. BLM regulations further guide closures and restrictions of uses on BLM lands. For example, they allow an authorized BLM officer to issue an order to close or restrict the use of designated public lands to protect people, property, public lands, and resources. Forest Service The FS administers the National Forest System (NFS), which consists of 193 million acres of land in the United States, predominantly in the West (145 million acres). The NFS also includes 26 million acres in the East and 22 million acres in Alaska. Under the Organic Administration Act of 1897, national forests—then called forest reserves—were originally established to improve and protect federal forests and watersheds and provide a source of timber. The Multiple-Use Sustained-Yield Act of 1960 expanded the uses of the NFS to also include activities related to outdoor recreation, rangeland management, and wildlife and fish management. Multiple use and sustained yield as defined by the act have similar definitions to those provided in FLPMA. The NFS is to be managed so as to best meet the needs of the American people while ensuring the lands remain highly productive in perpetuity. FS, similar to BLM, generally allows hunting and fishing on lands and waters it manages pursuant to state laws and regulations, with some exceptions for certain areas. Areas may be off limits to hunting and fishing for reasons such as public safety, administration, fish and wildlife management, or public use and entertainment. For example, FS may prohibit some forms of hunting near administrative sites or campgrounds. Some NFS units or management areas have specific statutory directives for hunting and fishing. For instance, P.L. 102-220 established the Greer Spring Special Management Area within the Mark Twain National Forest and directed that the Secretary of Agriculture shall permit hunting and fishing within the special management area. U.S. Fish and Wildlife Service Excluding national monument areas, the FWS administers 89 million acres of federal land within the National Wildlife Refuge System (NWRS) in the United States, of which 77 million acres (87%) are in Alaska. The NWRS is composed of national wildlife refuges, which encompass refuge lands, wildlife ranges, wildlife management areas, game preserves and conservation areas, and waterfowl production and coordination areas. At the end of FY2017, the NWRS contained 566 national wildlife refuges. The FWS has a primary-use mission—to conserve, manage, and, where appropriate, restore plants and animals—pursuant to the National Wildlife Refuge System Administration Act of 1966 (NWRSAA). In addition to the NWRS mission, each refuge or system unit is to be managed to fulfill any specific purposes for which the unit was established. Although not included as the primary use of conserving fish and wildlife, compatible wildlife-dependent recreational uses—such as hunting, fishing, bird-watching, hiking, and education, among others—are defined as priority public uses and are to receive priority consideration in planning and management pursuant to NWRSAA. Hunting and fishing are allowed in refuge units when determined by the Secretary to be compatible with the system mission and unit purpose. However, in contrast to BLM and FS, all uses, including hunting and fishing, are prohibited unless specifically allowed. Of the 566 wildlife refuges, 374 offer some form of hunting and/or fishing: Hunting is allowed on 336 and fishing is allowed on 277, pursuant to state and federal regulations. In addition, of the 38 wetland management districts in the NWRS, hunting is allowed on 37 and fishing is allowed on 34. Although NWRS units may offer hunting and fishing opportunities, specific areas within individual units may still be closed to these activities when they are not compatible with the mission of the system or purpose of the unit or not in the public interest. National Park Service NPS's National Park System contains 417 units with 80.0 million federal acres. NPS-managed units have diverse titles—national park, national monument, national preserve, national historic site, national recreation area, national battlefield, and more. As established in the National Park Service Organic Act, the NPS has a dual mission "to conserve the scenery, natural and historic objects, and wild life in the System units and to provide for the enjoyment of the scenery, natural and historic objects, and wild life in such manner and by such means as will leave them unimpaired for the enjoyment of future generations." Hunting is allowed in NPS-managed units only where it is permitted (i.e., authorized as a discretionary activity) or mandated in statute. Hunting may be allowed at specific times for recreational, subsistence, tribal, or conservation reasons. In units where hunting is permitted, the park superintendent is to determine whether it is "consistent with public safety, enjoyment, and sound resource management principles." Recreational fishing is allowed in park units when it is "authorized or not specifically prohibited by federal law provided that it has been determined to be an appropriate use." Where allowed, anglers are subject to approved fishing methods and must fish in accordance with state laws and regulations. Within NPS-managed units, hunting is currently statutorily mandated to be allowed in 70 units and authorized to be allowed in 6 additional units, of which 4 allow hunting. In addition, elk harvest is allowed for population control in 1 additional unit. Bureau of Reclamation The Bureau of Reclamation (BOR) is responsible for managing lands and waters associated with the construction and operation of many federal water resource development projects in the 17 western states. BOR manages 6.6 million acres of land and water and 0.6 million acres of easements. On BOR land, the bureau has 289 projects that have developed recreation areas and opportunities for public use. Many of these projects are managed by other federal agencies or nonfederal partners. The Federal Water Project Recreation Act of 1965 (P.L. 89-72) provides the primary framework for managing recreation and fish and wildlife facilities on BOR lands and waters. The law states that "full consideration shall be given to the opportunities, if any, which the project affords for outdoor recreation" for projects undertaken by the BOR. BOR lands and waters are open unless closed for hunting and fishing in accordance with state and federal law. Lands and waters may be closed to these activities or public access by an authorized official or by designation as a special use area. Special use areas can be designated to limit use of the area for reasons of public interest, such as the protection of health and safety, cultural and natural resources, and environmental and scenic values. Department of Defense As of September 30, 2014, the DOD, excluding USACE civil works sites, administered 11.4 million acres of federally owned land in the United States. Management of military lands is the responsibility of each military department and defense agency under the direction of the Secretary of Defense. As amended, the Sikes Act requires the DOD to develop an integrated natural resources management plan for installations with "significant" natural resources, in cooperation with the FWS and appropriate state fish and wildlife agencies, to address the conservation, protection, and management of fish and wildlife resources. Further, the Sikes Act requires DOD to provide lands for conservation and sustainable multipurpose use—including hunting and fishing—"consistent with the use of military installations and State-owned National Guard installations to ensure the preparedness of the Armed Forces." Pursuant to the Sikes Act, DOD lands therefore may be open to hunting and fishing, if these uses would be consistent with the military mission of the installation. Hunting and fishing access is determined at the installation level based on compatibility both with the management of the natural resources and with military preparedness, safety, and security needs at each installation. Based on the site-specific conditions and needs, DOD policy notes that some installations may be open for public use, whereas others may be restricted to active or retired servicemembers or not open to hunting and fishing at all. Information on the total acreage of DOD lands open to hunting and/or fishing is not available. Additional federal statutory authorities generally apply state fish and game laws to hunting and fishing that is allowed on military installations or facilities. However, the Secretary of Defense may waive the applicability of certain state fish and game laws at an installation for public health or safety reasons, except that the Secretary may not waive the requirement for a state license or the associated fee. In the event the Secretary determines a waiver is appropriate, the Secretary must provide written notice to the appropriate state officials at least 30 days prior to the implementation of the waiver. Some installations may also require added registration requirements in order to bring a firearm on base to hunt. The Sikes Act also authorizes the DOD to issue hunting and fishing permits and collect fees for hunting and fishing activities on military installations. Although hunting and fishing may be allowed at some installations, DOD policy states that the primary purpose of DOD lands, waters, airspace, and coastal resources is to support mission-related activities. In addition to military preparedness, DOD is to manage its natural resources in a way that sustains the long-term ecological integrity of the resource. Additional uses other than military preparedness, such as recreation and public access, can be considered only when compatible with the military mission of the installation and subject to safety requirements and military security. DOD has also promulgated regulations to implement the Sikes Act and other related statutory authorities to manage natural resources and public access, including hunting and fishing, on military installations. U.S. Army Corps of Engineers USACE is responsible for the management of 12 million acres of lands and waters as part of the agency's responsibilities to operate authorized water resources projects. As 90% of USACE projects are within 50 miles of a metropolitan center, USACE lands and waters are considered by some as an important provider of recreational opportunities. USACE project lands and waters are to be managed in the public interest and to provide recreational opportunities. As such, hunting is allowed except where prohibited by the overseeing USACE district commander; fishing is allowed except in swimming areas, at boat ramps, and other areas prohibited by the overseeing district commander. These activities are subject to applicable federal, state, and local laws. Fishing is addressed in the law for USACE recreational facilities at water resource development projects, which states that all waters shall be open to public use for boating, swimming, bathing, fishing, and other uses except where the Secretary of the Army finds that these uses are contrary to the public interest. Fishing on USACE water projects accounts for 18% of freshwater fishing in the United States; USACE projects receive roughly 6.6 million hunter visits annually. Federal Statutes Related to Hunting, Fishing, and Recreational Shooting Many federal laws are relevant to hunting and fishing on federal lands and waters. Furthermore, federal land management agencies manage lands and waters they administer pursuant to federal laws, even when they may conflict with state law. Federal laws can be specific to a particular land management agency, such as the agency-specific statutes cited above; to a particular species; or to a particular parcel of federal land, such as a wildlife refuge. These laws outline the purpose and mission of specific agencies and determine whether lands and waters managed by these agencies are open unless closed or closed unless open . (See " Hunting and Fishing on Federal Lands " for more information on agency-specific laws.) In contrast, other laws pertain to hunting and fishing at the national scale or are related to hunting- or fishing-related programs or taxation. This section will focus on the federal statutes applicable to hunting and fishing more generally. Migratory Bird Treaty Act The Migratory Bird Treaty Act of 1918 (MBTA) implements a bipartite convention between the United States and Great Britain (on behalf of Canada). The original act has been amended several times to implement subsequent conventions between the United States and Mexico, Japan, and the Soviet Union (now Russia). The MBTA provides the authority to regulate the take (including through hunting) and transport of migratory game birds (and mammals in the case of the United States-Mexico agreement) as well as a framework for punishment of any violations under the conventions of the MBTA. The FWS has regulatory authority over MBTA provisions. The MBTA establishes that it is unlawful to take, possess, or trade any migratory bird or its parts covered by the conventions, unless specifically permitted by regulation pursuant to the MBTA. This law applies to species that are native to the United States or U.S. territories. In addition to the broad prohibitions, the MBTA authorizes the Secretary of the Interior to regulate hunting seasons for migratory birds, pursuant to the original bipartite treaties. The Secretary of the Interior, after taking into account environmental conditions and the terms of the original convention, can set hunting seasons and approve methods to hunt migratory birds. For migratory game birds, the agreements dictate the window within which the hunting season can be established. FWS is responsible for identifying the "outside limits (frameworks)" for the open season within this window annually. Setting the hunting season for migratory game birds occurs through the federal rulemaking process, which provides for opportunity for public comment on proposed rules. In addition to state-based hunting regulations, the MBTA also provides the framework to establish tribal hunting regulations for migratory game birds. Once FWS has established the outside limits for hunting, individual states are allowed to set their own hunting seasons within the federally approved season pursuant to the MBTA. Migratory Bird Hunting and Conservation Stamp Act The Migratory Bird Hunting and Conservation Stamp Act of 1934 (the Duck Stamp Act) requires that waterfowl hunters over the age of 16 annually purchase and carry a valid federal hunting stamp (known as a duck stamp ) in addition to any required licenses under state laws for hunting waterfowl. Duck stamps are purchased by hunters as a requirement for hunting waterfowl and by collectors for collection and conservation purposes. The Duck Stamp Program provides a funding source to support bird habitat conservation. The Duck Stamp Program is jointly operated through the U.S. Postal Service and the Department of the Interior; duck stamps may be purchased in person or electronically. The proceeds from duck stamp sales are deposited into the Migratory Bird Conservation Fund (MBCF). Monies from the fund are used for habitat conservation purposes through the acquisition of "waterfowl production areas" pursuant to the Migratory Bird Conservation Act. The price of the stamp has increased from $1 in 1934 to $25 as of 2018. All proceeds in excess of $15 from each stamp sold after 2013 are placed into a subaccount within the MBCF for the acquisition of conservation easements for migratory birds. Since 1934, the sale of duck stamps has generated over $950 million for the MBCF. Endangered Species Act The Endangered Species Act (ESA) was passed in 1973 to protect and recover species and their ecosystems that are imperiled or at risk of extinction. Once a species is listed as threatened or endangered under ESA, certain prohibitions apply on interactions with the species. For example, listed species are not allowed to be "taken" without certain permits. Under ESA, "take" is defined as "to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct." This prohibition directly relates to hunting and fishing. Some exceptions to prohibitions on take are provided for activities subject to the acquisition of a permit. Federal Aid in Wildlife Restoration Act and Federal Aid in Sport Fish Restoration Act The Federal Aid in Wildlife Restoration Act (commonly referred to as the Pittman-Robertson Act) and the Federal Aid in Sport Fish Restoration Act (commonly referred to as the Dingell-Johnson Act) are both related to hunting and fishing. Both laws mandate excise taxes on hunting- and fishing-related equipment. The proceeds from these taxes are diverted to a fund (the Federal Aid to Wildlife Restoration Fund) and apportioned to states for conservation and education programs. Products taxed under the Pittman-Robertson Act include firearms, handguns, ammunition, and archery equipment. Products taxed under the Dingell-Johnson Act include sport fishing equipment, outboard boat motors, and motorboat and small engine fuels. In FY2016, receipts from excise taxes were estimated at $787 million for Pittman-Robertson and $628 million for Dingell-Johnson. Alaska National Interest Lands Conservation Act Management of federal lands and waters in Alaska can be different than that of comparable lands and waters outside the state. In addition to authorities guiding the actions of federal land management agencies (e.g., FLPMA, National Wildlife Refuge System Administration Act, and National Park Service Organic Act), Alaskan federal lands and waters are also governed pursuant to the Alaska National Interest Lands Conservation Act (ANILCA). ANILCA establishes requirements for both recreational (sport) and subsistence hunting and fishing on federal lands and waters. ANILCA generally specifies the importance of hunting and fishing in Alaska and directs the Secretary of the Interior to implement a subsistence hunting and fishing program for national parks in Alaska. ANILCA also mandates that sport hunting and fishing be allowed in national preserves, which are to be managed as units of the National Park System. Laws Related to International Hunting and Fishing International sport and trophy hunting is managed by the foreign country in which the hunting takes place and can be subject to international treaties, such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Under CITES, species are categorized into one of three appendixes corresponding to how threatened their population is due to trade; Appendix I consists of species most threatened with extinction. Although commercial trade in Appendix I species generally is prohibited under CITES, sport hunting is not considered a commercial activity. However, the import and trade of foreign trophies and animal parts into and within the United States are subject to U.S. regulations, including ESA. If a species is listed as endangered, import of a sport-hunted trophy is prohibited unless an enhancement of survival permit is obtained and used. Enhancement of survival implies that the import of endangered animals or their parts or products will provide incentives for increasing the survival of the species in its native habitat. If a species is listed as threatened, the same rules as if the species were endangered apply unless there is a special rule, which may allow for a limited number of trophies to be imported. The illegal killing of a foreign species (according to U.S. or foreign law) and the subsequent import of the animal or animal parts into the United States could be a violation of the Lacey Act. Under the Lacey Act, it is unlawful for any person to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any wildlife taken, possessed, transported, or sold in violation of any law or regulation of any foreign law. Other laws—including the Marine Mammal Protection Act (16 U.S.C. §§1361 et seq.) and the Fisherman's Protection Act (22 U.S.C. §§1971-1979)—are also relevant to the import and trade of internationally hunted or fished species within the United States. Selected Administrative Actions on Hunting and Fishing Hunting and fishing issues have been addressed in administrative actions through a number of policy mechanisms, including executive, secretarial, and director's orders and the rulemaking process. Presidents have on many occasions worked to promote and protect opportunities for hunting and fishing on federal lands and waters as well as conservation and resource management efforts. For example, Presidents have used executive orders through their authority under the Antiquities Act of 1906 to designate national monuments, many of which have both conservation and recreation embedded within their purposes. These efforts to conserve federal lands and promote hunting and fishing have continued in recent administrative efforts. Table 1 contains a list of selected recent administrative actions pertaining to hunting and fishing. E.O. 13433 President George W. Bush issued Executive Order 13443 (E.O. 13443) on August 16, 2007. The purpose of E.O. 13443 was to facilitate the expansion and enhancement of hunting activities and game management by federal agencies on federal lands. To achieve this purpose, every agency with federal land management responsibilities was directed to expand and enhance hunting opportunities for the public, consistent with their missions. E.O. 13443 also required the completion of the Recreational Hunting and Wildlife Resource Conservation Plan and established the Wildlife and Hunting Heritage Conservation Council . The conservation plan provided a 10-year plan to implement E.O. 13433, and the council was tasked with advising the Secretaries of the Interior and Agriculture on wildlife conservation and hunting issues. Department of the Interior Secretarial Orders in the 115th Congress Secretary of the Interior Ryan Zinke has introduced several secretarial orders (S.O.s). Two of these—S.O. 3347 and S.O. 3356—are directly related to implementing E.O. 13443 and expanding hunting and fishing opportunities on federal lands and waters. S.O. 3347, "Conservation Stewardship and Outdoor Recreation," was issued by Secretary Zinke on March 2, 2017. S.O. 3347 required two reports: an assessment of the implementation of E.O. 13443 and recommendations to improve implementation and recommendations; the other report included recommendations to enhance and expand recreational fishing. S.O. 3347 required that these reports be shared with the Wildlife and Hunting Heritage Conservation Council and the Sport Fishing and Boating Partnership Council, respectively, for consensus recommendations so that DOI could identify specific actions to expand access for hunting, fishing, and recreational shooting activities; improve coordination with states; improve habitat for fish and wildlife; manage predators effectively; and facilitate greater public access to DOI lands. S.O. 3356, "Hunting, Fishing, Recreational Shooting, and Wildlife Conservation Opportunities and Coordination with States, Tribes, and Territories," was issued on September 15, 2017. S.O. 3356 directed bureaus and offices within DOI, in collaboration with states, tribes, and territorial partners, to implement programs to promote conservation and enhance hunting, fishing, and recreational shooting opportunities on federal lands and waters. Specifically, S.O. 3356 directed DOI bureaus and offices to implement recommendations from S.O. 3347; increase access to DOI lands and waters for sportsperson activities; update and amend regulations and management plans to include sportsperson activities, including increasing opportunities in national monuments; improve opportunities for underrepresented groups, such as veterans and youth, to enhance hunting and fishing traditions; and increase migratory waterfowl populations and hunting opportunities while improving habitat conservation efforts; among other activities. Reactions to S.O.s 3347 and 3356 have been mixed. Proponents emphasize that federal lands are owned by all U.S. citizens and should be managed accordingly. Further, they note that the order will facilitate access to federal lands and waters for hunting and fishing opportunities and further conservation interests. Others have criticize d S.O. 3356 , stating that hunting and fishing activities are already included in existing multiple-use land management practices and that the purpose of the order was to distract from other administrative activities that could diminish environmental protection of federal lands, such as increasing energy and mineral production and altering national monuments. Issues for Congress Issues related to hunting and fishing are routinely considered by Congress. Many of these issues pertain to federal lands and waters and how to balance opportunities for hunting and fishing with the conservation of ecosystems and species. Some issues related to hunting and fishing that are deliberated by Congress include establishing what federal lands can be accessed for hunting and fishing; determining what types of land should be open to hunting and fishing; how to regulate the opening and closing of land to hunting and fishing; whether to reauthorize or amend existing laws that are related to hunting and fishing; and regulating the use of ammunition and tackle on federal lands. These issues, which represent only a subset of the broader array of hunting and fishing issues Congress might consider, are discussed below. (See Appendix for more information on legislation proposed in the 115 th Congress.) Access to Federal Lands and Waters Access to federal lands and waters is a concern for hunters and anglers. Access can refer to whether lands and waters are open to hunting and fishing, as well as what procedures are required to prohibit hunting and fishing, and whether individuals can physically access federal lands and waters. The latter is a concern when federal lands and waters are blocked from entry due to inholdings, historic land ownership patterns, or inadequate entry points, or when lands are barred from entry. Some contend that limited access to federal lands and waters can reduce opportunities for outdoor recreation, including hunting and fishing, and have suggested that Congress should increase efforts to authorize acquisition and expansion to ensure public lands are accessible. Others argue that the federal estate of lands and waters is too large and that there should be greater attention on managing existing lands and addressing the maintenance backlog rather than acquiring new lands. Others have also supported transferring federal lands to the states, but this suggestion has been contentious, and some have expressed concerns that transferring would diminish access for hunters and anglers. In the 115 th Congress, several bills aim to identify barriers and opportunities to improve access for recreation on federal lands and waters. For example, H.R. 4489 (Title XV), S. 733 (§206), and S. 1460 (§8106) would require the Secretaries responsible for NPS, FWS, BLM, and FS to identify federal lands and waters that have limited or no access for hunting and fishing. The bills would also require the Secretaries to identify opportunities for improving access options. Some bills also identify ways to improve access to restricted federal lands and waters, whereas others aim to improve opportunities for recreation on already accessible federal lands and waters. For example, H.R. 3400 and S. 1633 seek to streamline the permitting and renewal process for special recreation permits (including for cross-jurisdictional activities), provide increased opportunities for servicemembers and veterans to have access to outdoor recreation and volunteer activities, extend recreation seasons, and designate new national recreation areas. Although there is general support by many stakeholders for the concepts of streamlining permitting and increasing opportunities for veterans, some have commented that the bill language could be adjusted to clarify the intent of the bills as well as to ensure that the streamlining authority is provided through statute. Whether lands and waters are open to hunting and fishing is determined by authorizing statutes and missions for land management agencies as well as the purpose of individual units within the various land management systems. Some stakeholders contend that more federal lands and waters should be open to hunting and fishing. They support their position by stating that federal lands and waters are owned by all Americans and should be managed for the benefit of all Americans, including hunters and anglers. Others temper this sentiment by arguing that some lands should be kept off-limits for hunting and fishing, and that although multiple use is appropriate for some areas, it is inappropriate for some lands that should be set aside for conservation and preservation. Some also believe that hunting and fishing should be regulated where they affect other recreational activities on federal lands. Several bills in the 115 th Congress would also address opening and closing some federal lands to hunting and fishing. For example, H.R. 3668 (Title IV), H.R. 4489 (Title XII), S. 733 (Title II), and S. 1460 (Title VIII) would all clarify that BLM and FS lands are open to hunting and fishing unless specifically closed. Each bill also outlines the necessary procedures that would be required to close lands and waters to sportsperson activities. These requirements would include public comment and increased notification of local stakeholders. These bills would also codify the open unless closed policy for FS and BLM with regard to hunting and fishing activities. Although BLM and FS are the focus of these bills, both S. 733 and S. 1460 would also establish that it is the policy of the United States for all agencies and departments, in line with their missions, to facilitate the expansion and enhancement of hunting and fishing. Some titles within the legislation have been subject to controversy. Specific to the BLM and FS hunting and fishing provisions, some have argued that these provisions will ensure hunting and fishing are protected in the multiple-use mandates for FS and BLM, whereas others suggest that enactment of these changes could unjustifiably prioritize hunting and fishing activities while marginalizing other purposes, such as wilderness. Reauthorizations Congress routinely considers reauthorizing appropriations and/or programmatic authorities that are either directly or indirectly related to hunting and fishing. Within the deliberations regarding the reauthorization or modification of these laws, issues related to hunting and fishing on federal lands may surface. For example, several stakeholder groups have highlighted that certain conservation programs, such as the Land and Water Conservation Fund (LWCF) and the North American Wetlands Conservation Act (NAWCA), directly relate to hunting and fishing because they can lead to greater access to federal lands and support the wildlife populations needed for hunting and fishing. Others have contended that programs that support acquiring more federal land are not the best means to support conservation or provide greater access for hunters and fishers. For example, some have suggested that LWCF should be made available for maintenance of existing federal land rather than acquisition of new lands. Similarly, hunting and fishing stakeholders have argued that the Pittman-Robertson Wildlife Restoration Act needs to be amended to reflect the needs of the states and provide greater support for hunter and angler retention and recruitment. Several bills in the 115 th Congress would address these and other concerns (for specific examples, see Appendix ). Extension of LWCF has been proposed in several bills in the 115 th Congress. H.R. 502 , H.R. 4489 (Title III), S. 896 , and S. 1460 (§5102) would provide a permanent authorization for LWCF and would require funds within LWCF to be used specifically for projects to secure recreational public access on existing federal lands for hunting, fishing, and other recreational purposes. S. 1460 would also amend LWCF to set minimum percentages for certain uses of the fund. Perspectives on if and how to reauthorize LWCF have been mixed. Proponents have stated that it is a necessary source of funding to acquire and protect lands, which is necessary to enhance public access; opponents have argued that LWCF, in its current form, is flawed and that the federal estate should not prioritize acquiring new lands through LWCF. Several bills have proposed reauthorization of NAWCA in the 115 th Congress. H.R. 1099 , H.R. 3668 (Title XIII), and H.R. 4489 (Title I) would all extend NAWCA through FY2022; S. 1460 (§8403) would extend authorization through FY2023. However, although H.R. 1099 would only extend authorization, the other bills would also amend NAWCA in other ways, including through requirements for notification ( H.R. 4489 and S. 1460 ), provision for the long-term management of any acquired property or interest ( H.R. 4489 ), and limitation on acquisition of lands administered by the federal government ( H.R. 3668 ). Some also argue that NAWCA supports hunting and fishing activities by supporting projects to improve bird populations and wetland habitat. Some have also argued that language to limit acquisition authority under NAWCA (such as that proposed in H.R. 3668 ) is contrary to its purpose. Several bills— H.R. 788 , H.R. 3668 (Title II), H.R. 4489 (Title XI), S. 593 , S. 733 (§401), and S. 1460 (§8401)—would amend the Pittman-Robertson Wildlife Restoration Act to allow more funding allocated to the states to be used for target ranges. H.R. 2591 and S. 1613 would amend Pittman-Robertson to allow for the provision of financial and technical assistance to the states for the promotion of hunting and recreational shooting. Supporters of these bills note that they would allow Pittman-Robertson funds to be used in a way that is more in line with states' needs. Others may view them as diverting money from existing priority wildlife restoration activities. Regulation of Ammunition and Tackle Regulation of ammunition and tackle based on lead content is a contentious issue. Federal regulations for lead differ depending on both the hunting and fishing activity as well as location. Broadly, lead in ammunition is currently regulated for hunting waterfowl, coots, and those species included in aggregate bags and concurrent seasons with waterfowl and coots. Although lead in other ammunition and tackle is generally not regulated at the federal level, use of lead ammunition and tackle may be regulated for specific federal land units, such as on some national wildlife refuges, pursuant to federal regulations and/or state law. Some stakeholders have argued that regulating lead in other ammunition and fishing tackle is unnecessary and cost prohibitive. They note that the use of lead ammunition is already regulated for waterfowl hunting since regulations were phased in starting in 1987 and implemented nationwide in 1991. Other stakeholders argue that lead in fishing tackle and ammunition is dangerous to the environment and can poison species and threaten the health of consumers who eat animals killed by lead ammunition and tackle. Currently, ammunition is exempt from regulation under the Toxic Substances Control Act (TSCA), and tackle has recently been exempted from regulations based on lead content through annual appropriations bills. This issue has been addressed through administrative actions. For example, FWS Director's Order 219, issued on January 19, 2017, would phase out the use of lead ammunition and tackle on FWS-managed lands. However, on March 2, 2017, DOI Secretary Zinke issued S.O. 3346, rescinding the previous order. The rescinding action received mixed reactions, with supporters claiming that it would ease unnecessary restriction on hunters and anglers and opponents arguing that continued use of lead ammunition and tackle will threaten wildlife and pollute the environment. This issue has also been addressed in legislation in the 115 th Congress. In addition to P.L. 115-31 , which prohibited the use of funds to regulate tackle based on lead content in FY2017, the issue of regulating lead tackle has been raised in several other bills. For example, H.R. 3354 (the House version of the FY2018 Interior and Environment Appropriations bill) would extend the prohibition on using federal funds to regulate tackle, as has been mandated in recent years. Similarly, S. 1460 would prohibit the Environmental Protection Agency from regulating tackle based on lead content until 2028, and H.R. 3668 would prohibit any DOI or USDA bureaus or agencies from regulating ammunition or tackle based on lead content. Appendix. Summary of Selected Legislation in the 115th Congress Addressing Sportsperson Issues The following table presents issues addressed within selected hunting and fishing legislation introduced in the 115 th Congress. These four bills were selected from the many that have been introduced because they each address multiple sportsperson-related issues. Table A-1 includes selected sportsperson and general federal land issues included within these bills and, as such, includes certain issues that are outside the scope of this report.

This report provides an overview of issues related to hunting and fishing on federal lands. Each year millions of individuals participate in hunting and fishing activities, bringing in billions of dollars for regional and national economies. Due to their popularity, economic value, constituent appeal, and nexus to federal land management issues, hunting and fishing issues are perennially addressed by Congress. Congress addresses these issues through oversight, legislation, and appropriations, which target issues such as access to federal lands and waters for sportsperson activities, and striking the right balance among hunting and fishing and other recreational, commercial, scientific, and conservation uses. Most federal lands and waters are open to hunting and/or fishing; stakeholders contend that these areas provide many hunters and anglers with their only or best access to hunting and fishing. This is especially the case in the western United States. Federal lands and waters account for nearly 640 million acres (28%) of the 2.3 billion acres in the United States. Federal land management agencies manage recreational activities, including hunting and fishing, on federal lands. Four land management agencies—the Bureau of Land Management (BLM), U.S. Fish and Wildlife Service (FWS), and National Park Service (NPS) within the Department of the Interior (DOI), and the U.S. Forest Service (FS) within the Department of Agriculture (USDA)—manage over 95% of federal lands, while the rest is administered by other agencies within DOI, the Department of Defense (DOD), the U.S. Army Corps of Engineers (USACE), and others. Federal land management agencies have hunting and fishing policies that are derived from statutes establishing the agencies as well as federal and state laws pertaining to hunting and fishing. In general, federal land management agencies have hunting and fishing policies that are either open unless closed or closed unless open, depending on the mission of the agency. In the case of the former, the default status of lands is open to hunting and fishing unless closed by the relevant agency. For these agencies, recreation, including hunting and fishing, is often included within the mission of the agency. For lands that are closed unless open, hunting and fishing are often a secondary use and allowed only when compatible with the primary purpose or mission of the agency or the federal land unit. Overall, based on CRS analysis of agency data, more than 80% of federal lands and waters appear to be open to hunting in some capacity. Several federal statutes are applicable to hunting and fishing either directly or indirectly. For example, the Migratory Bird Treaty Act of 1918 provides the federal government with the authority to regulate the hunting of migratory birds in the United States. Similarly, the Migratory Bird Hunting and Conservation Stamp Act (better known as the Duck Stamp Act) authorizes the requirement for hunters to obtain a federal stamp to hunt migratory birds. Alternatively, federal laws may indirectly relate to hunting and fishing, such as the Federal Aid in Wildlife Restoration Act (also known as the Pittman-Robertson Act), which directs tax revenues from certain hunting and fishing equipment to states for wildlife restoration and hunter education. In the 115th Congress, hunting and fishing issues have been addressed through oversight and proposed legislation. These bills (e.g., H.R. 3668 and H.R. 4489, and S. 733 and S. 1460) reflect some of the key issues being deliberated by Congress. These issues include access to federal lands for hunting and fishing, procedures for closing certain lands to these activities, the transport of firearms on federal lands, and the use of specific ammunition and tackle in hunting and fishing. Although there is general agreement among Members of Congress regarding the importance of balancing sportsperson activities and other activities on federal lands, the question of what the appropriate balance is, and the best means of achieving it, has in some cases been contentious.

Introduction Allegations of abuse of Iraqi prisoners by U.S. soldiers at the Abu Ghraib prison in Iraq raisequestions about the applicability of the law of war to interrogations for military intelligencepurposes. Particular issues involve the level of protection to which the detainees are entitled underthe Geneva Conventions of 1949. After photos of prisoner abuse became public, the DefenseDepartment (DOD) released a series of documents disclosing policy deliberations about appropriatetechniques for interrogating persons the Administration had deemed to be unprotected by the GenevaConventions with respect to the Global War on Terrorism (GWOT). (1) Investigations related to theallegations at Abu Ghraib revealed that some of the techniques discussed for "unlawful combatants"had come into use in Iraq, although none of the prisoners there was deemed to be an unlawfulcombatant. This report outlines the provisions of the Conventions as they apply to prisoners of war andto civilians, and the minimum level of protection offered by Common Article 3 of the GenevaConventions. The report analyzes key terms that govern the treatment of prisoners with respect tointerrogation, which include torture, coercion, and cruel, inhuman and degrading treatment. Finally,the report discusses and analyzes the various interrogation techniques approved or considered foruse during interrogations of prisoners at Abu Ghraib. Interrogation of Prisoners Gathering of military intelligence has always been a top priority for belligerents, and capturedenemy soldiers could be expected to have at least some knowledge pertinent to militaryoperations. (2) As aconsequence, prisoners of war (POWs) can expect to be questioned by their captors, who can beexpected to employ whatever means are available to them for extracting such information. Possiblydue in part to the inherent interest of belligerents both in procuring intelligence information and inprotecting their own information and soldiers, ground rules developed for fair play in exploiting theintelligence value of captives. The emergence of "total war" in the twentieth century increased themilitary utility of economic data, industrial secrets, and other information about the enemy that incenturies past might have been of little interest to warriors, increasing the intelligence valuedetainees might have, but not necessarily improving their treatment. (3) Prisoners of War The ill-treatment of prisoners of war, even for the purpose of eliciting information deemedvital to self-defense, has long been considered a violation of the law of war, albeit one that isfrequently honored in the breach. (4) The practice was understood to be banned prior to the AmericanCivil War. The Lieber Code, (5) adopted by the Union Army to codify the law of war as it thenexisted, explained: "Honorable men, when captured, will abstain fromgiving to the enemy, information concerning their own army, and the modern law of war permits nolonger the use of any violence against prisoners in order to extort the desired information or topunish them for having given false information" (Art. 80). The Geneva Convention Relative to the Treatment of Prisoners of War (GPW) (6) Article 17, paragraph 4provides the general rule for interrogation of prisoners of war: No physical or mental torture, nor any other form ofcoercion, may be inflicted on prisoners of war to secure from them information of any kind whatever.Prisoners of war who refuse to answer may not be threatened, insulted, or exposed to unpleasant ordisadvantageous treatment of any kind. This language replaced a provision in the 1929 Geneva Convention that stated "[n]o pressureshall be exerted on prisoners to obtain information regarding the situation in their armed forces ortheir country." (7) According to the ICRC Commentary, (8) the many violations that occurred during World War II led draftersof the 1949 Convention to expand the provision to cover "information of any kind whatever," andby "prohibiting not only 'coercion' but also 'physical or mental torture.'" (9) The provision does notprohibit the detaining power from seeking any particular kind of information, but prohibits only themethods mentioned. (10) Coercion is also prohibited to elicit confessions from prisoners of war to be used against them attrial. (11) Other articles that apply at all times during captivity are also relevant. They suggest thatprisoners of war may not be singled out for special treatment based on the suspicion that they mayhave valuable information. Article 13 provides, in part, that "[p]risoners of war must at all times behumanely treated" (12) and they "must at all times be protected, particularly against acts of violence or intimidation..."Furthermore, it describes as a "serious breach" of the GPW "[a]ny unlawful act or omission by theDetaining Power causing death or seriously endangering the health of a prisoner of war in itscustody." Article 14 states that "[p]risoners of war are entitled in all circumstances to respect for theirpersons and their honor." (13) Reprisal against prisoners of war is explicitly prohibited in Article 13. Article 16 requires thatall prisoners of war must be treated equally: Taking into consideration the provisions of the presentConvention relating to rank and sex, and subject to any privileged treatment which may be accordedto them by reason of their state of health, age or professional qualifications, all prisoners of war shallbe treated alike by the Detaining Power, without any adverse distinction based on race, nationality,religious belief or political opinions, or any other distinction founded on similar criteria. Article 16 does not prohibit more favorable treatment (14) Article 25 provides for a minimum level of living conditions, suggesting that themanipulation of environmental conditions below these standards is not permitted: Prisoners of war shall be quartered under conditions asfavourable as those for the forces of the Detaining Power who are billeted in the same area. The saidconditions shall make allowance for the habits and customs of the prisoners and shall in no case beprejudicial to their health. .... The premises provided for the use of prisoners of war individually orcollectively, shall be entirely protected from dampness and adequately heated and lighted, inparticular between dusk and lights out. Articles 21 and 22 address physical conditions of confinement, and do not appear to allowthe placement of prisoners in solitary confinement in order to prepare them for interrogation. Article21 provides: Subject to the provisions of the present Conventionrelative to penal and disciplinary sanctions, prisoners of war may not be held in close confinementexcept where necessary to safeguard their health and then only during the continuation of thecircumstances which make such confinement necessary. Article 22 provides: Prisoners of war interned in unhealthy areas, or wherethe climate is injurious for them, shall be removed as soon as possible to a more favourable climate.The Detaining Power shall assemble prisoners of war in camps or camp compounds according totheir nationality, language and customs, provided that such prisoners shall not be separated fromprisoners of war belonging to the armed forces with which they were serving at the time of theircapture, except with their consent. Civilians The first important modern effort to protect civilians in occupied territory is reflected inHague Convention IV of 1907 and its accompanying Regulations. (15) Article 44 forbids theoccupying power "to force the inhabitants of territory occupied by it to furnish information about thearmy of the other belligerent, or about its means of defense." In 1949, the treatment of enemycivilians was addressed for the first time in a separate instrument, the Fourth Geneva Convention("GC"). (16) The GC governs the treatment of civilians who fall into the hands of the enemy, includingthose residing in the territory of that power as enemy aliens and the civilian population of occupiedterritory. Civilians in occupied territory are "protected persons" under the fourth Geneva Convention("GC"), and are entitled under article 27 "in all circumstances, to respect for their persons, theirhonor, their family rights, their religious convictions and practices, and their manners andcustoms." (17) While anoccupying power is permitted to "take such measures of control and security in regard to protectedpersons as may be necessary as a result of the war," Article 27 provides further that "[t]hey shall atall times be humanely treated, and shall be protected especially against all acts of violence or threatsthereof and against insults and public curiosity." Article 32 forbids any "measure of such a characteras to cause the physical suffering or extermination of protected persons in their hands. . . [including]not only . . . murder, torture, corporal punishment, mutilation and medical or scientific experimentsnot necessitated by the medical treatment of a protected person but also to any other measures ofbrutality whether applied by civilian or military agents." Reprisals against protected persons andtheir property are prohibited. Civilians may be detained or interned by an occupying power only if "security requirementsmake such a course absolutely necessary." (GC art. 42). (18) Article 5 provides for the detention of civilians who pose adefinite threat to the security of the occupying power: Where in occupied territory an individual protectedperson is detained as a spy or saboteur, or as a person under definite suspicion of activity hostile tothe security of the Occupying Power, such person shall, in those cases where absolute militarysecurity so requires, be regarded as having forfeited rights of communication under the presentConvention. In each case, such persons shall nevertheless be treatedwith humanity and, in case of trial, shall not be deprived of the rights of fair and regular trialprescribed by the present Convention. They shall also be granted the full rights and privileges of aprotected person under the present Convention at the earliest date consistent with the security of theState or Occupying Power, as the case may be. Internment or assigned residence is the most severe measure allowed in the cases of protectedcivilians who pose a definite security threat (GC art. 41(1)), and these measures are to be reviewedby a court or administrative board at least twice annually. (GC art. 43). Article 31 addresses interrogation explicitly. It provides that "[n]o physical or moral coercionshall be exercised against protected persons, in particular to obtain information from them or fromthird parties." (19) Inaddition, protected persons may not be held as hostages, which would appear to preclude anoccupying power from detaining civilians as a method of persuading others to cooperate in providinginformation about possible threats to the security. Protected civilians may be imprisoned as a punitive measure only after a regular trial, subjectto the protections in articles 64 through 77. Additionally, article 33 provides that "[c]ivilians maynot be punished for an offence he or she has not personally committed," and prohibits all forms ofcollective penalties and intimidation. Article 100 addresses discipline in internment camps: The disciplinary regime in places of internment shallbe consistent with humanitarian principles, and shall in no circumstances include regulationimposing on internees any physical exertion dangerous to their health or involving physical or moralvictimization. Identification by tattooing or imprinting signs on the body is prohibited. In particular,prolonged standing and roll-calls, punishment drills, military drill and maneuver, or the reductionof food rations, are prohibited. Like prisoners of war, protected civilians are entitled to equal treatment, "[w]ithout prejudiceto the provisions relating to their state of health, age and sex, all protected persons shall be treatedwith the same consideration by the Party to the conflict in whose power they are, without any adversedistinction based, in particular, on race, religion or political opinion." Common Article 3 The 1949 Geneva Conventions share several types of common provisions. The first threearticles of each Convention are identical. Common Article 3 provides minimal rules applicable to"armed conflicts not of an international character occurring in the territory of one of the HighContracting Parties." It provides that each Party to the conflict shall be bound to apply, as aminimum, the following provisions: 1. Persons taking no active part in the hostilities,including members of armed forces who have laid down their arms and those placed hors de combatby sickness, wounds, detention, or any other cause, shall in all circumstances be treated humanely,without any adverse distinction founded on race, colour, religion or faith, sex, birth or wealth, or anyother similar criteria. To this end, the following acts are and shall remainprohibited at any time and in any place whatsoever with respect to the above-mentioned persons: (a) Violence to life and person, in particular murder ofall kinds, mutilation, cruel treatment and torture; (b) Taking of hostages; (c) Outrages upon personal dignity, in particularhumiliating and degrading treatment; 2. The wounded and sick shall be collected and caredfor. . . . Common Article 3 has been described as "a convention within a convention" to provide a generalformula covering respect for intrinsic human values that would always be in force, without regardto the characterization the parties to a conflict might give it. (20) Originally a compromisebetween those who wanted to extend POW protection to all insurgents and rebels and those whowanted to limit it to soldiers fighting on behalf of a recognized State, Common Article 3 is nowwidely considered to have attained the status of customary international law. (21) The prohibition againstill-treatment applies during interrogations. (22) Interpreting the Geneva Conventions Despite the absolute-sounding provisions described above, whether certain techniquesemployed by interrogators are per se violations of the Geneva Convention remains subject to debate. Presumably, all aspects of prisoner treatment fall into place along a continuum that ranges frompampering to abject torture. The line between what is permissible and what is not remainselusive. (23) Tocomplicate matters, interrogators may employ more than one technique simultaneously, and thecourts and tribunals that have evaluated claims of prisoner abuse have generally ruled on the totalityof treatment without specifying whether certain conduct alone would also be impermissible. Notsurprisingly, governments may view conduct differently depending on whether their soldiers are theprisoners or the interrogators, and may be unwilling to characterize any conduct on the part of theadversary as lawful. Human rights advocates may tend to interpret the treaty language in a strictlytextual fashion, while governments who may have a need to seek information from prisoners appearto rely on more flexible interpretations that take into account military operational requirements. Nonetheless, it may be possible to identify some threshold definitions. Threshold Definitions The following sections explore relevant terms that provide boundaries for the conduct of aDetaining Power under the Geneva Convention with respect to prisoners of war, civilian internees,and other detainees. Torture. Torture is proscribed by all four of theGeneva Conventions and their additional Protocols, (24) as well as customary international law. (25) Torture, which can beeither mental or physical, is not explicitly defined in the Conventions. Modern tribunals may lookto the United Nations Convention Against Torture ("CAT") (26) for a definition of torture: For the purposes of this Convention, the term "torture"means any act by which severe pain or suffering, whether physical or mental, is intentionallyinflicted on a person for such purposes as obtaining from him or a third person information or aconfession, punishing him for an act he or a third person has committed or is suspected of havingcommitted, or intimidating or coercing him or a third person, or for any reason based ondiscrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or withthe consent or acquiescence of a public official or other person acting in an official capacity. It doesnot include pain or suffering arising only from, inherent in or incidental to lawfulsanctions (27) The International Tribunal for the former Yugoslavia (ICTY) has identified the followingelements of the crime of torture in a situation of armed conflict: (i) . . . the infliction, by act or omission, of severe painor suffering, whether physical or mental; in addition (ii) this act or omission must be intentional; (iii) it must aim at obtaining information or aconfession, or at punishing, intimidating, humiliating or coercing the victim or a third person, or atdiscriminating, on any ground, against the victim or a third person; (iv) it must be linked to an armed conflict. . . . (28) Physical Torture. The U.S. Army Field Manual (FM)34-52, Intelligence Interrogation (29) ("FM 34-52") lists the following as examples of physical torture:electric shock; infliction of pain through chemicals or bondage (other than legitimate use of restraintsto prevent escape); forcing an individual to stand, sit, or kneel in abnormal positions for prolongedperiods of time; food deprivation; and any form of beating. (30) The International Military Tribunal for the Far East (IMTFE) found that Japanese soldiershad used the following forms of torture: water treatment, burning, electric shocks, the knee spread,suspension, kneeling on sharp instruments and flogging. (31) The U.S. District Court for the District of Columbia found thatU.S. POWs during the First Gulf War were tortured in Iraq: The torture inflicted included severe beatings, mockexecutions, threatened castration, and threatened dismemberment. The POWs were systematicallystarved, denied sleep, and exposed to freezing cold. They were denied medical care and theirexisting injuries were intentionally aggravated. They were shocked with electrical devices andconfined in dark, filthy conditions exposing them to contagion and infection. The POWs sufferedserious physical injuries, including broken bones, perforated eardrums, nerve damage, infections,nausea, severe weight loss, massive bruises, and otherinjuries. (32) In the context of a non-international war, the conflict in the former Yugoslavia, frequentexamples of torture were said to include "beating, sexual violence, prolonged denial of sleep, food,hygiene, and medical assistance, as well as threats to torture, rape, or kill relatives. . ." (33) Mental Torture. According to FM 34-52, examplesof mental torture include mock executions, abnormal sleep deprivation, and chemically inducedpsychosis. (34) TheInternational Military Tribunal for the Far East noted in its judgement of the major Japanese warcriminals after World War II that mental torture had been commonly employed, (35) and cited the case of theDoolittle fliers to illustrate what mental torture entailed: After having been subjected to the various other formsof torture, they were taken one at a time and marched blindfolded a considerable distance. The victimcould hear voices and marching feet, then the noise of a squad halting and lowering their rifles asif being formed to act as a firing squad. A Japanese officer then came up to the victim and said: "Weare Knights of the Bushido of the Order of the Rising Sun; We do not execute at sundown; weexecute at sunrise." The victim was then taken back to his cell and informed that unless he talkedbefore sunrise, he would be executed. (36) A more recent example of mental torture, as found by a U.S. court, involved the treatmentof American POWs by Iraqi agents during the 1991 Gulf War: Iraqi agents caused the POWs to experience severemental anguish by falsely reporting that they had killed Americans, including a pilot's wingman,other American POWs, and the President of the United States. The POWs suffered from knowingthe agony that their families were enduring because the Iraqi authorities refused to inform thefamilies that the POWs were alive. (37) According to the ICTY, the following treatment may amount to mental torture: For instance, the mental suffering caused to anindividual who is forced to watch severe mistreatment inflicted on a relative would rise to the levelof gravity required under the crime of torture. [B]eing forced to watch serious sexual attacksinflicted on a female acquaintance was torture for the forced observer. The presence of onlookers,particularly family members, also inflicts severe mental harm amounting to torture on the personbeing raped. (38) Physical / Mental Suffering. Not all physical ormental suffering amounts to torture. While most people would likely accept that severe physicalbeatings or conduct such as electrocution and intentional cigarette burns amount to torture, relativelyless physically brutal conduct, what might be described as psychological pressure (threats, verbalintimidation) and non-impact physical abuse (forcing detainee to remain in an uncomfortableposition for a prolonged period) invite greater debate. Most forms of physical or psychologicalpressure are susceptible of being applied with varying degrees of intensity or duration. Relativelyhumane-sounding techniques applied at great length or in combination could cause physical andmental suffering that might be characterized as torture. (39) Distinguishing between physical and mental forms of pressuremay not be particularly helpful in determining whether torture has occurred. (40) Physical abuse may causemental suffering that outlasts the physical suffering. Non-violent physical methods (playing loudmusic), especially over an extended period of time may cause physical as well as psychologicalsuffering. Some victims may be more susceptible to certain types of pressure and thereforeexperience suffering that might not affect another. Permanent injury is not required. (41) According to the ICTY [T]he severity of the pain or suffering is a distinguishingcharacteristic of torture that sets it apart from similar offences. A precise threshold for determiningwhat degree of suffering is sufficient to meet the definition of torture has not been delineated. Inassessing the seriousness of any mistreatment, the Trial Chamber must first consider the objectiveseverity of the harm inflicted. Subjective criteria, such as the physical or mental effect of thetreatment upon the particular victim and, in some cases, factors such as the victim's age, sex, or stateof health will also be relevant in assessing the gravity of the harm. (42) For Interrogation Purposes. Some experts take theposition that the purpose of eliciting information from the victim is a necessary element of torture,and that behavior that is cruel and causes suffering, but does not entail coercion to elicit a confessionor information, is not torture. (43) Others take the view that cruel treatment for other purposes, oreven for no purpose, can constitute torture. (44) Under the Geneva Conventions, it appears to matter littlewhether certain treatment is described as torture; the Conventions protect against treatment that iscruel, inhumane, and degrading even if such treatment does not amount to torture. Coercion. The Geneva Conventions do not definecoercion. Their prohibition against coercion may vary somewhat depending on the status of theperson undergoing interrogation. In the case of protected civilians, "[n]o physical or moral coercionshall be exercised against [them], in particular to obtain information from them or from thirdparties." (45) Prisonersof war, on the other hand, may be subjected to no coercion of any kind , nor can they be "threatened,insulted, or exposed to unpleasant or disadvantageous treatment." The conclusion might be drawnthat some other kind of coercion, neither moral nor physical, may be permissible with respect tocivilians but not for POWs. Perhaps "moral" coercion is distinct from "mental" coercion. However,we have found no references purporting to describe techniques in this category. Common Article 3does not explicitly forbid coercion. The essence of coercion is the compulsion of a person by a superior force, often agovernment, to do or refrain from doing something involuntarily. The intentional application of anunlawful force that robs a person of free will is coercive. However, circumstances that cause a personto reevaluate a course of action, even if deception is instrumental, may arguably be non-coercivepressure. Under the interpretation set forth in FM 34-52, "physical or mental torture and coercionrevolve around the elimination of the source's free will." (46) These activities, along with "brainwashing," are not authorized,it explains, but are not to be confused with the psychological techniques and ruses presented in themanual. FM 34-52 includes in the definition of mental coercion "drugs that may induce lasting andpermanent mental alteration and damage." This appears to reflect a change from earlier doctrine,which prohibited the use of any drugs on prisoners unless required for medical purposes. (47) In the context of U.S. criminal law, coercion is usually asserted as a defense to a crime (48) or as an element of a crime,or to render a confession inadmissible in court as involuntary. The standards differ depending onthe purpose. To assert coercion as a defense to a criminal charge, a defendant generally has to showa well-grounded fear of imminent injury or death. (49) On the other hand, a confession is the product of coercion if adefendant's "'will was overborne' or if his confession was not 'the product of a rational intellect anda free will.'" (50) Prolonged questioning has been held to be inherently coercive, (51) as has incommunicadodetention (52) andinterrogation by a psychiatrist trained in hypnosis, (53) the use of violence, (54) threats, (55) and other mental "modes of persuasion." (56) The standards that apply in criminal cases, however, probably do not apply to a determinationof coercion under the Geneva Conventions. (57) The pertinent question appears to be whether the person subjectto treatment designed to influence his conduct is able to exercise a choice and complies willingly orhas no choice other than to comply. Asserting coercion by the enemy as a defense to treason or aiding the enemy has not beenfruitful; courts have tended to apply the same test that would govern in other criminal cases. (58) In the post-WWII treasonprosecution of Iva Ikuko Toguri D'Aquino (Tokyo Rose), the court stated its belief that despite thehostilities: there was no occasion for departing from the ordinaryrules applicable to the defense of duress and coercion. We know of no rule that would permit onewho is under the protection of an enemy to claim immunity from prosecution for treason merely bysetting up a claim of mental fear of possible future action on the part of the enemy. We think that thecitizen owing allegiance to the United States must manifest a determination to resist commands andorders until such time as he is faced with the alternative of immediate injury or death. Were any otherrule to be applied, traitors in the enemy country would by that fact alone be shielded from anyrequirement of resistance. The person claiming the defense of coercion and duress must be a personwhose resistance has brought him to the last ditch. (59) However, the failure of an asserted coercion defense does not mean that the behavior givingrise to the claim is lawful. Acts intended to coerce need not succeed to meet the definition ofcoercion as an element of a crime. (60) In the case of prisoners held by the Chinese during the KoreanWar, courts referred to conditions in the prisoner of war camps as brutal and inhumane, in violationor international law. The conditions under which American prisoners of warin Korea were required to live were at best abominable and at worst intolerable. During the earlystages, lack of adequate food, clothing, housing, and medical service resulted in a death rate whichbespeaks man's inhumanity to man. Nevertheless, the accused was not subjected to any discomfortswhich were not shared by his comrades, and if his lot was harsh, so was theirs. . . . It goes withoutsaying that all men cannot stand firm against torture, physical violence, starvation or psychologicalmistreatment. But in this instance, the record discloses that the accused weakened when others stoodfast, and it does not reveal that he was compelled to sacrifice his countrymen because of the use ofthose influences. (61) Yet soldiers who succumbed to the ill-treatment and collaborated with the enemy were unsuccessfulin asserting the defense of coercion. The infliction of any type of physical or mental suffering that would amount to torture wouldalmost certainly qualify as "coercion." However, States have sought to find methods of applying"pressure" to convince a detainee that cooperation would be in his best interest, thereby persuadinghim to disclose information voluntarily. It may be useful to consider theories about coercion fromthe field of counterintelligence. Non-coercive Interrogation. According to a 1963 CIAmanual (62) oninterrogation: The term non-coercive is used . . . to denote methodsof interrogation that are not based upon the coercion of an unwilling subject through the employmentof superior force originating outside himself. However, the non-coercive interrogation is notconducted without pressure. On the contrary, the goal is to generate maximum pressure, or at leastas much as is needed to induce compliance. The difference is that the pressure is generated insidethe interrogatee. His resistance is sapped, his urge to yield is fortified, until in the end he defeatshimself. (63) The manual describes the following techniques for non-coercive counterintelligenceinterrogation: "Nobody Loves You" (pointing out that all of the information about an interrogationsubject has come from persons other than himself, eliciting a desire to tell his side of the story); "TheAll-Seeing Eye (or Confession is Good for the Soul)" (by manipulating information already knownabout the subject, the interrogator can convince a subject that all his secrets are already out and thatfurther lies would be futile or even counterproductive); (64) "The Informer" (planting an informant as the source'scellmate); (65) "Newsfrom Home" (allowing a detainee to receive carefully selected letters from home); (66) "The Witness" (bringingan alleged witness with knowledge of subject's misdeeds within the subject's view to create a desireto refute charges); (67) "Joint Suspects" (causing the subject to believe that another person involved in the crime is tryingto throw all blame upon the subject); (68) "Ivan Is a Dope" (pointing out that the adversary is incompetentor ignores the welfare of its agents, but that the interrogator's entity will treat the subject better); (69) "Joint Interrogators" (goodcop/bad cop routine: the brutal, angry, domineering interrogator contrasted with the friendly, quietinterrogator, with multiple variations). (70) Coercive Interrogation. Coercive methods, accordingto the same CIA manual, "are designed not only to exploit the resistant source's internal conflicts andinduce him to wrestle with himself but also to bring a superior outside force to bear upon thesubject's resistance." Further, it noted, "[a]ll coercive techniques are designed to induce regression,"which is described as "the loss of those defenses most recently acquired by civilized man:. . . thecapacity to carry out the highest creative activities, to meet new, challenging, and complex situations,to deal with trying interpersonal relations, and to cope with repeated frustrations." These functions,it posited, could be impaired through the use of "relatively small degrees of homeostaticderangement, fatigue, pain, sleep loss, or anxiety" (71) to bring about the typical response to coercion: "debility,dependency, and dread." (72) The following were named as the "principal coercive techniquesof interrogation: arrest, detention, deprivation of sensory stimuli through solitary confinement orsimilar methods, threats and fear, debility, pain, heightened suggestibility and hypnosis, narcosis [useof drugs], and induced regression." (73) Inhumane or Degrading Treatment. The prohibition of inhumane treatment of prisoners of war was already understood to be partof the law of war during the 19th century. Art. 56 of the Lieber Code provided: A prisoner of war is subject to no punishment for beinga public enemy, nor is any revenge wreaked upon him by the intentional infliction of any suffering,or disgrace, by cruel imprisonment, want of food, by mutilation, death, or any otherbarbarity. Both the Union and Confederate governments accused the other of inhumane treatment of prisonersof war. The North was accused of exposing prisoners of war to cold weather as well as deprivationof adequate food, clothing, and fuel. (74) The South was accused of "subjecting [prisoners of war] totorture and great suffering, by confining in unhealthy and unwholesome quarters, by exposing to theinclemency of winter and to the dews and burning sun of summer, by compelling the use of impurewater, and by furnishing insufficient and unwholesome food," as well as using bloodhounds to trackescaped prisoners, thereby allowing recaptured prisoners to be "cruelly and inhumanly injured." (75) The barbarities complained of during the Civil War were repeated or multiplied duringsubsequent wars, despite the inclusion of provisions in treaties to protect prisoners of war. (76) The ICRC Commentaryto the Geneva Conventions views humane treatment as the fundamental theme running throughoutthe Convention. (77) GPW art. 13 is viewed as embodying the principal elements of humane treatment. (78) Paragraph 1 of article 13requires that POWs "at all times be humanely treated." (79) It goes on to identify as inhumane any "unlawful act or omissionby the Detaining Power causing death or seriously endangering the health of a prisoner of war,""physical mutilation or to [unjustified] medical or scientific experiments" and exposure to "acts ofviolence or intimidation and against insults and public curiosity." "Inhuman treatment" is definedin GPW art. 130 to constitute a grave breach of the Convention. (80) The prohibition on "acts of violence or intimidation and against insults and public curiosity"appears to have resulted from the World War II practice in Europe and the Far East of paradingcaptive soldiers through the streets for propaganda purposes. (81) The ICRC has interpretedGPW art. 13 to prohibit the public display of prisoners through the news media. The ICRC considersthe use of any image "that makes a prisoner of war individually recognizable" to be a violation,because the condition of being taken prisoner might be considered degrading or humiliating in itself,and that representations of captives could also have an impact on families. (82) The Department ofDefense interprets the provision to protect POWs from being filmed or photographed in such amanner that viewers would be able to recognize the prisoner. Photos and videos depicting POWswith their faces covered or their identities otherwise disguised does not, in the view of theDepartment of Defense, violate GPW art. 13. Other experts would make an exception for reportingon prisoners and their conditions of captivity, in order to enforce international humanitarian law andto improve their conditions in captivity. (83) However, it appears to be well-accepted that broadcastingimages of POWs for humiliation or propaganda purposes is inhumane. (84) Other examples of treatment deemed degrading or humiliating in the context of the GenevaConventions include urinating on POWs and forcing them to undergo inspections of their genitalsto determine if they were Jewish (Gulf War I), (85) forcing captured Royal Marines to lie down on the ground forthe benefit of television cameras (Falklands War), (86) and the Communist practices for indoctrinating POWs andpressuring them to sign confessions. (87) Acts causing severe humiliation or degradation may rise to thelevel of "outrages upon human dignity." (88) Status of Detainees Belligerents have sometimes argued that certain prisoners are not entitled to protection underthe laws of war and relevant treaties, and that such prisoners might be subjected to harsher treatmentthan that accorded to prisoners of war. For example, during the Civil War, the Union initiallypromised to treat Confederate soldiers and sailors as common criminals and brigands, but laterrelented, with respect to regular Confederate soldiers and partisans (but not "guerrilla marauders")in order to secure better treatment for captured Union soldiers. The Confederate States deniedprisoner-of-war status to Union soldiers who were black. This policy was a point of contentionbetween the two sides throughout the war, and afterward, when Johnson granted amnesty toparticipants in the rebellion, the amnesty did not extend to those who had refused to treat blacksoldiers as prisoners of war. (89) During World War II, Germany and Japan adopted different standards for various types ofprisoners. The Germans regarded Bolshevists as undeserving of POW status under the GenevaConvention, and those prisoners were to be shot on the slightest provocation without anywarning. (90) TheSecurity Police and Gestapo adopted a series of harsher techniques for interrogating certain (mainlycivilian) prisoners who were thought to possess valuable information and who resisted questioning. Known as the "Third Degree," the methods included a "simple diet (bread and water), hard bunk,dark cell, deprivation of sleep, exhaustive drilling, [and] flogging for more than twenty strokes adoctor must be consulted." (91) Such methods were restricted to "Communists, Marxists, Jehova's Witnesses, saboteurs, terrorists, members of resistance movements, parachute agents, anti-social elements, Polish or Soviet Russian loafers or tramps," and for any other case wherepermission from the Gestapo Chief was first obtained. (92) At Nuremberg, defendants argued that the treatment of Sovietprisoners was not unlawful because the Soviet Union had not ratified the Geneva Convention. Forthe most part, the international and national military tribunals did not accept this defense. (93) Countries fighting terrorism or insurgencies have sometimes adopted special methods ofinterrogating suspects. For example, Great Britain in the 1970's implemented sensory deprivationinterrogation methods known as the "five techniques" against suspected members of the terroristIrish Republican Army (IRA). (94) Some of the subjects of such interrogation brought suit in theEuropean Court of Human Rights. The court described these techniques as follows: (a) wall-standing: forcing the detainees to remain forperiods of some hours in a 'stress position,' described by those who underwent it as being'spreadeagled against the wall, with their fingers put high above the head against the wall, the legsspread apart and the feet back, causing them to stand on their toes with the weight of the body mainlyon the fingers'; (b) hooding: putting a black or navy colored bag over the detainees' heads and, atleast initially, keeping it there all the time except during interrogation; (c) subjection to noise:pending their interrogations, holding the detainees in a room where there was a continuous loud andhissing noise; (d) deprivation of sleep: pending their interrogations, depriving the detainees of sleep;(e) deprivation of food and drink: subjecting the detainees to a reduced diet during their stay at thecenter and pending interrogations. The ECHR held that "use of the five techniques did not constitute a practice of torture within themeaning of Article 3 [of the European Convention for the Protection of Human Rights andFundamental Freedoms]," but did constitute "inhuman and degrading treatment." (95) Israel's General Security Service ("GSS") has employed interrogation methods involving"psychological pressure" and "moderate physical pressure" to obtain information from suspectedterrorists. (96) A judicialcommission headed by the former Israeli Supreme Court President, Justice Moshe Landau,investigated the interrogation practices of the GSS. The Landau Commission justified the use ofphysical pressure as necessary in the face of hostile acts, and recommended that rather than coveringup the use of such tactics, the government should "acknowledge that some measure of coercion ispermissible, and then codify and carefully monitor the allowable techniques." (97) The Knesset endorsed thefindings of the Commission and enacted statutory authority adopting the Commission's guidelines. The Landau Commission recommended: The means of pressure should principally take the formof non-violent psychological pressure through a vigorous and extensive interrogation. However,when these do not attain their purpose, the exertion of a moderate measure of physical pressurecannot be avoided. (98) The contours of methods were detailed in a classified annex to the report and have not beenmade public, but later reports by human rights groups and a 1999 decision by the Israeli High Courtshed light on the types of pressure the GSS employed. (99) The methods reportedly included position abuse, imposing hoodson subjects to produce disorientation, sleep deprivation, "shaking," the use of excessively tighthandcuffs, and exposure to uncomfortable temperatures and loud noises. (100) The Israeli High Courtruled that while such techniques did not constitute torture, they were nonetheless barred because theytreated the suspects in an 'inhuman and degrading' manner. (101) Department of Defense Methods of Interrogation In the aftermath of the disclosure of photographs and reports of abuses at the Abu Ghraibprison in Bagdad, the Defense Department released a series of documents related to policy withrespect to the interrogation of prisoners there and at the U.S. Naval Station at Guantanamo Bay,Cuba, where detainees captured in Afghanistan or elsewhere are being held as (unlawful) "enemycombatants." The released documents reveal deliberations about appropriate techniques forinterrogating persons the Administration had deemed to be unprotected by the Geneva Conventions. The following sections analyze the interrogation methods that were suggested or approved for useat the Abu Ghraib prison. The descriptions of the various methods in the DOD documents aresomewhat sketchy, however, and the sensitive nature of intelligence methods and the lack of detailedinformation about how the methods have been put into practice make comparison between thesemethods and past practices difficult. Approved Approaches for all Detainees The list of approved methods for interrogation of terror suspects consisted, for the most part,of methods described in FM 34-52. (102) According to FM 34-52, "the Geneva and Hague Conventionsand the UCMJ set definite limits on the measures which can be used to gain the willing cooperationof prisoners of war." It does not, however, elaborate on what the "definite limits" are, (103) or the extent to whichthey apply to persons who are not prisoners of war. (104) Some of the techniques might be considered coercive for thepurposes of a criminal prosecution, and would likely be inadmissible were they used to elicitstatements from an accused soldier prior to a court-martial. (105) Some techniqueswould very likely be unpleasant, possibly contravening GPW art. 17 if used against POWs whorefuse to answer, but it appears to be the Army's position that the approved techniques below do notbreach the law. (106) Most of the techniques do not appear to violate any provisions of the Geneva Conventions on theirface, but military experts do not always agree among themselves as to their propriety and boundaries. The "approach phase" begins when the interrogator first comes in contact with thesource (107) andcontinues until the prisoner begins answering questions pertinent to the objective of theinterrogation." (108) The effort generally consists of the establishment of control over the source and the interrogation,establishment of rapport between the interrogator and the source, and the manipulation of thesource's emotions and weaknesses to gain his willing cooperation. (109) An interrogator mayemploy more than one technique simultaneously to elicit the desired information. Direct. This approach involves thestraightforward questioning of the detainee without the interrogator adopting any of the tacticsdescribed below. The interrogator simply asks the prisoner for the information, without concealingthe interrogator's purpose or using deception of any kind, and is most effective when the prisoner iscooperative. As long as there is no exploitation of circumstances to cause fear or suffering, theGeneva Conventions' prohibition on coercion would not seem to be implicated. While it may beacceptable to exploit a detainee's initial shock upon capture to obtain information, (110) exploiting a detainee'ssuffering by interrogating a wounded prisoner would be more problematic, and could constitute abreach of the obligation to provide medical treatment. (111) As noted above, it is generally agreed that the GenevaConventions allows any question to be posed to a prisoner of war, so long as the prisoner is notunlawfully compelled to give an answer. (112) Incentive / Incentive Removal. The incentiveapproach rewards the source for his cooperation. According to FM 34-52, the approach is based on"the application of inferred discomfort upon [a detainee] who lacks willpower." (113) It states thatinterrogators are not to withhold anything the prisoner is entitled to receive by right under theGeneva Conventions, but may withhold privileges. (114) Under this view, it would be improper to use as an incentivesomething that is required for the health or survival of the detainee, such as adequate nutrition andnecessary medical care. However, comfort items might serve as lawful incentives. (115) For example, it wouldbe improper to withhold water or food until a prisoner begins to cooperate, but it would not beimproper to reward a cooperative prisoner with food he may regard as a "treat." What qualifies as a "comfort item" or a "privilege" may be subject to debate, but the languageof the Geneva Conventions suggests that in addition to items necessary for basic subsistence, itemsnecessary for human dignity, such as clothing, would make inappropriate incentives. (116) However, it might notbe considered inhumane or degrading to compel prisoners to wear prison uniforms or clothing notto their particular liking, so long as the clothing is adequate for conditions (GPW art. 27) and theresult is not degrading or dehumanizing. (117) Such a practice might nonetheless breach other provisions,for example, GPW art. 18 (POWs are entitled to retain their personal articles other than weapons andmilitary equipment not for personal protection or identification); GPW art. 40 (POWs are allowedto wear their badges of rank and nationality, as well as decorations); GPW art. 34 and GC 38 (rightto practice religion); GC art. 27 (protected persons are entitled to respect for their religiousconvictions and practices, and their manners and customs). FM 34-52 suggests that "realistic incentives" be used to establish rapport, such as "a meal,shower, [opportunity to] send a letter home" for the short term, or for the long term, repatriation orpolitical asylum. (118) Whether the use of "privileges" or "entitlements" is appropriate under the Geneva Conventions maydepend on the circumstances. Prisoners of war and interned civilians are entitled to adequatenutrition and hygiene and, except for civilian internees who are definitely suspected of posing asecurity threat, to communicate with family members. Making these privileges available (or varyingtheir quantity and quality) based on the cooperation of each detainee during interrogations could runafoul of the GPW prohibition on disadvantageous treatment of any kind, (119) as well as otherprovisions outlining rights. (120) For example, one U.S. court found that depriving POWs ofany opportunity at all to communicate with the outside world amounted to "torture." (121) However, allowinga cooperative detainee the opportunity to send three letters home per month, where other prisonersare only allowed to send the two required by GPW art. 71 and GC art. 107, may be permissible. States whose prisoners of war have been subjected to the use of incentives to elicitinformation have criticized the technique as inhumane under the particular circumstances. Indescribing the conditions to which the U.S. prisoners of war (122) held by North Koreawere subjected, the Defense Department told Congress: Water was often scarce; bathing became difficult.Barracks were foul and unsanitary. In the best of the camps the men behind the barbed wire weresometimes given tobacco, a few morsels of candy, occasional mail. As will be noted, such itemswere usually offered as rewards for "cooperative conduct." (123) A British report describing the lot of their POWs held by the Chinese noted that supplies of food,medicine, and standards of accommodation the POWs received depended "to a large extent on thedegree of cooperation with their captors," and deplored the use of physical violence and solitaryconfinement as "incentives" for cooperation. (124) The report also described how the Chinese manipulated mailas an inducement for cooperation, commenting that the refusal to allow POWs the chance to writehome to let their families know they were alive was a breach of the Geneva Convention. (125) Emotional Love / Hate. Using the emotionalapproach, an interrogator seeks to exploit the source's emotions in order to override his rationale forresisting. According to FM 34-52, love or fear for one person may be exploited or turned into hatefor someone else. (126) For the emotional love approach, the interrogator focuses on the source's anxiety brought on by hispredicament. The interrogator then makes use of the love the source feels toward his family,homeland, comrades, etc., to devise an effective incentive, such as communication or promisedreunification with the source's family, a quicker end to the war to save his comrades' lives, and soforth. FM 34-52 states that a "good interrogator will usually orchestrate some futility with anemotional love approach to hasten the source's reaching the breaking point. This places a burden onthe source and may motivate him to seek relief through cooperation with the interrogator." The emotional hate approach focuses on any genuine feelings of hatred, or possibly a desirefor revenge, the source may feel toward his country's regime, his immediate superiors, officers ingeneral, his fellow soldiers or the like. The interrogator might hint at an opportunity for revenge ifthe source cooperates and divulges certain information. The manipulation of emotions as described does not seem to violate any prohibitions of theGeneva Conventions on its face. The success of the technique relies on the arts of perception andpersuasion, which most commentators agree are not out of bounds. However, if the emotional lovemethod, for example, were to involve threats against the lives of family members, for example, itsuse could contravene the Conventions' prohibitions of threats. Fear Up Harsh / Mild. According to FM 34-52,the aim of the "increased fear up harsh" technique is to convince the source who appears to behiding something that he does indeed have something to fear (not necessarily from the interrogator)and that he has no option but to cooperate. The interrogator will behave in a heavy, overpoweringmanner, using a loud and threatening voice, and perhaps throwing objects around the room toheighten the source's implanted feelings of fear. (127) Of the questioning methods approved by the manual, thisapproach is said to have greatest potential to violate the law of war, (128) presumably becauseit could lead to threats or violence against the subject. The 'mild' version of the 'fear up' approach seeks to exploit circumstances that point to theinterrogatee's involvement in some activity that could bring harsh punishment. The interrogator doesnot raise his voice or behave in an overbearing manner; instead, he uses a "credible distortion of thetruth" as a subtle means to blackmail the subject into cooperating. The interrogator persuades thesubject that he has good cause for fear under the circumstances, but the interrogator might intimatethat he might be willing to conceal or alter the reported circumstances of the source's capture, as longas the source cooperates. Reduced Fear. The "decreased fear down"approach is to be used primarily on a source who is already in a state of fear. The technique involvescalming the source and convincing him that he will be properly and humanely treated, or that he issafer in captivity than in combat, for example. (129) Using a soothing tone of voice, the interrogator attempts tocreate rapport with the source by engaging in small talk until the source is ready to answer morepressing questions. It is difficult to conceive of an implementation of this approach that would causea violation of the Conventions. Pride & Ego Up / Down. The "pride and ego"approach concentrates on tricking the source into revealing pertinent information through the use offlattery or abuse. The pride and ego up variation is used on sources who feel inferior, especially lowranking enlisted personnel or junior grade officers, who might respond to the opportunity todemonstrate their intellect or importance. The interrogator speaks as if he is very impressed with theaccomplishments of the subject, engendering positive feelings on the source's part that he is finallygetting the recognition he deserves. The source may reveal pertinent information in order to solicitmore laudatory comments from the interrogator. The "pride and ego down approach," in contrast, exploits a source's sense of inferiority by attacking the source's sense of personal worth, criticizing his loyalty, intelligence, abilities, technicalcompetence, leadership qualities, slovenly appearance, or any other perceived weakness. Theinterrogator uses a sarcastic, caustic tone of voice to express distaste or disgust. If the tactic works,the source will become defensive and try to prove the interrogator wrong. In his attempt to vindicatehis pride, according to FM 34-52, the source will usually involuntarily provide pertinentinformation. (130) Theapproach could contravene the Geneva Conventions' prohibition of insults and degrading treatment. Futility. The "futility" approach is used to exploitthe doubts and misgivings already in the source's mind to make him believe that it is useless to resistthe interrogation efforts. FM 34-52 describes multiple techniques for accomplishing the desiredeffect. (131) By makingthe situation appear hopeless, the interrogator allows the source to rationalize his cooperation. Thisapproach, as described, appears to be permissible as "guile," but extreme treatment designed toinduce a feeling of overall futility could cause mental suffering severe enough to raise questionsunder the Geneva Conventions. We Know All. The "we know all" approachinvolves making a source believe that the interrogator already knows everything about thesource. (132) Theinterrogator compiles all available data on the source and his unit. The interrogator then asksquestions to which he already has the answer. When the source refuses to answer or provides anincomplete or false response, the interrogator himself supplies the correct answer. The interrogatortries to convince the source that all information is already known, so he may as well cooperate. When the source begins to give accurate and complete information, the interrogator beginsinterjecting questions for which he does not have the answers. This appears to be an unobjectionabletactic involving more wile than coercion, and seems to be widely accepted as legitimate. Establish Your Identity. In the "establish youridentity approach," the interrogator insists that the source has been identified as an infamous criminalwho is merely posing as someone else to avoid punishment. (133) The source may betricked into giving detailed information on his unit to establish or substantiate his true identity inorder to refute the interrogator's allegations. The technique appears to involve trickery that mightbe acceptable under the Geneva Conventions, but could conceivably be applied in a threatening orcoercive manner. Repetition. The interrogator may repeat the samequestion many times in order to get a hostile source to cooperate. (134) The source becomesbored with the procedure and may give more complete and candid answers simply in order to gainrelief from the monotony. (135) Taken to extremes, for example, during prolongedinterrogations, it might be said to induce mental suffering File & Dossier. The "file and dossier" approachis a variation of the "we know all approach," but uses a prop. Prior to the session, the interrogatorprepares a dossier containing all available information obtained from records and documentsconcerning the source or his organization, possibly padding it with extra paper to create the illusionthat it contains much more information than is really there. The interrogator confronts the sourcewith the dossier, exploiting the known facts about the source to convince him that resistance wouldbe futile. Rapid Fire. FM 34-52 describes the "rapid fire"approach as a "psychological ploy based upon the principles that everyone likes to be heard whenhe speaks, and it is confusing to be interrupted in midsentence with an unrelated question." (136) One or twointerrogators ask a series of questions without allowing the source time to answer them completelybefore the next question is asked. The source may become confused and contradict himself, whichthe interrogator can exploit by confronting the source with the inconsistencies. The source mayreveal more than he intends in attempting to clarify his answers. Silence. The silence approach involves aninterrogator who says nothing to the source, but "looks him squarely in the eye, preferably with aslight smile on his face," in an effort to make the subject nervous and force him to break eye contactfirst (137) . The sourcemay begin to talk or ask questions to break the tension. When the interrogator eventually begins toask questions, the subject may feel relieved and more willing to divulge information. Require CG's Approval The methods listed below were authorized to be used under certain conditions but requiredthe approval of the Commanding General. These methods are not described in FM 34-52, althoughsome resemble techniques described as coercive by the CIA manual. (138) Some appear toinvolve the "environmental control" techniques of the sort that led to the revision of FM 34-52 in1992, (139) to cause"debility," (140) or fear. Some have argued that these techniques amount to torture, but Pentagon officials reportedly said thatsuch methods can be applied within the framework of the Geneva Convention, as long as theprisoner's basic physical needs are met. (141) Change of Scenery Down. For this technique,the interrogator removes the detainee from the standard interrogation setting to one that may be lesscomfortable, but would not constitute a "substantial change in environmental quality." (142) The purpose of achange of scenery is to throw the detainee off balance psychologically. As long as it is not seen aspunishment for failure to cooperate, and the environment does not fall below the standards for healthand hygiene, a change of scenery would not seem to violate the Geneva Conventions. Dietary Manipulation. This technique involveschanging the diet of a detainee, not in such a way as to deprive him of food or water, affect hishealth, or interfere with his religious practices. This could involve a substitution of cold rations forhot, according to the DOD Working Group Report. The object is probably to disorient the detaineeby upsetting his regular routine. (143) Environmental Manipulation. This methodinvolves alteration of the environment to create moderate discomfort, by means of adjusting theroom temperature or introducing an unpleasant smell, without bringing about conditions that wouldinjure the detainee. (144) Subjecting prisoners of war to inhospitable climate conditions has long formed the basis forcomplaints about inhumane treatment in violation of the law of war. (145) Purposeful exposureof prisoners of war to temperature extremes for interrogation purposes has been found to beill-treatment under the 1929 Geneva Conventions. (146) Sleep Adjustment. The detainee's ordinary sleepschedule is disturbed by, for example, reversing the sleep cycles from night to day, but withoutdepriving the detainee of sleep. The method likely induces a feeling of disorientation similar to "jetlag." "Sleep management" for a maximum of 72 hours was approved for use at Abu Ghraib with thecommander's approval. The DOD Working Group distinguished "sleep management" from "sleepdeprivation," which it defined as "[k]eeping the detainee awake for an extended period of time(allowing individual to rest briefly and then awakening him, repeatedly) NOT to exceed four daysin succession." (147) The DOD Working Group noted, "as a matter of policy," that other nations consider sleepdeprivation to amount to torture or cruel, inhuman, or degrading treatment. (148) Sleep deprivation is an age-old method for weakening the subject physically. However, theCIA manual recommended sleep disruption as a more effective method of coercion: Another objection to the deliberate inducing of debilityis that prolonged exertion, loss of sleep, etc., themselves become patterns to which the subjectadjusts through apathy. The interrogator should use his power over the resistant subject's physicalenvironment to disrupt patterns of response, not to create them. Meals and sleep granted irregularly,in more than abundance or less than adequacy, the shifts occurring on no discernible time pattern,will normally disorient an interrogatee and sap his will to resist more effectively than a sustaineddeprivation leading to debility. (149) Isolation. The detainee would be isolated fromother detainees (for no longer than 30 days (150) ), but otherwise complying with the basic standards oftreatment. The DOD Working Group recommended isolation as an "exceptional" (151) technique, and notedthat its use could implicate the definitions of torture or cruel, inhumane and degrading treatmentunder CAT, (152) andthat, if applied to POWs, it would violate articles 13 (prohibiting intimidation), 14 (requiring respectfor the person), 34 (prohibiting coercion) and 126 (entitlement to access and basic standards oftreatment). (153) Presence of Military Working Dogs. Introducingthe presence of military dogs without directly threatening action or endangering the detainee wassuggested as a method for creating anxiety but not terror or mental trauma. (154) The DOD WorkingGroup framed the technique as an example of "increasing anxiety by use of aversions," which itflagged as inconsistent with policies followed by U.S. allies and possibly violating the CAT. Sensory Deprivation. The DOD Working Groupdid not describe "sensory deprivation," but the CIA manual offered a discussion of it as a byproductof solitary confinement and isolation: The chief effect of arrest and detention, and particularlyof solitary confinement, is to deprive the subject of many or most of the sights, sounds, tastes, smells,and tactile sensations to which he has grown accustomed. (155) Artificially limiting the extent to which a person is able to sense his environment has beenfound to induce stress and when taken to the extreme, can cause hallucinations and delusions. The apparent reason for these effects is that a personcut off from external stimuli turns his awareness inward, upon himself, and then projects the contentsof his own unconscious outwards, so that he endows his faceless environment with his ownattributes, fears, and forgotten memories. [One expert] notes, "It is obvious that inner factors in themind tend to be projected outward, that some of the mind's activity which is usually reality-boundnow becomes free to turn to phantasy and ultimately to hallucination and delusion." (156) The CIA theorized that The more completely the place of confinementeliminates sensory stimuli, the more rapidly and deeply will the interrogatee be affected. Resultsproduced only after weeks or months of imprisonment in an ordinary cell can be duplicated in hoursor days in a cell which has no light (or weak artificial light which never varies), which issound-proofed, in which odors are eliminated, etc. An environment still more subject to control, suchas water-tank or iron lung, is even more effective. (157) Stress Positions. The DOD Working Group didnot define stress position, but suggested "prolonged standing" (not to exceed four hours in a 24-hourperiod), which it described as lengthy standing in a "normal" position (non-stress). . .not enforcedby physical restraints. (158) Prolonged standing is explicitly prohibited against civilianinternees as inhuman treatment. (159) The use of stress positions has been found to constitute tortureor cruel, inhumane and degrading treatment in the past. The KUBARK manual included prolongedstanding in its discussion of "coercive interrogation" methods, recommending that a subject's"resistance is likelier to be sapped by pain which he seems to inflict upon himself" rather than bydirect torture, and suggests forcing the detainee to stand at attention for long periods of time. (160) It seems likely that theuse of stress positions would violate the Geneva Conventions for all categories of persons under theirprotection if were to induce the requisite amount of suffering or humiliation, but the extent ofsuffering necessary to cross that line is not firmly established. Removal of Clothing. Depriving detainees ofclothing probably serves to divest them of their identity, but could endanger a detainees healthdepending on environmental conditions. The DOD Working Group stated its goal as creating afeeling of helplessness and dependence, but cautioned "it must be monitored to ensure theenvironmental conditions are such that this technique does not injure the detainee." (161) Forced nudity withoutthreats or sexual assault may not rise to the level of an "outrage upon human dignity," but wouldprobably be considered inhumane and degrading. Removal of All Comfort Items, Including ReligiousItems. This technique is a harsher version of the "Removal of Incentives" approachdescribed above. Whether it violates the Geneva Conventions depends on the nature of the itemsconsidered to fall under the "comfort" rubric. The removal of religious items could entail a violationof GC art. 27, providing that protected persons are entitled to respect for their religious convictionsand practices, or GPW art. 14, respect for the person of the prisoner of war. Forced Grooming. The DOD Working Groupdescribed forced grooming as shaving of hair or beard (accomplished without risking injury to thedetainee). It may be viewed as a violation of the respect for the person under GPW art. 14, or as aviolation of a prisoner's religious rights under GC art. 27. By itself, it would not seem to constitutean outrage on human dignity, (162) but could be seen as inhumane or degrading. Use of Scenarios Designed to Convince the Detainee that Deathor Severely Painful Consequences are Imminent. This technique was listed as a"Category III technique" that could only be used to interrogate the most uncooperative detainees atGuantanamo with the approval of the Commanding General. (163) Category III techniquesalso included exposure to cold weather or water (with medical monitoring) and "the use of a wettowel and dripping water to induce a feeling of suffocation." (164) There seems to be littledoubt that such methods would violate the Geneva Conventions, (165) as constitutingcoercion, threats, and possibly mental torture. (166) As such, these techniques are also likely to be consideredinhumane by Geneva Convention standards.

Allegations of abuse of Iraqi prisoners by U.S. soldiers at the Abu Ghraib prison in Iraq haveraised questions about the applicability of the law of war to interrogations for military intelligencepurposes. Particular issues involve the level of protection to which the detainees are entitled underthe Geneva Conventions of 1949, whether as prisoners of war or civilian "protected persons," orunder some other status. After photos of prisoner abuse became public, the Defense Department(DOD) released a series of internal documents disclosing policy deliberations about the appropriatetechniques for interrogating persons the Administration had deemed to be "unlawful combatants"and who resisted the standard methods of questioning detainees. Investigations related to theallegations at Abu Ghraib revealed that some of the techniques discussed for "unlawful combatants"had come into use in Iraq, although none of the prisoners there was deemed to be an unlawfulcombatant. This report outlines the provisions of the Conventions as they apply to prisoners of war andto civilians, and the minimum level of protection offered by Common Article 3 of the GenevaConventions. There follows an analysis of key terms that set the standards for the treatment ofprisoners that are especially relevant to interrogation, including torture, coercion, and cruel, inhumanand degrading treatment, with reference to some historical war crimes cases and cases involving thetreatment of persons suspected of engaging in terrorism. Finally, the report discusses and analyzessome of the various interrogation techniques approved or considered for use during interrogationsof prisoners at Abu Ghraib.

Introduction The growth of the national debt, which is considered unsustainable under current policies, continues to be one of the central issues of domestic federal policy making. On August 2, 2011, Congress adopted, and the President signed, the Budget Control Act (BCA; P.L. 112-25 ), which might be viewed as an initial step in addressing long-run debt issues. It had been recognized for some time that the growing long-term debt is an issue, and this concern was reinforced with Standard and Poor's downgrading of U.S. Treasury securities from AAA to AA+ on August 5, 2011. As part of the BCA, the Joint Committee on Deficit Reduction (sometimes referred to as the Super Committee) was appointed to find ways to achieve a specified amount of deficit reduction. The committee failed to reach agreement, which triggered a set of automatic spending cuts, largely on discretionary spending, that were put into effect in FY2013. At the end of 2012, however, concerns about the effect of recent spending cuts and tax increases about to take effect (called the fiscal cliff ) on economic recovery became a central issue. Action to address this problem resulted in retaining tax cuts compared with present law by making most expiring tax cuts permanent and increasing discretionary spending levels. These decreases in revenue collection and increases in spending resulted in higher budget deficits. This report examines alternative approaches to reducing the deficit, relating to the immediate issues arising from the BCA and the extended tax cuts as well as to ongoing, longer-term decisions about how to bring the debt under control. It focuses on the trade-offs between limiting the provision of defense and domestic public goods, reducing transfers to persons including entitlements for the elderly and those with low income, reducing support for state and local governments, and raising taxes. Using projections of the debt and deficit, it also addresses how limiting reliance on one source of deficit reduction creates pressure on other sources. The Budget Control Act and the Fiscal Cliff The BCA, the result of months of negotiation, combined a multistep increase in the debt ceiling with proposals to begin reducing the deficit. As part of the legislation increasing the debt ceiling, the BCA adopted caps that cut discretionary spending by $741 billion from FY2012 to FY2021. Along with mandatory spending reductions of $20 billion and savings in interest of $156 billion, these measures were estimated to reduce deficits by $916 billion over the FY2012-FY2021 period. The act also directed a newly created joint committee, composed of 12 members (3 each from the House majority, the House minority, the Senate majority, and the Senate minority) to find an additional $1.2 trillion over 10 years in deficit reduction for a total of 1% of gross domestic product (GDP) over that period from the act. In addition, the plan contained a process and enforcement mechanism. The committee was unable to reach agreement by the deadline of November 23, 2011, setting into motion automatic spending cuts ( sequestration ) that took effect on January 1, 2013. Congress faced, at the end of 2012, the expiration of the Bush tax cuts, which would increase revenues by 1.5% of GDP. In addition, at the end of 2012, some other temporary tax cut and expenditure provisions were scheduled to expire, including the 2 percentage point reduction in the payroll tax and some temporary increases in unemployment benefits. These reductions in spending were set to occur in addition to the cuts contained in the BCA, and the full set of spending cuts and tax increases came to be referred to as the fiscal cliff . Concern developed about the fiscal cliff's short-run contractionary effects on the economy. At the end of the 112 th Congress, the American Taxpayer Relief Act ( P.L. 112-240 ) made most of the Bush tax cuts permanent. Some other tax cuts (although not the payroll tax reduction) were extended, reductions under the BCA were delayed (and a portion of them were eliminated), and unemployment benefits continued for another year. These actions reduced, but did not eliminate, the contractionary effect of the fiscal cliff. In December 2013, the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) increased the discretionary spending caps for FY2014 and FY2015. The caps for FY2016 and later years were not changed. The Timing of Deficit Reductions How much should be done to address the budget issues, and how quickly, is a topic of some debate. As noted above in relation to the fiscal cliff, there was concern about front-loading deficit reduction at a time when the economy was operating well below potential. The economy's recovery from the 2007-2009 recession was slow, although by October 2014 the unemployment rate had dropped to 5.8%, close to the full employment rate. At that time, labor force participation was still below prerecession levels, as was part-time and long-term unemployment. According to the Congressional Budget Office (CBO), the output gap (the difference between potential and actual output) was at 3.5%. For that reason, some believed the deficit should not be significantly reduced until the economy fully recovered. Indeed, although the budget plan agreed upon on August 2, 2011, had limited spending cuts in FY2012, critics of the plan suggested at that time that it might be inappropriate given current economic conditions. Others suggested it did not go far enough. However, the budget plan may be viewed as an initial step toward addressing the long-run budget challenges. A case can also be made that once the economy recovered it would be important to move quickly to address the deficit. The greater the debt-to-GDP ratio grows, the more burdensome interest payments become and the more the debt compounds. For example, in CBO's long-run budget projections, under the agency's alternative baseline, which reflects current services, interest payments are projected to rise to 3.3% of output by FY2024 and 4.7% by FY2039. CBO also projects that a sustained reduction in the deficit of 1.2% of GDP would be required to stabilize debt at 74% of GDP, its current level, under the standard baseline, whereas a 2.6% cut would be required to bring debt to the average of the last 40 years (39%). If the reduction is delayed for 5 years, the required decreases would be 1.5% and 3.2% of GDP; if delayed for 10 years, 2.1% and 4.3% of GDP. The need to not move too slowly can also affect the optimal approaches to deficit reduction. For example, it is difficult to change current entitlements for the elderly (such as Social Security, Medicare, and part of Medicaid, which funds nursing home care). Many already-retired individuals have little leeway to adjust to such changes and could be particularly burdened by benefit reductions, which suggests that benefit changes be adopted in the near term but applicable to the future. Changing discretionary spending or increasing taxes can be achieved more quickly, although, as discussed below, the long-run gap between spending and taxes is too large to be addressed with discretionary spending revisions alone. Long-Term Budget Issues: Overview Addressing a federal budget deficit that is unsustainable over the long run involves choices. Fundamentally, the issues require deciding what government goods, services, and transfers are worth paying taxes for. Most people would agree that the country benefits from a wide range of government services—air traffic controllers, border security, courts and corrections, and so forth—provided by the federal government. Yet, as shown below, federal government provision of goods and services, outside of defense, constituted only 10% of federal spending and 2% of GDP in 2007, the last normal year before the recession. Transfers, including interest payments, accounted for around 70% of the federal budget. Finding budget savings by reducing nondefense federal government services alone would fall short of what is needed to address the deficit. Transfers, including interest payments, accounted for 75% of the federal budget in FY2014, up from the 70% figure from FY2007. Outside of the 10% for provision of domestic goods, defense spending for goods and services constitutes about 20% of federal spending. In this area as well, there are limits to the savings that might be found without compromising national security. Therefore, to address the budget shortfalls facing the country over the long run, it is likely that transfer payments to or on behalf of individuals (such as Social Security and Medicare), which already account for almost half of federal spending and are growing, must be reduced; transfers to state and local governments must be reduced (which would shift the budget problem to a different level of government); taxes must be raised; or some combination of the above. The next section of this report examines the allocation of government spending, the method of its financing, and how these shares and sources have changed over time. It demonstrates that the surge in the debt is a recent phenomenon that has occurred with the recession and is inherently transitory. Going forward, however, as shown in the subsequent section, the growth in transfers to the elderly and spending for health car—a trend that has been under way for some time but was offset by a decline in spending for other purposes, relative to GDP—will increasingly contribute to unsustainable deficits. The following section addresses philosophies for approaching deficit reduction, as embodied in a number of proposals. It discusses how different approaches to and constraints imposed on deficit reduction will have consequences for the menus of other choices available. For example, if deficit reduction begins with a constraint that taxes will not rise, policy would almost certainly require significant cutbacks in Social Security and Medicare. If the benefits of these programs are to be maintained, an increase in taxes would likely be required. Central findings of this analysis include the following: A comparatively small share of federal spending is for direct provision of domestic government goods and services, which many people may think of when considering federal spending. Because this spending is normally about 10% of total federal spending and about 2% of GDP, whereas deficits excluding interest are projected to be 2% to 7% by FY2039, cutting this type of spending alone cannot realistically contain the problem of unsustainable deficits. Transfers and payments to persons and to state and local governments constitute most of federal spending, about 70% or more. Defense spending, accounting for about 20% of federal spending, has declined as a share of output over the past 35 years, but it also tends to vary depending, in part, on the presence and magnitude of international conflicts. Until the recent recession, most types of nondefense spending had been constant or declining as a percentage of output, but spending on programs for the elderly and health care have been rising. Although some recent increases in the debt can be attributed to the Bush tax cuts and the conflicts in Iraq and Afghanistan, along with growth in spending on the elderly and health, the concern about the debt is not the result of prolonged and large deficits in the past. Debt grew during the recession and its aftermath. Debt held by the public had actually declined from almost 50% of GDP in 1993 to 33% in 2001; it rose slightly to 36% by 2007. During the first three recession and recovery years (2008 through 2010), it rose to 62%. With many of the Bush tax cuts made permanent and a slow recovery, it eventually rose to 74% by FY2014. It is projected to stabilize for a period of time and then grow, reaching 106% or more of GDP by FY2039. The problem with the debt lies not in the past but in the future, as growth in spending for health and Social Security is projected to continue. Because much of the pressure on future spending arises from imbalances in Social Security and Medicare Part A (Hospital Insurance) trust funds, keeping these funds and their source of financing intact is a concern that could constrain choices. Reductions in discretionary spending are insufficient to reduce the deficit to a sustainable level, so limiting taxes as a percentage of output or constraining the overall size of the government to current levels would likely require significant cuts in mandatory spending, including entitlement programs such as Social Security, Medicare, and Medicaid. Preserving entitlements would likely require significant increases in taxes, such as raising rates, reducing tax expenditures, increasing other taxes, or introducing new revenue sources. Tax expenditures may be difficult to eliminate, but they may be a reasonable source of new revenue if not used to lower rates. Addressing the eventual Social Security trust fund shortfall largely with tax increases would smooth the burden of accommodating longer lives across both working and retirement years. This argument might apply in part to Medicare and Medicaid issues. Because the federal government provides about one-fifth of the revenue for state and local governments, cutbacks in transfers to these governments may, in part, shift the burden of providing services from the national to subnational governments rather than altering the overall size of government services. Federal Spending and Taxes: Patterns over Time The objectives of government spending and taxes are generally viewed as providing for public and quasi-public goods, such as defense, law enforcement, infrastructure, and education; correcting market failures, including externalities (both negative, such as pollution, and positive, such as research and development); achieving distributive justice; and managing business cycles. Measured by amount of spending, the most important pure public good the federal government provides is defense. Many public and quasi-public goods, as well as income-support programs, are provided by state and local governments, and some federal spending is through grants to state and local governments for these programs. For example, in the state and local governments' FY2007, state governments received 21% of total revenues from federal transfers and local governments received 3.6%. States also provide transfers to local governments, and local governments provide transfers among themselves as well. These intergovernmental transfers are important in evaluating budget proposals because a reduction in transfers to state and local governments may in large part shift the burden to these governments rather than reduce the overall government role. Spending in the U.S. budget can be divided in various ways that are relevant to considering deficit reduction. In the remainder of this section, government spending is divided by whether the spending is to provide public goods or transfers, whether it is discretionary or mandatory (and the major categories within those divisions), and by function. This section also discusses taxes by source, tax structure, tax expenditures, and receipts and payments in the major trust funds. The first approach to presenting spending distinguishes between the provision of goods and services (defense and nondefense) and transfers to persons or to state and local governments. This approach is not a typical way of presenting budget data. It is important to divide spending in this way, however, to address concerns about potential inefficiency in federal government operations, especially outside of defense, as it indicates the scope for cutbacks relative to the deficit. The second approach divides spending into discretionary (requiring appropriations) and mandatory (embodied in laws providing entitlements to benefits). It is associated with the procedures needed to alter spending. The third, also a common way of presenting budget data, divides spending by function (defense, education, energy, health, etc.). Distribution of Spending By Fundamental Economic Form: Government Goods and Services Versus Transfers One way to look at spending is to examine the extent to which spending involves actual government consumption or production (that is, spending on the direct provision of goods and services) as compared with transfers. In calendar year 2007, a more normal year than the recent recession years, only 29% of government spending involved the direct provision of goods and services. Of the remaining payments, 45% were transfers to persons, 13% transfers to state and local governments, 11% interest payments, and 2% subsidies. Although federal government spending amounted to 20.6% of output in 2007, spending by the federal government on the provision of public and quasi-public goods was only 6% of output. Based on budget data reported subsequently, 3.9% was for defense, leaving 2.1% for nondefense. Because total nondefense discretionary spending was 3.6% of GDP, 40% of this amount was transfers. By the third quarter of 2014, as the economy was approaching full employment, consumption spending had declined to 5.6% of output, whereas transfers and interest had increased. Government spending on nondefense goods and services was 2.6% of GDP, and defense spending was 3%. Budget data for FY2014 indicate that discretionary spending was 6.9% of GDP, with defense spending at 3.4% and nondefense at 3.5%. Thus, a quarter of nondefense spending, about 1% of GDP, was transfers at that time. State and local government spending (netting out transfers between these remaining two levels of government spending) in 2007 was 14% of output, and total spending by all forms of government (after netting out federal transfers) was 32% of output. A larger share of state and local spending (which includes federal government transfers), 50%, was in government provision of goods and services (consumption), with 39% transfers to persons, 9% interest payments, and 1% subsidies. In the third quarter of 2014, state and local spending net of federal transfers was 11%, for a total of 34% for all governments. Provision of goods and services was 66%; transfers were 25%; and interest was 8%. Combining all levels of government, government production of goods and services in 2007 was 16% of output, so the federal government share (6%) was 38% on the total provided by all levels of government. Subtracting 4% from the federal government share and the total share to eliminate national defense spending (shown subsequently), the federal share of nondefense provision of goods and services by all levels of government was 17%. In 2014, the nondefense share had declined to 15%, with the federal share (6% of output) remaining at 38%. Similar results are found when examining employment levels. Total government civilian employment is 16% of total nonagricultural employment, with the federal government accounting for 2%, the state government accounting for 4%, and local government accounting for the remainder (11%). By October 2014, the share remained about 16%, and each level of government maintained approximately the same shares (with local government falling to 10%). The share of federal government spending that goes to the direct provision of public or quasi-public goods (consumption) has declined over time, as shown in Table 1 , which compares 1971 with 2007 and 2014. The decline from 9% of GDP in 1971 to 6% of GDP in 2007 is largely due to a reduction in defense spending, which was higher in 1971 during the Vietnam War. The discussion in this section indicates that although total spending as a percentage of GDP grew by about a percentage point between 1971 and 2007, government involvement in the economy, narrowly defined as using resources to provide public goods directly, had fallen by a third and, outside of defense, had remained roughly constant and small (at around 2% of output). At the same time, transfers to persons increased by more than 40% and transfers to state and local governments increased by more than a third. Spending rose another 2% of GDP by 2014, primarily due to transfers to persons, whereas consumption declined. Distribution of Spending by Broad Mandatory and Discretionary Categories19 Budget accounts often classify spending in budget documents as mandatory or discretionary spending, along with subcategories of spending. Interest payments are listed separately because they are a consequence of past spending and tax policies. Discretionary spending is determined in the annual appropriations process and is normally divided into defense and nondefense categories. It is also sometimes divided into security and nonsecurity spending, although security spending outside of defense is small. Discretionary spending is where most of the public provision of goods and services occurs, but some discretionary spending is in the form of transfers. Mandatory spending is governed by a set of permanent provisions, and some of these programs (such as Social Security and Medicare) are referred to as entitlements. These types of spending are listed in Table 2 as a percentage of output. Since 1971, defense spending has declined as a share of output, first as a result of the ending of the Vietnam War (by FY1981, defense spending was 5.2% of output). It rose in the 1980s and then fell, reaching 3.0% by 2001, before rising again with the Afghanistan and (second) Iraq wars. This pattern suggests that although defense spending may generally grow with the economy and be affected by other factors (such as moving to an all-volunteer force or the peacetime buildup in the 1980s), it also fluctuates depending on whether the United States is engaged in international conflicts. Nondefense discretionary spending has fluctuated much less, although it rose in the late 1970s, then reverted back to historical levels. Nondefense discretionary funding, although small as a share of the budget and of GDP, is largely the spending that many people think of when they think of the direct provision of goods and services by the federal government. What does nondefense discretionary spending include? About 16% is education, training, employment, and social services, and the vast majority of this spending is for elementary and secondary education for disadvantaged and special-needs children. A similar share, about 15%, goes to transportation, with about half related to highways, almost a quarter air transport, and about one-sixth mass transit, as well as small shares for marine and railroad transportation. About 11% is for income security (mostly low-income housing assistance); 10% is for health research and public health; 10% is for veterans' benefits; 9% is for international purposes (about half of which is for humanitarian and development aid and about 15% is funding for the State Department); and 9% is for administration of justice (border security, Federal Bureau of Investigation (FBI), Drug Enforcement Administration, courts and corrections). Finally, about 6% is for the environment and natural resources (of this, about one-quarter goes to the Environmental Protection Agency, one-quarter is for the Army Corps of Engineers, 15% is for the forest service, and the remainder is for parks, fish, and wildlife and national oceanic and atmospheric programs). About 5% is for general space and science (about half of that is for the space program). As noted in the discussion above, nontransfer domestic spending is 2% of GDP. In 2007, less than half (40%) of total discretionary nondefense spending was for transfers, such as highway funds and grants provided to state and local governments. Thus, any one program area is modest as a share of output, which means that cuts in a particular area would also be small. For example, total spending on the entire federal domestic enforcement program, including immigration and the border patrol, federal courts and prosecutors, federal prisons, and the FBI, constitutes only three-tenths of 1% of output, and even a significant cutback in this spending would be small compared with projected deficits of 3.8 percentage points of GDP by FY2024. Mandatory spending, although it varies over time, increased over the period FY1971 through FY2007 and again in FY2013. The increase is most pronounced for Medicare, which provides health care for the elderly and has grown relative to GDP due to rising health care costs, certain other benefit changes, aging, and increased life spans. Social Security has also grown relative to GDP, although by a smaller amount, due to aging and longer life expectancy of the population. A significant percentage of Medicaid benefits the elderly (largely through long-term care), and its growth has also been influenced by increased life spans as well as costs. Other mandatory programs that provide benefits for low-income individuals, the unemployed, retirement programs for federal workers, and other purposes (such as agricultural support payments) have remained relatively constant or declined between FY1971 and FY2007. The rise in some of these programs between FY2007 and FY2013 is probably due to the effects of the recession. Distribution of Spending by Function Another traditional way of viewing the budget is by budget function relating to the area of spending (education, health, etc.). These comparisons, shown in Table 3 , provide a similar picture to the previous allocation: although total spending as a share of output has remained about the same from FY1971 to FY2007, the federal government has an increasing share of output in health and programs for the elderly, with declining shares for almost every other functional category. In 2007, 64% of spending was for human resources, with 20% for defense, 9% for interest, and 7% for all other functions. These ratios were similar in FY2013. Table 3 presents these categories as a percentage of GDP and illustrates that the subcategories for many types of spending, which are those that represent direct provision of government goods and services, are small as a percentage of GDP. Tax Revenues, Tax Structure, Tax Expenditures and Earmarked Spending This section discusses four issues related to taxes: the sources of tax revenue and their growth over time, the differences in structure and distribution of revenue sources, the size and distribution of tax expenditures (special income tax provisions such as exclusions, deductions, and credits), and taxes that are specified as the revenue source for certain spending. Tax Revenues Table 4 provides the major sources of revenue and how they have changed over time. The individual income tax, the largest single source of revenue as a percentage of GDP, was about the same in FY1971, FY2007, and FY2013, but over the time period it fluctuated considerably. Individual income tax revenues grew during the 1970s due to bracket creep, reaching 9.4% in FY1981. The tax cuts in the Reagan Administration are the major reason revenues declined, falling to 7.6% in FY1992. Revenues increased slightly with the 1993 Clinton Administration tax increase, but the more significant growth occurred with the strong economic performance in the late 1990s, leading to a ratio of 9.7% in FY2001. They declined during the first decade of the 21 st century following the George W. Bush Administration tax cuts. Along with the individual income tax, total taxes have also fluctuated, dropping as low as 17.1% in FY1977 and rising as high as 20.6% in FY2001. The lower level in FY2013 reflects, in part, the lingering effects of the recession. Corporate taxes have fluctuated as well, although largely due to economic conditions, whereas payroll taxes rose to around their current levels by the mid-1980s, reached a peak of 6.8% in 2001, and have since declined slightly. Excise taxes have declined by two thirds, and other revenue sources have remained about the same. Part of the decline in excise taxes is because these taxes are imposed on a per unit basis and not indexed for inflation and, with the exception of tobacco taxes, have not been recently increased. Tax Structure These revenue sources differ in some important ways. Individual and corporate income taxes are progressive, have graduated rates, and can be revised in a variety of ways, including changing rates, deductions, exclusions, and credits. Income taxes are the main source of revenue for most federal spending outside of Social Security and Medicare Hospital Insurance (HI, whose benefits are about half of Medicare spending). Estate taxes are also progressive, but they are a very small share of government revenues and currently are smaller than they were in FY2007. Payroll taxes, which are significant, and excise taxes, which are small, tend to fall more heavily on middle- and lower-income individuals. Payroll taxes, the next-largest source of revenue after income taxes, have flat rates with an earnings cap for Social Security (but not Medicare). These taxes tend to be proportional, with a reduced burden on high-income taxpayers. Because of their simple structure, the main options for increasing revenues from this source are increasing rates and raising or eliminating the earnings cap. Social Security taxes are the basic source of finance for Social Security, and they are linked to benefits so that larger taxes lead eventually to larger benefits, although there are progressive elements in the benefit formula. Medicare payroll taxes qualify individuals for Medicare HI coverage, but the Medicare benefits are the same for all recipients. Excise taxes, which largely apply to alcohol, tobacco, and transportation fuels, tend to be regressive but are also small. Transportation fuel taxes are a major source of finance for highways, airports, and other transportation needs. Tax Expenditures Tax expenditures are revenue losses attributable to federal income tax laws that allow a special exclusion, exemption, deduction, credit, preferential rate of tax, or deferral of tax liability. The special tax credits and deductions in the income tax can also be viewed as a form of spending through the tax code. That is, one can view revenues as receipts without the special benefits and think of the special benefits from tax expenditures as spending. In FY2007, without tax expenditures, individual income tax receipts would have been an estimated 77% larger, corporate receipts 25% larger, and overall income tax receipts 39% larger. In FY2014, without tax expenditures, individual income taxes would have been an estimated 75% larger, corporate receipts would have been 44% larger, and overall income tax receipts would have been 39% larger. The significant increase in corporate tax expenditures relative to revenues appears to be largely due an increase in the estimated cost of deferring taxes on foreign source income . According to a Government Accountability Office (GAO) study, tax expenditures have tended to be around 7.5% of GDP during the period of the study (FY1974-FY2004). In FY2007, tax expenditures were 7.2% of GDP and about 36% of total government direct spending. In FY2014, tax expenditures were 6.9% of GDP and about 39% of government spending. Viewed from the perspective of dividing government activity between transfers and direct provision of public goods, as in Table 1 , tax expenditures are transfers and subsidies that go to persons, as is the case with the bulk of federal spending. Viewed from the perspective of discretionary versus mandatory spending, as in Table 2 , they are similar to a mandatory form of spending. Finally, viewed from the perspective of budget function, as in Table 3 and as shown in Table 5 , which compares spending and tax expenditures by function for FY2004, the pattern of tax expenditures is quite different from that of spending. A much larger share of tax expenditures is for physical resources. For specific subcategories, the largest share of tax expenditures is for commerce and housing, a category that attracts a small share of spending. The size of this category reflects special benefits for earnings from capital income. It also reflects benefits for housing in the form of mortgage interest and property tax deductions and, to a lesser extent, exemption from capital gains tax on owner-occupied housing and the low-income housing credit. The relatively large share for general government reflects tax-exempt bonds and itemized deductions for state and local income and sales taxes. (These amounts could also be distributed across the functional categories of state spending and thus would be more broadly distributed. Much of the benefit for tax-exempt bonds goes to education and highways, where funds are borrowed for capital improvements.) Tax expenditures also provide significant benefits for health through the exemption of employer-provided health insurance and for income security, largely through benefits for pensions and other retirement savings. Earmarked Revenues and Trust Funds As noted above, spending on some categories of services is financed by dedicated revenues, some of which are termed trust funds and some special federal funds. There are about 200 trust funds, but only a handful of them are important in terms of magnitude or for considering budgetary reform. In some cases, the trust funds lead to questions about addressing the deficit. Although some of these funds rely on contributions from general revenues, the Social Security and the Medicare HI trust funds rely on payroll taxes. (Transfers are made to the Social Security and Medicare HI trust funds in the amount of income taxes collected on Social Security benefits. A temporary transfer was also made for the temporary two percentage point reduction in the employee share of Social Security taxes for 2011 and 2012.) The largest trust funds relate to Social Security, which is divided into Old Age and Survivors Insurance (OASI) and Disability Insurance (DI), and Medicare, which is divided into Hospital Insurance Part A and Supplemental Medical Insurance (SMI) Parts B and D. Payroll taxes are the basic source of finance for Social Security and Medicare HI (also known as Medicare Part A). These programs are organized through trust funds that can also hold assets and earn interest. Medicare SMI to pay physicians and drugs is financed by a combination of premiums and general revenues. Table 6 shows the inflow of revenues and the payment of benefits in the three trust funds financed by payroll taxes. (This table does not include earnings from interest on government securities held by the funds and transfers of income taxes collected on Social Security benefits; it also does not reflect administrative costs.) As indicated in the table, in the HI fund, benefits exceeded taxes in FY2007. In that year, the Social Security trust funds were close to or at the point at which payouts were as large as revenues. By FY2013, benefits in all three funds exceeded outlays, although some of that was probably due to lingering effects of the recession. Because initial Social Security benefits are indexed to wages (and subsequently to prices), they tend to be a relatively constant share of output. Benefits have grown because of increasing longevity. Revenues also tend to be a relatively constant share of output but were increased in the mid-1980s, and Medicare as a program expanded significantly in its scope during this period. Table 7 provides income and outflow for the SMI trust fund. In FY1971, this fund was about equally financed by premiums paid by the beneficiaries and federal contributions from general revenues. Although premiums have increased as a percentage of output, the vast majority of financing is now from general revenues. The premium share for Medicare Part B (physicians) fluctuated over time, but it is now set by law at 25% of the cost of funding Medicare Part B; premiums are not as large as for the recently enacted Medicare D (drug) program, which is much smaller. As these tables indicate, the size of these programs, particularly Medicare, has grown over time. MSI has grown faster than HI, and the contribution of general revenues has grown at a similar pace. MSI currently accounts for slightly more than half the cost of Medicare. One open question surrounding the formulation of a long-run budget policy is whether to maintain the financing of Social Security and Medicare HI from payroll taxes. In both cases, the future benefits due from these programs are expected to outstrip future receipts and eventually draw down all the assets. The Social Security trust fund is projected to run out of accumulated assets in 2033, and the HI trust fund is predicted to run out in 2030. In the case of Social Security, there is a long history (dating from 1935, when the program was implemented) of treating Social Security as a separate program, similar to a retirement plan, in which contributions during the working years create an entitlement to benefits in old age. A similar approach has been used for the more recently established Medicare HI. If these programs are to be kept separate, then they will have to be brought into balance separately and, to maintain the historic source of financing, any shortfall not addressed through benefit cuts or delayed eligibility will need to be addressed through increases in a specific tax—the payroll tax. Growth in the Debt in Recent Years and the Recession In 2001, the CBO baseline projected a surplus for the next 10 years of $5.6 trillion, which would have led to a further decline in the debt. Ultimately, that surplus became a deficit of $6.2 trillion, or an $11.8 trillion shift. Some have addressed the causes of the growth in debt by referring to the shift in these CBO projections. Legislated changes in revenues accounted for an estimated 24% of the discrepancy, with most of that amount reflecting the 2001-2003 Bush tax cuts and extensions of these cuts. Changes in spending accounted for 37% (with about two-thirds due to discretionary spending), 11% was from increased interest, and the remainder was essentially some form of forecasting error. The CBO baseline should not be taken as a projection of what future deficits are likely to be for a continuation of current services. Rather, it is a benchmark by which lawmakers can consider changes in policy. For those items (revenues and mandatory spending) that are based on laws other than appropriations, the baseline reflects those laws. Because of that convention, in FY2007 the baseline did not allow for some expected tax cuts (such as the indexing of the alternative minimum tax exemption and the extension of temporary tax provisions). On the spending side, the baseline projects that discretionary spending will grow with inflation but not, as historically has been the case, with output. The baseline currently reflects the caps for discretionary spending through FY2021, with the caps subsequently adjusted for inflation. It is instructive to consider the path of debt and spending relative to output. In FY1971, debt held by the public was 28% of output, and it fluctuated in that vicinity (as both spending and taxes increased as a percentage of GDP) until the early 1980s. At that point, debt began to rise, reflecting a combination of a recession, lower income taxes, lower spending on nondefense discretionary programs, and higher defense spending. By FY1993, debt held by the public had reached 49.3% of GDP. Following the 1993 tax increase, spending caps, and the strong economic growth in the late 1990s, it declined, reaching 32.5% by FY2001. During this time, there was a gradual increase in health spending (Medicare and Medicaid) and Social Security benefits. Rather than a decline in the debt after 2001 as would have occurred with a surplus (and as CBO projected), debt began to rise slightly, reaching 36.9% in FY2005, although it declined to 36.2% by FY2007. The largest contributor to this rise was the decline in income-tax revenues (due largely to the 2001 and 2003 tax cuts and their speedups) along with an increase in defense spending and, to a lesser extent, an increase in Medicare payments. (Part of the reason Medicare spending rose was increased payments to physicians. Legislation was adopted in 1997 to limit these payments, the Sustainable Growth Rate [SGR] System, but the cuts required by this legislation have repeatedly been suspended. Addressing the increased spending compared with the baseline in reference to deficit reduction proposals is referred to as the doc fix .) This modest increase in debt accelerated with the recession, rising to 40.3%, 53.5%, and 62.1% in FY2008, FY2009, and FY2010, respectively. As shown in Table 8 and Table 9 , spending increased and revenues declined during this serious recession, both contributing about equally to the deficit increase by FY2010. The increased deficit between these years reflects measures undertaken to combat the recession, along with automatic stabilizer effects (taxes fall and spending rises during a downturn) that increased the deficit by about 2.5% of output between FY2007 and FY2010. (Note that comparing the two years obscures the temporary effect of the Troubled Asset Relief Program; in FY2009. Other mandatory spending was 2.6% of output due to this provision, although there was an offset in FY2010, with the net effect small.) On the spending side, the increases came from income-support programs as well as discretionary domestic spending, whereas on the tax side the primary decrease was in income taxes. These effects reflected, in part, stimulus provided through tax cuts as well as increases in programs such as unemployment compensation and transfers to states to fund infrastructure, Medicaid, education, and other programs (see Table 8 and Table 9 ). The slow recovery of the economy led to an additional rise in the deficit to 74% in FY2014. CBO projects it will stabilize before rising again. The debt's current level thus accumulated quickly due to the recession and, prior to that point, was not out of line with historical levels for the past 40 years. That is, today's debt has not been the consequence of years of excessive deficits. Rather, the current debt level reflects years of modest deficits with an increase due to the recession. The next section suggests that current debt problems are less troubling than those projected in the future, which will arise from population aging and rising health costs. These longer-run spending increases have long been anticipated. The fact that the U.S. government is beginning from a higher level of debt in the context of a fragile economy (rather than from the lower level of debt that was expected in the beginning of the 21 st century) makes these future issues more challenging. Deficit Challenges Going Forward The CBO baseline projects the debt will stay at about 74% of GDP (its FY2014 level) for a number of years, then grow to 78% in FY2024. However, CBO also uses an alternative baseline that may reflect policies consistent with current service levels, expectations, or history. In this baseline, the debt will continue to rise, reaching 87% of GDP in FY2024. This alternative baseline includes increased discretionary spending, eventually rising with output, higher Medicare payments to doctors, an extension of certain temporary tax provisions, and other limits on taxes. Table 10 shows the projected spending against the CBO baseline by FY024. As indicated earlier with respect to the baseline issues, this table includes the effects of spending caps. The table indicates that past patterns are expected to continue, in that programs for the elderly and health programs are becoming more costly over time. In addition, as deficits persist and interest rates are projected to rise, interest payments will increase as well. Table 11 shows the forecast for revenues, again using the baseline assumptions. With these assumptions and economic growth, revenues will rise to 18.4% of GDP by FY2024. CBO's long-run budget analysis indicates the possible pressures from a more realistic baseline, especially for health programs. Table 12 shows spending and revenues, along with debt-to-output ratios, further into the future under the CBO extended baseline. Table 13 compares this extended baseline with the alternative baseline. The alternative baseline may be a more realistic representation of current policy. CBO standard projections show an increase in transfers for old-age and health programs but a decline in other programs' relative size. The standard baseline assumes income taxes will continue to rise through real bracket creep, whereas the alternative baseline assumes that action will constrain revenues. The debt-to-GDP ratio increases in both scenarios, but it rises more steeply under the alternative baseline. In that baseline, the deficit reaches 17% of GDP in FY2039 and the primary deficit (excluding interest) reaches 7%. Debt Reduction Approaches and Strategies Numerous proposals were put forward to address the budget deficit while attention was focused on deficit reduction in 2011 and 2012. The Committee for a Responsible Federal Budget (CRFB) identified 32 different proposals and provided comparisons of provisions. This section relies in part on that comparison to summarize the different approaches taken by the various plans, which provide examples of potential changes. Also presented are projections for some plans of the expected effects on revenues and spending relative to GDP. Because updated estimates are not available for these plans, data are presented as they were projected to be in 2012. Although projections may have changed somewhat, the measures are presented as long-run effects rather than changes from a baseline and indicate the overall objectives of the plans. All of the plans aimed at reducing the debt-to-GDP ratio, but they varied in spending, taxes, and the deficit relative to output. For those plans in which measures were reported (for 2020), spending-to-GDP ratios ranged from 18% to 25%, whereas taxes-to-GDP ratios varied from 18% to 22.5%. Deficits ranged from 0% to 4% of output. A debt level can still be sustainable with some continuing deficit. The deficit causes the debt to grow, but as long as it is not large enough to cause debt to grow faster than GDP, the debt-to-GDP ratio will be stable or in decline. Although summarizing all of these plans is beyond the scope of this report, Table 14 shows five plans that have been widely discussed along with the CBO standard baseline projection at that time and the CRFB's own estimate of what it considered a realistic projection. That projection is similar to CBO's baseline for spending but reflected a tax assumption that permanently extended the Bush tax cuts (similar to the CBO alternative baseline at that time and roughly consistent with what occurred.). The five plans are the House Republican Budget Plan, the President's Framework, the bipartisan Fiscal Commission, and two private plans that are widely discussed, the Galston-MacGuineas plan and the Debt Reduction Task Force (Domenici-Rivlin). (In subsequent plan comparisons, the Senate's "Gang of Six" plan is also discussed; the CRFB reports no numbers for that plan.) Most of these plans had spending rising constantly or relative to 2007 (at which time spending was approximately 20% of GDP) but falling relative to current law projections at that time (and to the CBO alternative baseline projection). Taxes relative to GDP ranged from slightly below the 2007 level of 18.5% to slightly above the CBO baseline projection of 20.0% (a baseline that has the Bush tax cuts and other temporary provisions expiring as scheduled). These proposals raise five issues for consideration. First, although discretionary spending cuts were the short-term target of many proposals, how easy is it to make these specific cuts? Second, to what extent did proposals appear to maintain the current trust fund revenues for Social Security and Medicare, and how important is maintaining this relationship? Third, what spending measures would be required, and how realistic might it be, to maintain tax revenues at or below the levels experienced prior to the recessions? Fourth, is there a feasible way to preserve entitlement programs for the elderly and persons with low income (Social Security, Medicare, and low-income programs), and what measures would be necessary to achieve that purpose? Fifth, what are the consequences for state and local governments? How Much Can Discretionary Spending Cuts Reduce the Budget Deficit? Discretionary spending, as discussed above, whether for defense or nondefense purposes, is not the cause of the long-run growth in spending and historically has been relatively constant or in decline as a percentage of GDP. Discretionary spending, however, is targeted as a source of budget savings in the proposals and, because it is easier to change in the short run, may be a source of initial savings. Defense discretionary spending has declined since FY1971, and nondefense discretionary spending is projected to be at a low point (compared with the period FY1971-present) as a percentage of output in the CBO baseline by FY2024. The CBO baseline already built in a decline in discretionary spending as a percentage of output because that baseline assumed spending grew at the rate of inflation. It also incorporated the cuts in the BCA through FY2021. There is no magic number indicating how high this spending should be in relation to output. Nevertheless, recent history has shown that nondefense discretionary spending has been higher in the past and hence cuts would lead to lower level of government services than has traditionally been the case. (Defense spending, as noted above, fluctuates depending on international conflicts, although it has increased to respond to perceived threats or other changes such as an all-volunteer force. Overall, however, it has declined since FY1971.) As shown in Table 15 and Table 16 , all of the deficit reduction proposals envisioned lower levels of discretionary spending relative to GDP. At the same time, most of the proposals did not spell out the specific cuts proposed, an important issue given the diversity in the types of programs in nondefense spending. That is, these plans generally directed agencies to cut spending without outlining the specifics. Thus, the plans did not indicate, for example, if fewer prisons will exist, if grants for special-needs children will be reduced, if fewer highways will be built or repaired, etc. However, these reductions might have needed to be significant. For example, the Fiscal Commission proposed cuts that were 18% below the CBO baseline (as shown in Table 16 ). Even so, it is unlikely that reductions in discretionary spending could close much of the long-run deficit gap. The Fiscal Commission's proposed cut in discretionary spending, for example, would have reduced overall spending by about 1.3 percentage points of GDP. Yet, as seen in Table 13 , the gap between spending and taxes by FY2039 if present policies continue (alternative scenario) is 17% of GDP. Thus, closing this gap is likely to require cuts in other spending, including entitlements, increases in tax revenues, or a combination. CBO's 2011 study on budget options contained some specific proposals for cuts in discretionary spending, which might suggest the types of cuts that might be considered in these proposals, although most of these were small. For example, consider education, training, employment, and social services, the largest category in domestic discretionary spending. CBO included proposals to eliminate grants for educational opportunities outside school hours for low-income students, limit the availability of grants for college to the neediest students, eliminate national community service funding (which funds AmeriCorps and similar operations), eliminate funding for community-service jobs for low-income individuals over the age of 55, and cut funding for the arts by 25%. Taken together, these changes added up to about $40 billion over 10 years. In contrast, the Fiscal Commission's cuts for this area appear to be over $100 billion if allocated proportionally to all programs. Are Social Security and Medicare Trust Funds to Be Preserved? Since its inception in the 1930s, Social Security has been financed through a trust fund mechanism in which benefits were financed from payroll tax contributions. Payroll taxes are imposed at a flat rate, with a cap on income covered that is indexed to wages. Because of increasing disparities in income, this ceiling falls lower in the income distribution than it has in the past. Benefits, although they are linked to contributions, are progressive in that the replacement rate for wages falls as wages rise. Because of the link between wages and benefits, many viewed Social Security as much like a pension, with income in retirement earned through contributions. With Social Security, there was a link between contributions and benefits, although it was not precise and, because the trust fund did not accumulate retirement contributions in the same way as a pension plan (but rather paid most benefits out of current contributions), the trust fund's financing was affected by demographics. Currently, the trust fund is spending more in benefits than it collects in payroll taxes and using interest earnings to fill the gap. Benefits, as shown above, are growing faster than payroll taxes. As a result, under current policy the Social Security trust fund has been using its assets and will become insolvent by 2033, at which point it will have income sufficient to pay about three-fourths of benefits. Moreover, if a position is taken that taxes cannot be increased (as discussed below) or that payroll taxes are not to be increased, then either the close link between payroll contributions and earnings will have to be abandoned or the burden of restoring solvency will fall on cutting benefits. As shown in Table 17 , some of the plans had specific proposals to cut Social Security benefits and raise taxes (generally by adjusting the payroll cap). These proposals tended to be similar in some respects in the types of revisions they proposed. (Specific proposals for revision can also be found in the CBO's Budget Options document.) Some of the proposals do not directly provide changes to Social Security revisions but rather provide instructions to make the trust fund solvent. In general, therefore, these plans apparently intend to preserve the structure of the Social Security program. The Medicare HI trust fund has been affected over time (as has Medicare in general) by demographics and, more importantly, by the growth in health care expenditures per capita due to technical advances and cultural expectations. As shown in Table 18 , the plans have specific suggestions for health care (Medicare, Medicaid, and the new health mandates). In some cases, they include instructions to find savings in the future. There was no specific reference to trust funds and no payroll tax revenues raised for the Medicare HI trust fund. Can Long-Run Budget Issues Be Addressed by Keeping Tax Levels and the Size of Government at FY2007 Levels? Most of the proposals, as seen in Table 14 , envisioned some increase in taxes as a percentage of output compared with FY2007, the last year before the 2007-2009 recession, when the Bush tax cuts were in effect and taxes were 18.5% of output. One plan set the level at 18%, but the others set the tax revenue at around the peak historical level (19.5% in FY2001) or higher. One philosophy behind the view of keeping revenues fixed relative to GDP is that government spending takes away from private choices and creates inefficiency and that taxes impose distortions and inhibit economic activity. (This view depends on strong assumptions about benefits generated by federal spending.) By limiting revenues available, the scope of the government will be constrained. Most proposals contained higher tax levels. An argument is sometimes made that tax increases would inhibit economic activity so much that revenues will decline rather than rise. Empirical evidence does not generally support this view, however. If revenues are limited, significant pressure would be placed on major entitlements. For example, Social Security, health spending, and interest alone are projected to total 18% in FY2039 ( Table 12 ). If revenues are around 18.4% of GDP, only 0.4% is left for everything else. (In FY2014, this amount was 9.3% of GDP.) Defense, nondefense discretionary, and other mandatory programs are projected to amount to 6.9% of GDP in FY2039. These calculations would be even more constrained with the alternative scenario and the economic feedback in Table 13 . Thus, it would appear that major reductions in Social Security and health spending would be required to constrain tax levels at current percentages of GDP. The Republican Budget Committee's plan would have set the tax level at 18% and spending at 20% in 2020, fully four percentage points below the CBO baseline at that time (24%) and inclusive of interest payments. How did it accomplish this? Relative to the CBO baseline, it recommended a level of spending that was $5.8 trillion lower in the first 10 years. The discretionary spending reductions were large ($2.8 trillion), especially for nondefense, compared with other proposals. For nondefense spending, reductions by 2021 were 34% of the CBO baseline, which projected a level that was already historically low. The second-largest major change within the first 10 years, $1.4 trillion, was to repeal parts of the health care legislation that imposed costs (while retaining other cost-reducing provisions). The plan converted Medicaid payments to the states into a block grant that would reduce spending by $0.8 billion over 10 years, or 35% in 2022 according to CBO. The remainder included $0.7 trillion from other spending, which includes, as shown in Table 19 , a block grant for food support (SNAP) as well as other mandatory spending changes. Interest payments also were to fall. For Medicaid, the plan stipulated that either the programs' benefits would have to decline or the states would have to shoulder a larger share of the financial burden. Significant changes would have been made after 2021, primarily by converting Medicare to a voucher system (required for those under the age of 55 in 2011), which would then grow at the inflation rate. In addition, discretionary spending would continue to grow with inflation, so that it would continually decline as a percentage of output (the CBO long-run standard baseline assumes this spending will grow with output after FY2021). Essentially, this plan converted major entitlements into fixed payments that are constrained to grow with inflation to control the deficit and debt without raising taxes. Although this plan and its approach are illustrative, they are also suggestive of what would likely be necessary to hold the size of government and tax revenues fixed at 2007 levels: major changes to government programs for health care and other entitlements. What Would Be Required to Protect Entitlements? A Review of Tax Options To examine the other side of this coin, consider what would be required to protect entitlements. Protecting entitlements reflects a view that government should maintain its social safety net for lower-income persons and programs for the elderly, including provisions for health care, because they are important components of maintaining a reasonable standard of living. With respect to Social Security, sizeable surplus revenues have already been paid to support the payment of future benefits. Medicare HI also has accumulated surpluses that will maintain benefits for some years to come. Nevertheless, neither of these plans is sustainable in its current formulation, and the shortfall in revenues relative to payments contributes to the overall deficit. Most of the proposals already envisioned some increase in taxes (see Table 20 for details) along with cuts in benefits, but they also cut back on entitlements. Tax increases would likely be required to maintain the current level of entitlement programs. These effects can be seen by examining the different scenarios in Table 12 , Table 13 , and Table 14 . In Table 13 , under the alternative baseline, taxes are held at current levels and spending rises relative to the standard baseline, resulting in a deficit of 5% of output in FY2024 and 17% of output in FY2039. Consider the lower amount of spending from the CBO baseline compared with holding taxes at current levels from the CFRB projections in Table 14 , in which the deficit is 5.5%. As noted in the previous section, it is unlikely that cuts to discretionary and other non-entitlement spending alone would suffice to close the deficit to a sustainable level. Therefore, it is realistic to expect that tax collections would have to rise to restore the path of future deficits to sustainability. Justifications for Maintaining Entitlements Is there a justification for increasing the size of government to continue the present Social Security and health benefit payments? It is useful to consider separately Social Security, whose issues arise from demographics, and health care, whose issues arise from a combination of demographics and health care costs. Social Security benefits are expected to rise from the current 4.9% of output to 6.3% in FY2035. However, beyond that point, the costs remain about the same, falling slightly as the baby boom generation begins to die and then rising as longevity increases. The problem with Social Security funding did not arise from the baby boom; it arose from the increase in life span whose pressures on the system were masked for a time by the growth in the labor force (both from the baby boom and the entry of women into the labor force). Unlike health care, Social Security benefits are not expected to grow continuously but to settle down so that benefits and costs are relatively constant (with benefits slightly greater than 6% and revenues about 5% of GDP). There are, therefore, a range of tax increases, as well as benefit cuts, that could bring the program into permanent balance. A Congressional Research Service study of Social Security suggests that there are important justifications arising from market failure and that there is a rationale, based on life-cycle considerations, for making most of the adjustment in the imbalance through higher taxes rather than lower benefits. Another option, which affects both taxes and benefits, is to increase the retirement age, although such increases put pressure on the disability-insurance program because some individuals will find it more difficult to work longer. Thus, there are justifications for addressing more of the long-run insolvency of the Social Security program through tax increases rather than benefit reductions. This assessment considers outcomes in the steady state. There is also an issue of which generation bears the burden during the transition. The more the system relies on tax increases as opposed to benefit cuts in the short and medium term, the more the burden is shifted to younger generations. Similar life-cycle arguments could be applied to any program for the elderly to the extent that program is increasing in cost because of longevity, including Medicare and nursing home costs under Medicaid. These programs are financed by a combination of payroll taxes and general revenues, but most of these taxes would be collected during most individuals' working years. Cost increases for health care are a different matter, in part because they seem to be growing continuously and in part because there are different ways to view them. To the extent that rising costs reflect better medical care that extends and improves the quality of life, spending more money on health care may appropriately reflect preferences of individuals whose higher incomes permit them to spend more of their resources in this area. However, to the extent that rising medical costs reflect serious inefficiencies in the system arising from failure to allocate resources by price and causing patients and their physicians to consume large and inefficient amounts of health care, then increased benefits may not be justified. Revenue Raising Options If benefits are to be largely maintained, and because it is relatively clear that cutting other forms of spending will probably not be adequate, what are the tax options? Basically, these options, some of which are discussed in a number of the budget proposals, are raising rates, broadening the income tax base through reductions in tax expenditures, increasing other taxes (such as payroll and excise taxes), and introducing new taxes (such as a carbon tax). Rates can easily be varied, and many of the proposals included allowing the Bush tax cuts, especially for high-income taxpayers, to expire. Because most of these tax cuts were extended, this change would be the equivalent of a rate increase currently. The barriers for rate increases might be viewed as largely political rather than technical, and top tax rates in the past have been much higher than they are today. Allowing the temporary tax provisions to expire and including real bracket creep was reflected in the difference between the CBO standard and alternative baselines and accounted for 2.7% by FY2022. Although tax expenditures have received much attention and are included in budget proposals, policy makers face significant political and technical barriers to implementing changes. Some tax expenditures are technically difficult to eliminate (especially employer fringe benefits), some are valued as part of the social safety net (such as the earned income credit or exclusion of transfers), some are desirable for other reasons, and some are so politically popular (e.g., the home mortgage interest deduction) that eliminating them or scaling them back could be difficult. For example, considering technical challenges alone, the largest individual tax expenditure is the exclusion of employer health insurance, which accounts for 11% of the total revenue foregone. As discussed during the health reform debate, however, fairly designing an inclusion is very difficult because the value of insurance varies, for example, with the age of the employee and other characteristics. If not allowed to vary by age, young employees who work for firms with higher average employee ages will be imputed more income than employees working for firms with younger employees. Potentially more serious imputation problems arise with the third-largest tax expenditure (the exclusion of pension contributions and earnings), which accounts for 9% of the total. Problems arise with regard to this tax expenditure because of defined benefit pension plans, whose benefits are difficult to allocate because they ultimately depend on future work history with the firm. At the same time, many of the proposals discussed in Table 20 also envision eliminating tax expenditures to lower rates. If used to generate additional revenue, reducing tax expenditures could result in significant progress toward reducing the deficit. One study, for example, suggests that a more realistic appraisal of tax expenditure options, taking into account technical barriers, political barriers, and justification for some provisions, would increase income-tax revenues by about 15%. In the earlier CBO alternative baseline, income-tax revenues would have been about 10.6% in FY2021, suggesting increased revenues of 1.6% of GDP. This increase is about two-thirds of the difference in revenues between the regular and alternative CBO baselines, which reflected the Bush tax cuts, other temporary provisions, and some real bracket creep (growth in revenues because real incomes are rising). Two other types of taxes that might be altered are the payroll and excise taxes. For example, some proposals have included a provision for raising or eliminating the cap on earnings for payroll taxes. Other options include raising rates and expanding the base to include fringe benefits, such as pension contributions and health care. (Imputing income, however, as noted above, may be problematic.) A number of options could significantly extend solvency to the Social Security trust fund. Revenue could also be raised by taxing Social Security benefits in the same way as pensions, and this revenue, although considered as part of tax expenditures, could be designated to finance Social Security benefits. In addition, proposals have included increases in gasoline taxes to provide additional funding for highways and increases in alcohol taxes, whose real value has been declining since 1991 and would be an estimated 60% higher if they had been indexed to inflation since then. Finally, there are options for additional types of taxes. Three new tax sources that have been included in the proposals are value-added taxes, carbon taxes (revenue could also be collected through an auction of carbon rights through a cap-and-trade system), and taxes on sugar-sweetened beverages. Both value-added taxes and carbon taxes could raise significant amounts of additional revenues. These revenue sources differ in the incentives they create and also in their progressivity. Because income taxes tend to fall more heavily than other taxes on high-income individuals and tax expenditures tend to benefit higher-income individuals, these changes would likely add to the progressivity of the system. Changes in payroll rates would tend to be proportional and affect higher-income individuals less, although raising the wage cap would concentrate the effect on higher-income workers. Flat rate consumption taxes, including value-added taxes, carbon taxes, and specific excise taxes (such as those on gasoline, alcohol, and sugared beverages) tend to be regressive. A combination of changes could, however, achieve approximately the same distribution as current revenues. Effects on State and Local Governments Some of the proposals would address the budget deficit by reducing transfers to state and local governments. Because the details of discretionary spending (other than caps and limits) are not generally spelled out, some of this reduction could reduce transfers to state and local governments in areas such as education, transportation, and community development. In addition, many entitlements, both for health and income security, are administered by the state and local governments with federal transfers. One of the largest of these programs is Medicaid, which the House Republican Budget proposal restricts to a block grant that grows at population rates plus inflation rates. As noted above, federal transfers to state and local governments are 2.8% of output and constitute 21% of the receipts of these governments. State and local governments also benefit from tax expenditures that allow itemized deductions for state and local taxes and exclusions for interest on state and local bonds. Depending on how these governments respond, restrictions that affect state and local transfers could largely shift the burden of spending from federal to subnational governments.

A small share of federal spending is for direct provision of domestic government services, which many people may think of when considering federal spending. Because this spending is normally about 10% of total federal spending and about 2% of gross domestic product (GDP) and deficits are projected to be 2.8% of GDP and rising in the future, cutting this type of spending can make only a limited contribution to reducing the deficit. (Note that direct provision of domestic services by the federal government is smaller than the total of nondefense discretionary spending, about 17% of spending, because it excludes transfers. Discretionary spending is spending that requires appropriations.) Transfers and payments to persons and state and local governments constitute most of federal spending, about 70%. Defense spending, currently accounting for about 20% of spending, has declined over the past 35 years but tends to vary depending, in part, on the presence and magnitude of international conflicts. Recently, issues concerning the level of federal debt have become a significant source of debate in Congress. As a result of the recent recession (December 2007 to June 2009), along with policies enacted in response to it, federal debt held by the public rose from 36% of GDP in 2007 to 74% in 2014. Although the debt held by the public is projected to be relatively stable over the next decade, the Congressional Budget Office (CBO) projects it will rise to 106% of GDP by 2039. This increase in debt is mainly due to growth in federal spending on health care programs and Social Security, as well as increasing interest payments that typically accompany rising budget deficits. Although spending on these programs is rising, other types of federal spending have remained constant or declined. These trajectories are projected to continue under current policy. Because reductions in the spending allocated for federal provision of goods and services appear inadequate to reduce the future deficit and debt to a sustainable level, limiting taxes as a percentage of output or constraining the overall size of the government to current levels would likely require significant cuts in transfers, which include entitlement programs such as Social Security, Medicare, and Medicaid. Preserving entitlements would eventually require increases in taxes; CBO's baseline projection shows spending on Social Security, health, and interest will absorb virtually all revenue collected by 2039, leaving little room for any discretionary and other mandatory spending. Options to put the federal budget on a more sustainable path include raising tax rates, reducing tax expenditures, increasing other taxes, or introducing new revenue sources. Tax expenditures may be difficult to eliminate, but if not used to lower rates they may be a source of additional revenue. If Congress were to address the eventual Social Security trust fund shortfall largely with tax increases, it would smooth the burden of accommodating longer lives across both working and retirement years. This argument might also apply, in part, to Medicare and Medicaid. The federal government provides about one-fifth of the revenue for state and local governments. Reducing the long-term deficit and debt may require cutbacks in transfers to these governments that could, in part, shift the burden of providing services from the national to subnational governments rather than altering the overall size of government services.

Introduction The practice of breastfeeding has gained significant popularity in recent years. A stated objective of the U.S. Public Health Service, set out in its report Healthy People 2010 , is to increase the proportion of mothers who breastfeed their children. The national objective set out in this report is to achieve a 75% participation rate of nursing mothers in the early postpartum period, a 50% participation rate of nursing mothers in the period after the infant reaches six months of age, and a 25% participation rate of nursing mothers at the age of one year. Numerous health care professionals encourage breastfeeding as the optimal type of nutrition for infants for at least the first six months of life. It has been reported that in 2000, more than 68% of mothers were breastfeeding their infants immediately after delivery, and it has been observed that the number of nursing mothers is significantly increasing. Breastfeeding rates increased steadily from 1992-2004. Breastfeeding is considered to be beneficial to both mother and child, and breastfeeding is believed to reduce the incidence of various childhood illnesses and chronic diseases. Along with the growing popularity of breastfeeding and the growing incidence of women in the workforce, certain concerns have arisen. It may be necessary for a working mother to express milk during her working hours, and/or to breastfeed her child during working hours. Related issues concern nursing and/or the expression of milk in public or semi-public places such as restaurants, stores, public transportation facilities, and other locations where the public is present. Numerous legal issues and controversies have developed concerning where a mother may breastfeed her child. Concurrent with the growing popularity of breastfeeding, state and federal legislation relating to breastfeeding has been proposed and enacted. There has been significant legislation at the state level. Some of the legal issues which state legislation has addressed include exemption of nursing mothers from public nudity, lewdness, and indecent exposure laws; affirmation that breastfeeding is to be permitted in public places where the mother and child are lawfully present; and exemption (or postponement) of nursing mothers from jury service. Other states have enacted laws dealing with breastfeeding in the workplace; breastfeeding awareness education campaigns; and various breastfeeding support programs. At the current time, thirty-eight states and Puerto Rico have some type of legislation dealing with the protection of nursing mothers and/or the promotion of breastfeeding. Another legal issue that has arisen at the state level involves various issues concerning breastfeeding mothers and jury duty. Various states have enacted legislation to excuse or postpone the jury duty of a breastfeeding mother. At the federal level, Congress has established various federal programs to encourage the practice of breastfeeding and to improve child nutrition, especially infant nutrition. Congress has also enacted legislation, in appropriations measures, to affirm the right of a mother to breastfeed her child at any location in a federal building or on federal property, if the mother and child are otherwise authorized to be present at that location. This legislation is examined below. This practice has been promulgated into federal regulations. Legislation to significantly broaden federal fostering of the practice of breastfeeding has been introduced in the 109 th Congress. This proposal, contained in the Pregnancy Discrimination Act Amendments of 2005 ( H.R. 2122 ), follows proposals introduced in the 108 th Congress to encourage and protect breastfeeding through amendments to the Civil Rights Act of 1964 and the Internal Revenue Code. Other bills introduced in the 108 th Congress made indirect references to breastfeeding within the context of the use of mercury in dental fillings, the prevention of HIV transmission, and mercury ingestion through seafood consumption. To date, four other measures have been introduced in the 109 th Congress that deal with issues relating to breastfeeding. At the present time, all of these measures are in committee. The proposed Healthy Lifestyles and Prevention America Act (HeLP America Act) ( S. 1074 ) contains various provisions to encourage breastfeeding. The proposed Child Health Investment for Long-term Development (CHILD and Newborn) Act of 2005 ( H.R. 4222 ) and the companion Senate bill ( S. 2765 ) would authorize the President to provide assistance to improve the health of newborns, children, and mothers in developing countries. S.Res. 403 would recognize the health, economic, and social benefits of breastfeeding and urge the states to protect a mother's right to breastfeed and to remove legal barriers faced by women who breastfeed. Enacted Federal Legislation Relating to Breastfeeding The Breastfeeding Promotion Program The Breastfeeding Promotion Program ("Program") is a part of the Child Nutrition Programs administered by the Secretary of Agriculture ("Secretary"). The Program was created by the Child Nutrition Amendments of 1992 to the Child Nutrition Act of 1966. Under the Program, the Secretary is directed to promote breastfeeding as the best method of infant nutrition, to foster wider public acceptance of breastfeeding in the United States, and to assist in the distribution of breastfeeding equipment to breastfeeding women. The Program maintains a comprehensive website dealing with such issues as the benefits of breastfeeding, program funding, and other related issues. Current authorization for the Program is provided by the Child Nutrition and WIC Reauthorization Act of 2004 ("Act"). The act provides that there is to be cooperation between the federal government and "communities, State and local agencies, employers, health care professionals, and other entities in the private sector to build a supportive breastfeeding environment for women participating in the program under this section to support the breastfeeding goals of the Healthy People 2010 initiative." The act also provides the authority for "special projects to promote breastfeeding, including projects to assess the effectiveness of particular breastfeeding promotion strategies...." The current funding for federal breastfeeding support is contained in the FY2006 Department of Agriculture appropriations bill, as extended by continuing resolution. Funding for federal breastfeeding support was appropriated for not less than $15 million for a breastfeeding support initiative and for other breastfeeding activities. FY2007 funding would be maintained at the same level in the proposed Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2007. Breastfeeding in Federal Buildings and on Federal Property Federal appropriations legislation has affirmed the right to breastfeed on federal property or in federal buildings. The most recent affirmation of this practice was contained in the Consolidated Appropriations Act, 2005: Sec. 629. Notwithstanding any other provision of law, a woman may breastfeed her child at any location in a Federal building or on Federal property, if the woman and her child are otherwise authorized to be present at the location. This provision has been promulgated into the Code of Federal Regulations. Federal Breastfeeding Legislation 108th Congress In the 108 th Congress two bills were introduced which dealt with breastfeeding support. These bills are briefly summarized. S. 418 , the proposed Pregnancy Discrimination Act Amendments of 2003, was introduced by Senator Olympia J. Snowe on February 14, 2003. Through an amendment to section 701(k) of the Civil Rights Act of 1964 ("Act"), breastfeeding would have been added as a protected activity within prohibitions against sex discrimination in employment. The bill defined "breastfeeding" for this purpose as "the feeding of a child directly from the breast or the expression of milk from the breast by a lactating woman." H.R. 2790 , the proposed Breastfeeding Promotion Act, was introduced by Representative Carolyn B. Maloney on July 18, 2003. Similar to S. 418 , H.R. 2790 would have amended the employment discrimination provisions of the Civil Rights Act of 1964 ("Act") to protect lactation (including the expression of milk) under the prohibition against sex discrimination. The bill also proposed to amend the Internal Revenue Code ("Code") to allow a limited tax credit to employers for expenses incurred in enabling mothers to breastfeed at their places of employment. The Code definition of medical care would have been expanded to include qualified breastfeeding equipment and services. Other provisions would have directed the Secretary of Health and Human Services to (1) put into effect a performance standard for breast pumps and (2) issue a compliance policy to assure that women who want to breastfeed a child are given full and complete information respecting breast pumps. Additional bills in the 108 th Congress made reference—in a somewhat indirect way—to breastfeeding. These bills dealt with mercury in dental filling disclosure, prevention of HIV transmission, and mercury exposure through seafood consumption. 109th Congress Several bills and one resolution have been introduced in the 109 th Congress to deal with certain aspects of breastfeeding. None of them has been reported out of committee. The provisions of the bills and the resolution are summarized below. H.R. 2122 was introduced by Representative Carolyn Maloney and is based upon some of the provisions of H.R. 2790 of the 108 th Congress, discussed above. The provisions of the bill are summarized below. The bill has three main provisions: to amend the employment discrimination provisions of the Civil Rights Act of 1964 to protect breastfeeding by new mothers; to provide tax incentives to encourage breastfeeding; and to provide for a performance standard for breast pumps. Title I of the bill would amend title VII (equal employment opportunity) of the Civil Rights Act of 1964 ("Act") and is cited to as the Pregnancy Discrimination Act Amendments of 2005. Section 102 deals with various findings and purposes. This section recognizes that women with infants are a significant part of the labor force; cites to studies that indicate the benefits of breastfeeding for both mother and child; and observes that some courts have not applied the protection of title VII to mothers who are breastfeeding and expressing milk in the workplace. The stated purpose of the proposed amendment to Title VII is to promote the health and well-being of infants whose mothers return to the workplace after childbirth and clarify that breastfeeding and expressing breast milk in the workplace are protected conduct under the amendment made by the Pregnancy Discrimination Act of 1978 to Title VII of the act. Section 103 of Title 1 would amend section 701(k) of the Civil Rights Act of 1964, which defines sex discrimination for employment purposes, to insert the phrase "including lactation" after the term "childbirth," and by adding at the end, the following: "For the purposes of this subsection, the term 'lactation' means a condition that may result in the feeding of a child directly from the breast or the expression of milk from the breast." Title II of the bill would provide a tax credit under the Internal Revenue Code for an employer's expenses in providing an appropriate environment on business premises for employed mothers to breastfeed or express milk. The credit for a taxable year would equal 50% of qualified expenditures, up to a credit limit of $10,000. "Qualified breastfeeding promotion and support expenditure" is to include breast pumps and related "exclusive use property," if such materials meet prescribed standards, and consultation services related to breastfeeding. The term "other exclusive use property" is defined to mean any amount paid or incurred for the acquisition or lease of tangible personal property used by mothers who are employees of the taxpayer to breastfeed or to express milk for their children, unless the property is located in any residence of the taxpayer or any employee of the taxpayer. The amendments made by this section would be applicable to taxable years beginning after December 31, 2004. Title III of the bill deals with safe and effective breast pumps and is entitled the Safe and Effective Breast Pumps Act. Section 302 would require the Secretary of Health and Human Services ("Secretary") to establish a performance standard for breast pumps. The Secretary is to identify those pumps appropriate for use on a regular basis in a place of employment based on the efficiency and effectiveness of the pump and on sanitation factors related to communal use. Section 302 also requires that the Secretary, acting through the Commissioner of Food and Drugs, issue a compliance policy guide to assure that women who want to breastfeed a child are given full and complete information concerning breast pumps. Title IV of the bill would amend the definition of "medical care" in the Internal Revenue Code to include breastfeeding equipment and services. Section 401 would include as medical expenses the cost of: (A) breast pumps and other equipment specially designed to assist a mother to breastfeed or express milk for her child but only if such pumps and equipment meet such standards (if any) prescribed by the Secretary of health and Human Services, and (B) consultation services related to breastfeeding. The amendments made by this section are to apply to taxable years beginning after December 31, 2004. S. 1074 , the Healthy Lifestyles and Prevention Act America (or the HeLP America Act), was introduced by Senator Tom Harkin on May 18, 2005. The bill sets forth provisions for the establishment of, and incentives for, wellness programs. Certain provisions of the bill relate to breastfeeding and are summarized below. Section 105 of Title I, Healthier Kids and Schools, provides for the establishment, by the Director of the Office on Women's Health of the Department of Health and Human Services ("Director"), of the "Baby-Friendly Hospital Initiative," through which a hospital could be certified as a "baby friendly hospital/center for breastfeeding excellence." The Director would establish a certification process. The certification process would be based upon the international guidelines of the Baby-Friendly Hospital Initiative established by the World Health Organization and the United Nations Children's Fund. In order to be certified, a hospital would have to meet various requirements concerning breastfeeding policy, treatment of mothers and newly born infants, and other issues related to breastfeeding. The Director would be required to make an on-site assessment to determine hospital compliance with criteria guidelines and would have follow-up visits to assure continued compliance. The bill provides for a one-time award of up to $20,000 per hospital to offset the cost of being certified as a baby friendly hospital/center of breastfeeding excellence. Title II, Healthier Communities and Workplaces, Subtitle B, Healthy Communities contains two provisions relating to breastfeeding. Section 216 would establish a task force for the promotion of breastfeeding in the workplace. Under the bill, the Secretary of Health and Human Services and the Secretary of Labor would convene and chair a task force for the purpose of promoting breastfeeding by working mothers. Guidelines are established for the composition of the task force, periods of appointment, and vacancies. The task force would be required to issue a public report concerning various aspects of breastfeeding, copies of which would be sent to Congress. The bill would authorize the task force to hold hearings, gather information, and to elicit information from federal agencies. Funding is to come from the general operating expense funds of the Secretary of Health and Human Services and the Secretary of Labor. Section 217 deals with lactation accommodation and breastfeeding promotion at work. The section would amend the Family and Medical Leave Act of 1993 (29 U.S.C. § 2611 et seq.) to include provision for lactation periods and facilities. The bill further requires employers to provide lactation periods during each work day. However, a limitation is made that the employer would not be required to provide such period if it would impose "an undue hardship" on the employer. The bill also would require an employer to provide an "appropriate lactation facility," unless such provision would pose an "undue hardship" for the employer. Provision is made for enforcement of the provision and for remedies. Specific language is provided for breastfeeding at work for federal/civil service employees, which includes provision for lactation periods, lactation facilities, and enforcement and remedies. The companion bills, H.R. 4222 introduced by Representative Betty McCollum and S. 2765 introduced by Senator Christopher Dodd, provide for the Child Health Investment for Long-term Development (CHILD and Newborn) Act of 2006. The bill(s) would amend the Foreign Assistance Act of 1961 to authorize the President to furnish assistance to improve the health of newborns, children, and mothers in developing countries. The President would be directed to develop a comprehensive strategy to this end. The bill(s) also would establish the Interagency Task Force on Child Survival and Maternal Health in Developing Countries. Section 2(a) of the bill(s) deals with the findings of the legislation. Subsection 13 states that "[e]xclusive breastfeeding—giving only breast milk for the first six months of life—could prevent an estimated 1.3 million newborn and infant deaths each year, primarily by protecting against diarrhea and pneumonia." S.Res. 403 , introduced by Senator Richard Durbin, would recognize the benefits of breastfeeding. The resolution sets forth many of the benefits of breastfeeding, such as lower infant mortality, nutritional benefits, protection against childhood illnesses, protection against chronic diseases, health benefits to the mother, economic benefits, and other positive aspects of breastfeeding. The resolution would call upon the states to take steps to protect a mother's right to breastfeed and to remove the barriers faced by women who breastfeed. It is possible that other legislation concerning breastfeeding may be introduced in the 109 th Congress. It is expected that such legislation may be introduced in the 110 th Congress.

There has been significant growth in the practice of breastfeeding in recent years. As a result, Congress and numerous state legislatures have considered various proposals concerning different aspects of breastfeeding. Congress has authorized and funded the Breastfeeding Promotion Program ("Program") as part of the Child Nutrition Programs administered by the Secretary of Agriculture ("Secretary"). Under this Program, the Secretary is directed to establish a breastfeeding promotion program to encourage breastfeeding. Through appropriations legislation, Congress has repeatedly affirmed a mother's right to breastfeed on federal property or in a federal building, if the mother and child are authorized to be in that location. This practice was most recently affirmed in the Consolidated Appropriations Act, 2005, and the practice has been promulgated into federal regulations. In the 109th Congress, several bills have been introduced concerning breastfeeding. At this time all of the bills are in committee. H.R. 2122, the proposed Pregnancy Discrimination Act Amendments of 2005, was introduced on May 5, 2005. The bill contains provisions which if enacted, would amend title VII of the Civil Rights Act of 1964 (equal employment opportunity) to protect breastfeeding by new mothers; provide tax incentives to employers to encourage breastfeeding by employees; and provide a performance standard for breast pumps. S. 1074, the proposed Healthy Lifestyles and Prevention America Act (or the HeLP America Act), was introduced on May 18, 2005, and contains various provisions dealing with the encouragement of breastfeeding. H.R. 4222, the proposed Child Health Investment for Long-term Development (CHILD and Newborn) Act of 2005, would authorize the President to furnish assistance to improve the health of newborns, children, and mothers in developing countries. The bill was introduced on November 3, 2005. S. 2765, the companion bill to H.R. 4222, was introduced on May 9, 2006. S.Res. 403, introduced on March 16, 2006, would recognize the health, economic, and social benefits of breastfeeding and urge the states to protect a mother's right to breastfeed and to remove the legal barriers faced by women who breastfeed. This report will be updated as needed. It is expected that legislation concerning breastfeeding may be introduced in the 110th Congress.

Introduction Recent interest in possible changes to Senate procedural rules, and the potential difficulty of accomplishing them, has fostered renewed discussion about the procedures under which the Senate could consider such changes. Current public discussions have often described some features of these procedures in incomplete, misleading, or even inaccurate ways. This report discusses the procedural rules that govern how the Senate may consider changes in those procedural rules themselves, with emphasis on complications that may arise when proposed changes are controversial, on ways of addressing those complications, and on special considerations bearing on action at the start of a new Congress. Most of the recent interest in Senate Rules has focused on the "cloture rule" (Rule XXII paragraph 2), which permits the Senate to restrict the time for considering an item of business, and other rules that affect possible filibusters. "Filibuster" is not a formal designation for any specific procedure provided for by Senate rules; rather, it is a term colloquially used to refer to attempts to prevent or delay favorable Senate action on an item of business through dilatory or obstructive actions on the Senate floor. Historically, extended debate has been thought of as the chief means of conducting a filibuster, but other procedural actions permitted by Senate rules may also be used for the purpose. Increasingly in recent years, the term "filibustering" has also been used more loosely to refer to explicit or implicit threats to engage in dilatory action of any kind, and even to threats to block a request for unanimous consent to take up an item of business. A central issue in recent discussions has been that proposals to change Senate rules in ways that would restrict filibusters are, potentially, themselves subject to filibusters conducted consistent with the rules already in effect. This report, accordingly, focuses on the procedural mechanisms by which the Senate might accomplish a change in its rules. It does not address the content of recent proposals to change the cloture rule or associated procedures. Nor does it elaborate on the specific features of Senate rules that may affect filibustering, or how these rules may be used for filibustering purposes, except as these rules bear on the consideration of proposals to change Senate rules. Forms of Senate Rule and Vehicles for Their Change The Constitution gives each house of Congress plenary power over its own rules. For changes in its code of Standing Rules, the Senate has typically exercised this power through adoption of a Senate Resolution (S.Res.). This form of measure, called a "simple resolution," is constitutionally appropriate for this purpose because it requires adoption only in the chamber where it originates, with no participation by the other chamber or the President. Largely by adopting simple resolutions in the exercise of its constitutional rulemaking power, the Senate has, at various points throughout its history, adopted, amended, and recodified its body of Standing Rules. In addition to its Standing Rules, the Senate also makes use of several other forms of procedural regulation, each of which is associated with its own typical means of adoption. (1) Those st anding orders of the Senate that continue in effect unless altered or abolished have also usually been established by the adoption of simple resolutions. Many of these have procedural effects. (2) Other s tanding orders , effective only for the duration of the Congress in which they are adopted, are typically established, and renewed in each successive Congress, by unanimous consent when the Congress first convenes. (3) Some special procedures governing measures of specific kinds, known as expedited procedures , are contained in provisions of statute, which are nevertheless understood as having been enacted pursuant to the constitutional rulemaking power of the chamber to which they apply. (4) Finally, procedural precedents interpreting the import in practice of all these forms of procedural regulation are established by rulings of the chair and votes by the Senate on appeals from such rulings. The present report, however, begins from the presumption that proposed procedural changes are sought in the form of a simple resolution amending the Standing Rules of the Senate. Consideration of Resolutions to Change Standing Rules Several elements of the rules governing proceedings on a resolution to amend the Standing Rules of the Senate are especially important in determining how the Senate can consider such a resolution when it is controversial: (1) the Senate can adopt the resolution by a simple majority vote; (2) a supermajority vote may be needed in order to limit the time for consideration and ensure that the Senate can reach the point of voting on the resolution; (3) if this supermajority vote to limit consideration is adopted, amendments to the resolution will be limited to those that are germane and have been filed in advance; (4) a supermajority vote also may be required to limit the time for consideration of a motion to take up the resolution; and (5) in practice, the resolution could become available for consideration at all only if it had either been reported from committee or the order of business for its consideration was reached in a "morning hour." Simple Majority Vote Required In most respects, the Senate considers simple resolutions changing the Standing Rules under the same procedures applicable to any other simple resolutions, or, indeed, measures of any form. Specifically, to begin with, the Senate can, in general, agree to any measure, including a simple resolution, by a majority of Senators voting, a quorum being present (standardly known as a "simple majority"). Under the Constitution, a quorum is a majority of all Senators. This requirement for a simple majority applies to all votes in the Senate, except as otherwise provided either by the Constitution or by any other procedural regulation of the Senate. Some have argued that the Senate has no authority to establish requirements for a supermajority vote in addition to those specified in the Constitution, but the Senate has, in practice, regarded its constitutional rulemaking power as extending to the power to establish additional supermajority requirements. Proponents of change, nevertheless, might contend that the Senate could not constitutionally require a standard higher than a simple majority for the adoption of rules. Any such higher threshold could be deemed to conflict with the constitutional grant of rulemaking power to the Senate, on grounds that, unless otherwise specified, the act of a majority of a quorum is the act of the body. In fact, the Senate has often changed its Standing Rules with the support of less than a supermajority (and even by voice vote). On December 14, 1982 (97 th Congress), for example, the Senate adopted S.Res. 512 , repealing Senate Rule XXXVI, relating to limitations on outside earned income and honoraria, by a vote of 54 to 38. Limiting Debate Requires Two-Thirds Vote Among the conditions that apply to the consideration of resolutions to change the Standing Rules, three become salient especially if the proposed change is controversial. First, like any other measure under the general Rules of the Senate, a resolution to change Senate Rules is debatable. When a question is debatable, Senate Rules place no general, overall limits on how long it can be considered or how long individual Senators can hold the floor in debate. The Senate can agree to limit the time for considering a matter by unanimous consent, but in the absence of such consent, the only mechanism provided by Senate Rules for imposing such limits is the motion for cloture (Rule XXII, paragraph 2). If the Senate votes for cloture on any debatable question, further consideration of the question is limited to 30 additional hours, after which a final vote on that question would occur. Second, also as with any other measure, when a resolution to change Senate rules is under consideration, the Senate may amend it. When a measure is amendable, Senate Rules impose no general restrictions on the subject matter of amendments that may be offered; the Senate may impose such restrictions only by unanimous consent or through cloture. Under cloture, amendments may be considered only if they are germane to the matter on which cloture was invoked and were filed at the desk by a specified deadline in advance of the cloture vote. Invoking cloture requires a supermajority vote. Senate Rules provide no means by which a simple majority can vote to bring consideration of a matter to a close or limit the amendment process. Even if a specific matter commands the support of a numerical majority of Senators, a minority of Senators may be able to prevent the Senate—either permanently or temporarily—from agreeing to the proposition by filibustering in order to forestall the Senate from ever reaching the point where a vote on the underlying question can occur. For most matters, however, invoking cloture requires three-fifths of the full membership of the Senate (60 votes, if there is no more than one vacancy). For changes in the Standing Rules, cloture can be invoked only by vote of two-thirds of Senators voting, with a quorum present. (This majority is now often referred to as "67 votes," implicitly assuming that all Senators are present and voting; if not all Senators vote, however, the votes required will be fewer, because the requirement is based on the total number voting.) For these reasons, the frequent recent assertion that a supermajority is required to amend the Rules of the Senate is imprecise. A precise statement would reflect this understanding: in cases in which opponents are willing to carry on a filibuster , it can become necessary to obtain supermajority support (by two-thirds of Senators present and voting) in order to bring the Senate to the point at which it can vote on a proposal to amend Senate Rules. An ordinary simple majority of Senators voting can then adopt the proposal itself. Motion to Consider is Debatable; Layover Requirements Other obstacles to a rules change resolution can arise in the process of taking it up for consideration, and even in the process by which it becomes available for consideration in the first place. The Senate can normally take up any measure for consideration in only two ways: by unanimous consent or by agreeing to a motion to proceed to consider. For controversial rules changes, unanimous consent could presumably not be obtained, and a motion to proceed would be necessary. A simple majority can adopt a motion to proceed, but a motion to proceed to consider a proposal to change Standing Rules is always debatable, and therefore can itself be filibustered. In order for the Senate to be able to vote on whether to take up a measure for consideration, accordingly, it may become necessary for the Senate first to invoke cloture on the motion to proceed. Moreover, it appears that cloture on a motion to proceed to consider a resolution changing the Standing Rules would be held to require two-thirds of a quorum present and voting, just as does the resolution itself. As a result, it might become necessary to obtain a (two-thirds supermajority) vote to invoke cloture on the motion to proceed to consider a rules change resolution in order to reach a (simple majority) vote on that motion, and then to invoke cloture again (by a two-thirds supermajority) to limit debate on the resolution itself (which can be adopted by a simple majority). Under the present rules of the Senate, furthermore, the motion to proceed to consider a measure may be offered only on a measure that has been on the Calendar of General Orders for at least one "legislative day." In practice, this means that at least one daily adjournment of the Senate must intervene between the time a measure is placed on the Calendar and the time the motion to proceed to its consideration is made. In addition, a Senate resolution normally reaches the Calendar in the first place by being reported from committee, and Senate committees are, in general, not required to report any measure referred to them. A Senate resolution, like any other measure, is normally referred to committee the day it is submitted. Accordingly, if a resolution is referred, the Senate will normally be unable to consider it unless and until the committee of referral chooses to report it back for consideration. The Senate could bring a simple resolution to the floor without going through the committee process only through an alternative procedure that involves difficulties of its own. At the point when a simple resolution is initially submitted in the Senate, the Senate may proceed to its immediate consideration, but only by unanimous consent. If a request for immediate consideration is made, and any Senator objects, the measure will be "laid over" for consideration on some subsequent legislative day. But on that subsequent day, a resolution that has been laid over in this way can be taken up for consideration only during a two-hour period at the beginning of the day called the "morning hour," and only if the Senate finishes disposing of several other types of routine business before the end of this two-hour period. If the Senate does reach this point, the resolution that has been in this status longest comes up for consideration automatically, without need for any motion to proceed. The Senate may then consider it until the expiration of the two hours, after which, if consideration is not completed, it is placed on the Calendar of General Orders. From that status, the resolution may be called up for further consideration in the ways already described, by unanimous consent or motion to proceed. As in the cases already discussed, as well, the motion to proceed would normally be debatable, so that both it and the resolution itself could be subjected to filibuster. In present practice, however, the Senate normally gives unanimous consent on each day not to have a morning hour at all on the following day, so that typically, no morning hour ever occurs unless the majority leader arranges for it. Finally, even if a morning hour were to occur, experience has shown that it is often possible for opponents of a resolution that has been laid over to forestall the occurrence of the point when the measure could be called up, by engaging in delaying tactics until the full two hours allotted to the morning hour have expired. In the case of a resolution proposing a change in Standing Rules, an additional restriction applies. Senate Rule V paragraph 1 requires that any "motion to ... modify ... or amend any rule, or any part thereof, shall be in order" only on "one day's notice in writing." The layover required by this Rule has been construed as a calendar day, not a legislative day. Nevertheless, it has the consequence that the Senate could consider a rules change resolution immediately upon its submission only if the required notice had been given on a previous day. Procedure for Proposals in Other Forms Supporters of a proposed change in Senate procedure might be able to avoid some, but not all, of the potential difficulties for their consideration just discussed by couching their proposal in some form other than as a change in the Standing Rules. First, a standing order may be established, just as may a change to the Standing Rules, by adopting a simple resolution. The requirement for a supermajority of two-thirds of Senators present and voting in order to invoke cloture, however, applies only to changes in the Standing Rules. For all other matters, including simple resolutions establishing standing orders, cloture requires a supermajority only of three-fifths of the full membership of the Senate (60 votes, if there is no more than one vacancy). If a resolution establishing new procedures were framed as a standing order, or other form of procedural regulation, rather than a change in the Standing Rules, it would be subject to a requirement for cloture that might be easier to meet. It also appears that the requirement for one day's notice of a motion to modify or amend the rules would be applicable only to changes in the Standing Rules, and not to a proposal to establish a standing order. In other respects, the procedure for a resolution establishing a standing order would be the same as for one changing the Standing Rules: it would be debatable and amendable, the motion to proceed to its consideration would be debatable, and, if a request for immediate consideration when submitted met objection, the resolution either would have to be referred to committee (and available for consideration only if reported back), or would be laid over for consideration in a morning hour on a subsequent day, as discussed earlier. It might also be possible to frame a procedural change as a provision in a bill or joint resolution. If a provision in a bill or joint resolution directed a change in the Standing Rules, the measure as a whole (and, presumably, any motion to proceed to its consideration) would become subject to the requirement for two-thirds of Senators present and voting for cloture, but if the provision established some other form of procedural regulation, such as a standing order, the requirement of three-fifths of the full membership of the Senate would apply. If a proposal to change Standing Rules were offered as an amendment to a bill or joint resolution, no motion to proceed to consider the amendment would be required, although the requirement for one calendar day's notice of the proposal would still apply. This notice requirement would apparently not be applicable for an amendment proposing a standing order or other form of procedural regulation. Like simple resolutions, bills and joint resolutions are normally referred to committee when introduced, and, if so referred, they could normally receive floor consideration only if and when reported back. Also like simple resolutions, bills and joint resolutions may be considered immediately when introduced, but only by unanimous consent. In addition, however, the Senate has a procedure (referred to as "Rule XIV") by which a bill or joint resolution can be placed directly on the Calendar of General Orders after being introduced, bypassing committee referral. This procedure has several steps that must (absent unanimous consent) take place on different legislative days, so that, at least when opposition is present, it typically takes two or three legislative days to bring the measure to the point at which it is placed on the Calendar. Once a measure reaches this point, however, it can be called up and considered under the normal procedures of the Senate (either by unanimous consent or through a motion to proceed to consider), as described earlier. Unlike a simple resolution, its eligibility for consideration (absent unanimous consent) is not restricted to occasions when the proper order of business is reached at the end of a morning hour. Provisions changing Senate procedure also could be included in a concurrent resolution. Senate proceedings on concurrent resolutions, however, follow the same procedures as simple resolutions, including the possibility of being laid over to a subsequent day when submitted, and thereby of being prevented from consideration except at the end of a morning hour (or by unanimous consent). A concurrent resolution neither considered nor laid over when submitted would be referred to committee, and could probably then receive floor consideration only if the committee reported it. As with a bill or joint resolution, if the concurrent resolution included provisions amending Standing Rules, the motion to proceed to its consideration would necessarily be debatable. The requirement for one calendar day's notice would apply, as well, to proposals amending the Standing Rules, but not to those establishing a standing order or other form of procedural regulation. Similarly, if the procedural proposal were to be offered as an amendment to a concurrent resolution, the notice requirement would apply to the amendment only if it proposed to change Standing Rules. Bills and joint resolutions are the forms of measure used to make law, which means that, under the Constitution, the process of enacting them requires the participation of the House and the President. A concurrent resolution takes effect if adopted in identical form by both Senate and House; the President has no participation in its approval. In any of these cases, accordingly, unlike that of a simple resolution, approval by the Senate alone would not suffice to place into effect the procedural changes it contained. The change would become effective only when (and if) the measure ultimately received the kind of final approval requisite to its form. Changing Procedure by Establishing Precedents The preceding discussion indicates that the chief potential difficulty for consideration of a proposal to change Senate procedures is that opponents may filibuster it, and thereby make it necessary for supporters to secure a supermajority vote for cloture in order to permit the Senate to reach a vote on the proposal itself. In response to this situation, supporters of change have sought to find some alternative path for the Senate to act on proposed procedural changes that would avoid the potential necessity of achieving a supermajority vote in the process. These efforts have focused especially on establishing a new precedent, reinterpreting existing Senate procedural regulations in a way that would establish the desired interpretation. Such a proceeding might result either in a ruling that directly establishes an altered practice or in one that permits a simple majority to bring the Senate to a vote on a change in rules. Changing the effective procedures of the Senate by establishing new precedential interpretations of existing rules has sometimes been referred to as the "nuclear option" for change, or, if the new interpretations rely on constitutional provisions as a basis, as the "constitutional option." To be clear, there is nothing especially novel to Senate practice about altering its interpretations of its rules. Indeed, the Senate has always understood its capacity to determine the interpretation of its own rules to be an essential element of its constitutional power to say what its rules shall be. Historical experience suggests, however, that it is difficult to construct a way for the Senate to consider a procedural proposition that would allow a simple majority to establish the desired precedent in the face of a filibustering opposition, except through proceedings that would involve violations of Senate rules and practices already in existence. In this context, some would hold that what would render proceedings "nuclear" is not simply that they would establish new precedential interpretations of the rules, but that they would do so through proceedings that, in themselves, involve violations of procedural standards previously established and already in effect at the time the Senate is considering the proposed new interpretation. This difficulty arises because any procedural claim that would support the desired result could become effective in regulating the actual proceedings of the Senate only if the Senate itself were to accept it as a standard governing its action. Given the constitutional power of the Senate over its own rules, this acceptance would presumably occur through a decision by the Senate on some procedural question that would establish the pertinent principle. Accordingly, the procedural question would have to be framed, and placed before the Senate, in a form that would allow the body to reach a vote thereon without itself being subjected to filibuster. Unless the procedural question is raised in a form in which its own consideration either is limited or can be limited by the vote of a simple majority, its consideration would simply reproduce, at a higher level, the difficulties already faced by consideration of the rules change proposal itself. Opponents would be able to filibuster the procedural question, potentially rendering the Senate unable to reach a vote by which a simple majority could establish the desired precedent unless a supermajority vote could be secured for cloture on the procedural proposition. The "Continuing Body" Doctrine and the "Beginning of a Congress" Claim These difficulties may be most readily illustrated through consideration of the form of "nuclear option" that has been most commonly addressed in recent discussions. The proposed proceeding would be based on the argument that, to make effective the constitutional power of the Senate to determine its own procedures, it is requisite that a simple majority be able to bring to a close the consideration of a proposal to establish or amend Senate rules. Usually, the procedural claim has been that this capacity for a simple majority of the Senate to act must exist at least at the opening of a new Congress. Such claims are offered in response to the circumstance that the Senate treats its rules as remaining in effect continuously from one Congress to the next without having to be re-adopted. Under this practice, Senate rules are considered to remain perpetually applicable for the consideration of business, and specifically of proposals to alter those rules themselves. In 1959, the Senate explicitly incorporated this principle in what is now Rule V paragraph 2, which declares that "The rules of the Senate shall continue from one Congress to the next Congress unless they are changed as provided in these rules." Under this provision of Senate Rules, any proposed change in rules has to be considered under the procedures provided for by the rules already in existence—including, in particular, the consequence that if a filibuster arises against the proposal, it may be necessary to achieve a supermajority vote in order to overcome the filibuster and reach a vote on the proposal itself. The principle that existing Senate rules remain continuously in effect is based on the premise that the Senate is a "continuing body" that never has to reconstitute itself afresh. This argument can usefully be viewed as involving two separate propositions. There is a straightforward sense in which the Senate is, unquestionably, a continuing body: namely, that even at the beginning of a new Congress, when the terms of one-third of the Senators have ended and their successors have not yet been sworn in, a quorum of the Senate (which, under the Constitution, is a majority of the Senate) remains in being and could, in principle, do any business within the power of the Senate. The conclusion that the rules remain automatically in effect, on the other hand, is not a necessary implication of the Senate's being a continuing body in the sense that a quorum is continuously in being. It is, rather, a conclusion that the Senate has reached about the implications of that fact, although the Senate could, in principle, decide to draw a different conclusion. It is this conclusion that might properly be called the "continuing body doctrine," as distinguished from the simple fact of the Senate's being a continuing body. The Senate's decision to treat its rules as continuously in effect, however, has important implications for efforts to change those rules. In particular, it means that if the Senate considers any proposal to change the rules so as to make it easier to overcome filibusters, it will do so under procedures that permit opponents to filibuster in order to prevent the adoption of the proposal, at least unless a supermajority for cloture can be obtained. In this way, the Senate's existing rules about limiting the time for consideration of a measure, together with the rule affirming the continuing character of Senate Rules, have a tendency to prevent changes in those same rules. In this sense, it has been argued, the Standing Rules of the Senate "entrench" themselves against possible change. This "entrenchment" is not absolute, for the Senate retains the power to adopt changes in its procedures by a simple majority vote, and it can always enable itself to reach such a vote, at least if it can muster the supermajority requisite for cloture on the proposed change. Supporters of change in Senate rules governing filibustering have, nevertheless, frequently advanced the argument that, by requiring a supermajority for cloture, the existing rules go too far in restricting the effective power of a simple majority of the Senate to exercise the constitutional power to determine the rules of the body, and that the Senate ought to be able make such decisions without having to face a possible need to obtain a supermajority in the course of such action. Although this argument has been advanced in various forms, one prominent version rests on a claim that, for the Senate to be able to make effective exercise of its constitutional power over its own rules, it is necessary that the rules of a previous Senate not be regarded as binding a new Senate against being able to change them. Against the continuing body doctrine, such an argument contends that, at least at the opening of a new Congress, the Constitution requires that the body be able to adopt a proposal to change the rules without potentially being required to secure a supermajority in order to reach the point at which the simple majority vote can occur. On several occasions since the middle of the 20 th century, supporters of changes in Senate rules regulating the filibuster have advanced arguments of this sort during Senate floor consideration of proposals for change. The Senate has on some occasions appeared prepared to entertain such arguments, but has never ultimately endorsed such a conclusion. At one point in the proceedings of 1975, the Senate actually voted in support of such a position, but later in the same proceedings, as part of a compromise that resolved the issue for that time, it reversed itself and affirmed the principle that rules changes must be considered under the procedures provided by the existing rules. Nevertheless, supporters of change sometimes refer to arguments offered and rulings made during this debate, and during similar proceedings in other years, as evidence that the continuing-body doctrine is not uncontested, and in fact has been questioned at numerous times in Senate history. Effect of Previously Existing Rules at the Start of a Congress The argument that special circumstances apply to consideration of rules changes at the beginning of a new Congress may be taken to imply not only that the rules of the Senate of the previous Congress cannot inhibit the incoming Senate from changing those rules, but that they cannot even be regarded as being in effect until the Senate takes some action (either affirmatively or by acquiescence) to accept them. This version of the argument, however, would raise a question of what rules the Senate is then to observe until it takes such action. Accordingly, advocates of this position sometimes implicitly argue, instead, that the only rules to be regarded as not being in effect are those that would inhibit a simple majority from exercising the Senate's authority to determine its own rules. Although the cloture rule is clearly the outstanding instance of a rule whose applicability might be rejected on these grounds, the Senate's layover requirements for the consideration of resolutions give rise to issues of the same kind. The possible difficulty in this connection turns on the meaning of "the beginning of a Congress." Sometimes, when a new Congress has convened with the consideration of rules changes in prospect, the Senate has continued to recess its sessions from day to day, instead of adjourning, so that the Senate's first legislative day may continue for several weeks or more. This circumstance has been taken to support an argument that the Senate is still at "the beginning" of its new session. As previously discussed, however, except when unanimous consent can be obtained, a resolution or concurrent resolution cannot be considered on the legislative day on which it is submitted, but must be laid over for consideration at the end of a morning hour on a subsequent legislative day. Correspondingly, the process of placing a bill or joint resolution, at its introduction, directly on the Calendar, from which the Senate could take it up for consideration, requires several steps that must take place on different legislative days. If any bill or resolution is, instead, referred to committee, it would normally become available for consideration only if the committee subsequently reports it. If reported, the measure would be placed on the Calendar, and a motion to proceed to its consideration would be in order only after it had been on the Calendar for at least one legislative day. It therefore appears that under established procedures, and in the absence of unanimous consent, the Senate would never be able to take up a measure containing a proposal for change in its rules until it had adjourned at least once, creating a new legislative day. Yet if it is the continuation of the first legislative day through recesses that is held to keep the Senate at the beginning of its session, it could be argued that in bringing about a new legislative day, the Senate had brought the beginning of its session to an end, and thereby vitiated the argument that special conditions permitting changes in rules by a simple majority process were still in effect. On some occasions, such as 1975, the Senate has moved to preserve the argument for special conditions at the beginning of a Congress by granting unanimous consent that any adjournment of the Senate did not affect any rights of Senators in relation to any proposals. Alternatively, it might be possible to argue that the rules establishing the pertinent layover requirements, along with other rules that might interfere with action at the beginning of a Congress by a simple majority to change the rules, do not apply until re-adopted, either affirmatively or by acquiescence, the provisions of Rule V to the contrary notwithstanding. By raising such an argument, however, supporters of rules changes might only bring back the question of how to bring about Senate acceptance of the proposed procedural principle. Implementing a "Nuclear" or "Constitutional" Option Under the line of argument described in the preceding sections, supporters of change in the rules would pursue a "nuclear option" during the beginning of a new Congress by raising some point of order whose settlement would permit a majority to close debate on a pending rules change proposal (or on a pending motion to proceed to its consideration), perhaps on the basis that the Constitution requires that this action be possible. A sympathetic chair would rule in favor of the point of order, opponents would appeal the ruling of the chair, and supporters would move to lay the appeal on the table. The motion to lay on the table is itself non-debatable, so that it could immediately be adopted by a simple majority, and its adoption would have the effect of overruling the appeal and affirming the ruling of the chair, thereby establishing the desired interpretation of the rules. This account overlooks that, under fundamental principles of Anglo-American parliamentary law, the chair in a deliberative assembly is not supposed to make procedural rulings according to the individual preferences and discretion of its occupant, but rather is to rule in accordance with existing rules and their established precedential interpretations. If the chair rules in favor of a point of order asserting a new interpretation of rules, the ruling will presumably run contrary to existing precedential interpretations, and in that sense will itself constitute a violation of established procedure. Yet such a ruling by the chair is an essential element of the proposed proceedings, for it is only if the chair rules in a way favorable to the proposed new interpretation that it becomes necessary for opponents of change to take the appeal, which, in turn, makes it possible for supporters to establish their new interpretation by agreeing to the non-debatable motion to lay the appeal on the table. By contrast, if the chair rules, in conformance with existing precedent, against the point of order embodying the new interpretation, it is supporters of change who would have to appeal the decision. There is little likelihood that they could be prevented from doing so, for the right of appeal is understood to be an essential element of the power of the Senate to determine its own rules. The Senate could then potentially overturn the old precedent, and establish the new interpretation, by a simple majority vote on the appeal. Doing so would violate no parliamentary principle, for the constitutional power of the Senate over its own rules is understood to entail the power to alter its interpretation of the meaning of those rules. Under existing Senate practice, however, appeals are, in general, debatable. In these circumstances, as a result, opponents of change could attempt to prevent the establishment of the new precedent by filibustering the vote on the appeal. In this situation, supporters of change could obtain no benefit from moving to lay the appeal on the table, because if the motion to table were to win, the appeal would be rejected, meaning that the old precedent would be reaffirmed, and if the motion to table were to lose, the appeal would remain before the Senate in a debatable condition, so that the filibuster could continue. In this situation, supporters of change might be unable to secure their desired result unless they could find some means by which a simple majority could limit consideration of the appeal. (Cloture may be moved on an appeal, but a supermajority would still be required to invoke it.) This situation, accordingly, would simply reproduce, at a higher level, the difficulties supporters of change were originally trying to overcome. Supporters might attempt to deal with such a situation by raising some further procedural claim under which either the appeal would be deemed non-debatable, or a simple majority could limit its consideration. Yet it might remain impossible to resolve the situation in a way favorable to procedural change unless the new claim could itself be settled by a simple majority vote; that is, without itself being subject to filibuster. It is not clear in what kind of parliamentary situation such a settlement by a simple majority might be possible. A further obstacle to successfully changing Senate practice by procedural means arises if the justification offered for the procedural claim is constitutional. Under Senate precedents of long standing, if any procedural question is raised that involves a constitutional question, the chair is not to rule at all, but is instead to submit the question to the Senate for decision. If the question is submitted to the Senate, it could establish the proposed new interpretation by a simple majority vote, but a procedural question submitted to the Senate is debatable. In this case too, accordingly, opponents might be able to prevent the occurrence of the vote that would establish the desired interpretation by filibustering, unless supporters could obtain a supermajority vote to invoke cloture on the submitted point of order. The key to successful procedural change through precedential action, then, is to place a question before the Senate that, if agreed to by a simple majority, would result in limiting or closing debate on the rules change proposal (or the motion to proceed to consider it, etc.). Supporters of change might, for example, simply move that the chair immediately put their proposal to a vote. They might then, themselves, raise a point of order that their motion is out of order because existing Senate rules recognize no such motion. Normally, of course, on the basis of existing precedents, the chair would uphold this point of order, holding the motion out of order, leaving supporters no option but to appeal the ruling. Given that the appeal would itself be debatable, supporters would then still be faced with their original dilemma. If the point of order attacked the motion offered by advocates of procedural change, on the other hand, but a sympathetic presiding officer chose not to rule on the point of order, and instead to submit it directly to the Senate for decision as involving a constitutional question, the situation would be reversed. Even if no constitutional question were involved, Senate Rule XX paragraph 2 accords the chair discretion to submit any procedural question directly to a vote of the Senate. In the past, the chair has sometimes exercised this discretion in cases in which previous precedential interpretations were lacking, although current practice reflects a strong presumption that the settlement of points of order will proceed on the basis of an initial ruling by the chair. If the chair does submit a procedural question to the Senate for decision, the question is debatable, and would, accordingly, potentially be subject to filibuster. It would also, however, be subject to a motion to lay on the table. When a submitted point of order is tabled, the effect is the same as overruling the point of order, and thereby also holding the challenged action to be in order. In this way, a simple majority vote (on the non-debatable motion to table the point of order), by admitting the motion to proceed to a vote on the pending rules change proposal, might enable a simple majority to bring about a vote on the proposal itself. This decision of the Senate on the submitted point of order could have the broader consequence of establishing precedent for a procedure under which the Senate could change its rules without having to face the potential that a supermajority vote would be required in the process. Even proceedings of this kind, however, would involve departures from established Senate practice in the process of approving procedural changes, at least insofar as the potential exercise of the chair's discretion in submitting the point of order (if it was not based on a constitutional question) would run counter to currently accepted expectations. Self-Disposing Motions The Senate's consideration of cloture rule changes in 1975 appears to have involved proceedings of essentially the form just described (although, as noted earlier, the Senate later voted to reverse the precedent set though those proceedings). Part of the reason for the reversal is that the motion originally held in order was a compound motion, involving several questions. Essentially, the motion proposed, first, that the Senate proceed to consider a rules change proposal; second, that the chair immediately put to a vote the question of ending debate on this motion to proceed; and third, that if the Senate voted to end debate, the chair also put to a vote the motion to proceed itself. Arguably, such a motion might have been held out of order on the grounds that separate motions cannot be "chained" in a single proposition. An argument might also be made that the motion was out of order as purporting to provide for its own disposition, on grounds that the directive specifying how the Senate would dispose of the motion could have no authoritative force until the Senate had already disposed (favorably) of the very motion whose disposition was being directed. Occasionally, however, the Senate has admitted other motions that appeared to be subject to one or both of these objections. Neither of these arguments was advanced in 1975. Instead, the compound motion was held in order, by virtue of the Senate's laying on the table a point of order that was raised against the motion and submitted to the Senate by the chair. Opponents, however, then took advantage of the compound nature of the motion to demand that it be divided for debate and voting. If a question consists of several independent, separable propositions, any Senator may demand that it be divided, and the chair in this instance admitted the demand. After the question was divided, the Senate proceeded to consider the first division of the motion (the motion to proceed to consider the rules change resolution). Inasmuch as the Senate had not acted on the second division of the motion (directing that the question on the whole motion be immediately put), the first division of the question was held to be debatable, and extended debate took place thereon. As a result, the Senate was never able to reach a vote on the question of whether it should vote without debate on the motion to proceed. It was in this situation that a compromise resolution of the issue was negotiated. It is not clear that a version of this approach could be devised that did not involve a compound motion or one purporting to provide for its own disposition.

This report discusses procedures and related issues involved in considering changes to Senate rules. The Constitution empowers each house of Congress to determine its own rules. The Senate normally considers changes to its Standing Rules in the form of a simple resolution, which (like any ordinary measure) can be adopted by a majority of Senators voting, a quorum being present ("simple majority"). Like most measures, however, such a resolution is debatable. Senate rules place no general limits on how long consideration of a measure may last, and allow such limits to be imposed only by a supermajority vote for cloture. As a result, opponents may be able to prevent the resolution from coming to a vote by filibustering. For changes in Standing Rules, the supermajority requisite for cloture is two-thirds of Senators voting, with a quorum present. Except by unanimous consent, moreover, the Senate can normally take up a resolution changing rules (or any other measure) only by adopting a motion to proceed to consider. A simple majority can adopt this motion, but the motion is itself debatable, so that in order to reach a vote, it may be necessary to obtain a two-thirds supermajority to invoke cloture first on the motion to proceed, then also on the measure itself. For these reasons, in cases in which opponents are willing to filibuster, it can become necessary, in practice, to obtain supermajority support in order to bring the Senate to the point at which it can vote on a proposal to amend Senate Rules, even though a simple majority can then adopt the proposal itself. Changes to Standing Rules could also be included in other forms of resolution, or in bills, but any motion to consider a measure containing such provisions is still always debatable, and a two-thirds supermajority is still required for cloture. Procedural changes could also be established as standing orders, or as certain other kinds of procedural regulation. A motion to proceed to consider a measure establishing procedural regulations in any such form would also be debatable, but cloture on such a measure would require three-fifths of the full membership of the Senate. Finally, the Senate may also change its procedures by establishing new precedents that interpret existing rules or other standards differently from before. This might be achieved either by a ruling that directly establishes an altered practice or by one that permits a simple majority to bring the Senate to a vote on a change in rules. If a point of order asserts a new interpretation, the chair will normally overrule it on the basis of existing precedents, but if that decision is appealed to the full Senate, a simple majority could establish the new interpretation by voting to reverse the decision. Appeals are normally debatable, however, so that opponents may be able to prevent any vote to overturn the ruling by filibustering the appeal, unless a supermajority would vote for cloture. Proceedings that would permit the Senate to reinterpret rules without requiring a supermajority vote in the process have been called the "nuclear option," or, if implemented through raising a point of order on constitutional grounds, the "constitutional option." It is not clear that any such form of proceeding can be proposed that would not require violations of existing rules in the process of changing them. Some of the proceedings proposed would require the chair to make a ruling contrary to precedent, or else to submit to the decision of the Senate a settled procedural question on which the chair would routinely rule. Others would require the Senate to entertain a novel motion through which a simple majority could close debate, or would involve disposing of a motion through proceedings that would be in order only if the Senate were already to have approved the motion.

Introduction This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2003-2010. It provides the total dollar values of U.S. arms agreements with its top five purchasers in five specific regions of the world for the periods 2003-2006, 2007-2010, and for 2010. It also reports the total dollar values of U.S. arms deliveries to its top five purchasers in five specific regions for those same years. In addition, the report provides a listing of the total dollar values of U.S. arms agreements with and deliveries to its top 10 purchasers for the periods 2003-2006, 2007-2010, and for 2010. The data are official, unclassified, United States Defense Department figures compiled by the Defense Security Cooperation Agency (DSCA), unless otherwise indicated. The data have been restructured for this report by DSCA from a fiscal year format to a calendar year format. Thus a year in this report covers the period from January 1 to December 31, and not the fiscal year period from October 1 to September 30. U.S. Agreements with Leading Purchasers, 2003-2010 The following regional tables ( Tables 1-5 ) provide the total dollar values of all U.S. defense articles and defense services sold to the top five purchasers in each region indicated for the calendar year(s) noted. These values represent the total value of all government-to-government agreements actually concluded between the United States and the foreign purchaser under the Foreign Military Sales (FMS) program during the calendar year(s) indicated. In Table 6 , the total dollar values of all U.S. defense articles and defense services sold to the top 10 purchasers worldwide are provided for calendar year period noted. All totals are expressed as current U.S. dollars. U.S. Deliveries to Leading Purchasers, 2003-2010 The following regional tables ( Tables 7-11 ) provide the total dollar values of all U.S. defense articles and defense services delivered to the top five purchasers in each region indicated for the calendar year(s) noted for all deliveries under the U.S. Foreign Military Sales (FMS) program. These values represent the total value of all government-to-government deliveries actually concluded between the United States and the foreign purchaser under the FMS program during the calendar year(s) indicated. Commercial licensed deliveries totals are excluded, due to concerns regarding the accuracy of existing data. In Table 12 , the total dollar values of all U.S. defense articles and defense services actually delivered to the top 10 purchasers worldwide is provided. The delivery totals are for FMS deliveries concluded for the calendar year(s) noted.

This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2003-2010, made through the U.S. Foreign Military Sales (FMS) program. In a series of data tables, it lists the total dollar values of U.S. government-to-government arms sales agreements with its top five purchasers, and the total dollar values of U.S. arms deliveries to those purchasers, in five specific regions of the world for three specific periods: 2003-2006, 2007-2010, and 2010 alone. In addition, the report provides data tables listing the total dollar values of U.S. government-to-government arms agreements with and deliveries to its top 10 purchasers worldwide for the periods 2003-2006, 2007-2010, and for 2010 alone. This report is prepared in conjunction with CRS Report R42017, Conventional Arms Transfers to Developing Nations, 2003-2010, by [author name scrubbed]. That annual report details both U.S. and foreign arms transfer activities globally and provides analysis of arms trade trends. The intent here is to complement that elaborate worldwide treatment of the international arms trade by focusing exclusively on U.S. arms sales and deliveries, and providing the names of the major U.S. arms customers, by region, together with the total dollar values of their arms purchases or deliveries for the calendar years 2003-2006, 2007-2010, and 2010.

Introduction On October 26, 2001, President George W. Bush signed P.L. 107-56 , the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act or the USA PATRIOT Act. Among its provisions are a number which impacted or amended the Foreign Intelligence Surveillance Act (FISA), 50 U.S.C. § 1801 et seq. , an act which provides a statutory structure for the use of electronic surveillance, physical searches, pen registers, trap and trace devices, and orders requiring production of tangible things within the United States to gather foreign intelligence information or to assist in specified types of investigations. The changes made to FISA by P.L. 107-56 were far reaching. For example, the law expanded the number of United States district court judges on the Foreign Intelligence Surveillance Court and provided for roving or multipoint electronic surveillance authority under FISA. It amended FISA provisions with respect to pen registers and trap and trace devices, and substantially expanded the reach of the business records provisions to provide a mechanism for production of any tangible thing pursuant to a FISA court order. The amended language changed the certification demanded of a federal officer applying for a FISA order for electronic surveillance or a physical search from requiring a certification that the purpose of the surveillance or physical search is to obtain foreign intelligence information to requiring certification that a significant purpose of the surveillance or search is to obtain foreign intelligence information. As implemented, this has made it possible for FISA to be used where the primary purpose of the investigation is criminal investigation, so long as a significant foreign intelligence purpose is also present. FISA, as amended, also affords a private right of action to persons aggrieved by inappropriate use or disclosure of information gathered in or derived from a FISA surveillance or physical search or through the use of a pen register or trap and trace device. Of the amendments made by the USA PATRIOT Act, all but the section which increased the number of judges on the Foreign Intelligence Surveillance Court were set by that Act to sunset on December 31, 2005. P.L. 109-160 and P.L. 109-170 extended the sunset of certain FISA provisions, among others, to February 3, 2006, and March 10, 2006, respectively. The USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 , replaced the sunset provisions of P.L. 107-56 , as amended, with new provisions extending the application of the affected amendments to December 31, 2009. Amendments to FISA were also made by the Intelligence Authorization Act for Fiscal Year 2003, P.L. 107-108 ; the Homeland Security Act of 2002, P.L. 107-296 ; and the Intelligence Reform and Terrorism Protection Act of 2004, P.L. 108-458 . In the 109 th Congress, two measures, the USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 , and the USA PATRIOT Act Additional Reauthorizing Amendments Act of 2006, P.L. 109-178 , made significant changes to FISA. P.L. 109-177 extended the duration of FISA electronic surveillance, physical searches, and pen register and trap and trace devices. It also added requirements to applications for production of certain sensitive types of records, and expanded the requirements for applications for FISA orders for production of tangible things and for orders authorizing such production. This Act created a new petition review pool within the U.S. Foreign Intelligence Surveillance Court (FISC) to address challenges to such production orders or to related nondisclosure orders, and established a detailed procedure for review of such orders. Further, it directed the Inspector General of the U.S. Department of Justice to perform a comprehensive audit of the effectiveness and use, including improper or illegal use, of the investigative authority under title V of FISA, 50 U.S.C. § 1861 et seq. , for fiscal years 2002-2006. The measure modified the requirements for multipoint electronic surveillance under FISA. It also expanded congressional oversight of FISA electronic surveillance, physical searches, and use of pen registers and trap and trace devices. P.L. 109-178 amends the procedures for judicial review of production and nondisclosure orders under 50 U.S.C. § 1861. On May 17, 2002, the U.S. Foreign Intelligence Surveillance Court issued an opinion and order written by the then Presiding Judge of the court, U.S. District Judge Royce C. Lamberth. All of the other judges then on the FISC concurred in the order. The opinion was provided by the current Presiding Judge of the FISC, U.S. District Judge Colleen Kollar-Kotelly, to the Senate Judiciary Committee in response to a July 31 letter from Senator Leahy, Senator Grassley and Senator Specter. On August 22, 2002, the unclassified opinion was released to the public by Senator Leahy, Senator Grassley and Senator Specter. In the memorandum opinion and order, the FISC considered a motion by the U.S. Department of Justice "to vacate the minimization and 'wall' procedures in all cases now or ever before the Court, including this Court's adoption of the Attorney General's July 1995 intelligence sharing procedures, which are not consistent with new intelligence sharing procedures submitted for approval with this motion." In its memorandum and accompanying order, the FISC granted the Department of Justice's motion, but modified the second and third paragraphs of section II.B of the proposed minimization procedures. The FISC's May 17 th memorandum opinion and order were not appealed directly. However, the Justice Department sought review in the U.S. Foreign Intelligence Court of Review (Court of Review) of an FISC order authorizing electronic surveillance of an agent of a foreign power, subject to restrictions flowing from the May 17 th decision, and of an FISC order renewing that surveillance subject to the same restrictions. The Court of Review reversed and remanded the FISC orders. This opinion, the first issued by the U.S. Foreign Intelligence SurveillanceCourt of Review since its creation in 1978, was also released to the public. This report will provide background on the Foreign Intelligence Surveillance Act, discuss its statutory framework, and review these two decisions. Background Investigations for the purpose of gathering foreign intelligence give rise to a tension between the Government's legitimate national security interests and the protection of privacy interests. The stage was set for legislation to address these competing concerns in part by Supreme Court decisions on related issues. In Katz v. United States , 389 U.S. 347 (1967), the Court held that the protections of the Fourth Amendment extended to circumstances involving electronic surveillance of oral communications without physical intrusion. The Katz Court stated, however, that its holding did not extend to cases involving national security. In United States v. United States District Court , 407 U.S. 297 (1972) (the Keith case), the Court regarded Katz as "implicitly recogniz[ing] that the broad and unsuspected governmental incursions into conversational privacy which electronic surveillance entails necessitate the application of Fourth Amendment safeguards." Mr. Justice Powell, writing for the Keith Court, framed the matter before the Court as follows: The issue before us is an important one for the people of our country and their Government. It involves the delicate question of the President's power, acting through the Attorney General, to authorize electronic surveillance in internal security matters without prior judicial approval. Successive Presidents for more than one-quarter of a century have authorized such surveillance in varying degrees, without guidance from the Congress or a definitive decision of this Court. This case brings the issue here for the first time. Its resolution is a matter of national concern, requiring sensitivity both to the Government's right to protect itself from unlawful subversion and attack and to the citizen's right to be secure in his privacy against unreasonable Government intrusion. The Court held that, in the case of intelligence gathering involving domestic security surveillance, prior judicial approval was required to satisfy the Fourth Amendment. Justice Powell emphasized that the case before it "require[d] no judgment on the scope of the President's surveillance power with respect to the activities of foreign powers, within or without the country." The Court expressed no opinion as to "the issues which may be involved with respect to activities of foreign powers or their agents." However, the guidance which the Court provided in Keith with respect to national security surveillance in a domestic context to some degree presaged the approach Congress was to take in foreign intelligence surveillance. The Keith Court observed in part: ...We recognize that domestic surveillance may involve different policy and practical considerations from the surveillance of "ordinary crime." The gathering of security intelligence is often long range and involves the interrelation of various sources and types of information. The exact targets of such surveillance may be more difficult to identify than in surveillance operations against many types of crime specified in Title III [of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. § 2510 et seq. ]. Often, too, the emphasis of domestic intelligence gathering is on the prevention of unlawful activity or the enhancement of the Government's preparedness for some possible future crisis or emergency. Thus, the focus of domestic surveillance may be less precise than that directed against more conventional types of crimes. Given these potential distinctions between Title III criminal surveillances and those involving domestic security, Congress may wish to consider protective standards for the latter which differ from those already prescribed for specified crimes in Title III. Different standards may be compatible with the Fourth Amendment if they are reasonable both in relation to the legitimate need of Government for intelligence information and the protected rights of our citizens. For the warrant application may vary according to the governmental interest to be enforced and the nature of citizen rights deserving protection.... It may be that Congress, for example, would judge that the application and affidavit showing probable cause need not follow the exact requirements of § 2518 but should allege other circumstances more appropriate to domestic security cases; that the request for prior court authorization could, in sensitive cases, be made to any member of a specially designated court...; and that the time and reporting requirements need not be so strict as those in § 2518. The above paragraph does not, of course, attempt to guide the congressional judgment but rather to delineate the present scope of our own opinion. We do not attempt to detail the precise standards for domestic security warrants any more than our decision in Katz sought to set the refined requirements for the specified criminal surveillances which now constitute Title III. We do hold, however, that prior judicial approval is required for the type of domestic surveillance involved in this case and that such approval may be made in accordance with such reasonable standards as the Congress may prescribe. Court of appeals decisions following Keith met more squarely the issue of warrantless electronic surveillance in the context of foreign intelligence gathering. In United States v. Brown , 484 F.2d 418 (5 th Cir. 1973), cert. denied , 415 U.S. 960 (1974), the Fifth Circuit upheld the legality of a warrantless wiretap authorized by the Attorney General for foreign intelligence purposes where the conversation of Brown, an American citizen, was incidentally overheard. The Third Circuit in United States v. Butenko , 494 F.2d 593 (3 rd Cir. 1974), cert. denied sub nom, Ivanov v. United States , 419 U.S. 881 (1974), concluded that warrantless electronic surveillance was lawful, violating neither Section 605 of the Communications Act nor the Fourth Amendment, if its primary purpose was to gather foreign intelligence information. In its plurality decision in Zweibon v. Mitchell , 516 F.2d 594, 613-14 (D.C. Cir. 1975), cert. denied , 425 U.S. 944 (1976), the District of Columbia Circuit took a somewhat different view in a case involving a warrantless wiretap of a domestic organization that was not an agent of a foreign power or working in collaboration with a foreign power. Finding that a warrant was required in such circumstances, the plurality also noted that "an analysis of the policies implicated by foreign security surveillance indicates that, absent exigent circumstances, all warrantless electronic surveillance is unreasonable and therefore unconstitutional." With the passage of the Foreign Intelligence Surveillance Act (FISA), P.L. 95-511 , Title I, October 25, 1978, 92 Stat. 1796, codified as amended at 50 U.S.C. § 1801 et seq. , Congress sought to strike a delicate balance between these interests when the gathering of foreign intelligence involved the use of electronic surveillance. Collection of foreign intelligence information through electronic surveillance is now governed by FISA and E.O. 12333. This report will examine the provisions of FISA which deal with electronic surveillance in the foreign intelligence context, as well as those applicable to physical searches, the use of pen registers and trap and trace devices under FISA, and access to business records and other tangible things for foreign intelligence purposes. As the provisions of E.O. 12333 to some extent set the broader context within which FISA operates, we will briefly examine its pertinent provisions first. Executive Order 12333 Executive Order 12333, 46 Fed. Reg. 59,941 (December 4, 1981), as amended, 50 U.S.C. § 401 note, deals with "United States Intelligence Activities." Under Section 2.3 of E.O. 12333, the agencies within the Intelligence Community are to "collect, retain or disseminate information concerning United States persons only in accordance with procedures established by the head of the agency concerned and approved by the Attorney General, consistent with the authorities provided by Part 1 of this Order...." Among the types of information that can be collected, retained or disseminated under this section are: (a) Information that is publicly available or collected with the consent of the person concerned; (b) Information constituting foreign intelligence or counterintelligence, including such information concerning corporations or other commercial organizations. Collection within the United States of foreign intelligence not otherwise obtainable shall be undertaken by the FBI or, when significant foreign intelligence is sought, by other authorized agencies of the Intelligence Community, provided that no foreign intelligence collection by such agencies may be undertaken for the purpose of acquiring information concerning the domestic activities of United States persons; (c) Information obtained in the course of a lawful foreign intelligence, counterintelligence, international narcotics or international terrorism investigation; (d) Information needed to protect the safety of any persons or organizations, including those who are targets, victims or hostages of international terrorist organizations; (e) Information needed to protect foreign intelligence or counterintelligence sources or methods from unauthorized disclosure. Collection within the United States shall be undertaken by the FBI except that other agencies of the Intelligence Community may also collect such information concerning present or former employees, present or former intelligence agency contractors or their present or former employees, or applicants for any such employment or contracting; (f) Information concerning persons who are reasonably believed to be potential sources or contacts for the purpose of determining their suitability or credibility; (g) Information arising out of a lawful personnel, physical or communications security investigation; ... (i) Incidentally obtained information that may indicate involvement in activities that may violate federal, state, local or foreign laws; and (j) Information necessary for administrative purposes. In addition, agencies within the Intelligence Community may disseminate information, other than information derived from signals intelligence, to each appropriate agency within the Intelligence Community for purposes of allowing the recipient agency to determine whether the information is relevant to its responsibilities and can be retained by it. In discussing collections techniques, Section 2.4 of E.O. 12333 indicates that agencies within the Intelligence Community are to use the least intrusive collection techniques feasible within the United States or directed against United States persons abroad. Agencies are not authorized to use such techniques as electronic surveillance, unconsented physical search, mail surveillance, physical surveillance, or monitoring devices unless they are in accordance with procedures established by the head of the agency concerned and approved by the Attorney General. Such procedures shall protect constitutional and other legal rights and limit use of such information to lawful governmental purposes.... Section 2.5 of the Executive Order 12333 states that: The Attorney General hereby is delegated the power to approve the use for intelligence purposes, within the United States or against a United States person abroad, of any technique for which a warrant would be required if undertaken for law enforcement purposes, provided that such techniques shall not be undertaken unless the Attorney General has determined in each case that there is probable cause to believe that the technique is directed against a foreign power or an agent of a foreign power. Electronic surveillance, as defined in the Foreign Intelligence Surveillance Act of 1978 [section 1801 et seq. of this title], shall be conducted in accordance with that Act, as well as this Order. The Foreign Intelligence Surveillance Act The Statutory Framework The Foreign Intelligence Surveillance Act (FISA), P.L. 95-511 , Title I, October 25, 1978, 92 Stat. 1796, codified at 50 U.S.C. § 1801 et seq. , as amended, provides a framework for the use of electronic surveillance and physical searches to obtain foreign intelligence information. It also provides a statutory structure for the installation and use of pen registers and trap and trace devices and for orders requiring production of tangible things for use in federal investigations to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. Such an investigation of a United States person may not be conducted solely on the basis of activities protected by the First Amendment to the Constitution. This measure seeks to strike a balance between national security needs in the context of foreign intelligence gathering and privacy rights. Creation of the U.S. Foreign Intelligence Surveillance Court and the U.S. Foreign Intelligence Court of Review FISA establishes two special courts, the U.S. Foreign Intelligence Surveillance Court (FISC) and the U.S. Foreign Intelligence Surveillance Court of Review (Court of Review), comprised of federal judges to address applications for court orders authorizing such electronic surveillance, physical searches, installation and use of pen registers and trap and trace devices, and production of tangible things. Under 50 U.S.C. § 1803(a), the Chief Justice of the United States must publicly designate eleven U.S. district court judges from seven of the United States judicial circuits, of whom no fewer than three must reside within 20 miles of the District of Columbia. These eleven judges constitute the U.S. Foreign Intelligence Surveillance Court (FISC), which has jurisdiction over applications for and orders approving electronic surveillance, physical searches, pen registers or trap and trace devices or orders for production of tangible things anywhere within the United States under FISA. If an application for electronic surveillance or a physical search under this Act is denied by one judge of this court, it may not then be considered by another judge on the court. If a judge denies such an application, he or she must immediately provide a written statement for the record of the reason(s) for this decision. The Chief Justice also publicly designates the three U.S. district court or U.S. court of appeals judges who together make up the U.S. Foreign Intelligence Surveillance Court of Review (Court of Review). This court has jurisdiction to review any denial of an order under FISA. If the United States appeals an FISC denial of an application, the record from the FISC must be transmitted under seal to the Court of Review established. If the Court of Review determines that an application was properly denied, again a written statement of the reason(s) for the court's decision must be provided for the record. The United States may petition for a writ of certiorari to the United States Supreme Court for review of that decision. All proceedings under FISA must be conducted expeditiously, and the record of all proceedings including applications and orders granted, must be maintained under security measures established by the Chief Justice in consultation with the Attorney General and the Director of National Intelligence. Three FISC judges who reside within 20 miles of the District of Columbia, or, if all of such judges are unavailable, other judges of the FISC designated by the presiding judge of such court, comprise a petition review pool which has jurisdiction to review petitions filed pursuant to 50 U.S.C. § 1861(f)(1) challenging production orders and non-disclosure orders. The judges of the FISC and the Court of Review serve for seven year terms and may not be redesignated. The FISC and the Court of Review may establish rules and procedures, and may take such actions, as are reasonably necessary to administer their responsibilities under FISA. The FISC has established the Foreign Intelligence Surveillance Court Rules of Procedure, and Procedures for Review of Petitions filed pursuant to Section 501(f) of the Foreign Intelligence Surveillance Act of 1978, as Amended have also been adopted. Rules of procedure for the Court of Review have not been identified. Any such rules and procedures, and any modifications thereto, must be recorded and transmitted in an unclassified form (although they may include a classified annex) to all of the judges on the FISC; all of the judges on the Court of Review; the Chief Justice of the United States; the Committee on the Judiciary of the Senate and of the House of Representatives; and the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence. Electronic surveillance under FISA Electronic surveillance under title I of FISA, 50 U.S.C. § 1801 et seq ., is generally conducted under an FISC order, unless the surveillance fits within one of three statutory exceptions. 50 U.S.C. § 1802—Electronic Surveillance of Certain Foreign Powers Without a Court Order The first of these exceptions is electronic surveillance of certain foreign powers without a court order upon Attorney General certification that specific criteria have been met. Under section 101(g) of FISA, 50 U.S.C. § 1801(g), as amended by Subsection 506(a)(5) of P.L. 109-177 , the term "Attorney General" is defined to mean "the Attorney General of the United States (or Acting Attorney General), the Deputy Attorney General, or, upon the designation of the Attorney General, the Assistant Attorney General designated as the Assistant Attorney General for National Security under section 507A of title 28, United States Code." Under 50 U.S.C. § 1802, the President, through the Attorney General, may authorize electronic surveillance to acquire foreign intelligence information for up to one year without a court order if two criteria are satisfied. First, to utilize this authority, the Attorney General must certify in writing under oath that: (A) the electronic surveillance is solely directed at— (i) the acquisition of the contents of communications transmitted by means of communications used exclusively between or among foreign powers, as defined in [50 U.S.C. § 1801(a)(1), (2), or (3)]; or (ii) the acquisition of technical intelligence, other than the spoken communications of individuals, from property or premises under the open and exclusive control of a foreign power, as defined in [50 U.S.C. § 1801(a)(1), (2) or (3)]; (B) there is no substantial likelihood that the surveillance will acquire the contents of any communication to which a United States person is a party; and (C) the proposed minimization procedures with respect to such surveillance meet the definition of minimization procedures under [50 U.S.C. § 1801(h)]; .... Second, in order for the President, through the Attorney General, to use this authority ... the Attorney General [must report] such minimization procedures and any changes thereto to the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence at least thirty days prior to their effective date, unless the Attorney General determines immediate action is required and notifies the committees immediately of such minimization and the reason for their becoming effective immediately. Such electronic surveillance must be conducted only in accordance with the Attorney General's certification and minimization procedures adopted by him. A copy of his certification must be transmitted by the Attorney General to the FISC. This certification remains under seal unless an application for a court order for surveillance authority is made under 50 U.S.C. §§ 1801(h)(4) and 1804, or the certification is necessary to determine the legality of the surveillance under 50 U.S.C. § 1806(f). In connection with electronic surveillance so authorized, the Attorney General may direct a specified communications common carrier to furnish all information, facilities, or technical assistance needed for the electronic surveillance to be accomplished in a way that would protect its secrecy and minimize interference with the services provided by the carrier to its customers. 50 U.S.C. § 1802(a)(4)(A). In addition, the Attorney General may direct the specified communications common carrier to maintain any records, under security procedures approved by the Attorney General and the Director of National Intelligence, concerning the surveillance or the assistance provided which the carrier wishes to retain. 50 U.S.C. § 1802(a)(4)(B). Compensation at the prevailing rate must be made to the carrier by the Government for providing such aid. If the President, by written authorization, empowers the Attorney General to approve applications to the FISC, an application for a court order may be made pursuant to 50 U.S.C. § 1802(b). A judge receiving such an application may grant an order under 50 U.S.C. § 1805 approving electronic surveillance of a foreign power or an agent of a foreign power to obtain foreign intelligence information. There is an exception to this, however. Under 50 U.S.C. § 1802(b), a court does not have jurisdiction to grant an order approving electronic surveillance directed solely as described in 50 U.S.C. § 1802(a)(1)(A) (that is, at acquisition of the contents of communications transmitted by means of communications used exclusively between or among foreign powers, or acquisition of technical intelligence, other than the spoken communications of individuals, from property or premises under the open and exclusive control of a foreign power), unless the surveillance may involve the acquisition of communications of a United States person. 50 U.S.C. § 1802(b). 50 U.S.C. § 1804—Applications for FISC Orders Authorizing Electronic Surveillance An application for a court order authorizing electronic surveillance for foreign intelligence purposes may be sought under 50 U.S.C. § 1804. An application for such a court order must be made by a federal officer in writing on oath or affirmation to an FISC judge. The application must be approved by the Attorney General based upon his finding that the criteria and requirements set forth in 50 U.S.C. § 1801 et seq . have been met. Section 1804(a) sets out what must be included in the application: (1) the identity of the Federal officer making the application; (2) the authority conferred on the Attorney General by the President of the United States and the approval of the Attorney General to make the application; (3) the identity, if known, or a description of the specific target of the electronic surveillance; (4) a statement of the facts and circumstances relied upon by the applicant to justify his belief that— (A) the target of the electronic surveillance is a foreign power or an agent of a foreign power; and (B) each of the facilities or places at which the electronic surveillance is directed is being used, or is about to be used, by a foreign power or an agent of a foreign power; (5) a statement of the proposed minimization procedures; (6) a detailed description of the nature of the information sought and the type of communications or activities to be subjected to the surveillance; (7) a certification or certifications by the Assistant to the President for National Security Affairs or an executive branch official or officials designated by the President from among those executive officers employed in the area of national security or defense and appointed by the President with the advice and consent of the Senate — (A) that the certifying official deems the information sought to be foreign intelligence information; (B) that a significant purpose of the surveillance is to obtain foreign intelligence information; (C) that such information cannot reasonably be obtained by normal investigative techniques; (D) that designates the type of foreign intelligence information being sought according to the categories described in 1801(e) of this title; and (E) including a statement of the basis for the certification that— (i) the information sought is the type of foreign intelligence information designated; and (ii) such information cannot reasonably be obtained by normal investigative techniques; (8) a statement of the means by which the surveillance will be effected and a statement whether physical entry is required to effect the surveillance; (9) a statement of the facts concerning all previous applications that have been made to any judge under this subchapter involving any of the persons, facilities, or places specified in the application, and the action taken on each previous application; (10) a statement of the period of time for which the electronic surveillance is required to be maintained, and if the nature of the intelligence gathering is such that the approval of the use of electronic surveillance under this subchapter should not automatically terminate when the described type of information has first been obtained, a description of facts supporting the belief that additional information of the same type will be obtained thereafter; and (11) whenever more that one electronic, mechanical or other surveillance device is to be used with respect to a particular proposed electronic surveillance, the coverage of the devices involved and what minimization procedures apply to information acquired by each device. The application for a court order need not contain the information required in Subsections 1804(6), (7)(E), (8), and (11) above if the target of the electronic surveillance is a foreign power and each of the facilities or places at which surveillance is directed is owned, leased, or exclusively used by that foreign power. However, in those circumstances, the application must indicate whether physical entry is needed to effect the surveillance, and must also contain such information about the surveillance techniques and communications or other information regarding United States persons likely to be obtained as may be necessary to assess the proposed minimization procedures. 50 U.S.C. § 1804(b). Where an application for electronic surveillance under 50 U.S.C. § 1804(a) involves a target described in 50 U.S.C. § 1801(b)(2), the Attorney General must personally review the application if requested to do so, in writing, by the Director of the Federal Bureau of Investigation, the Secretary of Defense, the Secretary of State, or the Director of National Intelligence. The authority to make such a request may not be delegated unless the official involved is disabled or otherwise unavailable. Each such official must make appropriate arrangements, in advance, to ensure that such a delegation of authority is clearly established in case of disability or other unavailability. If the Attorney General determines that an application should not be approved, he must give the official requesting the Attorney General's personal review of the application written notice of the determination. Except in cases where the Attorney General is disabled or otherwise unavailable, the responsibility for such a determination may not be delegated. The Attorney General must make advance plans to ensure that the delegation of such responsibility where the Attorney General is disabled or otherwise unavailable is clearly established. Notice of the Attorney General's determination that an application should not be approved must indicate what modifications, if any, should be made in the application needed to make it meet with the Attorney General's approval. The official receiving the Attorney General's notice of modifications which would make the application acceptable must modify the application if the official deems such modifications warranted. Except in cases of disability or other unavailability, the responsibility to supervise any such modifications is also a non-delegable responsibility. 50 U.S.C. § 1805—Issuance of FISC Order Authorizing Electronic Surveillance If a judge makes the findings required under 50 U.S.C. § 1805(a), then he or she must enter an ex parte order as requested or as modified approving the electronic surveillance. The necessary findings must include that: (1) the President has authorized the Attorney General to approve applications for electronic surveillance for foreign intelligence information; (2) the application has been made by a Federal officer and approved by the Attorney General; (3) on the basis of the facts submitted by the applicant there is probable cause to believe that— (A) the target of the electronic surveillance is a foreign power or an agent of a foreign power: Provided , That no United States person may be considered a foreign power or an agent of a foreign power solely upon the basis of activities protected by the first amendment to the Constitution of the United States; and (B) each of the facilities or places at which the electronic surveillance is directed is being used, or is about to be used, by a foreign power or an agent of a foreign power; (4) the proposed minimization procedures meet the definition of minimization procedures under section 1801(h) of this title; and (5) the application which has been filed contains all statements and certifications required by section 1804 of this title and, if the target is a United States person, the certification or certifications are not clearly erroneous on the basis of the statement made under section 1804(a)(7)(E) of this title and any other information furnished under section 1804(d) of this title. In making a probable cause determination under 50 U.S.C. § 1805(a)(3), the judge may consider past activities of the target as well as facts and circumstances relating to the target's current or future activities. Section 1805(c) sets out particular specifications and directions which must be included in an order approving a FISA electronic surveillance: (1) Specifications.—An order approving an electronic surveillance under this section shall specify (A) the identity, if known, or a description of the specific target of the electronic surveillance identified or described in the application pursuant to [50 U.S.C. § 1804(a)(3)]; (B) the nature and location of each of the facilities or places at which the electronic surveillance will be directed , if known ; (C) the type of information sought to be acquired and the type of communications or activities to be subjected to the surveillance; (D) the means by which the electronic surveillance will be effected and whether physical entry will be used to effect the surveillance; (E) the period of time during which the electronic surveillance is approved; and (F) whenever more than one electronic, mechanical, or other surveillance device is to be used under the order, the authorized coverage of the device involved and what minimization procedures shall apply to information subject to acquisition by each device. (2) Directions.—An order approving an electronic surveillance under this section shall direct (A) that the minimization procedures be followed; (B) that, upon the request of the applicant a specified communication or other common carrier, landlord, custodian, or other specified person, or in circumstances where the Court finds , based upon specific facts provided in the application, that the actions of the target of the application may have the effect of thwarting the identification of a specified person, such other persons, furnish the applicant forthwith all information, facilities, or technical assistance necessary to accomplish the electronic surveillance in such a manner as will protect its secrecy and produce a minimum of interference with the services that such carrier, landlord, custodian, or other person is providing that target of electronic surveillance; (C) that such carrier, landlord, custodian, or other person maintain under security procedures approved by the Attorney General and the Director of National Intelligence any records concerning the surveillance or the aid furnished that such person wishes to retain; and (D) that the applicant compensate, at the prevailing rate, such carrier, landlord, custodian, or other person for furnishing such aid. (3) Special directions for certain orders An order approving an electronic surveillance under this section in circumstances where the nature and location of each of the facilities or places at which the surveillance will be directed is unknown shall direct the applicant to provide notice to the court within ten days after the date on which surveillance begins to be directed at any new facility or place, unless the court finds good cause to justify a longer period of up to 60 days, of— (A) the nature and location of each new facility or place at which the electronic surveillance is directed; (B) the facts and circumstances relied upon by the applicant to justify the applicant's belief that each new facility or place at which the electronic surveillance is directed is or was being used, or is about to be used, by the target of the surveillance; (C) a statement of any proposed minimization procedures that differ from those contained in the original application or order, that may be necessitated by a change in the facility or place at which the electronic surveillance is directed; and (D) the total number of electronic surveillances that have been or are being conducted under the authority of the order. The italicized portions of Section 1805(c)(1)(B) and Section 1805(c)(2)(B) reflect changes, added by P.L. 107-108 and P.L. 107-56 respectively, intended to provide authority for "multipoint" or "roving" electronic surveillance where the actions of the target of the surveillance, such as switching phones and locations repeatedly, may thwart that surveillance. The Conference Report on H.R. 2338 , the Intelligence Authorization Act for Fiscal Year 2002 (which became P.L. 107-108 ), H.Rept. 107-328 , at page 24, provided the following explanation of these changes: The multipoint wiretap amendment to FISA in the USA PATRIOT Act (section 206) allows the FISA court to issue generic orders of assistance to any communications provider or similar person, instead of to a particular communications provider. This change permits the Government to implement new surveillance immediately if the FISA target changes providers in an effort to thwart surveillance. The amendment was directed at persons who, for example, attempt to defeat surveillance by changing wireless telephone providers or using pay phones. Currently, FISA requires the court to "specify" the "nature and location of each of the facilities or places at which the electronic surveillance will be directed." 50 U.S.C. § 105(c)(1)(B). Obviously, in certain situations under current law, such a specification is limited. For example, a wireless phone has no fixed location and electronic mail may be accessed from any number of locations. To avoid any ambiguity and clarify Congress' intent, the conferees agreed to a provision which adds the phrase, "if known," to the end of 50 U.S.C. § 1805(c)(1)(B). The "if known" language, which follows the model of 50 U.S.C. § 1805(c)(1)(A), is designed to avoid any uncertainty about the kind of specification required in a multipoint wiretap case, where the facility to be monitored is typically not known in advance. The underlined portions of subsection 1805(c) reflect changes made by P.L. 109-177 , Section 108. If the target of the electronic surveillance is a foreign power and each of the facilities or places at which the surveillance is directed is owned, leased, or exclusively used by that foreign power, the order does not need to include the information covered by Section 1805(c)(1)(C), (D), and (F), but must generally describe the information sought, the communications or activities subject to surveillance, the type of electronic surveillance used, and whether physical entry is needed. 50 U.S.C. § 1805(d). Such an order may approve an electronic surveillance for the period of time necessary to achieve its purpose or for ninety days, whichever is less, unless the order is targeted against a foreign power as defined in 50 U.S.C. § 1801(a)(1), (2), or (3), or against an agent of a foreign power who is not a United States person. In the case of an order targeted against a such a foreign power, the order shall approve an electronic surveillance for the period specified in the order or for one year, whichever is less. An order under FISA for surveillance targeted against an agent of a foreign power who is not a U.S. person may be for the period specified in the order or 120 days, whichever is less. Generally, upon application for an extension, a court may grant an extension of an order on the same basis as an original order. An extension must include new findings made in the same manner as that required for the original order. However, an extension of an order for a surveillance targeted against a foreign power as defined in 50 U.S.C. § 1801(a)(5) (a foreign-based political organization, not substantially composed of United States persons) or (6) (an entity that is directed and controlled by a foreign government or governments), or against a foreign power as defined in 50 U.S.C. § 1801(a)(4) (a group engaged in international terrorism or activities in preparation therefor) that is not a United States person, may be for a period of up to one year if the judge finds probable cause to believe that no communication of any individual United States person will be acquired during the period involved. In addition, an extension of an order for surveillance targeted at an agent of a foreign power who is not a U.S. person may be extended to a period not exceeding one year. Certifications made by the Attorney General pursuant to 50 U.S.C. § 1802(a) and applications made and orders granted for electronic surveillance under title I of FISA, must be retained for a period of at least ten years from the date of the certification or application. Emergency Authorization of Electronic Surveillance upon Attorney General Certification while an FISC Order Is Pursued . Emergency situations are addressed in 50 U.S.C. § 1805(f). Notwithstanding other provisions of this subchapter, if the Attorney General reasonably determines that an emergency situation exists with respect to the employment of electronic surveillance to obtain foreign intelligence information before an order authorizing such surveillance can with due diligence be obtained and that the factual basis for issuance of an order under this subchapter to approve such surveillance exists, he may authorize electronic surveillance if specified steps are taken. At the time of the Attorney General's emergency authorization, he or his designee must inform an FISC judge that the decision to employ emergency electronic surveillance has been made. An application for a court order under Section 1804 must be made to that judge as soon as practicable, but not more than 72 hours after the Attorney General authorizes such surveillance. If the Attorney General authorizes emergency electronic surveillance, he must require compliance with the minimization procedures required for the issuance of a judicial order under this subchapter. Absent a judicial order approving the emergency electronic surveillance, the surveillance must terminate when the information sought is obtained, when the application for the order is denied, or after 72 hours from the time of the Attorney General's authorization, whichever is earliest. If no judicial order approving the surveillance is issued, the information garnered may not be received in evidence or otherwise disclosed in any court proceeding, or proceeding in or before any grand jury, department, office, agency, regulatory body, legislative committee, or other authority of the United States, a State, or political subdivision thereof. No information concerning any United States person acquired through such surveillance may be disclosed by any Federal officer or employee without the consent of that person, unless the Attorney General approves of such disclosure or use where the information indicates a threat of death or serious bodily harm to any person. 50 U.S.C. § 1805(g)—Authority for Electronic Surveillance for Testing of Electronic Equipment; Discovering Unauthorized Electronic Surveillance; or Training of Intelligence Personnel in Use of Electronic Equipment Notwithstanding any other provision of title I of FISA, under Section 1805(g), federal officers, employees, or agents are authorized in the normal course of their official duties to conduct electronic surveillance not targeted against the communications of any particular person or persons, under procedures approved by the Attorney General, solely to: (1) test the capability of electronic equipment, if— (A) it is not reasonable to obtain the consent of the persons incidentally subjected to the surveillance; (B) the test is limited in extent and duration to that necessary to determine the capability of the equipment; (C) the contents of any communication acquired are retained and used only for the purpose of determining the capability of the equipment, are disclosed only to test personnel, and are destroyed before or immediately upon completion of the test; and: (D) Provided, That the test may exceed ninety days only with the prior approval of the Attorney General; (2) determine the existence and capability of electronic surveillance equipment being used by persons not authorized to conduct electronic surveillance, if— (A) it is not reasonable to obtain the consent of persons incidentally subjected to the surveillance; (B) such electronic surveillance is limited in extent and duration to that necessary to determine the existence and capability of such equipment; and (C) any information acquired by such surveillance is used only to enforce chapter 119 of Title 18, or section 605 of Title 47, or to protect information from unauthorized surveillance; or (3) train intelligence personnel in the use of electronic surveillance equipment, if— (A) it is not reasonable to— (i) obtain the consent of the persons incidentally subjected to the surveillance; (ii) train persons in the course of surveillances otherwise authorized by this subchapter; or (iii) train persons in the use of such equipment without engaging in electronic surveillance; (B) such electronic surveillance is limited in extent and duration to that necessary to train the personnel in the use of the equipment; and (C) no contents of any communication acquired are retained or disseminated for any purpose, but are destroyed as soon as reasonably possible. 50 U.S.C. § 1805(i)—Limitation on Liability for Compliance with FISC Order Authorizing Electronic Surveillance or Physical Search Section 1805(i) bars any cause of action in any court against any provider of a wire or electronic communication service, landlord, custodian, or other person (including any officer, employee, agent, or other specified person thereof) that furnishes any information, facilities, or technical assistance in accordance with a court order or request for emergency assistance under FISA for electronic surveillance or a physical search. 50 U.S.C. § 1806—Use of Information Obtained from FISA Electronic Surveillance The uses to which information gathered pursuant to electronic surveillance under FISA may be put are addressed under 50 U.S.C. § 1806. Under this section, disclosure, without the consent of the person involved, of information lawfully acquired under FISA electronic surveillance which concerns a United States person must be in compliance with the statutorily mandated minimization procedures. Communications which were privileged when intercepted remain privileged. Where information acquired under FISA electronic surveillance is disclosed for law enforcement purposes, neither that information nor any information derived therefrom may be used in a criminal proceeding without prior authorization of the Attorney General. If the United States Government intends to disclose information acquired under FISA electronic surveillance or derived therefrom in any proceeding before a court, department, officer regulatory body or other authority of the United States against an aggrieved person, then the Government must give prior notice of its intent to disclose to the aggrieved person and to the court or other authority involved. Similarly, a State or political subdivision of a State that intends to disclose such information against an aggrieved person in a proceeding before a State or local authority must give prior notice of its intent to the aggrieved person, the court or other authority, and the Attorney General. 50 U.S.C. § 1806(c)-(f)—U.S. District Court Consideration of Notices, Motions to Suppress or Discovery Motions . Section 1806 also sets out in camera and ex parte U.S. district court review procedures to be followed where such notification is received, or where the aggrieved person seeks to discover or obtain orders or applications relating to FISA electronic surveillance, or to discover, obtain, or suppress evidence or information obtained or derived from the electronic surveillance, and the Attorney General files an affidavit under oath that such disclosure would harm U.S. national security. The focus of this review would be to determine whether the surveillance was lawfully conducted and authorized. Only where it is needed to make an accurate determination of these issues does the section permit the court to disclose to the aggrieved person, under appropriate security measures and protective orders, parts of the application, order, or other materials related to the surveillance. If, as a result of its review, the district court determines that the surveillance was unlawful, the resulting evidence must be suppressed. If the surveillance was lawfully authorized and conducted, the motion of the aggrieved person must be denied except to the extent that due process requires discovery or disclosure. Resultant court orders granting motions or requests of the aggrieved person for a determination that the surveillance was not lawfully conducted or authorized and court orders requiring review or granting disclosure are final orders binding on all Federal and State courts except a U.S. Court of Appeals and the U.S. Supreme Court. If the contents of any radio communication are unintentionally acquired by an electronic, mechanical, or other surveillance device in circumstances where there is a reasonable expectation of privacy and where a warrant would be required if the surveillance were to be pursued for law enforcement purposes, then the contents must be destroyed when recognized, unless the Attorney General finds that the contents indicate a threat of death or serious bodily harm to any person. As noted above, Section 1805 provides for emergency electronic surveillance in limited circumstances, and requires the subsequent prompt filing of an application for court authorization to the FISC in such a situation. Under Section 1806, if the application is unsuccessful in obtaining court approval for the surveillance, notice must be served upon any United States person named in the application and such other U.S. persons subject to electronic surveillance as the judge determines, in the exercise of his discretion, is in the interests of justice. This notice includes the fact of the application, the period of surveillance, and the fact that information was or was not obtained during this period. Section 1806 permits postponement or suspension of service of notice for up to ninety days upon ex parte good cause shown. Upon a further ex parte showing of good cause thereafter, the court will forego ordering such service of notice. 50 U.S.C. § 1806(k)—Consultation by Federal Officers Conducting FISA Electronic Surveillance with Federal Law Enforcement Officers . P.L. 107-56 , Section 504, added a new subsection 1806(k)(1). Under this subsection, federal officers who conduct electronic surveillance to acquire foreign intelligence under FISA are permitted to consult with Federal law enforcement officers to coordinate investigative efforts or to protect against— (A) actual or potential attack or other grave hostile acts of a foreign power or an agent of a foreign power; (B) sabotage or international terrorism by a foreign power or an agent of a foreign power; or (C) clandestine intelligence activities by an intelligence service or network of a foreign power or by an agent of a foreign power. This subsection indicates further that such coordination would not preclude certification as required by 50 U.S.C. § 1804(a)(7)(B) or entry of a court order under 50 U.S.C. § 1805. 50 U.S.C. §§ 1807 and 1808—Congressional Oversight Reporting requirements are included in Sections 1807 and 1808. Under Section 1807, each year in April, the Attorney General is directed to transmit to the Administrative Office of the United States Courts and to the Congress a report covering the total number of applications made for orders and extensions of orders approving electronic surveillance under FISA during the previous year, and the total number of orders and extensions granted, modified, or denied during that time period. Section 1808(a) requires the Attorney General to fully inform the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, and the Senate Judiciary Committee semiannually about all electronic surveillance under FISA. Each such report must contain a description of the total number of applications made for orders and extensions of orders approving electronic surveillance under this subchapter where the nature and location of each facility or place at which the electronic surveillance will be directed is unknown; each criminal case in which information acquired by electronic surveillance under FISA has been authorized for use at trial during the period covered by the report; and the total number of emergency employments of electronic surveillance under section 1805(f) of this title and the total number of subsequent orders approving or denying such electronic surveillance. 50 U.S.C. § 1809—Criminal Sanctions Section 1809 provides criminal sanctions for intentionally engaging in electronic surveillance under color of law except as authorized by statute; or for disclosing or using information obtained under color of law by electronic surveillance, knowing or having reason to know that surveillance was not authorized by statute. The provision makes it a defense to prosecution under this subsection if the defendant is a law enforcement officer or investigative officer in the course of his official duties and the electronic surveillance was authorized by and conducted under a search warrant or court order of a court of competent jurisdiction. Section 1809 provides for Federal jurisdiction over such an offense if the defendant is a Federal officer or employee at the time of the offense. 50 U.S.C. § 1810—Civil Liability Civil liability is also provided for under Section 1810, where an aggrieved person, who is neither a foreign power nor an agent of a foreign power, has been subjected to electronic surveillance, or where information gathered by electronic surveillance about an aggrieved person has been disclosed or used in violation of Section 1809. 50 U.S.C. § 1811—Electronic Surveillance without FISC Order after Congressional Declaration of War Finally, Section 1811 provides that, notwithstanding any other law, the President, through the Attorney General, may authorize electronic surveillance without a court order to acquire foreign intelligence information for up to 15 calendar days following a declaration of war by Congress. Physical searches for foreign intelligence gathering purposes Physical searches for foreign intelligence purposes are addressed in 50 U.S.C. § 1821 et seq . While tailored for physical searches, the provisions in many respects follow a pattern similar to that created for electronic surveillance. The definitions from 50 U.S.C. § 1801 for the terms "foreign power," "agent of a foreign power," "international terrorism," "sabotage," "foreign intelligence information," "Attorney General," "United States person," "United States," "person," and "State" also apply to foreign intelligence physical searches except where specifically provided otherwise. Minimization procedures also apply to physical searches for foreign intelligence purposes. Those defined under 50 U.S.C. § 1821(4) are tailored to such physical searches and, like those applicable to electronic surveillance under 50 U.S.C. § 1801(h), these procedures are designed to minimize acquisition and retention, and to prohibit dissemination, of nonpublicly available information concerning unconsenting U.S. persons, consistent with the needs of the United States to obtain, produce and disseminate foreign intelligence. 50 U.S.C. § 1822—Physical Searches without FISC Order of Premises Owned or Controlled by Certain Foreign Powers Under 50 U.S.C. § 1822, the President, acting through the Attorney General, may authorize physical searches to acquire foreign intelligence information without a court order for up to one year if the Attorney General certifies under oath that the search is solely directed at premises, property, information or materials owned by or under the open and exclusive control of certain foreign power or powers. For these purposes, "foreign power or powers" means a foreign government or component of a foreign government, whether or not recognized by the United States, a faction of a foreign nation or nations, not substantially composed of U.S. persons; or an entity that is openly acknowledged by a foreign government or governments to be directed and controlled by such foreign government or governments. In addition, the Attorney General must certify that there is no substantial likelihood that the physical search will involve the premises, information, material or property of a U.S. person, and that the proposed minimization procedures with respect to the physical search are consistent with 50 U.S.C. § 1821(4)(1)-(4). Under normal circumstances, these minimization procedures and any changes to them are reported to the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence by the Attorney General at least 30 days before their effective date. However, if the Attorney General determines that immediate action is required, the statute mandates that he advise these committees immediately of the minimization procedures and the need for them to become effective immediately. In addition, the Attorney General must assess compliance with these minimization procedures and report such assessments to these congressional committees. The certification of the Attorney General for a search under 50 U.S.C. § 1822 is immediately transmitted under seal to the Foreign Intelligence Surveillance Court, and maintained there under security measures established by the Chief Justice of the United States with the Attorney General's concurrence, in consultation with the Director of National Intelligence. Such a certification remains under seal unless one of two circumstances arise: (1) either an application for a court order with respect to the physical search is made to the Foreign Intelligence Surveillance Court under 50 U.S.C. § 1821(4) (dealing with minimization procedures) and § 1823 (dealing with the process by which a federal officer, with the approval of the Attorney General, may apply for an order from the FISC approving a physical search for foreign intelligence gathering purposes); or (2) the certification is needed to determine the legality of a physical search under 50 U.S.C. § 1825 (dealing with use of the information so gathered). In connection with physical searches under 50 U.S.C. § 1822, the Attorney General may direct a landlord, custodian or other specified person to furnish all necessary assistance needed to accomplish the physical search in a way that would both protect its secrecy and minimize interference with the services such person provides the target of the search. Such person may also be directed to maintain any records regarding the search or the aid provided under security procedures approved by the Attorney General and the Director of National Intelligence. The provision of any such aid must be compensated by the Government. As in the case of applications for electronic surveillance under FISA, the Foreign Intelligence Surveillance Court (FISC) has jurisdiction to hear applications and grant applications with respect to physical searches under 50 U.S.C. § 1821 et seq. No FISC judge may hear an application already denied by another FISC judge. If an application for an order authorizing a physical search under FISA is denied, the judge denying the application must immediately provide a written statement of reasons for the denial. If the United States so moves, the record is then transmitted under seal to the court of review established under 50 U.S.C. § 1803(b). If the court of review determines that the application was properly denied, it, in turn, must provide a written statement of the reasons for its decision, which must be transmitted under seal to the Supreme Court upon petition for certiorari by the United States. Any of the proceedings with respect to an application for a physical search under FISA must be conducted expeditiously, and the record of such proceedings must be kept under appropriate security measures. 50 U.S.C. § 1823—Application for an FISC Order Authorizing a Physical Search The requirements for application for an order for a physical search under FISA are included in 50 U.S.C. § 1823. While tailored to a physical search, the requirements strongly parallel those applicable to electronic surveillance under 50 U.S.C. § 1804(a)(1)-(9). Like Section 1804(a)(7)(B) with respect to required certifications for an application for electronic surveillance under FISA, Section 1823(a)(7)(B) was amended by P.L. 107-56 , Section 218, to require that the Assistant to the President for National Security Affairs or designated Executive Branch official certify, among other things, that a significant purpose (rather than "that the purpose") of the physical search is to obtain foreign intelligence information. Section 1823(d) also parallels Section 1804(e) (dealing with requirements for some applications for electronic surveillance under FISA), in that, if requested in writing by the Director of the FBI, the Secretary of Defense, the Secretary of State, or the Director of National Intelligence, the Attorney General must personally review an application for a FISA physical search if the target is one described by Section 1801(b)(2). 50 U.S.C. § 1801(b)(2) deals with targets who knowingly engage in clandestine intelligence gathering activities involving or possibly involving violations of federal criminal laws by or on behalf of a foreign power; targets who, at the direction of an intelligence service or network of a foreign power, engage in other clandestine intelligence activities involving or potentially involving federal crimes by or on behalf of a foreign power; targets who knowingly engage in sabotage or international terrorism, activities in preparation for sabotage or international terrorism, or activities on behalf of a foreign power; targets who knowingly aid, abet, or conspire with anyone to engage in any of the previously listed categories of activities; or targets who knowingly enter the United States under false identification by or on behalf or a foreign power or who assume a false identity on behalf of a foreign power while present in the United States. Should the Attorney General, after reviewing an application, decide not to approve it, he must provide written notice of his determination to the official requesting the review of the application, setting forth any modifications needed for the Attorney General to approve it. The official so notified must supervise the making of the suggested modifications if the official deems them warranted. Unless the Attorney General or the official involved is disabled or otherwise unable to carry out his or her respective responsibilities under Section 1823, those responsibilities are non-delegable. 50 U.S.C. § 1824—Issuance of an FISC Order Authorizing a Physical Search As in the case of the issuance of an order approving electronic surveillance under 50 U.S.C. § 1805(a), certain findings by the FISC judge are required before an order may be forthcoming authorizing a physical search for foreign intelligence information under 50 U.S.C. § 1824(a). Once an application under Section 1823 has been filed, an FISC judge must enter an ex parte order, either as requested or as modified, approving the physical search if the requisite findings are made. These include findings that: (1) the President has authorized the Attorney General to approve applications for physical searches for foreign intelligence purposes; (2) the application has been made by a Federal officer and approved by the Attorney General; (3) on the basis of the facts submitted by the applicant there is probable cause to believe that— (A) the target of the physical search is a foreign power or an agent of a foreign power, except that no United States person may be considered an agent of a foreign power solely on the basis of activities protected by the first amendment to the Constitution of the United States; and (B) the premises or property to be searched is owned, used, possessed by, or is in transit to or from an agent of a foreign power or a foreign power; (4) the proposed minimization procedures meet the definition of minimization contained in this subchapter; and (5) the application which has been filed contains all statements and certifications required by section 1823 of this title, and, if the target is a United States person, the certification or certifications are not clearly erroneous on the basis of the statement made under section 1823(a)(7)(E) of this title and any other information furnished under section 1823(c) of this title. Like Section 1805(b) regarding electronic surveillance under FISA, an FISC judge making a probable cause determination under Section 1824 may consider the target's past activities, plus facts and circumstances pertinent to the target's present or future activities. As in the case of an order under 50 U.S.C. § 1805(c) with respect to electronic surveillance, an order granting an application for a physical search under FISA must meet statutory requirements in 50 U.S.C. § 1824(c) as to specifications and directions. An order approving a physical search must specify: (A) the identity, if known, or a description of the target of the physical search; (B) the nature and location of each of the premises of property to be searched; (C) the type of information, material, or property to be seized, altered, or reproduced; (D) a statement of the manner in which the physical search is to be conducted and, whenever more than one physical search is authorized under the order, the authorized scope of each search and what minimization procedures shall apply to the information acquired by each search; and (E) the period of time during which the physical searches are approved; .... In addition, the order must direct: (A) that the minimization procedures be followed; (B) that, upon the request of the applicant, a specified landlord, custodian, or other specified person furnish the applicant forthwith all information, facilities, or assistance necessary to accomplish the physical search in such a manner as will protect its secrecy and produce a minimum of interference with the services that such landlord, custodian, or other person is providing to the target of the physical search; (C) that such landlord, custodian, or other person maintain under security procedures approved by the Attorney General and the Director of National Intelligence any records concerning the search or the aid furnished that such person wishes to retain; (D) that the applicant compensate, at the prevailing rate, such landlord, custodian, or other person for furnishing such aid; and (E) that the federal officer conducting the physical search promptly report to the court the circumstances and results of the physical search. Subsection 1824(d) sets the limits on the duration of orders under this section and makes provision for extensions of such orders if certain criteria are met. 50 U.S.C. § 1824(e)—Emergency Authorization of a Physical Search upon Attorney General Certification while FISC Order Is Pursued . Subsection 1824(e) deals with emergency orders for physical searches. It permits the Attorney General, under certain circumstances, to authorize execution of a physical search if the Attorney General or his designee informs an FISC judge that the decision to execute an emergency search has been made, and an application under 50 U.S.C. § 1821 et seq. is made to that judge as soon as possible, within 72 hours after the Attorney General authorizes the search. The Attorney General's decision to authorize such a search must be premised upon a determination that "an emergency situation exists with respect to the execution of a physical search to obtain foreign intelligence information before an order authorizing such search can with due diligence be obtained," and "the factual basis for issuance of an order under this title [50 U.S.C. § 1821 et seq. ] to approve such a search exists." If such an emergency search is authorized by the Attorney General, he must require that the minimization procedures required for issuance of a judicial order for a physical search under 18 U.S.C. § 1821 et seq. be followed. If there is no judicial order for a such a physical search, then the search must terminate on the earliest of the date on which the information sought is obtained, the date on which the application for the order is denied, or the expiration of the 72 hour period from the Attorney General's authorization of the emergency search. If an application for approval is denied or if the search is terminated and no order approving the search is issued, then neither information obtained from the search nor evidence derived from the search may be used in evidence or disclosed in any ... trial, hearing, or other proceeding in or before any court, grand jury, department, office, agency, regulatory body, legislative committee, or other authority of the United States, a State, or political subdivision thereof, and no information concerning any United States person acquired from such search shall subsequently be used or disclosed in any other manner by Federal officers or employees without the consent of such person, except with the approval of the Attorney General, if the information indicates a threat of death or serious bodily harm to any person. A denial of the application made under this subsection may be reviewed as provided in section 302 [50 U.S.C. § 1822]. Subsection 1824(f) requires retention of applications made and orders granted under 50 U.S.C. § 1821 et seq. , for a minimum of ten years from the date of the application. 50 U.S.C. § 1825—Use of Information Obtained from a FISA Physical Search Like 50 U.S.C. § 1806 with respect to electronic surveillance under FISA, 50 U.S.C. § 1825 restricts and regulates the uses of information secured under a FISA physical search. Such information may only be used or disclosed by Federal officers or employees for lawful purposes. Federal officers and employees must comply with minimization procedures if they use or disclose information gathered from a physical search under FISA concerning a United States person. If a physical search involving the residence of a United States person is authorized and conducted under 50 U.S.C. § 1824, and at any time thereafter the Attorney General determines that there is no national security interest in continuing to maintain the search's secrecy, the Attorney General must provide notice to the United States person whose residence was searched. This notice must include both the fact that the search pursuant to FISA was conducted and the identification of any property of that person which was seized, altered, or reproduced during the search. Disclosure for law enforcement purposes of information acquired under 50 U.S.C. § 1821 et seq ., must be accompanied by a statement that such information and any derivative information may only be used in a criminal proceeding with advance authorization from the Attorney General. The notice requirements relevant to intended use or disclosure of information gleaned from a FISA physical search or derivative information, are similar to those applicable where disclosure or use of information garnered from electronic surveillance is intended. If the United States intends to use or disclose information gathered during or derived from a FISA physical search in a trial, hearing, or other proceeding before a court, department, officer, agency, regulatory body or other authority of the United States against an aggrieved person, the United States must first give notice to the aggrieved person, and the court or other authority. Similarly, if a State or political subdivision of a state intends to use or disclose any information obtained or derived from a FISA physical search in any trial, hearing, or other proceeding before a court, department, officer, agency, regulatory body, or other State or political subdivision against an aggrieved person, the State or locality must notify the aggrieved person, the pertinent court or other authority where the information is to be used, and the Attorney General of the United States of its intention to use or disclose the information. 50 U.S.C. §§ 1825(d)-(g)—U.S. District Court Consideration of Notices, Motions to Suppress, or Discovery Motions . An aggrieved person may move to suppress evidence obtained or derived from a FISA physical search on one of two grounds: that the information was unlawfully acquired; or that the physical search was not made in conformity with an order of authorization or approval. Such a motion to suppress must be made before the trial, hearing or other proceeding involved unless the aggrieved person had no opportunity to make the motion or was not aware of the grounds of the motion. In camera, ex parte review by a United States district court may be triggered by receipt of notice under Subsections 1825(d) or (e) by a court or other authority; the making of a motion to suppress by an aggrieved person under Subsection 1825(f); or the making of a motion or request by an aggrieved person under any other federal or state law or rule before any federal or state court or authority to discover or obtain applications, orders, or other materials pertaining to a physical search authorized under FISA or to discover, obtain, or suppress evidence or information obtained or derived from a FISA physical search. If the Attorney General files an affidavit under oath that disclosure of any adversary hearing would harm U.S. national security, the U.S. district court receiving notice or before whom a motion or request is pending, or, if the motion is made to another authority, the U.S. district court in the same district as that authority, shall review in camera and ex parte the application, order, and such other materials relating to the physical search at issue needed to determine whether the physical search of the aggrieved person was lawfully authorized and conducted. If the court finds it necessary to make an accurate determination of the legality of the search, the court may disclose portions of the application, order, or other pertinent materials to the aggrieved person under appropriate security procedures and protective orders, or may require the Attorney General to provide a summary of such materials to the aggrieved person. If the U.S. district court makes a determination that the physical search was not lawfully authorized or conducted, then it must "suppress the evidence which was unlawfully obtained or derived from the physical search of the aggrieved person or otherwise grant the motion of the aggrieved person." If, on the other hand, the court finds that the physical search was lawfully authorized or conducted, the motion of the aggrieved person will be denied except to the extent that due process requires discovery or disclosure. If the U.S. district court grants a motion to suppress under 50 U.S.C. § 1825(h); deems a FISA physical search unlawfully authorized or conducted; or orders review or grants disclosure of applications, orders or other materials pertinent to a FISA physical search, that court order is final and binding on all federal and state courts except a U.S. Court of Appeals or the U.S. Supreme Court. As a general matter, where an emergency physical search is authorized under 50 U.S.C. § 1824(d), and a subsequent order approving the resulting search is not obtained, any U.S. person named in the application and any other U.S. persons subject to the search that the FISC judge deems appropriate in the interests of justice must be served with notice of the fact of the application and the period of the search, and must be advised as to whether information was or was not obtained during that period. However, such notice may be postponed or suspended for a period not to exceed 90 days upon an ex parte showing of good cause to the judge, and, upon further good cause shown, the court must forego such notice altogether. 50 U.S.C. § 1825(k)—Consultation by Federal Officers Doing FISA Searches with Federal Law Enforcement Officers . Section 504(b) of P.L. 107-56 , added a new 50 U.S.C. § 1825(k) to the statute, which deals with consultation by federal officers doing FISA searches with federal law enforcement officers. Section 899 of the Homeland Security Act of 2002, P.L. 107-296 expanded this authority to also permit consultation with "law enforcement personnel of a State or political subdivision of a State (including the chief executive officer of that State or political subdivision who has the authority to appoint or direct the chief law enforcement officer of that State or political subdivision)." Under this new language, as amended, federal officers "who conduct physical searches to acquire foreign intelligence information" under 50 U.S.C. § 1821 et seq. , may consult with federal law enforcement officers or state or local law enforcement personnel: ... to coordinate efforts to investigate or protect against (A) actual or potential attack or other grave hostile acts of a foreign power or an agent of a foreign power; (B) sabotage or international terrorism by a foreign power or an agent of a foreign power; or (C) clandestine intelligence activities by an intelligence service or network of a foreign power or by an agent of a foreign power. Such coordination does not preclude certification required under 50 U.S.C. § 1823(a)(7) or entry of an order under 50 U.S.C. § 1824. 50 U.S.C. § 1826—Congressional Oversight 50 U.S.C. § 1826 provides for semiannual congressional oversight of physical searches under FISA. The Attorney General is directed to "fully inform" the Permanent Select Committee on Intelligence of the House of Representatives, the Select Committee on Intelligence of the Senate, and the Senate Judiciary Committee with respect to all physical searches conducted under 50 U.S.C. § 1821 et seq . Also on a semiannual basis, the Attorney General is required to provide a report to "those committees" and to the House Judiciary Committee setting forth: the total number of applications for orders approving FISA physical searches during the preceding six month period; the total number of those orders granted, modified, or denied; the number of such physical searches involving the residences, offices, or personal property of United States persons; the number of occasions, if any, the Attorney General gave notice under 50 U.S.C. § 1825(b); and the total number of emergency physical searches authorized by the Attorney General under section 1824(e) of this title and the total number of subsequent orders approving or denying such physical searches. 50 U.S.C. § 1827—Criminal Sanctions Section 1827 imposes criminal sanctions for intentionally executing a physical search for foreign intelligence gathering purposes under color of law within the United States except as authorized by statute. In addition, criminal penalties attach to a conviction for intentionally disclosing or using information obtained by a physical search under color of law within the United States for the purpose of gathering intelligence information, where the offender knows or has reason to know that the information was obtained by a physical search not authorized by statute. In either case, this section provides that a person convicted of such an offense faces a fine of not more than $10,000, imprisonment for not more than five years or both. Federal jurisdiction attaches where the offense is committed by an officer or employee of the United States. It is a defense to such a prosecution if the defendant was a law enforcement or investigative officer engaged in official duties and the physical search was authorized and conducted pursuant to a search warrant or court order by a court of competent jurisdiction. 50 U.S.C. § 1828—Civil Action In addition, an aggrieved person other than a foreign power or an agent of a foreign power as defined under section 1801(a) or 1801(b)(1)(A), whose premises, property, information, or material within the United States was physically searched under FISA; or about whom information obtained by such a search was disclosed or used in violation of 50 U.S.C. § 1827, may bring a civil action for actual damages, punitive damages, and reasonable attorney's fees and other investigative and litigation costs reasonably incurred. 50 U.S.C. § 1829—Physical Searches without FISC Order after Congressional Declaration of War In times of war, the President, through the Attorney General, may authorize physical searches under FISA without a court order to obtain foreign intelligence information for up to 15 days following a declaration of war by Congress. Pen registers or trap and trace devices116 used for foreign intelligence gathering purposes Title IV of FISA, 50 U.S.C. § 1841 et seq ., was added in 1998, amended by P.L. 107-56 , and amended further by Section 314(5) of P.L. 107-108 . 50 U.S.C. § 1842(a)-(c)—Application for an FISC Order Authorizing Installation and Use of Pen Register or Trap and Trace Device Under 50 U.S.C. § 1842(a)(1), notwithstanding any other provision of law, the Attorney General or a designated attorney for the Government may apply for an order or extension of an order authorizing or approving the installation and use of a pen register or trap and trace device " for any investigation to protect against international terrorism or clandestine intelligence activities, provided such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution " conducted by the Federal Bureau of Investigation (FBI) under guidelines approved by the Attorney General pursuant to E.O. 12333 or a successor order. This authority is separate from the authority to conduct electronic surveillance under 50 U.S.C. § 1801 et seq . Each such application is made in writing upon oath or affirmation to an FISC judge or to a U.S. magistrate judge publicly designated by the Chief Justice of the United States to hear such applications and grant orders approving installation of pen registers or trap and trace devices on behalf of an FISC judge. The application must be approved by the Attorney General or a designated attorney for the Government. Each application must identify the federal officer seeking to use the pen register or trap and trace device covered by the application. It must also include a certification by the applicant " that the information likely to be obtained is relevant to an ongoing investigation to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution. " Under 50 U.S.C. § 1842, as amended by P.L. 107-56 , pen registers and trap and trace devices may now be installed and used not only to track telephone calls, but also other forms of electronic communication such as e-mail. 50 U.S.C. § 1842(d)—Issuance of FISC Order for Installation and Use of Pen Register or Trap and Trace Device Once an application is made under Section 1842, the judge must enter an ex parte order as requested or as modified approving the installation and use of a pen register or trap and trace device if the application meets the requirements of that section. Generally, an order issued under 50 U.S.C. § 1842 may authorize the installation and use of a pen register or trap and trace device for a period not to exceed 90 days. Extensions of such an order may also be granted for up to 90 days. However, in the case of an application under subsection 1842(c) where the applicant has certified that the information likely to be obtained is foreign intelligence information not concerning a United States person, an order, or an extension of an order for a FISA pen register or trap and trace device may be up to one year. 50 U.S.C. § 1842(f)—Limitation of Liability Section 1842(f) bars any cause of action in any court against any provider of a wire or electronic communication service, landlord, custodian, or other person (including any officer, employee, agent, or other specified person thereof) that furnishes any information, facilities, or technical assistance under subsection 1842(d) in accordance with the terms of an order issued under this section. 50 U.S.C. § 1843—Emergency Attorney General Authorization of Pen Register or Trap and Trace Device while FISC Order Is Pursued Section 1843 of Title 18 of the United States Code focuses upon authorization for installation and use of a pen register or trap and trace device under FISA during specified types of emergencies. This provision applies when the Attorney General makes a reasonable determination that: (1) an emergency requires the installation and use of a pen register or trap and trace device to obtain foreign intelligence information not concerning a United States person or information to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution before an order authorizing the installation and use of the pen register or trap and trace device, as the case may be, can with due diligence be obtained under section 1842 of this title; and (2) the factual basis for issuance of an order under section 1842(c) of this title to approve the installation and use of the pen register or trap and trace device, as the case may be, exists. Upon making such a determination, the Attorney General may authorize the installation and use of a pen register or trap and trace device for this purpose if two criteria are met. First, the Attorney General or his designee must inform a judge referred to in Section 1842(b) at the time of the emergency authorization that the decision to install and use the pen register or trap and trace device has been made. Second, an application for a court order authorizing a pen register or trap and trace device under 50 U.S.C. § 1842(a)(1) must be made to the judge as soon as practicable, but no later that 48 hours after the emergency authorization. If no order approving the installation and use of a pen register or trap and trace device is forthcoming, then the installation and use of such pen register or trap and trace device must terminate at the earlier of the time when the information sought is obtained, the time when the application for the order is denied under 50 U.S.C. § 1842, or the expiration of 48 hours from the time the Attorney General made his emergency authorization. If an application for an order sought under Section 1843(a)(2) is denied, or if the installation and use of the pen register or trap and trace device is terminated, and no order approving it is issued under 50 U.S.C. § 1842(b)(2), then no information obtained or evidence derived from the use of the pen register or trap and trace device may be received in evidence or disclosed in any trial, hearing or other proceeding in any court, grand jury, department, office, agency, regulatory body, legislative committee or other federal state or local authority. Furthermore, in such circumstances, no information concerning a United States person acquired from the use of the pen register or trap and trace device may later be used or disclosed in any other way by federal officers or employees without consent of the U.S. person involved, with one exception. If the Attorney General approves the disclosure because the information indicates a threat of death or serious bodily harm to anyone, then disclosure without consent of the U.S. person involved is permitted. 50 U.S.C. § 1844—Use of Pen Register or Trap and Trace Device without FISC Order after Congressional Declaration of War If Congress declares war, then, notwithstanding any other provision of law, the President, through the Attorney General, may authorize use of a pen register or trap and trace device without a court order to acquire foreign intelligence information for up to 15 calendar days after the declaration of war. 50 U.S.C. § 1845—Use of Information Obtained from FISA Pen Register or Trap and Trace Device 50 U.S.C. § 1845 sets parameters with respect to the use of information obtained through the use of a pen register or trap and trace device under 50 U.S.C. § 1841 et seq . Federal officers and employees may only use or disclose such information with respect to a U.S. person without the consent of that person in accordance with Section 1845. Any disclosure by a Federal officer or employee of information acquired pursuant to FISA from a pen register or trap and trace device must be for a lawful purpose. Disclosure for law enforcement purposes of information acquired under 50 U.S.C. § 1841 et seq . is only permitted where the disclosure is accompanied by a statement that the information and any derivative information may only be used in a criminal proceeding with the advance authorization of the Attorney General. Under 50 U.S.C. § 1845(c), when the United States intends to enter into evidence, use, or disclose information obtained by or derived from a FISA pen register or trap and trace device against an aggrieved person in any federal trial, hearing, or proceeding, notice requirements must be satisfied. The Government, before the trial, hearing, or proceeding or a reasonable time before the information is to be proffered, used or disclosed, must give notice of its intent both to the aggrieved person involved and to the court or other authority in which the information is to be disclosed or used. If a state or local government intends to enter into evidence, use, or disclose information obtained or derived from such a trap and trace device against an aggrieved person in a state or local trial, hearing or proceeding, it must give notice to the aggrieved person and to the Attorney General of the United States of the state or local government's intent to disclose or use the information. 50 U.S.C. §1845(c)-(f)—U.S. District Court Consideration of Notices, Motions to Suppress, or Discovery Motions . The aggrieved person in either case may move to suppress the evidence obtained or derived from a FISA pen register or trap and trace device on one of two grounds: that the information was unlawfully acquired; or that the use of the pen register or trap and trace device was not made in conformity with an order of authorization or approval under 50 U.S.C. § 1841 et seq . If notice is given under 50 U.S.C. §§ 1845(c) or (d), or a motion or request is made to suppress or to discover or obtain any applications, orders, or other materials relating to use of a FISA pen register or trap and trace device or information obtained by or derived from such use, the Attorney General may have national security concerns with respect to the effect of such disclosure or of an adversary hearing. If he files an affidavit under oath that disclosure or any adversary hearing would harm the national security of the United States, the United States district court in which the motion or request is made, or where the motion or request is made before another authority, the U.S. district court in the same district, shall review in camera and ex parte the application, order, and other relevant materials to determine whether the use of the pen register or trap and trace device was lawfully authorized and conducted. In so doing, the court may only disclose portions of the application, order or materials to the aggrieved person or order the Attorney General to provide the aggrieved person with a summary of these materials if that disclosure is necessary to making an accurate determination of the legality of the use of the pen register or trap and trace device. Should the court find that the pen register or trap and trace device was not lawfully authorized or conducted, it may suppress the unlawfully obtained or derived evidence or "otherwise grant the motion of the aggrieved person." On the other hand, if the court finds the pen register or trap and trace device lawfully authorized and conducted, it may deny the aggrieved person's motion except to the extent discovery or disclosure is required by due process. Any U.S. district court orders granting motions or request under Section 1845(g), finding unlawfully authorized or conducted the use of a pen register or trap and trace device, or requiring review or granting disclosure of applications, orders or other materials regarding installation and use of a pen register or trap and trace device are deemed final orders. They are binding on all federal and state courts except U.S. courts of appeals and the U.S. Supreme Court. 50 U.S.C. § 1846—Congressional Oversight Section 1846 deals with congressional oversight of the use of FISA pen registers and trap and trace devices. It requires the Attorney General semiannually to fully inform the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, and the House and Senate Judiciary Committees regarding all FISA uses of pen registers and trap and trace devices. In addition, the Attorney General, on a semi-annual basis, must report to the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, the House Judiciary Committee and the Senate Judiciary Committee on the total number of applications made for orders approving the use of such pen registers and trap and trace devices; the total number of such orders granted, modified, or denied during the previous six month period; the total number of pen registers and trap and trace devices whose installation and use was authorized by the Attorney General on an emergency basis under section 1843 of this title, and the total number of subsequent orders approving or denying the installation and use of such pen registers and trap and trace devices. Access to certain business records or other tangible things for foreign intelligence purposes Added in 1998, Title V of FISA, 50 U.S.C. § 1861 et seq ., was substantially changed by P.L. 107-56 , and modified further by P.L. 107-108 , P.L. 109-177 , and P.L. 109-178 . Although denominated "access to certain business records for foreign intelligence and international terrorism investigations," the reach of Section 1861, as amended by the USA PATRIOT Act, P.L. 107-108 , P.L. 109-177 , and P.L. 109-178 , is now substantially broader than business records alone. 50 U.S.C. § 1861(a)(1)—Applications for FISC Order for Production of any Tangible Thing Under 50 U.S.C. § 1861(a)(1), subject to Subsection 1861(a)(3), the Director of the FBI, or his designee (who must be at the Assistant Special Agent in Charge level or higher in rank) may apply for an order requiring ... the production of any tangible things (including books, records, papers, documents, and other items) for an investigation to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities, provided that such investigation of a United States person is not conducted solely upon the basis of activities protected by the first amendment to the Constitution. Subsection 1861(a)(2) requires that such an investigation must be conducted under guidelines approved by the Attorney General under E.O. 12333 or a successor order and prohibits such an investigation of a United States person based solely upon First Amendment protected activities. Under Subsection 1861(a)(3), which was added by Section 106(a)(2) of P.L. 109-177 , if the application is for an order requiring production of library circulation records, library patron lists, book sales records, book customer lists, firearms sales records, tax return records, educational records, or medical records containing information that would identify a person, the Director of the Federal Bureau of Investigation may delegate the authority to make such application to either the Deputy Director of the Federal Bureau of Investigation or the Executive Assistant Director for National Security (or any successor position). The Deputy Director or the Executive Assistant Director may not further delegate such authority. An application for an order under Section 1861 must be made to an FISC judge or to a U.S. magistrate judge publicly designated by the Chief Justice of the United States to hear such applications and grant such orders for the production of tangible things on behalf of an FISC judge. The application must contain a statement of facts showing that there are reasonable grounds to believe that the tangible things sought are relevant to an authorized investigation (other than a threat assessment) conducted in accordance with 50 U.S.C. § 1861(a)(2) to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. 50 U.S.C. § 1861(c)—Issuance of FISC Production Order When such an application is made, if the judge finds that the application meets the requirements of subsections 1861(a) and (b), he or she must enter an ex parte order as requested, or as modified, approving the release of tangible things. The order must direct that minimization procedures adopted pursuant to subsection 1861(g) be followed. An order issued under 50 U.S.C. § 1861(c) must: describe the tangible things that are ordered to be produced with sufficient particularity to permit them to be fairly identified; include the date on which the tangible things must be provided, which must allow a reasonable period of time within which the tangible things can be assembled and made available; and provide recipients with clear and conspicuous notice of nondisclosure requirements under Subsection 1861(d). The order may only require the production of a tangible thing which may be subject to a subpoena duces tecum issued by a court of the United States in aid of a grand jury investigation or to any other order issued by a court of the United States directing the production of records or tangible things. An order issued under 50 U.S.C. § 1861(c) shall not disclose that it is issued for purposes of an investigation described in Subsection 1861(a). 50 U.S.C. § 1861(d)—Prohibition on Disclosure Subsection 1861(d) prohibits any person to disclose that the FBI has sought or obtained tangible things under Section 1861, except where the disclosure is made to persons necessary to the production of tangible things involved, to an attorney to obtain legal advice or assistance with respect to the production of things in response to the order, or to other persons as permitted by the Director of the FBI or his designee. A person to whom such disclosure is made is also subject to these nondisclosure requirements, and must be put on notice of the nondisclosure requirements by the person making such disclosures to him or her. At the request of the Director of the FBI or his designee, anyone making or intending to make such a disclosure must identify to the Director or his designee the person to whom the disclosure was or is to be made. 50 U.S.C. § 1861(e)—Limitation on Liability for Good Faith Compliance with Production Order Subsection 1861(e) precludes liability for persons who, in good faith, produce tangible things under such a Section 1861 order. It further indicates that production does not constitute a waiver of any privilege in any other proceeding or context. 50 U.S.C. § 1861(f)—Petitions for Review of Production Orders and Related Nondisclosure Orders before FISC Petition Review Pool Subsection 1861(f), which was added by Subsection 106(f) of P.L. 109-177 and amended by Section 3 of P.L. 109-178 , gives a person in receipt of a production order under 50 U.S.C. § 1861 a means by which to challenge the legality of such order by filing a petition before the petition review pool of the FISC established by 50 U.S.C. § 1803(e)(1). The recipient of a production order must wait at least one year after issuance of that order to challenge the nondisclosure order imposed in connection with the production order by filing a petition to modify or set aside the nondisclosure order before the petition review pool. The presiding judge must assign a petition filed with the pool under subsection 1861(f)(2)(A)(i) to one of the FISC judges in the pool immediately, and the judge receiving such petition must conduct an initial review of it within 72 hours. If the petition is deemed frivolous, the assigned judge must immediately deny it and affirm the production order or nondisclosure order at issue. If the assigned judge does not find the petition frivolous, he or she must promptly consider it under the Procedures for Review of Petitions filed pursuant to Section 501(f) of the Foreign Intelligence Surveillance Act of 1978, as Amended, established under 50 U.S.C. § 1803(e)(2), and provide a written statement for the record of the reasons for any determination made. An order setting aside a nondisclosure order may be stayed, upon request of the Government, pending review by the Court of Review. A petition to modify or set aside a production order may only be granted if the judge finds the order does not meet the requirements of 50 U.S.C. § 1861 or is otherwise unlawful. If the judge does not modify or set aside the production order, he or she must immediately affirm the order and order the recipient to comply with it. A petition to modify or set aside a nondisclosure order may only be granted if the judge finds that there is no reason to believe that disclosure may endanger U.S. national security; interfere with a criminal, counterterrorism, or counterintelligence investigation; interfere with diplomatic relations; or endanger the life or physical safety of any person. If, upon the filing of a petition to modify or set aside a nondisclosure order, the Attorney General, Deputy Attorney General, an Assistant Attorney General, or the Director of the FBI certifies that disclosure may endanger the national security of the United States or interfere with diplomatic relations, that certification will be treated as conclusive unless the judge finds that the certification was made in bad faith. If a petition to modify or set aside a nondisclosure order is denied, the recipient may not file another petition to modify or set aside that nondisclosure order for one year. A production order or nondisclosure order that is not explicitly modified or set aside under Section 1861 remains in full effect. The Government or any person receiving a production or nondisclosure order may file a petition before the Court of Review to review a decision by a petition review pool judge to affirm, modify, or set aside such order. The Court of Review must provide a written statement of the reasons for its decision for the record. The record will be transmitted under seal to the U.S. Supreme Court for review on a petition for certiorari by the Government or any person receiving such order. Judicial proceedings under 50 U.S.C. § 1861(f) are to be concluded as expeditiously as possible, and the record of such proceedings is to be maintained under security measures established by the Chief Justice of the United States, in consultation with the Attorney General and the Director of National Intelligence. Petitions are to be filed under seal. Upon the request of the Government, the court in proceedings under Subsection 1861(f) shall review ex parte and in camera any Government submissions, or portions thereof, which may contain classified information. 50 U.S.C. § 1861(h)—Use of Information Acquired from Tangible Things Received Under Production Order Subsection 1861(g), as added by Subsection 106(g) of P.L. 109-177 , requires the Attorney General to adopt specific minimization procedures governing retention and dissemination by the FBI or any tangible things, or information in those things, received by the FBI in response to an order under 50 U.S.C. § 1861. Subsection 1861(h), also added by Subsection 106(g) of P.L. 109-177 , provides that information acquired from tangible things received by the FBI pursuant to an order under 50 U.S.C. § 1861 concerning any U.S. person may be used and disclosed by federal officers and employees without that U.S. person's consent only in accordance with these minimization procedures. Otherwise privileged information acquired from tangible things received by the FBI title V of FISA, 50 U.S.C. §§ 1861-1862, retains its privileged character. Information acquired by the FBI under Section 1861 orders may only be used or disclosed by federal officers or employees for lawful purposes. 50 U.S.C. § 1862—Congressional Oversight 50 U.S.C. § 1862 deals with congressional oversight. Subsection 1862(a), as amended by Subsection 106(h) of P.L. 109-177 , requires the Attorney General annually to fully inform the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, and the House and Senate Committees on the Judiciary regarding all request for production of tangible things under Section 1861. Subsection 1862(b) requires the Attorney General, in April of each year, to report to the House and Senate Judiciary Committees with respect to the previous calendar year on the total number of applications for Section 1861 orders for production of tangible things; the total number of such orders granted, modified, or denied; and the number of such orders either granted, modified, or denied for the production of each of the following: library circulation records, library patron lists, book sales records, or book customer lists; firearms sales records; tax return records; educational records; and medical records containing information that would identify a person. Under Subsection 1862(c), in April of each year, the Attorney General is required to submit an unclassified report to Congress with respect to the preceding year setting forth the total number of applications made for orders approving requests for the production of tangible things under 50 U.S.C. § 1861; and the total number of such orders either granted, modified, or denied. Section 106A of P.L. 109-177 directs the Inspector General of the U.S. Department of Justice to perform a comprehensive audit of the effectiveness and use, including improper or illegal use, of the investigative authority under title V of FISA, 50 U.S.C. § 1861 et seq. , for fiscal years 2002-2006, and sets out detailed requirements for the audit. The results of the audit are to be submitted in two unclassified reports (one for 2002-2004 and one for 2005-2006) to the House and Senate Judiciary Committees, the House Permanent Select Committee on Intelligence, and the Senate Select Committee on Intelligence. 50 U.S.C. § 1871—Additional Reporting Requirements Section 6002 of P.L. 108-458 , the Intelligence Reform and Terrorism Prevention Act of 2004, created additional semiannual reporting requirements under FISA. Under the new language, the Attorney General, on a semiannual basis, must submit to the House Permanent Select Committee on Intelligence, the Senate Select Committee on Intelligence, the House Judiciary Committee and the Senate Judiciary Committee, in a manner consistent with protection of national security, reports setting forth with respect to the preceding six month period: (1) the aggregate number of persons targeted for orders issued under this Act, including a breakdown of those targeted for— (A) electronic surveillance under section 105 [50 U.S.C. § 1805]; (B) physical searches under section 304 [50 U.S.C. § 1824]; (C) pen registers under section 402 [50 U.S.C. § 1842]; and (D) access to records under section 501 [50 U.S.C. § 1861]; (2) the number of individuals covered by an order issued pursuant to section 101(b)(1)(C) [50 U.S.C. § 1801(b)(1)(C)]; (3) the number of times that the Attorney General has authorized that information obtained under this Act may be used in a criminal proceeding or any information derived therefrom may be used in a criminal proceeding; (4) a summary of significant legal interpretations of this Act involving matters before the Foreign Intelligence Surveillance Court or the Foreign Intelligence Surveillance Court of Review, including interpretations presented in applications or pleadings filed with the Foreign Intelligence Surveillance Court or the Foreign Intelligence Court of Review by the Department of Justice; and (5) copies of all decisions (not including orders) or opinions of the Foreign Intelligence Surveillance Court or Foreign Intelligence Surveillance Court of Review that include significant construction or interpretation of the provisions of this Act. Private Right of Action in U.S. District Court for Those Aggrieved by Willful Violations of 50 U.S.C. §§ 1806(a), 1825(a), or 1845(a) of FISA In addition to provisions which amended FISA explicitly, other provisions of the USA PATRIOT Act, P.L. 107-56 , touched upon FISA, at least tangentially. For example, Section 223 of P.L. 107-56 , among other things, created a new 18 U.S.C. § 2712. This new section, in part, created an exclusive private right of action for any person aggrieved by any willful violation of sections 106(a), 305(a), or 405(a) of FISA (50 U.S.C. §§ 1806(a), 1825(a), 1845(a), respectively) to be brought against the United States in U.S. district court to recover money damages. Such monetary relief would amount to either actual damages or $10,000, whichever is greater; and reasonably incurred litigation costs. It also set forth applicable procedures. Sunset Provisions Section 224 of the USA PATRIOT Act set a sunset for many of the provisions in P.L. 107-56 of December 31, 2005, including all of the FISA amendments except that in Section 208 of P.L. 107-56 , which increased the number of FISC judges from 7 to 11. Section 224 was repealed by the USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 , Subsection 102(a). Subsection 102(b) of P.L. 109-177 provided that Sections 105(c)(2) of FISA, 50 U.S.C. § 1805(c)(2) (dealing with multipoint or roving wiretaps under FISA), 501 of FISA, 50 U.S.C. § 1861 (dealing with production of any tangible thing under FISA), and 502 of FISA, 50 U.S.C. § 1862 (dealing with congressional oversight of such production under FISA) will sunset on December 31, 2009. However, Subsection 102(b) of P.L. 109-177 excepts from the application of the sunset provision any particular foreign intelligence investigations that began before December 31, 2009, or any criminal offenses or potential offenses which began or occurred before December 31, 2009. As to those particular investigations or offenses, applicable provisions would continue in effect after December 31, 2009. Section 6001(a) of the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458 , expanded the definition of "agent of a foreign power" in 50 U.S.C. § 1801(b)(1)(C) to include any person other than a U.S. person who engages in international terrorism or activities in preparation for international terrorism. Under Section 103 of P.L. 109-177 , this so-called "lone wolf" terrorist provision will also sunset on December 31, 2009, except with respect to any particular foreign intelligence investigation that began before that date, or with respect to any particular offense or potential offense that began or occurred before that date. Published Decisions of the FISC and the U.S. Foreign Intelligence Surveillance Court of Review The FISC Decision Summary In its May 17, 2002, decision, the FISC considered a government motion for the court "to vacate the minimization and 'wall' procedures in all cases now or ever before the Court, including this Court's adoption of the Attorney General's July 1995 intelligence sharing procedures, which are not consistent with new intelligence sharing procedures submitted for approval with this motion." The court viewed the new intelligence sharing procedures under review as proposed new Attorney General minimization procedures. In a memorandum and order written by the then Presiding Judge, U.S. District Court Judge Royce Lamberth, issued on the last day of his tenure on the FISC, and concurred in by all of the judges then sitting on the FISC, the FISC granted the Department of Justice (DOJ) motion with significant modifications to section II.B. of what the FISC characterized as the proposed minimization procedures. The court required a continuation of the Attorney General's 1995 minimization procedures, as subsequently modified by the Attorney General and the Deputy Attorney General, and preservation of a "wall" procedure to maintain separation between FBI criminal investigators and DOJ prosecutors and raw FISA investigation data regarding the same facts or individuals, so as to prevent these law enforcement personnel from becoming "de facto partners in FISA surveillances and searches," while permitting extensive sharing of information between such investigations. The FISC was particularly concerned with those aspects of section II.B. of the proposed procedures which would permit criminal prosecutors and law enforcement officers to initiate, direct or control electronic surveillance or physical searches under FISA, with an eye towards law enforcement objectives, rather than foreign intelligence information gathering. The FISC set the stage for its analysis by recounting a significant number of past instances where FISA applications had included false, inaccurate or misleading information regarding information sharing or compliance with "wall" procedures in FBI affidavits or, in one case, in a statutorily required certification by the FBI Director; and past occasions where the FISC's orders had been violated in regard to information sharing and unauthorized dissemination of FISA information to criminal investigators and prosecutors. While both the FBI's and DOJ's Offices of Professional Responsibility had been investigating these incidents for over a year at the time of the writing of the opinion, the court had not been advised of any explanations as to how such misrepresentations had occurred. The court's dissatisfaction with these irregularities formed a backdrop for its analysis of the motion and applications before it. Discussion of the Memorandum Opinion and Order Its analysis was based upon its reading of the statutory language and premised, in part, on the fact that the USA PATRIOT Act had not amended the provisions of FISA dealing with minimization requirements, although other FISA provisions had been modified. The minimization provisions with respect to both electronic surveillance and physical searches under FISA continue to be designed to "minimize the acquisition and retention, and prohibit the dissemination, of non-publicly available information concerning unconsenting United States persons, consistent with the need of the United States to obtain, produce, and disseminate foreign intelligence information ." The court regarded the standard it applied to the proposed procedures before it as "mandated in [50 U.S.C.] § 1805(a)(4) and § 1824(a)(4), which state that 'the proposed minimization procedures meet the definition of minimization procedures under § 101(h), [§ 1801(h) and §1824(4)] of the act.'" In its memorandum opinion, the FISC first discussed the court's jurisdiction, noting that the text of the statute "leaves little doubt that the collection of foreign intelligence information is the raison d ' etre for the FISA." The court found support for this conclusion in a review of pertinent provisions of the act. It found further support in E.O. 12139 and E.O. 12949, which give the Attorney General authority to approve the filing of applications for orders for electronic surveillances and physical searches and authorize the Director of the FBI and other senior executives to make required certifications under FISA for the "purpose of obtaining foreign intelligence information." The FISC therefore concluded that its jurisdiction was limited to granting FISA orders for electronic surveillance and physical searches for the collection of foreign intelligence information under the standards and procedures prescribed in the act. In reaching this conclusion, the FISC, in a footnote, characterized the issue before it as "whether the FISA authorizes electronic surveillance and physical searches primarily for law enforcement purposes so long as the Government also has 'a significant' foreign intelligence purpose." Rejecting the approach taken by the Government in its supplemental brief in the case, the Court stated that "its decision is not based on the issue of its jurisdiction but on the interpretation of minimization procedures." Maintaining its focus upon the minimization procedures, the FISC also declined to reach the question raised by the Attorney General "whether FISA may be used primarily for law enforcement purposes." The court also regarded the scope of its findings regarding minimization as applicable "only to communications concerning U.S. persons as defined in § 1801(i) of the act: U.S. citizens and permanent resident aliens whether or not they are named targets in the electronic surveillance and physical searches." It emphasized that its opinion was not applicable to communications of foreign powers as defined under 50 U.S.C. § 1801(a), or to non-U.S. persons. After stating its continued approval of the "Standard Minimization Procedures for a U.S. Person Agent of a Foreign Power," the court turned its attention to two sections of supplementary minimization procedures adopted by the Attorney General on March 6, 2002, regarding "II. Intelligence sharing procedures concerning the Criminal Division," and "III. Intelligence sharing procedures concerning a USAO [U.S. Attorney's Office]." The FISC regarded these procedures as minimization procedures as that term is defined under FISA by virtue of the fact that they were adopted by the Attorney General and were "designed to minimize the acquisition and retention, and prohibit the dissemination, of nonpublicly available information concerning unconsenting United States persons." Therefore, these procedures were measured against the standard for minimization procedures set forth in 50 U.S.C. §§ 1805(a)(4) and 1824(a)(4): ... The operative language of each section to be applied by the Court provides that minimization procedures must be reasonably designed in light of their purpose and technique, and mean— specific procedures, which shall be adopted by the Attorney General, that are reasonably designed in light of the purpose and technique of the particular surveillance, [search] to minimize the acquisition and retention, and prohibit the dissemination, of nonpublicly available information concerning unconsenting United States persons consistent with the need of the United States to obtain, produce, and disseminate foreign intelligence information. §1801(h)(1) and §1821(4)(A). The court then reviewed the minimization procedures upon which it had been relying prior to the application before it, to wit, the Attorney General's 1995 "Procedures for Contacts between the FBI and Criminal Division Concerning FI [Foreign Intelligence] and Foreign Counterintelligence Investigations,"as augmented by the Attorney General in January 2000 and expanded further by the Deputy Attorney General in August 2001. The FISC indicated that these procedures permitted the following "substantial consultation and coordination": a. reasonable indications of significant federal crimes in FISA cases are to be reported to the Criminal Division of the Department of Justice; b. [t]he Criminal Division may then consult with the FBI and give guidance to the FBI aimed at preserving the option of criminal prosecution, but may not direct or control the FISA investigation toward law enforcement objectives; c. the Criminal Division may consult further with the appropriate U.S. Attorney's Office about such FISA cases; d. on a monthly basis senior officials of the FBI provide briefings to senior officials of the Justice Department, including OIPR [Office of Intelligence Policy and Review] and the Criminal Division, about intelligence cases, including those in which FISA is or may be used; e. all FBI 90-day interim reports and annual reports of counterintelligence investigations, including FISA cases, are being provided to the Criminal Division, and must now contain a section explicitly identifying any possible federal criminal violations; f. all requests for initiation or renewal of FISA authority must now contain a section devoted explicitly to identifying any possible federal criminal violations ; g. the FBI is to provide monthly briefings directly to the Criminal Division concerning all counterintelligence investigations in which there is a reasonable indication of a significant federal crime; h. prior to each briefing the Criminal Division is to identify (from FBI reports) those intelligence investigations about which it requires additional information and the FBI is to provide the information requested; and i. since September 11, 2001, the requirement that OIPR be present at all meetings and discussions between the FBI and Criminal Division involving certain FISA cases has been suspended; instead, OIPR reviews a daily briefing book to inform itself and this Court about those discussions. The FISC indicated further that it "routinely approved the use of information screening 'walls' proposed by the government in its applications" to maintain both the appearance and the fact that FISA surveillances and searches were not being used " sub rosa for criminal investigations." In March 2000, September 2000, and March 2001, the FISC was advised by the Department of Justice of a significant number of erroneous statements or omissions of material facts in FISA applications, almost all of which involved misstatements or omissions as to information sharing and unauthorized disseminations to criminal investigators and prosecutors. Although the FBI and the Department of Justice Office of Professional Responsibility had been investigating the circumstances involved in these misstatements and omissions for over a year, as of the date of the opinion, the court had not been advised of the reasons for these erroneous statements. The court responded to these concerns in 2001 by instituting supervisory measures to assess compliance with "wall" procedures. In the case before the FISC, the government moved that all "wall" procedures be eliminated in international terrorism surveillances and physical searches under FISA. The FISC indicated that the new 2002 procedures proposed by the Attorney General would apply to two types of cases in which " FISA is the only effective tool available to both counterintelligence and criminal investigators" (emphasis supplied)—those involving overlapping investigations (which the court described as cases, usually international terrorism cases, in which separate intelligence and criminal investigations of the same FISA target who is a U.S. person are conducted by different FBI agents, where separation can easily be maintained) and those involving overlapping interests (i.e., cases in which one investigation of a U.S. person FISA target is conducted by a team of FBI agents with both intelligence and criminal interests "usually involving espionage and similar cases in which separation is impractical"). In both types of investigations, the FISC indicated that the 2002 proposed minimization procedures provided authority for "extensive consultations between the FBI and criminal prosecutors 'to coordinate efforts to investigate or protect against actual or potential attack, sabotage, international terrorism and clandestine intelligence activities by foreign powers and their agents....'" Such consultation is expressly provided for in 50 U.S.C. §§ 1806(k)(1) and 1825(k)(1). Under the proposed minimization procedures, those consultations would include providing prosecutors with access to "all information" developed in FBI counterintelligence investigations, including through FISA, among other information. Section II.B. of the proposed minimization techniques would authorize criminal prosecutors to "consult extensively and provide advice and recommendations to intelligence officials about 'all issues necessary to the ability of the United States to investigate or protect against foreign attack, sabotage, terrorism, and clandestine intelligence activities.'" The FISC was particularly concerned about the authority given criminal prosecutors under Section II.B. "to advise FBI intelligence officials concerning ' the initiation, operation, continuation, or expansion of FISA searches or surveillance .'" The court regarded this provision as "designed to use this Court's orders to enhance criminal investigation and prosecution, consistent with the government's interpretation of the recent amendments that FISA may now be 'used primarily for a law enforcement purpose.'" Under section III of the proposed procedures, U.S. attorneys are given the authority to engage in consultations to the same extent as the Criminal Division of DOJ under parts II.A. and II.B. in cases involving international terrorism. The FISC interpreted these procedures as giving criminal prosecutors "a significant role directing FISA surveillances and searches from start to finish in counterintelligence cases involving overlapping intelligence and criminal investigations or interests, guiding them to criminal prosecution." In light of the court's past experience with FISA searches and surveillances, the FISC found the proposed procedures to be "designed to enhance the acquisition, retention and dissemination of evidence for law enforcement purposes, instead of being consistent with the need of the United States to 'obtain, produce, and disseminate foreign intelligence information ' (emphasis added [by the FISC]) as mandated in § 1801(h) and § 1821(4)." The court regarded the procedures as, in effect, an effort by the government to amend FISA's definition of minimization procedures in ways that Congress had not and to substitute FISA for the electronic surveillance requirements of Title III of the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. § 2510 et seq. , and for the search warrant requirements in Rule 41 of the Federal Rules of Criminal Procedure. The court found this unacceptable. Nor was the court persuaded by the government's contention that the 1995 procedures' prohibition against criminal prosecutors "directing or controlling" FISA cases should be revoked. "If criminal prosecutors direct both the intelligence and criminal investigations, or a single investigation having combined interests, coordination becomes subordination of both investigations or interests to law enforcement objectives." The FISC stated: Advising FBI intelligence officials on the initiation, operation, continuation or expansion of FISA surveillances and searches of U.S. persons means that criminal prosecutors will tell the FBI when to use FISA (perhaps when they lack probable cause for a Title III electronic surveillance), what techniques to use, what information to look for, what information to keep as evidence and when use of FISA can cease because there is enough evidence to arrest and prosecute. The 2002 minimization procedures give the Department's criminal prosecutors every legal advantage conceived by Congress to be used by U.S. intelligence agencies to collect foreign intelligence information, ... based on a standard that the U.S. person is only using or about to use the places to be surveilled or searched, without any notice to the target unless arrested and prosecuted, and, if prosecuted, no adversarial discovery of the FISA applications and warrants. All of this may be done by use of procedures intended to minimize collection of U.S. person information, consistent with the need of the United States to obtain and produce foreign intelligence information. If direction of counterintelligence cases involving the use of highly intrusive FISA surveillances and searches by criminal prosecutors is necessary to obtain and produce foreign intelligence information, it is yet to be explained to the Court. Having found section II.B. of the proposed minimization procedures inconsistent with the statutory standard for minimization procedures under 50 U.S.C. §§ 1801(h) and 1821(4), the court substituted its own language in place of the second and third paragraphs of II.B. as submitted by the Attorney General. The substitute language permitted consultation between the FBI, the Criminal Division of DOJ, and the Office of Intelligence Policy and Review of DOJ (OIPR) "to coordinate their efforts to investigate or protect against foreign attack or other grave hostile acts, sabotage, international terrorism, or clandestine intelligence activities by foreign powers or [agents of foreign powers]," so that the goals and objectives of both the intelligence and law enforcement investigations or interests may be achieved. However, it prohibited law enforcement officials from making recommendations to intelligence officials regarding initiation, operation, continuation, or expansion of FISA surveillances and searches. In addition, the substitute language foreclosed law enforcement officials from directing or controlling the use of FISA procedures to enhance criminal prosecution; nor was advice intended to preserve the option of criminal prosecution to be permitted to inadvertently result in the Criminal Division directing or controlling an investigation involving FISA surveillance or physical searches to achieve law enforcement objectives. While direct consultation and coordination were permitted, the substitute language required OIPR to be invited to all such consultations and, where OIPR was unable to attend, the language required OIPR to be apprized forthwith in writing of the substance of the consultations, so that the FISC could be notified at the earliest opportunity. In its order accompanying the FISC memorandum opinion, the court held that the proposed minimization procedures, so modified, would be applicable to all future electronic surveillances and physical searches under FISA, subject to the approval of the court in each instance. In this order, the court also adopted a new administrative rule to monitor compliance. The new Rule 11 regarding criminal investigations in FISA cases provided: All FISA applications shall include informative descriptions of any ongoing criminal investigations of FISA targets, as well as the substance of any consultations between the FBI and criminal prosecutors at the Department of Justice or a United States Attorney's Office. The Decision of the U.S. Foreign Intelligence Surveillance Court of Review Summary The FISC memorandum opinion and order discussed above were not appealed directly. Rather, the Department of Justice sought review in the U.S. Foreign Intelligence Surveillance Court of Review (Court of Review) of an FISC order which authorized electronic surveillance of an agent of a foreign power, but imposed restrictions on the government flowing from the FISC's May 17 th decision, and of an order renewing that surveillance subject to the same restrictions. Because of the electronic surveillance context of these orders, the Court of Review's analysis was cast primarily in terms of such surveillance, although some aspects of its analysis may have broader application to other aspects of FISA. In its first decision ever, the Court of Review, in a lengthy per curiam opinion issued on November 18, 2002, reversed and remanded the FISC orders. In so doing the Court of Review emphasized that the May 17 th decision, although never appealed, was "the basic decision before us and it [was] its rationale that the government challenge[d]." After reviewing the briefs of the government and two amici curiae, the American Civil Liberties Union (joined on the brief by the Center for Democracy and Technology, the Center for National Security Studies, the Electronic Privacy Information Center, and the Electronic Frontier Foundation) and the National Association of Criminal Defense Lawyers, the Court of Review concluded that "FISA, as amended by the Patriot Act, supports the government's position, and that the restrictions imposed by the FISA court are not required by FISA or the Constitution." Discussion of the Opinion The Court of Review began its analysis by articulating its view of the May 17 th FISC decision. The Court of Review stated that the FISC appeared to proceed in its opinion from the assumption that FISA constructed a barrier between counterintelligence/intelligence officials and law enforcement officers in the Executive Branch, but did not support that assumption with any relevant language from the statute. The Court of Review opined that this "wall" was implicit in the FISC's "apparent" belief that "it can approve applications for electronic surveillance only if the government's objective is not primarily directed toward criminal prosecution of the foreign agents for their foreign intelligence activity," while referencing neither statutory language in FISA nor USA PATRIOT Act amendments, which the government argued altered FISA to permit an application even if criminal prosecution was the primary goal. Instead, the Court of Review noted that the FISC relied upon its statutory authority to approve "minimization procedures" in imposing the restrictions at issue. The Court of Review stated that the government raised two main arguments: First, DOJ contended that the restriction, recognized by several courts of appeals prior to the enactment of the USA PATRIOT Act, that FISA could only be used if the government's primary purpose in gathering foreign intelligence information was not criminal prosecution, was not supported by the statutory language or the legislative history of FISA. This argument was not presented to the FISC, but the Court of Review indicated that it could entertain the argument, because proceedings before the FISC and before the Court of Review were ex parte . Second, the government argued that, even if the primary purpose test was appropriate prior to the passage of the USA PATRIOT Act, the amendments made by that act eliminated that concept. The government also argued that the FISC's interpretation of the minimization procedures provisions misconstrued those provisions and amounted to "an end run" around the USA PATRIOT Act amendments. DOJ argued further that the FISC minimization procedures so intruded into the Department's operations as to be beyond the constitutional authority of Article III judges. Finally, DOJ contended that application of the primary purpose test in a FISA case was not constitutionally compelled under the Fourth Amendment. The Court of Review noted that, as enacted in 1978, FISA authorized the grant of an application for electronic surveillance to obtain foreign intelligence information if there is probable cause to believe that "the target of the electronic surveillance is a foreign power or an agent of a foreign power," and that "each of the facilities or places at which the surveillance is directed is being used, or is about to be used by a foreign power or an agent of a foreign power." The reviewing court focused upon the close connection between criminal activity and the definitions of "agent of a foreign power" applicable to United States persons contained in 50 U.S.C. §§ 1801(b)(2)(A) and (C), to wit: "any person who 'knowingly engages in clandestine intelligence activities ... which activities involve or may involve a violation of the criminal statutes of the United States,' or 'knowingly engages in sabotage or international terrorism, or activities that are in preparation therefor.'" The court noted further that FISA defined "international terrorism" to mean "activities that 'involve violent acts or acts dangerous to human life that are a violation of the criminal laws of the United States or of any State, or that would be a criminal violation if committed within the jurisdiction of the United States or any State.'" "Sabotage," as defined by FISA, covers activities that "'involve a violation of chapter 105 of [the criminal code] [18 U.S.C. §§ 2151-2156], or that would involve such a violation if committed against the United States.'" For purposes of its opinion, the Court of Review described these types of crimes as "foreign intelligence crimes." The court observed that, as passed in 1978, 50 U.S.C. §1804 required a national security official of the Executive Branch, usually the FBI Director, to certify that "the purpose" of the electronic surveillance under FISA was to obtain foreign intelligence information, and opined that "it is virtually impossible to read the 1978 FISA to exclude from its purpose the prosecution of foreign intelligence crimes, most importantly because, as we have noted, the definition of an agent of a foreign power—if he or she is a U.S. person—is grounded on criminal conduct." It found further support for its view that "foreign intelligence information" included evidence of "foreign intelligence crimes" from the legislative history as reflected in H.Rept. 95-1283 and S.Rept. 95-701, while acknowledging that the House report also stated that FISA surveillances "are not primarily for the purpose of gathering evidence of a crime. They are to obtain foreign intelligence information, which when it concerns United States persons must be necessary to important national concerns." The Court of Review regarded the latter statement as an observation rather than a proscription. The Court of Review saw the U.S. Court of Appeals for the Fourth Circuit's decision in United States v. Truong Dinh Hung , 629 F.2d 908 (4 th Cir. 1980), a decision based upon constitutional analysis rather than FISA provisions, as the springboard for the "primary purpose" test cases interpreting FISA and upholding FISA surveillances against Fourth Amendment challenges. After reviewing a number of the FISA cases applying the primary purpose test, the Court of Review concluded that a dichotomy between foreign intelligence gathering and criminal investigations implicit in the application of the primary purpose test was not statutorily compelled. The court found that FISA, as originally passed, did not "preclude or limit the government's use or proposed use of foreign intelligence information, which included evidence of certain kinds of criminal activity, in a criminal prosecution." In addition, the Court of Review, relying on arguments of the Department of Justice and the language of subsection 1805(a)(5), interpreted 50 U.S.C. §§ 1805 of FISA as originally enacted as not contemplating that the [FISC] would inquire into the government's purpose in seeking foreign intelligence information. Further, the court rejected the FISC's characterization of the Attorney General's 1995 procedures, as modified and augmented in January 2000 and August 2001, as minimization procedures. These procedures were formally adopted by the FISC as minimization procedures defined in 50 U.S.C. §§ 1801(h) and 1821(4) in November 2001, after passage of the USA PATRIOT Act, and were incorporated in all applicable orders and warrants granted since their adoption by the FISC. On March 6, 2002, the Attorney General adopted new "Intelligence Sharing Procedures," intended to supercede prior procedures, to "allow complete exchange of information and advice between intelligence and law enforcement officials," to "eliminate the 'direction and control' test," and to permit "exchange of advice between the FBI, OIPR, and the Criminal Division regarding 'the initiation, operation, continuation, or expansion of FISA searches or surveillance." The following day, the government filed a motion with the FISC advising the court of the Attorney General's adoption of the 2002 procedures, seeking to have that court adopt the new procedures in all matters before the FISC and asking the court to vacate its orders adopting the prior procedures as minimization procedures and imposing "wall" procedures in certain types of cases. That motion led to the FISC decision to adopt the 2002 procedures with modifications that was, by reference, before the Court of Review in its November 18, 2002, decision. The Court of Review characterized the FISC's adoption of the Justice Department's 1995 procedures, as modified and augmented, as minimization procedures as follows: Essentially, the FISA court took portions of the Attorney General's augmented 1995 Procedures—adopted to deal with the primary purpose standard—and imposed them generically as minimization procedures. In doing so, the FISA court erred. It did not provide any constitutional basis for its action—we think there is none—and misconstrued the main statutory provision on which it relied. The court mistakenly categorized the augmented 1995 Procedures as FISA minimization procedures and then compelled the government to utilize a modified version of those procedures in a way that is clearly inconsistent with the statutory purpose. The Court of Review interpreted "minimization procedures" under 50 U.S.C. § 1801(h) to be designed to protect, as far as reasonable, against the acquisition, retention, and dissemination of nonpublic information which is not foreign intelligence information. In light of the Court of Review's interpretation of "minimization procedures" under 50 U.S.C. § 1801(h), the court found no basis for the FISC's reliance upon that section "to limit criminal prosecutors' ability to advise FBI intelligence officials on the initiation, operation, continuation, or expansion of FISA surveillances to obtain foreign intelligence information, even if such information includes evidence of a foreign intelligence crime." In addition, the Court of Review found that the FISC had misconstrued its authority under 50 U.S.C. § 1805 and misinterpreted the definition of minimization procedures under 50 U.S.C. § 1801(h). The Court of Review expressed approbation for the Government's argument that the FISC, in imposing the modified 1995 procedures upon the Department of Justice as minimization procedures, "may well have exceeded the constitutional bounds that restrict an Article III court. The FISA court asserted authority to govern the internal organization and investigative procedures of the Department of Justice which are the province of the Executive Branch (Article II) and the Congress (Article I)." The Court of Review deemed the FISC's "refusal ... to consider the legal significance of the Patriot Act's crucial amendments [to be] error." The appellate court noted that, as amended by the USA PATRIOT Act, the requirement in 50 U.S.C. § 1804(a)(7)(B) that the Executive Branch officer certify that "the purpose" of the FISA surveillance or physical search was to gather foreign intelligence information had been changed to "a significant purpose." The court noted that floor statements indicated that this would break down traditional barriers between law enforcement and foreign intelligence gathering, making it easier for law enforcement to obtain FISA court orders for surveillance or physical searches where the subject of the surveillance "is both a potential source of valuable intelligence and the potential target of a criminal prosecution." The court noted that some Members raised concerns about the Fourth Amendment implications of this language change which permitted the Government to obtain a court order under FISA "even if the primary purpose is a criminal investigation." Interestingly, although the Court of Review did not regard a dichotomy between foreign intelligence gathering and law enforcement purposes as necessarily implied by the 1978 version of 50 U.S.C. § 1804(a)(7)(B), the court viewed the statutory change from "the purpose" to "a significant purpose" in the USA PATRIOT Act as recognizing such a dichotomy. The Court of Review disagreed with the FISC interpretation of the consultation authority under 50 U.S.C. § 1806(k). The Court of Review saw this provision as one which reflected the elimination of barriers between law enforcement and intelligence or counterintelligence gathering, without a limitation on law enforcement officers directing or controlling FISA surveillances. "[W]hen Congress explicitly authorizes consultation and coordination between different offices in the government, without even suggesting a limitation on who is to direct and control, it necessarily implies that either could take the lead." In analyzing the "significant purpose" amendment to 50 U.S.C. § 1804(a)(7)(B), the Court of Review deemed this a clear rejection of the primary purpose test. If gathering foreign intelligence information is a significant purpose, another purpose such as criminal prosecution could be primary. Further, the court found that the term "significant" "imposed a requirement that the government have a measurable foreign intelligence purpose, other than just criminal prosecution of even foreign intelligence crimes.... Although section 1805(a)(5) ... may well have been intended to authorize the FISA court to review only the question whether the information sought was a type of foreign intelligence information, in light of the significant purpose amendment of section 1804, it seems section 1805 must be interpreted as giving the FISA court the authority to review the government's purpose in seeking the information." The Court of Review saw the "significant purpose" language as "excluding from the purpose of gaining foreign intelligence information a sole objective of criminal prosecution." If the government, at the commencement of a FISA surveillance has not yet determined whether to prosecute the target, "[s]o long as the government entertains a realistic option of dealing with the agent other than through criminal prosecution, it satisfies the significant purpose test." Under the Court of Review's analysis: If the certification of the application's purpose articulates a broader objective than criminal prosecution—such as stopping an ongoing conspiracy—and includes other potential non-prosecutorial responses, the government meets the statutory test. Of course, if the court concluded that the government's sole objective was merely to gain evidence of past criminal conduct—even foreign intelligence crimes—to punish the agent rather than halt ongoing espionage or terrorist activity, the application should be denied. The court stated further that, while ordinary crimes may be intertwined with foreign intelligence crimes, the FISA process may not be utilized to investigate wholly unrelated ordinary crimes. The Court of Review emphasized that the government's purpose as reflected in the Section 1804(a)(7)(B) certification is to be judged by the FISC on the basis of ...the national security officer's articulation and not by a FISA court inquiry into the origins of an investigation nor an examination of the personnel involved. It is up to the Director of the FBI, who typically certifies, to determine the government's national security purpose, as approved by the Attorney General or Deputy Attorney General.... That means, perforce, if the FISA court has reason to doubt that the government has any real non-prosecutorial purpose in seeking foreign intelligence information it can demand further inquiry into the certifying officer's purpose—or perhaps even the Attorney General's or Deputy Attorney General's reasons for approval. The important point is that the relevant purpose is that of those senior officials in the Executive Branch who have the responsibility of appraising the government's national security needs." Turning from its statutory analysis to its examination of whether the statute, as amended, satisfied Fourth Amendment parameters, the Court of Review compared the FISA procedures with those applicable to criminal investigations of "ordinary crimes" under Supreme Court jurisprudence and under the wiretap provisions of Title III of the Omnibus Crime Control and Safe Streets Act. Relying upon Dalia v. United States , 441 U.S. 238, 255 (1979), the court indicated that in criminal investigations, beyond requiring that searches and seizures be reasonable, the Supreme Court has interpreted the Fourth Amendment's warrant requirement to demand satisfaction of three criteria: a warrant must be issued by a neutral, detached magistrate; those seeking the warrant must demonstrate to the magistrate that there is probable cause to believe that the evidence sought will assist in a particular apprehension or conviction for a particular offense; and the warrant must describe with particularity the things to be seized and the place to be searched. The Court of Review compared the procedures in Title III with those in FISA, finding in some respects that Title III had higher standards, while in others FISA included additional safeguards. In both, there was provision for a detached, neutral magistrate. The probable cause standard in Title III for criminal investigations was deemed more demanding than that in FISA. Title III requires a showing of probable cause that a specific individual has committed, is committing, or is about to commit a particular criminal offense. FISA requires a showing of probable cause that the target of the FISA investigative technique is a foreign power or an agent of a foreign power. A foreign power is not defined solely in terms of criminal activity. In the case of a target who is a U.S. person, the definition of "agent of a foreign power" contemplates, in part, the involvement of or, in the case of clandestine intelligence activities for a foreign power, the possibility of criminal conduct. The court regarded the lesser requirement with respect to criminal activity in the context of clandestine intelligence activities as to some extent balanced by the safeguard provided by FISA's requirement that there be probable cause to believe that the target is acting "for or on behalf of a foreign power." With regard to the particularity requirement, as to the first element, Title III requires a finding of probable cause to believe that the interception will obtain particular communications regarding a specified crime. In contrast, FISA requires an official to designate the type of foreign intelligence information being sought and to certify that the information being sought is foreign intelligence information. When the target of the FISA investigation is a U.S. person, the standard of review applied by the FISC is whether there is clear error in the certification, a lower standard that a judicial finding of probable cause. While the FISC can demand that the government provide further information needed for the court to make its determination as to whether the certification is clearly erroneous, the statute relies also upon internal checks on Executive Branch decisions through the requirement that the certification must be made by a national security officer and approved by the Attorney General or Deputy Attorney General. In connection with the second particularity element, Title III ... requires probable cause to believe that the facilities subject to surveillance are being used or are about to be used in connection with commission of a crime or are leased to, listed in the name of, or used by the individual committing the crime, 18 U.S.C. § 2518(3)(d), [while] FISA requires probable cause to believe that each of the facilities or places at which the surveillance is directed is being used, or is about to be used by a foreign power or agent [of a foreign power]. 50 U.S.C. § 1805(a)(3)(B). ... Simply put, FISA requires less of a nexus between the facility and the pertinent communications that Title III, but more of a nexus between the target and the pertinent communications." The Court of Review also compared Title III to FISA with respect to necessity (both statutes require that the information sought is not available through normal investigative procedures, although the standards differ somewhat), duration of surveillance (30 days under Title III, 18 U.S.C. § 2518(3)(c), as opposed to 90 days under FISA for U.S. persons, 50 U.S.C. § 1805(e)(1)), minimization and notice. With respect to minimization, the Court of Review noted that Title III, under 18 U.S.C. § 2518(5), required minimization of what was acquired, directing that surveillance be carried out "in such a way as to minimize the interception of communications not otherwise subject to interception under this chapter." FISA, on the other hand, "requires minimization of what is acquired, retained, and disseminated." Observing that the FISC had found "in practice FISA surveillance devices are normally left on continuously, and the minimization occurs in the process of indexing and logging the pertinent communications," the Court of Review deemed the reasonableness of such an approach to be dependent upon the facts and circumstances of each case: Less minimization in the acquisition stage may well be justified to the extent the intercepted communications are "ambiguous in nature or apparently involve[] guarded or coded language," or "the investigation is focusing on what is thought to be a widespread conspiracy [where] more extensive surveillance may be justified in an attempt to determine the precise scope of the enterprise." ... Given the targets of FISA surveillance, it will often be the case that intercepted communications will be in code or a foreign language for which there is no contemporaneously available translator, and the activities of foreign agents will involve multiple actors and complex plots.... With respect to notice, the Court of Review observed that under 18 U.S.C. § 2518(8)(d), Title III mandated notice to the target of the surveillance and, in the judge's discretion, to other persons whose communications were intercepted, after the surveillance has expired. In contrast, under 50 U.S.C. § 1806(c) and (d), FISA does not require notice to a person whose communications were intercepted unless the government intends to use, disclose, or enter into evidence those communications or derivative information in a trial, hearing, or other proceeding in or before any court, department, officer, agency, regulatory body, or other federal, state or local authority against that person. The Court of Review noted that where such information was to be used against a criminal defendant, he or she would be given notice, and stated that "where such evidence is not ultimately going to be used for law enforcement," Congress had observed that "[t]he need to preserve secrecy for sensitive counterintelligence sources and methods justifies elimination of the notice requirement." In a footnote, the court noted that the Amici had drawn attention to the difference in the nature of the notice given the defendant or aggrieved person under Title III as opposed to FISA. Under Title III, a defendant is generally entitled under 18 U.S.C. § 2518(9) to obtain the application and order to challenge the legality of the surveillance. However, under FISA, the government must give the aggrieved person and the court or other authority (or in the case of a state or local use, the state or political subdivision must give notice to the aggrieved person, the court or other authority, and the Attorney General) of their intent to so disclose or use communications obtained from the surveillance or derivative information. In addition, under 50 U.S.C. §§ 1806(f) and (g), if the Attorney General files an affidavit under oath that disclosure or an adversary hearing would harm national security, the U.S. district court may review in camera and ex parte the application, order, and other materials related to the surveillance, to determine whether the surveillance was lawfully authorized and conducted, whether disclosure or discovery is necessary, and whether to grant a motion to suppress. The Court of Review noted that these determinations are to be made by the U.S. district judge on a case by case basis, and stated that "whether such a decision protects a defendant's constitutional rights in a given case is not before us." Based on this comparison of Title III and FISA, the Court of Review found that "to the extent that the two statutes diverge in constitutionally relevant areas—in particular, in their probable cause and particularity showings—a FISA order may not be a 'warrant' contemplated by the Fourth Amendment.... Ultimately, the question becomes whether FISA, as amended by the Patriot Act, is a reasonable response based on a balance of the legitimate need of the government for foreign intelligence information to protect against national security threats with the protected rights of citizens." The court framed the question as follows: "does FISA amplify the President's power by providing a mechanism that at least approaches a classic warrant and which therefore supports the government's contention that FISA searches are constitutionally reasonable." In its analysis, the court first considered whether the Truong case articulated the correct standard. Truong held that the President had inherent authority to conduct warrantless searches to obtain foreign intelligence information, but did not squarely address FISA. Starting from the perspective that Truong deemed the primary purpose test to be constitutionally compelled as an application of the Keith case balancing standard, the Court of Review found that the Truong determination that "once surveillance becomes primarily a criminal investigation, the courts are entirely competent to make the usual probable cause determination, and ... individual privacy interests come to the fore and government foreign policy concerns recede when the government is primarily attempting to form the basis of a criminal investigation." The Court of Review found that this analysis was based upon a faulty premise that in the context of criminal prosecution "foreign policy concerns recede," and found further that the line the Truong court "sought to draw was inherently unstable, unrealistic, and confusing." The Court of Review opined that in the context of counterintelligence, foreign policy concerns did not recede when the government moved to prosecute. Rather "the government's primary purpose is to halt the espionage or terrorism efforts, and criminal prosecutions can be, and usually are, interrelated with other techniques used to frustrate a foreign power's efforts." In addition, the court found that the method of determining when an investigation became primarily criminal by looking to when the Criminal Division of the Department of Justice assumed the lead role, had led over time to the "quite intrusive organizational and personnel tasking the FISA court [had] adopted." The court found the "wall" procedure to generate dangerous confusion and create perverse organizational incentives that discouraged wholehearted cooperation of "all the government's personnel who can be brought to the task." This the court suggested could be thought to be dangerous to national security and could be thought to discourage desirable initiatives. In addition, the court saw the primary purpose test as administered by the FISC, "by focusing on the subjective motivation of those who initiate investigations ... was at odds with the Supreme Court's Fourth Amendment cases which regard subjective motivation of an officer conducting a search or seizure as irrelevant." Assuming arguendo that FISA orders were not warrants within the scope of the Fourth Amendment, the Court of Review returned to the question of whether searches under FISA are constitutionally reasonable. While the Supreme Court has not considered directly the constitutionality of warrantless government searches for foreign intelligence purposes, the balance between the government's interest and personal privacy interests is key to an examination of this question. The Court of Review viewed Keith as suggesting that a somewhat relaxed standard might be appropriate in foreign intelligence crimes as opposed to ordinary crimes. The Court of Review then briefly touched upon the Supreme Court's "special needs" cases, where the Court upheld searches not based on a warrant or individualized suspicion in extraordinary circumstances involving "special needs, beyond the normal need for law enforcement." In City of Indianapolis v. Edmond , 531 U.S. 32, 42 (2000), the U.S. Supreme Court held that a highway check point program designed to catch drug dealers was not within the "special needs" exception to the requirement that a search be based upon individualized suspicion, because "the government's 'primary purpose' was merely 'to uncover evidence of ordinary criminal wrongdoing.'" The Court stated that "the gravity of the threat alone cannot be dispositive of questions concerning what means law enforcement officers may employ to pursue a given purpose." The Court relied upon an examination of the primary purpose of the program, but not the motivations of individual officers, to determine whether the "special needs" standard had been met. The Supreme Court noted that an appropriately tailored road block could be used "to thwart an imminent terrorist attack." After summarizing Edmond , the Court of Review emphasized that it is the nature of the threat or emergency that took the matter beyond the realm of ordinary crime control. It concluded that, while the gravity of the threat alone cannot be dispositive of the reasonableness of a search under the Fourth Amendment standard, it is a critical factor in the analysis. In its view, the "programmatic purpose" of FISA, "to protect the nation against terrorists and espionage threats directed by foreign powers," was one which, from FISA's inception, was distinguishable from "ordinary crime control." The Court of Review also concluded that, "[e]ven without taking into account the President's inherent constitutional authority to conduct warrantless foreign intelligence surveillance, we think the procedures and government showings required under FISA, if they do not meet the minimum Fourth Amendment warrant standards, certainly come close." Applying the balancing test that it had drawn from Keith between foreign intelligence crimes and ordinary crimes, the Court of Review held surveillances under FISA, as amended by the USA PATRIOT Act, were reasonable and therefore constitutional. In so doing, however, the Court of Review acknowledged] ... that the constitutional question presented by this case—whether Congress' disapproval of the primary purpose test is consistent with the Fourth Amendment—has no definitive jurisprudential answer. The Supreme Court's special needs cases involve random stops (seizures) not electronic searches. In one sense, they can be thought of as a greater encroachment into personal privacy because they are not based on any particular suspicion. On the other hand, wiretapping is a good deal more intrusive than an automobile stop accompanied by questioning. The Court of Review reversed the FISC's orders before it for electronic surveillance "to the extent they imposed conditions on the grant of the government's applications, vacate[d] the FISA court's Rule 11, and remand[ed] with instructions to grant the applications as submitted and proceed henceforth in accordance with this opinion." 50 U.S.C. § 1803(b) provides that, where the Court of Review upholds a denial by the FISC of a FISA application, the United States may file a petition for certiorari to the United States Supreme Court. Since consideration of applications for FISA orders is ex parte, there is no provision in FISA for an appeal to the United States Supreme Court from a decision of the Court of Review by anyone other than the United States. Nevertheless, on February 18, 2003, a petition for leave to intervene and a petition for writ of certiorari to the U.S. Foreign Intelligence Surveillance Court of Review was filed in this case in the U.S. Supreme Court by the American Civil Liberties Union, National Association of Criminal Defense Lawyers, American-Arab Anti-Discrimination Committee, and the Arab Community Center for Economic and Social Services. On March 14, 2003, the Bar Association of San Francisco filed a motion to file an amicus curiae brief in support of the motion to intervene and petition for certiorari. On March 24, 2003, the Supreme Court denied the motion for leave to intervene in order to file a petition for a writ of certiorari and denied the motion for leave to file an amicus curiae brief. Conclusion The Foreign Intelligence Surveillance Act, as amended, provides a statutory structure to be followed where electronic surveillance, 50 U.S.C. § 1801 et seq. , physical searches, 50 U.S.C. § 1821 et seq. , or pen registers or trap and trace devices, 50 U.S.C. § 1841 et seq. , for foreign intelligence gathering purposes are contemplated. In addition, it provides a statutory mechanism for the FBI to seek production of "any tangible things" for an investigation seeking foreign intelligence information not involving a U.S. person or to protect against international terrorism or clandestine intelligence with respect to any person under 50 U.S.C. § 1861. FISA creates enhanced procedural protections where a United States person is involved, while setting somewhat less stringent standards where the surveillance involves foreign powers or agents of foreign powers. With its detailed statutory structure, it appears intended to protect personal liberties safeguarded by the First and Fourth Amendments while providing a means to ensure national security interests. The USA PATRIOT Act, P.L. 107-56 , increased the number of FISC judges from 7 to 11, while expanding the availability of FISA electronic surveillance, physical searches and pen registers and trap and trace devices. For example, under P.L. 107-56 , an application for a court order permitting electronic surveillance or a physical search under FISA is now permissible where "a significant purpose" of the surveillance or physical search, rather than "the purpose" or, as interpreted by some courts, "the primary purpose" of the surveillance or physical search, is to gather foreign intelligence information. While the previous language withstood constitutional challenge, the Supreme Court has not yet determined the constitutional sufficiency of the change in the FISA procedures under the Fourth Amendment. On the other hand, the U.S. Foreign Intelligence Court of Review has examined a number of constitutional issues in In re Sealed Case , finding that FISA orders, if not satisfying the constitutional warrant requirement, are close to doing so; and finding that, even if a FISA order does not qualify as a warrant for Fourth Amendment purposes, electronic surveillance under FISA as amended by the USA PATRIOT Act is reasonable and therefore constitutional. At the same time, however, the Court of Review acknowledged that the constitutional question of whether Congress' disapproval of the primary purpose test is consistent with the Fourth Amendment "has no definitive jurisprudential answer." The USA PATRIOT Act also amended FISA to allow court orders permitting so-called multipoint or "roving" electronic surveillance, where the orders do not require particularity with respect to the identification of the instrument, place, or facility to be intercepted, upon a finding by the court that the actions of the target of the surveillance are likely to thwart such identification. P.L. 107-108 further clarified this authority. Under P.L. 107-56 , pen registers and trap and trace devices may now be authorized for e-mails as well as telephone conversations. In addition, the act expanded the previous FBI access to business records, permitting court ordered access in connection with a foreign intelligence or international terrorism investigation not just to business records held by common carriers, public accommodation facilities, physical storage facilities, and vehicle rental facilities, but to any tangible things. While expanding the authorities available for foreign intelligence investigations, FISA, as amended by the USA PATRIOT Act and the Intelligence Authorization Act for FY2002, also contains broader protections for those who may be the target of the various investigative techniques involved. For example, whether the circumstances involve electronic surveillance, physical searches, pen registers or trap and trace devices or access to business records and other tangible items, FISA, as amended by the USA PATRIOT Act, does not permit the court to grant orders based solely upon a United States person's exercise of First Amendment rights. In addition, P.L. 107-56 created a new private right of action for persons aggrieved by inappropriate disclosure or use of information gleaned or derived from electronic surveillance, physical searches or the use of pen registers or trap and trace devices. These claims can be brought against the United States for certain willful violations by government personnel. Finally, the inclusion of a sunset provision for the FISA changes made in the USA PATRIOT Act, with the exception of the increase in the number of FISC judges, provides an opportunity for the new authorities to be utilized and considered, and an opportunity for the Congress to revisit them in light of that experience. Sections 898 and 899 of the Homeland Security Act of 2002, P.L. 107-296 , amended FISA, 50 U.S.C. §§1806(k)(1) and 1825(k)(1) respectively, to permit federal officers conducting electronic surveillance or physical searches to acquire foreign intelligence information under FISA to consult with federal law enforcement officers "or law enforcement personnel of a state or political subdivision of a State (including the chief executive officer of that State or political subdivision who has the authority to appoint or direct the chief law enforcement officer of that State or political subdivision)." Such consultations are to coordinate efforts to investigate or protect against actual or potential attacks or other grave hostile acts of a foreign power or an agent of a foreign power; sabotage or international terrorism by a foreign power or an agent of a foreign power; or clandestine intelligence activities by an intelligence service or network of a foreign power or an agent of a foreign power. These sections also state that such consultations do not preclude the Assistant to the President for National Security Affairs or other designated Executive Branch officials from making the necessary certifications as part of the application process for a FISA court order under 50 U.S.C. §§ 1804(a)(7) or 1823(a)(7), nor are these consultations to preclude entry of an order under 50 U.S.C. §§ 1805 or 1824. Section 6001 of Title VI of FISA, as added by the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458 , expanded the definition of "agent of a foreign power" in the context of non-U.S. persons to encompass those who engage in international terrorism or in activities in preparation for international terrorism, regardless of whether they have any connection or affiliation with a foreign government or other foreign organization or entity. This new definition is included among those FISA provisions subject to the sunset provisions in Section 224 of the USA PATRIOT Act, as amended. Section of the new Title VI of FISA also imposed new, detailed semiannual reporting requirements to facilitate congressional oversight of the implementation of the Act, which are codified at 50 U.S.C. § 1871. The USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177 (Reauthorization Act), Section 102, adopted a sunset of December 31, 2009, for FISC orders for multipoint or "roving" wiretaps under Section 105(a) of FISA, 50 U.S.C. § 1805(a), for FISC orders for production of tangible things under Section 501 of FISA, 50 U.S.C. § 1861, and congressional oversight requirements in Section 502 of FISA, 50 U.S.C. § 1862. Section 103 of P.L. 109-177 extended the sunset relating to "lone wolf" agents of foreign powers to December 31, 2009. Section 105 of P.L. 109-177 extended the maximum duration initial orders authorizing of electronic surveillances and physical searches under Sections 105(e) and 304 of FISA to 120 days, while extensions of such electronic surveillances and physical searches could be for up to one year. The duration of both initial orders and extensions to orders authorizing installation and use of FISa pen registers or trap and trace devices is extended from 90 days to one year in cases where the Government has certified that the information likely to be obtained is foreign intelligence information not concerning a U.S. person. Section 106(a) of P.L. 109-177 permits the FBI Director to delegate his authority to make an application for a production order regarding library circulation records, library patron lists, book sales records, book customer lists, firearms sales records, tax return records, educational records, or medical records containing information that would identify a person, to either the Deputy Director of the Federal Bureau of Investigation or the Executive Assistant Director for National Security (or any successor position). Neither the Deputy Director nor the Executive Assistant Director may not further delegate such authority. Section 106(b) of P.L. 109-177 requires an application for a FISA production order to include statement of the facts supporting a reasonable belief that the tangible things sought are relevant to an authorized investigation (other than a threat assessment) to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. It provides that certain tangible things are "presumptively relevant" to such an investigation if the statement of facts shows that they pertain to a foreign power or agent of a foreign power, the activities of a suspected agent of a foreign power who is the subject of the authorized investigation, or an individual in contact with or known to a suspected agent of a foreign power who is the subject of the investigation. Section 106(c) of P.L. 109-177 provides that an FISC judge must approve a FISA production order if he or she finds that the application meets the statutory requirements. Under Section 106(d) of P.L. 109-177 , such an ex parte order must include a particularized description of the tangible things sought, must allow a reasonable time for such things to be assembled, must notify the recipients of the production order of applicable nondisclosure requirements, and must be limited to things which may be subject to a grand jury subpoena or any other federal court order directing production of records or tangible things. The order must not disclose that such order is issued for purposes of such an authorized investigation. Section 106(d) of the Reauthorization Act prohibits the recipient of a production order from disclosing to anyone except those persons to whom disclosure is necessary to comply with such order; an attorney to obtain legal advice or assistance with respect to the production of things in response to the order; or other persons as permitted by the FBI Director or his designee. Subsection 106(e) of the measure requires the production order recipient, upon the request of the FBI Director or his designee, to identify to the FBI those to whom such disclosure has been or will be made, unless the disclosure has been or is to be made to an attorney from whom legal advice or assistance is sought. Section 106(f) of P.L. 109-177 amends 50 U.S.C. § 1803 to establish a petition review pool of FISC judges to hear challenges to FISA production or related nondisclosure orders, and sets forth a detailed judicial review process for consideration of such petitions. Section 106A of the Reauthorization Act directs the Inspector General of the U.S. Department of Justice to conduct a comprehensive audit of the effectiveness and use, including any improper or illegal use, of the investigative authority provided to the FBI under 50 U.S.C. 1861 for calendar years 2002-2006, and requires the results to be filed in two unclassified reports to the House and Senate Intelligence and Judiciary Committees. Section 108(a) and (b) amend the requirements for an application and for an FISC order authorizing multipoint electronic surveillance under FISA. Subsection 108(c) expands the list of committees to whom the Attorney General's semiannual reports on FISA electronic surveillance to include not only the Intelligence Committees but also the Senate Judiciary Committee; and requires the report to include an additional category of information, that is, a description of the total number of applications made for orders approving such multipoint electronic surveillance. Section 109(a) of P.L. 109-177 modifies the list of congressional committees receiving two semiannual reports from the Attorney General on physical searches under FISA pursuant to 50 U.S.C. § 1826, and requires the second of these reports to include, among other things, the total number of emergency physical searches authorized by the Attorney General under 50 U.S.C. § 1824(e) and the total number of subsequent orders approving or denying such physical searches. Section 109(b) of P.L. 109-177 requires the Attorney General, in his semiannual statistical report submitted to the House and Senate Judiciary Committees on FISA pen registers and trap and trace devices, to include, among other things, the total number of pen registers and trap and trace devices whose installation and use was authorized by the Attorney General on an emergency basis under 50 U.S.C. §1843, and the total number of subsequent orders approving or denying the installation and use of such pen registers and trap and trace devices. Section 109(d) of P.L. 109-177 amends 50 U.S.C. § 1803 to permit the FISC and Court of Review to establish such rules and procedures, and take such actions, as are reasonably necessary to administer their responsibilities under this chapter. Any such rules and procedures are to be recorded and transmitted to all of the judges on the FISC and on the Court of Review, the Chief Justice of the United States, the House and Senate Judiciary Committees, the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence. Section 128(a)(3) of P.L. 109-177 added 50 U.S.C. § 1842(d)(2)(C), which permits the FISC, in an order authorizing use of a pen register or trap and trace device, to direct a wire or communication service provider to provide the federal officer using the device specific subscriber or customer information upon request. That information may include, with respect to a customer or subscriber using the service during the period of the order, the name of the customer or subscriber; the address of the customer or subscriber; the telephone or instrument number, or other subscriber number or identifier, of the customer or subscriber, including any temporarily assigned network address or associated routing or transmission information; the length of the provision of service by such provider to the customer or subscriber and the types of services utilized by the customer or subscriber. In the case of a provider of local or long distance telephone service, the information provided may include any local or long distance telephone records of the customer or subscriber; if applicable, any records reflecting period of usage (or sessions) by the customer or subscriber; any mechanisms and sources of payment for such service, including the number of any credit card or bank account utilized for payment for such service; and, if available, with respect to any customer or subscriber of incoming or outgoing communications to or from the service covered by the order, the name of such customer or subscriber; the address of such customer or subscriber; the telephone or instrument number, or other subscriber number or identifier, of such customer or subscriber, including any temporarily assigned network address or associated routing or transmission information; and the length of the provision of service by such provider to such customer or subscriber and the types of services utilized by such customer or subscriber. Section 128(b) of P.L. 109-177 added the House and Senate Judiciary Committees to the list of committees to be kept fully informed by the Attorney General regarding all use of FISA pen registers and trap and trace devices. Section 506 of P.L. 109-177 amends the definition of "Attorney General" under 50 U.S.C. § 1801(g) to include the Assistant Attorney General for National Security, so that the term includes "the Attorney General of the United States (or Acting Attorney General), the Deputy Attorney General, or, upon the designation of the Attorney General, the Assistant Attorney General designated as the Assistant Attorney General for National Security under section 507A of title 28, United States Code." Section 3 of P.L. 109-178 amends the provisions in 50 U.S.C. § 1861(f) regarding judicial review of production orders and related nondisclosure orders. In addition, Section 4 of the measure amends 50 U.S.C. § 1861(d)(2) to provide that, at the request of the FBI Director or his designee, any person disclosing or intending to disclose that the FBI has sought or obtained tangible things under a FISA production order to someone in one of the three categories of individuals to whom such disclosure is permitted, shall identify to the Director or his designee the person to whom the disclosure will be or has been made. In so doing, the measure in effect deletes an exception to this identification requirement where the person to whom the disclosure is made is an attorney from whom the person making the disclosure is seeking legal advice or assistance. In addition to examining the statutory structure in FISA, as amended, this report has explored two published decisions, one from the FISC in In re All Matters Submitted to the Foreign Intelligence Surveillance Court and one from the U.S. Foreign Intelligence Court of Review in In re Sealed Case . Because historically the decisions of the FISC have not been made public, and because the opinion of the U.S. Foreign Intelligence Surveillance Court of Review discussed in this report was the first decision ever made by that court, the recent decisions of the FISC and the Court of Review provided a unique opportunity to observe the decision-making processes and differing perspectives of the two courts created by FISA. The FISC's decision was set against a backdrop of a significant number of instances in which the Department of Justice had failed to maintain a "wall" between foreign intelligence gathering and criminal investigations. All seven of the then sitting members of the FISC concurred in the May 17, 2002, order of the court, written by the then presiding judge of the court. The FISC, in its May 17 th opinion and order, treated the Attorney General's proposed 2002 "Intelligence Sharing Procedures for Foreign Intelligence and Foreign Counterintelligence Investigations Conducted by the FBI" as minimization procedures, and approved them as modified. The modifications made by the Court permitted the FBI, the Criminal Division, and OIPR to consult with one another "to coordinate their efforts to investigate or protect against foreign attack or other grave hostile acts, sabotage, international terrorism, or clandestine intelligence activities by foreign powers or their agents." In so doing, the FISC permitted such cooperation and coordination to address, among other things, the exchange of information already acquired, identification of categories of information needed and being sought, prevention of either foreign intelligence gathering or criminal law enforcement investigation or interest from obstructing or hindering the other; compromise of either investigation, and long term objectives and overall strategy of both investigations to insure that overlapping intelligence and criminal interests of the United States are both achieved. While permitting direct consultation and coordination between components, the FISC required that OIPR be invited to all consultations and, if OIPR was unable to attend, the modified procedures required that OIPR be "forthwith" informed in writing of the substance of the meeting so that the FISC could be notified promptly. In addition, under the procedures as modified by the FISC, law enforcement officials were prohibited from making recommendations to intelligence officials regarding the initiation, operation, continuation or expansion of FISA searches or surveillances. Nor could law enforcement officials direct or control the use of FISA procedures to enhance criminal prosecution. The FBI and the Criminal Division were given the responsibility to ensure that this did not occur, and were also required to make certain that advice intended to preserve the criminal prosecution option did not inadvertently result in the Criminal Division directing or controlling the investigation using FISA tools to further law enforcement objectives. In addition, the FISC adopted a new Rule 11, dealing with criminal investigations in FISA cases, to facilitate monitoring of compliance with its May 17, 2002 order. This rule required all FISA applications to include informative descriptions of ongoing criminal investigations of FISA targets, as well as the substance of consultations between the FBI and criminal prosecutors at the Department of Justice or a U.S. Attorney's office. In its November 18, 2002 opinion, the Court of Review took a starkly different view of the Attorney General's proposed procedures and firmly rejected the FISC analysis and conclusions. The issue came before the Court of Review as an appeal of two FISC orders, one granting an application to authorize electronic surveillance of an agent of a foreign power subject to restrictions stemming from the FISC May 17 th opinion and order and the other renewing the authorization for electronic surveillance subject to the same conditions. The Court of Review held that the FISC's interpretation of the augmented 1995 procedures and the proposed 2002 procedures as minimization procedures under 50 U.S.C. § 1801(h) was in error. The Court of Review found that the FISC had misconstrued 50 U.S.C. §§ 1801(h) and 1805 and may have overstepped its constitutional authority by asserting authority to govern the internal organization and investigative procedures of the Justice Department. It found that FISA, as originally enacted, did not create a dichotomy between foreign intelligence information gathering and law enforcement investigations, nor did it require maintenance of a "wall" between such investigations. While FISA as enacted in 1978 required that a national security official certify that "the purpose" of the investigation was to gather foreign intelligence information, the court regarded the definition of "foreign intelligence information" as including evidence of criminal wrongdoing where a U.S. person is the target of the FISA investigation. In light of the fact that the definition of "agent of a foreign power" applicable to U.S. persons involved criminal conduct, or, in the context of clandestine intelligence operations, the possibility of criminal conduct, the court distinguished "foreign intelligence crimes" from "ordinary crimes." In foreign intelligence crimes, intelligence gathering and criminal investigations may become intertwined. The Court of Review reviewed past court decisions requiring that, in seeking a FISA order authorizing electronic surveillance, the government must demonstrate that the "primary purpose" of the surveillance was to gather foreign intelligence information and not to further law enforcement purposes. Rejecting the "primary purpose test" as applied by the FISC and the courts of appeals of several circuits, the Court of Review did not find it to be compelled by the statutory language of FISA as originally enacted or by the Fourth Amendment. The Court of Review also held the FISC to have been in error in its refusal "to consider the legal significance of the Patriot Act's crucial amendments...." In particular, the court focused upon the change of the required certification by the national security official from a certification that "the purpose" of the surveillance was to obtain foreign intelligence information to a certification that "a significant purpose" of the surveillance was to obtain foreign intelligence information in 50 U.S.C. § 1804(a)(7)(B); and the enactment of 50 U.S.C. § 1806(k), authorizing consultation and coordination by federal officers engaged in electronic surveillance to acquire foreign intelligence information with federal law enforcement officers. Finding that the "significant purpose" amendment recognized the existence of a dichotomy between intelligence gathering and law enforcement purposes, the Court of Review concluded that this test was satisfied if the government had "a measurable foreign intelligence purpose, other than just criminal prosecution of even foreign intelligence crimes." While the gathering of foreign intelligence information for the sole objective of criminal prosecution would be precluded by the "significant purpose" language, if "the government entertains a realistic option of dealing with the agent [of a foreign power] other than through criminal prosecution," the court found the "significant purpose" test satisfied. Although the court was of the view that, prior to passage of the USA PATRIOT Act, the FISC may well not have had authority under 50 U.S.C. § 1805(a)(5) to inquire into anything other than the issue of "whether the information sought was a type of foreign intelligence information, in light of the significant purpose amendment of section 1804" the Court of Review concluded that "it seems section 1805 must be interpreted as giving the FISA court the authority to review the government's purpose in seeking the information." The court held that the government's purpose under 50 U.S.C. § 1804(a)(7)(B) was "to be judged by the national security official's articulation and not by a FISA court inquiry into the origins of an investigation nor an examination of the personnel involved.... [I]f the FISA court has reason to doubt that the government has any real non-prosecutorial purpose in seeking foreign intelligence information it can demand further inquiry into the certifying officer's purpose—or perhaps even the Attorney General's or Deputy Attorney General's reasons for approval." The Court of Review also considered whether FISA, as amended, passed constitutional muster under the Fourth Amendment. It deemed the procedures and government showings required under FISA to come close to the minimum requirements for a warrant under the Fourth Amendment, if not meeting such requirements. Assuming arguendo that a FISA order was not a warrant for Fourth Amendment purposes, the Court of Review found FISA constitutional because the surveillances authorized thereunder were reasonable.

The Foreign Intelligence Surveillance Act (FISA), 50 U.S.C. § 1801 et seq., as passed in 1978, provided a statutory framework for the use of electronic surveillance in the context of foreign intelligence gathering. In so doing, Congress sought to strike a delicate balance between national security interests and personal privacy rights. Subsequent legislation expanded federal laws dealing with foreign intelligence gathering to address physical searches, pen registers and trap and trace devices, and access to certain business records. The USA PATRIOT Act of 2001, P.L. 107-56, made significant changes to some of these provisions. Further amendments were included in the Intelligence Authorization Act for Fiscal Year 2002, P.L. 107-108, and the Homeland Security Act of 2002, P.L. 107-296, the Intelligence Reform and Terrorism Prevention Act, P.L. 108-458, the USA PATRIOT Improvement and Reauthorization Act of 2005, P.L. 109-177, and the USA PATRIOT Act Additional Reauthorizing Amendments Act of 2006, P.L. 109-178. In addressing international terrorism or espionage, the same factual situation may be the focus of both criminal investigations and foreign intelligence collection efforts. Some of the changes in FISA under these public laws are intended, in part, to facilitate information sharing between law enforcement and intelligence elements. In its Final Report, the 9/11 Commission noted that the removal of the pre-9/11 "wall" between intelligence and law enforcement "has opened up new opportunities for cooperative action within the FBI." On May 17, 2002, the U.S. Foreign Intelligence Surveillance Court (FISC) issued a memorandum opinion and order written by the then Presiding Judge of the court, and concurred in by all of the other judges then on the court. The unclassified opinion and order were provided to the Senate Judiciary Committee in response to a letter from Senator Leahy, Senator Grassley, and Senator Specter, who released them to the public on August 22, 2002. In its decision, the FISC considered a motion by the U.S. Department of Justice "to vacate the minimization and 'wall' procedures in all cases now or ever before the Court, including this Court's adoption of the Attorney General's July 1995 intelligence sharing procedures, which are not consistent with new intelligence sharing procedures submitted for approval with this motion." The FISC granted the Department's motion, but modified part of what it saw as proposed minimization procedures. This decision was not appealed directly, but the Department of Justice did seek review of an FISC order granting as modified an application for electronic surveillance of an agent of a foreign power and for an FISC order renewing that surveillance, both subject to restrictions based on the May 17 memorandum opinion and order by the FISC. The U.S. Foreign Intelligence Surveillance Court of Review reversed and remanded the FISC orders on November 18, 2002. This report will examine the detailed statutory structure provided by FISA and related provisions of E.O. 12333, and will discuss the decisions of the U.S. Foreign Intelligence Surveillance Court and the U.S. Foreign Intelligence Surveillance Court of Review. It will be updated as subsequent changes require.

Background The use of economic sanctions to stem weapons proliferation acquired a new dimension in the 1990s. While earlier legislation required the cutoff of foreign aid to countries engaged in specified nuclear proliferation activities and mentioned other sanctions as a possible mechanism for bringing countries into compliance with goals of treaties or international agreements, it was not until 1990 that Congress enacted explicit guidelines for trade sanctions related to missile proliferation. In that year a requirement for the President to impose sanctions against U.S. persons or foreign persons engaging in trade of items or technology listed in the Missile Technology Control Regime Annex (MTCR Annex) was added to the Arms Export Control Act and to the Export Administration Act of 1979. Subsequently, Congress legislated economic sanctions against countries that contribute to the proliferation of chemical, biological, and nuclear weapons in a broad array of laws. The use of economic sanctions in furtherance of foreign policy or national security policy fell into disfavor in the mid- to late 1990s, in reaction to reports of the substantial toll paid by civilian populations when sanctions were cast broadly or wielded as a blunt force. At the same time, however, concerns about nuclear weapons proliferation shifted into high gear, fueled by nuclear weapons tests conducted by India and Pakistan (1998), and later by North Korea (2006 and 2009), North Korea's formal withdrawal from the Nuclear Nonproliferation Treaty (2003), multiple missile tests by North Korea, reports of Iraq having weapons of mass production, possibly chemical and biological (leading into war in 2003); Iran's noncompliance with international agreements (which the International Atomic Energy Act began reporting in 2005), and the 2004 discovery that a leading nuclear scientist in Pakistan—A.Q. Khan—had been selling nuclear materials, technology, and knowledge to the highest bidder, including North Korea, Iraq, Iran, and Libya, for more than a decade. The 111 th Congress enacted the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, but some have expressed concern that the executive branch is taking full advantage of flexibility the Act provides in its implementation. The new Congress might revisit this legislation. Unfinished initiatives of the 111 th Congress raise the possibility that Belarus, Burma, Pakistan, Saudi Arabia, the United Arab Emirates, and Venezuela are supporting proliferation of weapons of mass destruction. Events of recent weeks signaling North Korea's and Iran's belligerence, disclosure of classified diplomatic documents that has churned up speculation and conjecture in the policy making and policy analysis communities, and the shift in political power particularly in the House of Representatives, could all have an impact on the 112 th Congress's approach to both sanctions and proliferation concerns. Other foreign policy and national security concerns—terrorism, regional stability, human rights, and the nexus among these issues that shape rogue regimes—could result in increased use of economic sanctions. President Obama has also initiated a scrutiny of U.S. export policy, with an eye toward streamlining licensing procedures and increasing exports. Many statutes that establish an authority or a requirement to impose economic sanctions to deter proliferation are implicated in export controls and thus are likely to be at least impacted by export control reforms, and perhaps will present an obstacle to that reform. This report offers an alphabetic listing and brief description of legal provisions that require or authorize the imposition of some form of economic sanction on countries, companies, or persons who violate U.S. nonproliferation norms. For each provision, information is included on what triggers the imposition of sanctions, their duration, what authority the President has to delay or abstain from imposing sanctions, and what authority the President has to waive the imposition of sanctions. Selected Current Law: Sanctions Provisions 18 U.S.C. (Relating to Criminal Procedure) 18 U.S.C. 229-229F (part I, chapter 11) makes it generally unlawful for a person knowingly "(1) to develop, produce, otherwise acquire, transfer directly or indirectly, receive, stockpile, retain, own, possess, or use, or threaten to use, any chemical weapon; or (2) to assist, induce, in any way, any person to violate paragraph (1), or to attempt or conspire to violate paragraph (1)." The sections establish criminal and civil penalties, and terms of criminal forfeiture. Sec. 201 of the Chemical Weapons Convention Implementation Act of 1998 (Division I of P.L. 105-277 ; approved October 21, 1998) enacted these sections to bring the criminal and civil penalties section of United States Code into conformity with the requirements of the Chemical Weapons Convention. Sec. 211 of that Act, furthermore, authorized the President to suspend or revoke export privileges of anyone found in violation of 18 U.S.C. 229. P.L. 109-304 (enacted Oct. 6, 2006) made a technical correction. 18 U.S.C. 832 makes it an offense to attempt to willfully participate in or knowingly provide material support or resources to a nuclear weapons program or other weapons of mass destruction (WMD) program of a foreign terrorist power. Such an offense is punishable by imprisonment of not more than 20 years. The section also makes it an offense to develop, possess, or attempt or conspire to develop or possess, a radiological weapon, to threaten to use, or use, such a weapon against any person in the United States, and any U.S. national regardless of where he/she may be, or against property owned or used by the United States. Such offense is punishable by imprisonment for "any term of years or for life." Sec. 6803(c) of the Weapons of Mass Destruction Prohibition Improvement Act of 2004 (title VI, subtitle I, of the Intelligence Reform and Terrorism Prevention Act of 2004; P.L. 108-458 ; approved December 17, 2004) added sec. 832. 18 U.S.C. 2332a makes it an offense to use, threaten to use, attempt or conspire to use WMD against a national of the United States or within the United States. A "weapon of mass destruction" is a destructive device as defined in 18 U.S.C. 921—any explosive, incendiary, or poison gas bomb, grenade, mine, or rocket or missile of a certain size, any type of weapon of a certain size that delivers its projectile by explosion or other propellant—and any weapon that delivers toxic or poisonous chemicals, biological agent, toxin, or vector, radiation, or radioactivity. One found to have used a WMD "shall be imprisoned for any term of years or for life, and if death results, shall be punished by death or imprisoned for any term of years or for life." Sec. 60023(a) of P.L. 103-322 (108 Stat. 1980) added sec. 2332a. The section was substantially reworked by the Antiterrorism and Effective Death Penalty Act of 1996 ( P.L. 104-132 ; approved April 24, 1996). The Chemical Weapons Convention Implementation Act of 1998 (division I of P.L. 105-277 ; approved October 21, 1998) exempted chemical weapons from application of this section of 18 U.S.C., and in its place enacted chapter 11B of part I of 18 U.S.C. (secs. 229 through 229F, above) to establish criminal and civil penalties in conformity with the Chemical Weapons Convention. The Economic Espionage Act of 1996( P.L. 104-294 ; approved October 11, 1996) and the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ; approved June 12, 2002) made technical changes. The Weapons of Mass Destruction Prohibition Improvement Act of 2004 (title VI, subtitle I, of the Intelligence Reform and Terrorism Prevention Act of 2004; P.L. 108-458 ; approved December 17, 2004) expanded the means of delivering the WMD to include the U.S. mail service and variations on " foreign commerce, " included attacks against property, and changed the section heading from " Use of certain weapons of mass destruction " to " Use of weapons of mass destruction, " consolidating WMD-related offenses in this chapter and section. Arms Export Control Act4 The Arms Export Control Act (AECA), as amended, authorizes U.S. government military sales, loans, leases, and financing, and licensing of commercial arms sales to other countries. The AECA requires the President to coordinate such actions with other foreign policy considerations, including nonproliferation, and states guidelines by which the President determines eligibility of recipients for military exports, sales, leases, loans, and financing. Section 3(f) (Eligibility; 22 U.S.C. 2753(f)) prohibits U.S. military sales or leases to any country that the President determines is in material breach of binding commitments to the United States under international treaties or agreements regarding nonproliferation of nuclear explosive devices and unsafeguarded special nuclear material. Subsec. (f) was added by sec. 822(a)(1) of the Nuclear Proliferation Prevention Act of 1994 (title VIII of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995; P.L. 103-236 ; approved April 30, 1994). Section 38 (Control of Arms Exports and Imports; 22 U.S.C. 2778) authorizes the President, "in furtherance of world peace and the security and foreign policy of the United States," to control the import and export of defense articles and services, to provide foreign policy guidelines to U.S. importers/exporters, and to promulgate the United States Munitions List (USML) constituting what defense articles and services are regulated. Section 38(c) establishes that any person who willfully violates any provision of the section, section 39 (relating to the reporting of fees, contributions, gifts, and commissions paid by those involved in commercial sales of defense articles or services), certain treaties, or rules and regulations relating to any of these provisions, may be fined not more than $1 million (for each violation), imprisoned not more than 20 years, or both. Section 38(e) authorizes the Secretary of State to assess civil penalties and initiate civil actions against violators; any civil penalty for violations under this section is capped at $500,000. Section 38(j) authorizes the President to exempt a foreign country from licensing requirements under the AECA when that country commits to a binding bilateral agreement with the United States to establish export controls on a par with export controls in U.S. law and regulations, or in instances where particular defense trade cooperation treaties are a factor. Section 38 was added by sec. 212(a)(1) of the International Security Assistance and Arms Export Control Act of 1976 ( P.L. 94-329 ; approved June 30, 1976). Subsec. (c) was added by the 1976 amendment; the fine and imprisonment terms were amended, however, by sec. 119(a) of the International Security and Development Cooperation Act of 1985 ( P.L. 99-83 ; approved August 8, 1985). Formerly, fine was " not more than $100,000, " and period of imprisonment was not more than two years. Sec. 107(a)(2) of the Comprehensive Iran Sanctions , Accountability, and Divestment Act of 2010 ( P.L. 111-195 ; approved July 10, 2010) extended the imprisonment terms from 10 years to twenty. Applicability of subsec s . (c) , (e) , (f) , and (j) were expanded to include certain defense treaties by sec.103(a) of the Defense Trade Cooperation Treaties Implementation Act of 2010 (title I of the Security Cooperation Act of 2010; P.L. 111-266 ; approved October 8, 2010) . Subsec. (e) was added by the 1976 amendment. Sec. 119(b) of P.L. 99-83 , in 1985, however, added the language that caps civil penalties, and sec. 1303 of the Arms Control, Nonproliferation and Security Assistance Act of 1999 (division B of the Nance/Donovan Foreign Relations Authorization Act, FY 2000-2001; H.R. 3427 , enacted by reference in P.L. 106-113 ), gave civil action authority to the Secretary of State. Previously the section referred to such authority in the Export Administration Act, which resides with the Secretary of Commerce and was capped in that Act at $100,000.Sec. 102(a) of the Security Assistance Act of 2000 ( P.L. 106-280 ; approved October 6, 2000) limited the President ' s authority to exempt a foreign country from certain licensing exceptions in subsec. (f), and added subsec. (j ). Sec. 6910 of the Prevention of Terrorist Access to Destructive Weapons Act of 2004 (subtitle J, title VI, of the Intelligence Reform and Terrorism Prevention Act of 2004; P.L. 108-458 ; 118 Stat. 3774) expanded requirements on the President to develop mechanisms to identify persons subject to various Public Laws that restrict transactions related to WMD. Section 40 (Transactions With Countries Supporting Acts of International Terrorism; 22 U.S.C. 2780) prohibits exporting or otherwise providing munitions, providing financial assistance to facilitate transfer of munitions, granting eligibility to such transfers, issuing licenses for such transfers, or facilitating the acquisition of munitions to a country the government of which "has repeatedly provided support for acts of international terrorism." The section includes in its definition of acts of international terrorism, "all activities that the Secretary [of State] determines willfully aid or abet the international proliferation of nuclear explosive devices to individuals or groups, willfully aid or abet an individual or groups in acquiring unsafeguarded special nuclear material, or willfully aid or abet the efforts of an individual or group to use, development, produce, stockpile, or otherwise acquire chemical, biological, or radiological weapons." The President may rescind the Secretary's determination (sec. 40(f)) by reporting to the Speaker of the House and the Chairperson of the Senate Foreign Relations Committee, before issuing the rescission, that the leadership and policies of the country in question have changed, the government is not supporting international terrorism, and the government has issued assurances that it will not support international terrorism in the future. Congress may block the rescission of the terrorist determination by enacting a joint resolution. The President, however, may unilaterally waive any or all of the prohibitions in this section if he determines to do so is essential to the national security interests of the United States, and so reports to Congress. Those found to be in violation of the section face criminal prosecution with penalties of as much as a $1 million fine and imprisonment of not more than 20 years. Civil penalties for violations under this section, similar to those in sec. 38, are capped at $500,000; the Secretary of State has the authority to assess civil penalties and initiate civil actions against violators. Section 40 was added by the Omnibus Diplomatic Security and Antiterrorism Act of 1986 ( P.L. 99-399 ; approved August 27, 1986), and later amended and restated by the Anti-Terrorism and Arms Export Amendments Act of 1989 ( P.L. 101-222 ; approved August 27, 1986). Sec. 822(a)(2)(A) of the Nuclear Proliferation Prevention Act of 1994 (title VIII of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995; P.L. 103-236 ; approved April 30, 1994) added a definition of acts of international terrorism that would lead the Secretary of State to make a determination. The same section added definitions " nuclear explosive device " and " unsafeguarded special nuclear material ." Sec. 321 of the Foreign Relations Authorization Act, Fiscal Years 1992 and 1993 ( P.L. 102-138 ; approved October 28, 1991), made technical changes to the guidelines for Congress ' s passage of a joint resolution relating to the section. Sec. 1303 of the Arms Control, Nonproliferation and Security Assistance Act of 1999 (division B of the Nance/Donovan Foreign Relations Authorization Act, FY 2000-2001; H.R. 3427 , enacted by reference in P.L. 106-113 ) gave civil action authority to the Secretary of State. Previously the section referred to such authority in the Export Administration Act, which resides with the Secretary of Commerce and was capped in that Act at $100,000. Sec. 1204 of the Foreign Relations Authorization Act, Fiscal Year 2003 ( P.L. 107-228 ; approved September 30, 2002), expanded the definitions to make the sanctions applicable to an individual or group in pursuit of chemical, biological, or radiological weapons. Sec. 107(a)( 3 ) of the Comprehensive Iran Sanctions , Accountability, and Divestment Act of 2010 ( P.L. 111-195 ; approved July 10, 2010) extended the imprisonment terms from 10 years to twenty. Sections 72 and 73 (Denial of the Transfer of Missile Equipment or Technology by U.S. Persons; 22 U.S.C. 2797a; Transfers of Missile Equipment or Technology by Foreign Persons; 2797b), require sanctions against any U.S. citizen or any foreign person whom the President determines to be engaged in exporting, transferring, conspiring to export or transfer, or facilitating an export or transfer of, any equipment or technology identified by the Missile Technology Control Regime (MTCR) that "contributes to the acquisition, design, development, or production of missiles in a country that is not an MTCR adherent...." Sanctions vary with the type of equipment or technology exported, and are increasingly severe where the type of equipment or technology is more controlled. Worst-case sanctions may be imposed for not less than two years, and include denial of U.S. government contracts, denial of export licenses for items on the U.S. Munitions List, and a prohibition on importation into the United States. The law allows several exceptions, wherein some or all of the sanctions may not be imposed against foreign persons: if an MTCR adherent with jurisdictional authority finds the foreign person innocent of wrongdoing in relation to the transaction; if the State Department issues an advisory opinion to the individual stating that a transaction would not result in sanctions; if the export, transfer, or trading activity is authorized by the laws of an MTCR adherent and not obtained by misrepresentation or fraud, except when the activity in question is conducted by an entity subordinate to a government of an independent state of the former Soviet Union, and when the President determines that government has knowingly transferred missiles or missile technology in a manner inconsistent with MTCR guidelines; if the export, transfer, or trade is made to an end-user in a country that is an MTCR adherent; in the case of foreign persons fulfilling contracts for defense services or defense articles; then the President will not prohibit importations if —the articles or services are considered essential to U.S. national security, —the President determines that the provider is a sole supplier and the articles or services are essential to U.S. national security, or —the President determines that the articles or services are essential to U.S. national security under defense cooperation agreements or NATO Programs of Cooperation; in the case of foreign persons importing products or services into the United States in fulfillment of contracts entered into before the President announces intentions to impose sanctions, then the President will not prohibit importations; or in the case of foreign persons providing spare parts, component parts essential to U.S. products or production, routine service and maintenance, essential information and technology. Sanctions are not imposed, or those imposed may be lifted, against individuals when the President certifies that a foreign government, which is an MTCR adherent, has adequately attended to the violation through some judicial process or enforcement action. The President may waive the sanction, for either a U.S. citizen or foreign person, if he certifies to Congress that it is essential to the national security of the United States, or that the individual provides a product or service essential to U.S. national security, and that person is a sole source provider of the product or service. Section 1703 of the National Defense Authorization Act for Fiscal Year 1991 ( P.L. 101-510 ; approved November 5, 1990) added sections 71-74. In section 72, sec. 734(a) of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 ( P.L. 103-236 ; approved April 30, 1994), added paragraph about " presumption " in guidelines for p residential determination on transfers of MTCR Annex materials. In sec. 73, sec. 323(a) of the Foreign Relations Authorization Act, Fiscal Years 1992 and 1993 ( P.L. 102-138 ; approved October 28, 1991), added assisting another country in acquiring missiles to the list of sanctionable acts; sec. 1136 of the Arms Control and Nonproliferation Act of 1999 (title XI of the Nance/Donovan Foreign Relations Authorization Act, Fiscal Years 2000 and 2001; H.R. 3427 , enacted by reference in P.L. 106-113 ; approved November 29, 1999) added potential limitation on independent states of the former Soviet Union and the President ' s certification pertaining to judicial attention by MTCR adherents. Sec. 734(b) of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 added the Director of the Arms Control and Disarmament Agency to those with whom the Secretary of State consults when administering the policy. This language, however, was struck out to conform with agency reorganization, particularly that of ACDA being incorporated into the State Department, by sec. 1136 of the Arms Control and Nonproliferation Act of 1999. Sec. 1408 of the National Defense Authorization Act for Fiscal Year 1996 ( P.L. 104-106 ; approved February 10, 1996) made technical changes to reporting requirements relating to issuing a waiver. Section 73B (Authority Relating to MTCR Adherents; 22 U.S.C. 2797b-2) authorizes the President to impose sanctions against a foreign person, notwithstanding that person's operating in compliance with the laws of an MTCR adherent or that person exporting to an end-user in a country that is an MTCR adherent, if the country of jurisdiction over that foreign person is a country (1) that has entered into an understanding with the United States after January 1, 2000, (2) for which the United States retains the right to impose sanctions against those in the country's jurisdiction for exporting of controlled items that contribute to the acquisition, design, development, or production of missiles in a country that is not an MTCR adherent. Sec. 1137 of the Arms Control and Nonproliferation Act of 1999 (title XI of the Nance/Donovan Foreign Relations Authorization Act, Fiscal Years 2000 and 2001; H.R. 3427 , enacted by reference in P.L. 106-113 ; approved November 29, 1999) added sec. 73B, and made supporting amendments in sec. 73 relating to conditions of applicability, and sec. 74, defining " international understanding. " Section 74 (Definitions; 22 U.S.C. 2797c) provides definitions of terms that also affect how the sanctions may be applied. For example, while the MTCR is a policy statement originally announced on April 16, 1987, by the United States, the United Kingdom, Germany, France, Italy, Canada, and Japan, the term "MTCR adherent" in this law is much more broadly defined, to include the countries that participate in the MTCR "or that, pursuant to an international understanding to which the United States is a party, controls MTCR equipment or technology in accordance with the criteria and standards set forth in the MTCR." Within that definition, the term "international understanding" has been further defined to limit its applicability or to broaden the President's authority to impose sanctions. As another example, the term "person" has changed over time. The law formerly included as part of the definition of "person," "countries where it may be impossible to identify a specific governmental entity." This has been amended to refer to "countries with non-market economies (excluding former members of the Warsaw Pact)." The same definition formerly restricted government activity relating to development of aircraft; this now refers specifically to military aircraft. Sec. 323 of the Foreign Relations Authorization Act, Fiscal Years 1992 and 1993 ( P.L. 102-138 ; approved October 28, 1991), amended the definition of " person " to target China—the " Helms amendment " —and narrowed the definition of " person " to include activities of a government affecting the development of, among other things, " military aircraft " (formerly referred to " aircraft " ). Sec. 1136(a) of the Arms Control and Nonproliferation Act of 1999 (title XI of the Nance/Donovan Foreign Relations Authorization Act, Fiscal Years 2000 and 2001; H.R. 3427 , enacted by reference in P.L. 106-113 ; approved November 29, 1999) added the definition of " international understanding, " a term used in the course of defining " MTCR adherent. " Section 81 ([CBW] Sanctions Against Foreign Persons; 22 U.S.C. 2798) requires imposition of sanctions to deny government procurement, contracts with the U.S. government, and imports from foreign persons who knowingly and materially contribute, through exports from the United States or another country, or through other transactions, to foreign efforts to use, develop, produce, stockpile, or otherwise acquire chemical or biological weapons. Foreign persons are sanctionable if the recipient country has used chemical or biological weapons in violation of international law, has used chemical or biological weapons against its own people, or has made preparations to engage in such violations. Foreign persons are sanctionable if the recipient country has been determined to be a supporter of international terrorism, pursuant to section 6(j) of the Export Administration Act, or if the President has specifically designated the country as restricted under this section. The President may delay the imposition of sanctions for up to 180 days if he is in consultation with the sanctionable person's government to bring that government to take specific and effective steps to terminate the sanctionable activities. The President may not be required to impose sanctions if the sanctionable person otherwise provides goods needed for U.S. military operations, if the President determines that the sanctionable person is a sole source provider of some good or service, or if the President determines that goods and services provided by the sanctionable person are essential to U.S. national security under defense cooperation agreements. Exceptions are also made for completing outstanding contracts, the purchase of spare or component parts, service and maintenance otherwise not readily available, information and technology essential to U.S. products or production, or medical or other humanitarian items. The President may terminate the sanctions after 12 months if he determines and certifies to Congress that the sanctioned person no longer aids or abets any foreign government, project, or entity in its efforts to acquire biological or chemical weapons capability. The President may waive the application of a sanction after a year of its imposition if he determines it is in U.S. national security interests to do so. Not less than 20 days before a national security waiver is issued, the President must notify Congress, fully explaining the rationale for waiving the sanction. Sec. 81 was added by sec. 305 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (title III of P.L. 102-182 ; approved December 4, 1991.) Section 101 (Nuclear Enrichment Transfers; 22 U.S.C. 2799aa) (similar to former section 669 of the Foreign Assistance Act of 1961) prohibits foreign economic or military assistance to any country that the President determines delivers or receives nuclear enrichment equipment, materials, or technology. The prohibition is not required if the countries involved in the transaction agree to place all materials, equipment, or technology under multilateral safeguard arrangements. The prohibition is not required, furthermore, if the recipient country has an agreement with the International Atomic Energy Agency (IAEA) regarding safeguards. The President may waive the sanctions if he determines, and certifies to the Speaker of the House and the Senate Committee on Foreign Relations, that denying assistance would have a serious adverse effect on vital U.S. interests, and he has been assured that the country in question will not acquire, develop, or assist others in acquiring or developing nuclear weapons. Congress may negate a certification by enacting a joint resolution stating its disapproval. Sec. 826(a) of the Nuclear Proliferation Prevention Act of 1994 (title VIII of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995; P.L. 103-236 ; approved April 30, 1994) added secs. 101 and 102. Similar language, however, previously had been in the Foreign Assistance Act of 1961, as secs. 669 and 670. Sec. 669, popularly referred to as the Symington amendment, was added by sec. 305 of the International Security Assistance and Arms Export Control Act of 1976 ( P.L. 94-329 ; approved June 30, 1976). The section was amended and restated by sec. 12 of the International Security Assistance Act of 1977 ( P.L. 95-92 ; approved August 4, 1977), which also added sec. 670 to the law. Sec. 669 was further amended by secs. 10(b)(4) and 12 of the International Security Assistance Act of 1978 ( P.L. 95-384 ; approved September 26, 1978). Sec. 737(b) of the International Security and Development Cooperation Act of 1981 ( P.L. 97-113 ; approved December 29, 1981) amended and restated both secs. 669 and 670. Sec. 1204 of the International Security and Development Cooperation Act of 1985 ( P.L. 99-83 ; approved August 8, 1985), made further changes to sec. 670 before both sections were repealed in 1994 and similar language was incorporated into the AECA. Section 102 (Nuclear Reprocessing Transfers, Illegal Exports for Nuclear Explosive Devices, Transfers of Nuclear Explosive Devices, and Nuclear Detonations; 22 U.S.C. 2799aa-1) (similar to former section 670 of the Foreign Assistance Act of 1961) prohibits foreign economic or military assistance to countries that the President determines deliver or receive nuclear reprocessing equipment, material, or technology to or from another country; or any non-nuclear-weapon state that illegally exports, through a person serving as that country's agent, from the United States items that would contribute to nuclear proliferation. The President may waive the sanctions if he determines, and certifies to the Speaker of the House and the Senate Committee on Foreign Relations, that terminating assistance would adversely impact on the United States' nonproliferation objectives, or would jeopardize the common defense and security. Congress may negate a certification by enacting a joint resolution stating its disapproval. The section further prohibits assistance (except humanitarian or food assistance), defense sales, export licenses for U.S. Munitions List items, other export licenses subject to foreign policy controls (except medicines or medical equipment), and various credits and loans (except Department of Agriculture credits and support to procure food and agriculture commodities) to any country that the President has determined (A) transfers a nuclear explosive device to a non-nuclear-weapon state; (B) is a non-nuclear-weapon state and either (i) receives a nuclear explosive device; or (ii) detonates an nuclear explosive device; (C) transfers to a non-nuclear-weapon state any design information or component that is determined by the President to be important to, and known by the transferring country to be intended by the recipient state for use in, the development or manufacture of any nuclear explosive devices; or (D) is a non-nuclear-weapon state and seeks and receives any design information or component that is determined by the President to be important to, and intended by the recipient state for use in, the development or manufacture of any nuclear explosive device. In any of these latter four instances, sanctions are mandatory once the President has determined that an event has occurred. If the event has to do with transferring a nuclear explosive device to a non-nuclear-weapon state, or a non-nuclear-weapon state receiving or detonating a nuclear explosive device, the President may delay the imposition of sanctions for 30 days (of congressional continuous session) if he determines that the immediate imposition of sanctions "would be detrimental to the national security of the United States," and so certifies to the Speaker of the House and the Chairperson of the Senate Committee on Foreign Relations. If the President makes such a determination, he may further waive the imposition of sanctions if the Congress, within those 30 days after the first determination, takes up a joint resolution under expedited procedure, that states: That the Congress having received on ________ a certification by the President under section 102(b)(4) of the Arms Export Control Act with respect to ________, the Congress hereby authorizes the President to exercise the waiver authority contained in section 102(b)(5) of that Act. With passage of a joint resolution authorizing him to exercise further waiver authority, the President may waive any sanction that would otherwise be required in instances involving the transferring of a nuclear explosive device to a non-nuclear-weapon state, or a non-nuclear-weapon state receiving or detonating a nuclear explosive device. To exercise this waiver, the President determines and certifies in writing to the Speaker of the House and the Senate Committee on Foreign Relations "that the imposition of such sanction would be seriously prejudicial to the achievement of United State nonproliferation objectives or otherwise jeopardize the common defense and security." Alternatively, if Congress does not take up a relevant joint resolution within the 30 days, the sanctions enter into effect. Section 102 does not state the means for otherwise suspending or terminating the sanctions. For legislative history of the origin of and early changes to this section, see discussion following sec. 101, above. Section 102, and sec. 670 before it, is popularly referred to as the Glenn amendment. Sec. 2(a) of the Agriculture Export Relief Act of 1998 ( P.L. 105-194 ; approved July 14, 1998) broadened the kinds of exchanges that are exempt from the application of sanctions to include medicine, medical equipment, and Department of Agriculture financing. Atomic Energy Act of 195410 The Atomic Energy Act of 1954 declares U.S. policy for the development, use, and control of atomic energy. The Act authorizes the Nuclear Regulatory Commission to oversee the export of special nuclear materials and nuclear technology in accordance with bilateral and international cooperation agreements negotiated by the Department of State. The Act defines the nature and requirements of those cooperative agreements and the procedure by which Congress reviews them. The Act states export licensing criteria for nuclear materials and sensitive equipment and technology. Section 129 (Conduct Resulting in Termination of Nuclear Exports; 42 U.S.C. 2158) prohibits the transfer of nuclear materials, equipment, or sensitive technology from the United States to any non-nuclear-weapon state that the President finds to have detonated a nuclear explosive device, terminated or abrogated safeguards of the International Atomic Energy Agency (IAEA), materially violated an IAEA safeguards agreement, or engaged in manufacture or acquisition of nuclear explosive devices. The section similarly prohibits transfers to any country, or group of countries, that the President finds to have violated a nuclear cooperation agreement with the United States, assisted, encouraged, or induced a non-nuclear-weapon state to engage in certain activities related to nuclear explosive devices, or agreed to transfer reprocessing equipment, materials, or technology to a non-nuclear-weapon state, except under certain conditions. The President may waive the restriction if he determines that the prohibition would hinder U.S. nonproliferation objectives or jeopardize the common defense and security. Sixty days before a determination is issued, the President is required to forward his reasons for waiving the sanctions to Congress, which may block the waiver by adopting a joint resolution. The section, as amended August 8, 2005, also prohibits the export, transfer, or licensing for export or transfer, of nuclear materials, nuclear equipment, or sensitive nuclear technology that could be applied to the design or construction of a nuclear reactor or nuclear weapon, to any country the government of which is cited as a supporter of acts of international terrorism, pursuant to sec. 620A(a) of the Foreign Assistance Act of 1961, sec. 6(j) of the Export Administration Act of 1979, or sec. 40(d) of the Arms Export Control Act. The President may waive the restriction if he determines that to do so will not result in any increased risk that the targeted country will acquire a nuclear weapon, nuclear reactor, or any materials or components of a nuclear weapon. The President's authority to waive sanctions also requires his determination and certification that the government of the country in question has not aided or abetted in the international proliferation of nuclear explosive devices or the acquisition of unsafeguarded nuclear materials within the past year, "has provided adequate, verifiable assurances that it will cease its support for acts of international terrorism," that waiving imposition is in the vital U.S. national security interest, or is "essential to prevent or respond to a serious radiological hazard in the country...that may or does threaten public health and safety." Sec. 307 of the Nuclear Non-Proliferation Act of 1978 ( P.L. 95-242 ; approved March 10, 1978) added sec. 129. Sec. 632(a) of the Energy Policy Act of 2005 ( P.L. 109-58 ; approved August 8, 2005) added authorities related to restricting exports to a country the government of which is found to be a supporter of acts of international terrorism. Originally, the statute stated Congress could block a President's waiving of restrictions for common defense and security reasons by adopting a concurrent resolution; this was amended to "joint resolution" by sec. 203 of the U.S.-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act ( P.L. 110-369 , approved October 8, 2008). Chemical and Biological Weapons Control and Warfare Elimination Act of 199111 The Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 mandates U.S. sanctions, and encourages international sanctions, against countries that use chemical or biological weapons in violation of international law. Section 307 (Sanctions Against Use of Chemical or Biological Weapons; 22 U.S.C. 5605) requires the President to terminate foreign assistance (except humanitarian, food, and agricultural assistance), arms sales and licenses, credits, guarantees, and certain exports to a government of a foreign country that he has determined has used or made substantial preparation to use chemical or biological weapons. Within three months, the President must determine and certify to Congress that the government: is no longer using chemical or biological weapons in violation of international law; is no longer using such weapons against its own people; has provided credible assurances that such behavior will not resume; and is willing to cooperate with U.N. or other international observers to verify that biological and chemical weapons are not still in use. Without this three-month determination, sanctions are required affecting multilateral development bank loans, U.S. bank loans or credits, exports, imports, diplomatic relations, and aviation access to and from the United States. The President may lift the sanctions after a year, with a determination and certification to Congress that the foreign government has met the conditions listed above, and that it is making restitution to those affected by its use of chemical or biological weapons. The President may waive the imposition of these sanctions if he determines and certifies to Congress and the appropriate committees that such a waiver is essential to U.S. national security interests. The Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 was enacted as title III of P.L. 102-182 (a law dealing with trade issues otherwise unrelated to nonproliferation). Sec. 1308 of the F oreign Relations Authorization Act, Fiscal Year 2003 ( P.L. 107-228 ; approved September 30, 2002) struck out reporting requirements that had been stated in sec. 308, as similar reports are required in other statutes. Chemical Weapons Convention Implementation Act of 199813 The Chemical Weapons Convention Implementation Act of 1998 implements the Chemical Weapons Convention, which was originally signed on January 13, 1993, and to which the United States became a party on April 29, 1997. The Convention bans the development, production, stockpiling, and use of chemical weapons, requires the destruction of existing weapons and related materials, establishes an international verification regime, and requires export controls and punitive measures to be leveled for noncompliance. Section 103 (Civil Liability of the United States; 22 U.S.C. 6713) requires a wide range of sanctions to be imposed, for a period of not less than ten years, on an individual who is a member of, or affiliated with, the Organization for the Prohibition of Chemical Weapons "whose actions or omissions the United States has been held liable for a tort or taking..."; or a foreign company or an individual affiliated with that company, "which knowingly assisted, encouraged, or induced, in any way, a foreign person" affiliated with the Organization "to publish, divulge, disclose, or make known in any manner or to any extent not authorized by the Convention any United States confidential business information" including: no arms export transactions—sales of items on U.S. Munitions List, transactions under Arms Export Control Act; no licenses for goods or services covered by foreign policy controls under the Export Administration Act of 1979; U.S. opposition to support in international financial institutions; no U.S. Export-Import Bank transactions; prohibition on U.S. private banks engaging with sanctioned person; assets in United States to be frozen by presidential action; and no rights to land aircraft in the United States (other than in cases of emergency). The Secretary of State is further required to deny a visa to any individual affiliated with the Organization who divulges any confidential U.S. business if that disclosure results in financial loss or damages. The section requires the President to impose similar sanctions on any foreign government found by the President to have similarly divulged such information, with the sanctions imposed for not less than five years. Foreign countries are further subject to: no U.S. economic assistance (other than humanitarian assistance), military assistance, foreign military financing, grant military education and training, military credits, guarantees; and no export licensing for commercial satellites. Sanctions may be suspended if the sanctioned entity fully and completely compensates the U.S. government to cover the liability. The President, alternatively, may waive the sanctions if he determines and notifies Congress that U.S. national security interests are served by such a waiver. Comprehensive Iran Sanctions, Accountability, and Divestment Act of 201015 This Act, often referred to by its acronym—CISADA—substantively amends the Iran Sanctions Act of 1996, discussed elsewhere in this report. Several freestanding sections of CISADA, however, further codify restrictions on economic trade and transactions with Iran, and provide the President enhanced authority, and in some instances, require the President to take further steps, to isolate the government of Iran. Section 103 (Economic Sanctions Relating to Iran; 22 U.S.C. 8512) prohibits most imports and exports from Iran, and freezes Iranian assets that are under U.S. jurisdiction. The restrictions are redundant to steps taken by the President under the authority of the International Emergency Economic Powers Act (IEEPA), but in effect further codify the broadest restrictions on transactions with Iran. The section imposes these restrictions "notwithstanding section 101of the Iran Freedom Support Act," which codifies sanctions imposed by the President as of January 1, 2006, under authority granted his office in the IEEPA. The section requires the President to justify the import of any Iran-origin good on U.S. national interest grounds, and requires the President to certify this to Congress in advance of entering into such trade. He may also waive the application of sanctions if he finds it in the national interest to do so and certifies to Congress (under sec. 401). Section 104 (Ma ndatory Sanctions With Respect t o Financial Institutions That Engage in Certain Transactions; 22 U.S.C. 8513) requires the Secretary of the Treasury, with consultation from the Secretary of State, to issue regulations "to prohibit, or impose strict conditions on, the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that the Secretary finds knowingly" facilitates the efforts of Iran to acquire WMD or related delivery systems, supports any foreign terrorist organization, or supports acts of international terrorism; or facilitates the activities of a person subject to U.N. financial sanctions. The Secretary may waive the imposition of sanctions if he determines it in the national interest to do so and notifies Congress. Section 302 ( I dentification of Countries of Concern With Respect to the Diversion of Certain Goods, Services, and Technologies to or through Iran; 22 U.S.C. 8542 ) requires the Director of National Intelligence to identify countries of concern that are diverting to or through Iran goods, services, and technologies that are controlled or make a material contribution to Iran's WMD pursuits. Section 303 (Destinations of Diversion Concern; 22 U.S.C. 8543) requires the President to designate any country of concern as a Destination of Diversion Concern if he determines that its government "allows substantial diversion of goods, services, or technologies … to Iranian end-users or Iranian intermediaries." The President is required to report to Congress such determinations, and "shall require a license under the Export Administration Regulations or the International Traffic in Arms Regulations (whichever is applicable) to export to that country a good, service, or technology on the list required under subsection (b)(2), with the presumption that any application for such a license will be denied." The President may, however, delay the imposition of imposing licensing requirements if he finds the offending country is improving its own export control regime, indicting materials destined for Iran, complying with related U.N. Security Council resolutions, or meeting other standards. He may also waive the application of license controls if he finds it in the national interest to do so (under sec. 401). Section 304 (Report on Expanding Diver s ion Concern System to Address the Diversion of United States Origin Goods, Services, and Technologies to Certain Countries Other Than Iran) requires the President to report on broader diversion of U.S. Munitions List (USML) and Commerce Control List (CCL) items, and could ultimately serve as grounds for a new facet in the U.S. export control system. Section 401 (General Provisions; 22 U.S.C. 8551) terminates many of these authorities and the CISADA amendments to the Iran Sanctions Act of 1996 on the President's certification to Congress that Iran no longer supports acts of international terrorism and has "ceased the pursuit, acquisition, and development of nuclear, biological, and chemical weapons and ballistic missiles and ballistic missile launch technology." P.L. 111-195 ; approved July 1, 2010 . No amendments have been enacted. Department of State, Foreign Operations, and Related Programs Appropriations Act, 201016 An appropriations act funding Department of State and foreign operations programs is enacted annually—with rare exceptions when the previous year's legislation is continued through the next fiscal year by a continuing resolution—generally at the start of a fiscal year, to make appropriations for various foreign assistance, military assistance, and international financial institutions programs. Language enacted to fund programs in a current fiscal year act pertains only to that fiscal year unless otherwise expressly stated. Congress has not enacted a comprehensive foreign aid authorization bill since 1985; however, as a result, the annual appropriations act increasingly has become a means of enacting authorizing language that carries the force of law beyond the fiscal year. In recent years, Security Assistance Acts and authorization acts addressing single issues have been enacted. Recent single-issue legislation has established the Millennium Challenge Corporation; authorized funding for microenterprise, HIV/AIDS, tuberculosis and malaria treatment and prevention programs, clean water, and programs for orphans and vulnerable children; transferred excess military equipment; established trafficking in persons as a human rights issue; and country-specific programs as a part of U.S. relations with North Korea, Afghanistan, Russia, and Sudan. Title VI, Export and Investment Assistance, Export-Import Bank of the United States , prohibits the use of Export-Import Bank funds in the current fiscal year to make expenditures, contracts, or commitments for the export of nuclear equipment, fuel or technology to any non-nuclear-weapon state, if that state is otherwise eligible to receive economic or military assistance under this Act, but has detonated a nuclear explosive device after the date of enactment of this Act. Title VII, General Provisions, Section 7043, Iran Sanctions, states that it is U.S. policy "to seek to prevent Iran from achieving the capability to produce or otherwise manufacture nuclear weapons…." The section prohibits the use of Export-Import Bank funds to guarantee, insure, or extend credit to any "energy producer or refiner that continues to … provide Iran with significant refined petroleum resources; … materially contribute to Iran's capability to import refined petroleum resources; or … allow Iran to maintain or expand … its domestic production of refined petroleum resources…." This prohibition may be waived by the Secretary of State if she determines that the country targeted for these sanctions is "closely cooperating" with U.S. policy toward Iran. The President also retains the authority to waive the aid prohibition if he finds it important to U.S. national security interests to do so. Title VII, General Provisions, Section 7073, Independent States of the Former Soviet Union, withholds 60 percent of funds allocated for Russia of the funds appropriated for "Assistance for Europe, Eurasia and Central Asia"—the Act provides $741,632,000 for the region (123 Stat. 3330)—until the President determines and certifies to the Committees on Appropriations that the Government of Russia has terminated its efforts "to provide Iran with technical expertise, training, technology, or equipment necessary to develop a nuclear reactor, related nuclear research facilities or programs, or ballistic missile capability ... and … is providing full access to international non-government organizations providing humanitarian relief to refugees and internally displaced persons in Chechnya." The restriction does not apply to assistance for combating infectious diseases, child survival activities, assistance for victims of trafficking in persons, and nonproliferation and disarmament programs authorized under title V of the FREEDOM Support Act. Congress has incorporated the language related to Export-Import Bank programs into the foreign assistance appropriations bill for several years. Iran-related text is new in FY2010. Russia-related text has been enacted in the foreign assistance appropriations measure since FY1999, though year-to-year the language has changed to make a comparison not particularly meaningful . In earlier years, the President was authorized to waive the restriction on the basis of vital U.S. national security interests, or if he found that the Government of Russia was taking meaningful steps to limit major supply contracts and to curtail the transfer of technology and technical expertise to certain programs in Iran. Beginning with the FY2006 Act, the latter condition was omitted. Export Administration Act of 197917 The Export Administration Act of 1979 (EAA) authorizes the executive branch to regulate private sector exports of particular goods and technology to other countries. The EAA coordinates such actions with other foreign policy considerations, including nonproliferation, and determines eligibility of recipients for exports. Section 5 (National Security Controls; 50 U.S.C. app. 2404) authorizes the President to curtail or prohibit the export of any goods or services for national security reasons: to comply with other laws regarding a potential recipient country's political status or political stability; to cooperate with international agreements or understandings; or to protect militarily critical technologies. Section 6 (Foreign Policy Controls; 50 U.S.C. app. 2405) similarly authorizes the President to curtail or prohibit the export of goods or services for foreign policy reasons. Within section 6, for example, section 6(j) establishes the State Department's list of countries found to be supporting acts of international terrorism, a list on which many other restrictions and prohibitions in law are based. Section 6(k) restricts exportation of certain crime control equipment. Section 6(l) restricts exportation for a list of dual use goods and technology. Section 6(m) restricts exportation for a list of goods and technology that would directly and substantially assist a foreign government or group in acquiring the capability to develop, produce, stockpile, or deliver chemical or biological weapons. Section 11A (Multilateral Export Control Violations; 50 U.S.C. app. 2410a) requires the President to prohibit, for two to five years, the U.S. government from contracting with, or procuring goods or services from, a foreign person who has violated any country's national security export regulations in accordance with the agreement of the Coordinating Committee for Multilateral Export Controls (COCOM), and that the violation results "in substantial enhancement of Soviet and East Bloc capabilities in submarines or antisubmarine warfare, ballistic or antiballistic missiles technology, strategic aircraft, command, control, communications and intelligence, or other critical technologies." The President also is required generally to prohibit importation of products from the sanctioned person. The President may impose sanctions at his discretion if the first but not the second condition exists. In this case, the restrictions may be in place no longer than five years. Sanctions may not be required for some goods if contracts with the sanctionable person meet U.S. operational military requirements, if the President determines that the sanctionable person is a sole source provider of an essential defense article or service, or if the President determines that such articles or services are essential to U.S. national security under defense coproduction agreements. The President also may not be required to apply sanctions if he determines that a company affiliated with the sanctionable person had no knowledge of the export control violation. After sanctions have been in place for two years, the President may modify terms of the restrictions under certain conditions, and if he notifies Congress. Sec. 2444 of the Multilateral Export Control Enhancement Amendments Act (title II, subtitle D, part II of the Omnibus Trade and Competitiveness Act of 1988; P.L. 100-418 ; approved August 23, 1988) added sec. 11A. The section has not been amended. Section 11B (Missile Proliferation Control Violations; 50 U.S.C. app. 2410b) is similar to sections 72 and 73 of the AECA, but authorizes sanctions against U.S. persons and foreign persons who engage in commercial transactions that violate missile proliferation controls. The section requires sanctions against any U.S. citizen whom the President determines to be engaged in exporting, transferring, conspiring to export or transfer, or facilitating an export or transfer of, any equipment or technology identified by the Missile Technology Control Regime Annex. Sanctions vary with the type of equipment or technology exported; worst-case sanctions deny export licenses for goods on controlled pursuant to the Export Administration Act for not less than two years. The President may waive the imposition of sanctions if he certifies to Congress that the product or service to be restricted is essential to U.S. national security, and that the provider is a sole source provider. The section further requires sanctions against any foreign person whom the President determines to be engaged in exporting, transferring, conspiring to export or transfer, or facilitating an export or transfer of, any MTCR equipment or technology that contributes to the design, development, or production of missiles in a country that is not an MTCR adherent. Sanctions vary with the type of equipment or technology exported; worst-case sanctions deny licenses for transfer to the foreign person items otherwise controlled by the Export Administration Act for not less than two years. The President may also prohibit importation into the United States of products produced by the foreign person. The law allows several exceptions, wherein some or all of the sanctions may not be imposed against foreign persons. These exceptions are nearly identical to those found in sections 72 and 73 of the AECA. The President may waive the imposition of sanctions for national security reasons, but must notify Congress beforehand. The presidential authority to restrict importation is conditional in a manner identical to that in section 73 of the AECA. The definition of "MTCR adherent" in section 11B is also identical to that in section 74 of the AECA. The definition of "person," however, retains its earlier form, applying to all "countries where it may be impossible to identify a specific governmental entity," and not adopting the narrower reference to military aircraft but referring to government activity relating to development of aircraft generally. Sec. 1702(b) of the National Defense Authorization Act for Fiscal Year 1991 ( P.L. 101-510 ; approved November 5, 1990) added sec. 11B. The section has not been amended. Section 11C (Chemical and Biological Weapons Proliferation Sanctions; 50 U.S.C. app. 2410c) , similar to section 81 of the AECA, authorizes the President to apply procurement and import sanctions against foreign persons that he determines knowingly contribute to the use, development, production, stockpile, or acquisition of chemical or biological weapons by exporting goods or technology from the United States or any other country. The President may delay the imposition of sanctions for up to 180 days if he is in consultation with the sanctionable person's government to bring that government to take specific and effective steps to terminate the sanctionable activities. The President may not be required to impose or maintain sanctions if the sanctionable person otherwise provides goods needed for U.S. military operations, if the President determines that the sanctionable person is a sole source provider of some good or service, or if the President determines that goods and services provided by the sanctionable person are essential to U.S. national security under defense cooperation agreements. Exceptions are also made for completing outstanding contracts, the purchase of spare or component parts, service and maintenance otherwise not readily available, information and technology essential to U.S. products or production, or medical or other humanitarian items. The President may terminate the sanctions after 12 months, if he determines and certifies to Congress that the sanctioned person no longer aids or abets any foreign government, project, or entity in its efforts to acquire biological or chemical weapons capability. The President may waive the application of a sanction after a year of its imposition, if he determines it is in U.S. national security interests to do so. Not less than 20 days before a national security waiver is issued, the President must notify Congress, fully explaining the rationale for waiving the sanction. Sec. 505(a) of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (title III of P.L. 102-182 ; approved December 4, 1991) added sec. 11C. No amendments have been enacted. Export-Import Bank Act of 194520 The Export-Import Bank Act of 1945 establishes the Export-Import Bank of the United States and authorizes the Bank to finance and facilitate exports and imports and the exchange of commodities and services between the United States and foreign countries. Section 2(b)(1)(B) (12 U.S.C. 635(b)(1)(B)) generally states the United States' policy of administering loan programs through the Export-Import Bank. The section provides that the Bank will deny applications for credit for nonfinancial or noncommercial considerations only when the President determines it is in the U.S. national interest to deny credit to advance U.S. policies in international terrorism—including taking into account a nation's lack of cooperation in efforts to eradicate terrorism—nuclear proliferation, environmental protection, and human rights. Sec. 2(b)(1) was amended and restated in 1972 (P.L. 92-126) and again in 1974 ( P.L. 93-646 ). The language pertaining to international ter rorism and nuclear proliferation was added by sec. 1904 of the Export-Import Bank Act Amendments of 1978 (title XIX of the Financial Institutions Regulatory and Interest Rate Control Act of 1978; P.L. 95-630 ; approved November 10, 1978). The Export-Import Bank Reauthorization Act of 2002 ( P.L. 107-189 ; approved June 14, 2002) added a reference to the Universal Declaration of Human Rights adopted by the United Nations General Assembly on December 10, 1948 (sec. 15), added language pertaining to a nation ' s lack of cooperation with efforts to eradicate terrorism (sec. 17), and added enforcement of the Foreign Corrupt Practices Act, the Arms Export Control Act, the International Emergency Economic Powers Act, or the Export Administration Act of 1979, as justification for denying Export-Import Bank financing (sec. 21). Numerous technical changes were made by P.L. 107-189 , as well. Section 2(b)(4) (12 U.S.C. 635(b)(4)) provides that the Secretary of State can determine, and report to Congress and to the Export-Import Bank Directors, if: any country has agreed to IAEA nuclear safeguards but has materially violated, abrogated, or terminated such safeguards after October 26, 1977; any country has entered into a cooperation agreement with the United States concerning the use of civil nuclear energy, but has violated, abrogated, or terminated any guarantee or other undertaking related to that agreement after October 26, 1977; any country has detonated a nuclear explosive device after October 26, 1977, but is a not a nuclear-weapon state; any country willfully aids or abets, after June 29, 1994, any non-nuclear-weapon state to acquire a nuclear explosive device or to acquire unsafeguarded special nuclear material; or any person knowingly aids or abets, after September 23, 1996, any non-nuclear-weapon state to acquire a nuclear explosive device or to acquire unsafeguarded special nuclear material. If such a determination is made relating to a person, the Secretary is urged to consult with that person's government to curtail that person's activities. Consultations are allowed 90 days, at the end of which the Secretary will report to Congress as to their progress. After the 90 days, unless the Secretary requests an additional 90 days, or unless the Secretary reports that the violations have ceased, the Export-Import Bank will not approve any transactions to support U.S. exports to any country, or to or by any person, for which/whom a determination has been made. The imposition of sanctions may also be waived if the President, 45 days before any transaction is approved, certifies that the violations have ceased, and that steps have been taken to ensure the questionable transactions will not resume. The President may also waive the imposition of sanction if he certifies that to impose them would have a serious adverse effect on vital U.S. interests, or if he certifies that the objectionable behavior has ceased. Sec. 2(b)(4) was added by sec. 3(b) of P.L. 95-143 ; approved October 26, 1977. Sec. 825 of the Nuclear Proliferation Prevention Act of 1994 (title VIII of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995; P.L. 103-236 ; approved April 30, 1994) added " (as defined in section 830(4) of the Nuclear Proliferation Prevention Act of 1994), or that any country has willfully aided or abetted any non-nuclear-weapons state (as defined in section 830(5) of that Act) to acquire any such nuclear explosive device or to acquire unsafeguarded special nuclear material (as defined in section 830(8) of that Act) " to define " nuclear explosive device " and to broaden what acts are sanctionable. This is often referred to as a " Glenn Amendment " (but not to be confused with " the Glenn Amendment, " which, by all accounts, would be sec. 102 of the AECA). The section was further amended and restated by sec. 1303 of the National Defense Authorization Act for Fiscal Year 1997 ( P.L. 104-201 ; approved September 23, 1996). Sec. 1303(b) of that Act further required the President to report to Congress within 180 days " his recommendations on ways to make the laws of the United States more effective in controlling and preventing the proliferation of weapons of mass destruction and missiles. The report shall identify all sources of government funds used for such nonproliferation activities. " Section 2(b)(12) (12 U.S.C. 635(b)(12)) requires the President to notify the Export-Import Bank if he determines "that the military or Government of the Russian Federation has transferred or delivered to the People's Republic of China an SS-N-22 missile system and that the transfer or delivery represents a significant and imminent threat to the security of the United States... Upon receipt of the notice and if so directed by the President of the United States, the Board of Directors of the Bank shall not give approval to guarantee, insure, extend credit, or participate in the extension of credit in connection with the purchase of any good or service by the military or Government of the Russian Federation." Sec. 12 of the Export-Import Bank Reauthorization Act of 1997 ( P.L. 105-121 ; approved November 26, 1997) added paragraph 12. Foreign Assistance Act of 196122 The Foreign Assistance Act of 1961 (FAA) authorizes U.S. government foreign aid programs including development assistance, economic support funding, numerous multilateral programs, housing and other credit guaranty programs, Overseas Private Investment Corporation, international organizations, debt-for-nature exchanges, international narcotics control, international disaster assistance, development funding for Africa, assistance to states of the former Soviet Union, military assistance, international military education and training, peacekeeping, antiterrorism, and various regional enterprise funds. Section 307(c) (Withholding of United States Proportionate Share for Certain Programs of International Organizations; 22 U.S.C. 2227) requires that foreign assistance the United States pays in to international organizations and programs not be used for programs in certain countries. The section exempts the International Atomic Energy Agency (IAEA) from this limitation, except for particular projects the IAEA finances in Cuba. U.S. proportionate support to the IAEA, in particular, is not available to any IAEA project relating to the Juragua Nuclear Power Plant near Cienfugeos, Cuba, or the Pedro Pi Nuclear Research Center in Cuba, unless Cuba: ratifies the Treaty on Non-Proliferation of Nuclear Weapons or the Treaty of Tlatelelco and is in compliance with terms of the treaty; negotiates full-scope safeguards of the IAEA not later than two years after treaty ratification; and "incorporates internationally accepted nuclear safety safeguards." Section 307 was added to the Foreign Assistance Act of 1961 by sec. 403 of the International Security and Development Cooperation Act of 1985 ( P.L. 99-83 ; approved August 8, 1985). The countries to which it is applied has changed over time; the countries for which program funding is currently restricted are Burma, North Korea, Syria, Iran, Cuba, and the Palestine Liberation Organization (though application to the PLO has been waived under other legislation in the course of peace negotiations), and communist countries listed under sec. 620(f) of the Act (currently North Korea, China, Cuba, Vietnam, and Tibet). Most recently, sec. 616 of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2008 (division J of P.L. 110-161 ; 121 Stat. 2320) removed Libya from the sec. 307 list. Limitations in subsec. (c) were originally added by sec. 431(a)(2) of the Foreign Relations Authorization Act, 1994 and 1995 ( P.L. 103-236 ; approved April 30, 1994). Language pertaining to nuclear developments in Cuba was added by sec. 2809(a)(1) of the Foreign Relations Authorization Act, 1998 and 1999 (subdivision B of division G of P.L. 105-277 ; approved October 21, 1998). Section 498A(b) (Criteria for Assistance to Governments of the Independent States [of the Former Soviet Union] ; 22 U.S.C. 2295a(b)) requires that the President not provide assistance to independent states of the former Soviet Union if he determines that the government of that state, among other things, (1) has failed to implement arms control obligations signed by the former Soviet Union, or (2) has knowingly transferred to another country: missiles or missile technology inconsistent with guidelines and parameters of the Missile Technology Control Regime; "any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determines that the material, equipment, or technology was to be used by such country in the manufacture of such weapon." The section further prohibits foreign assistance under chapter 11 of the Foreign Assistance Act of 1961 to any country for which a determination has been issued pursuant to sections 101 or 102 of the Arms Export Control Act or sections 306(a)(1) or 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991. The President may waive the prohibition—other than that based on other proliferation legislation as cited in the section—on U.S. national security grounds, if he determines that furnishing assistance "will foster respect for internationally recognized human rights and the rule of law or the development of institutions of democratic governance," or to alleviate suffering resulting from a natural or man-made disaster. Assistance may also be provided under the U.S. Information Agency's (USIA) secondary school exchange program notwithstanding a country's ineligibility (except in instances where ineligibility is based on nonproliferation violations). Any waiver requires an immediate report to Congress of any determination or decision. Section 498A was added by sec. 201 of the FREEDOM Support Act ( P.L. 102-511 ; approved October 24, 1992). See also discussion, above, on sec. 73(b)(2) and sec. 73B of the AECA, as amended. Those sections refer to sec. 498A(b)(3)(A) to limit certain transactions with independent states of the former Soviet Union if the transactions involve missiles or missile technology and are conducted in a manner inconsistent with guidelines and parameters of the MTCR. Sec. 106 of the Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ; adopted March 12, 1996) added requirements to curtail assistance to any third country engaged in certain support of Cuba. Section 620(y) (Prohibitions Against Furnishing Assistance; 22 U.S.C. 2370) restricts foreign assistance, or assistance pursuant to any other act, to any country providing nuclear fuel, related assistance, and credits to Cuba. Assistance denied the country in question equals the value of that country's nuclear development assistance, sales, or transfers to Cuba. The requirement to limit assistance is waived if Cuba (A) ratifies the Treaty on Non-Proliferation of Nuclear Weapons or the Treaty of Tlatelelco and is in compliance with terms of the treaty; (B) "has negotiated and is in full compliance with full-scope safeguards of the International Atomic Energy Agency" within two years of the treaty ratification; and (C) "incorporates and is in compliance with internationally accepted nuclear safety safeguards." The section also requires the Secretary of State to report to Congress annually on the matter. Added by sec. 2810(a) of the Foreign Relations Authorization Act, Fiscal Years 1998 and 1999 (subdivision B of Division G of P.L. 105-277 ; approved October 21, 1998) . Section 620E (Assistance to Pakistan; 22 U.S.C. 2375) , related to U.S. assistance to Pakistan, was enacted in response to the threat posed by Soviet occupation of neighboring Afghanistan. Section 620E(d) authorizes the President to waive sanctions under section 101 of the AECA to provide assistance to Pakistan, if he determines it is in the U.S. national interest to do so. Subsection 620E(e) states that no military assistance shall be furnished and no military equipment or technology shall be sold or transferred to Pakistan unless the President certifies to the Speaker of the House and the Chairperson of the Senate Foreign Relations Committee that, for the fiscal year in which the assistance, sale or transfer would occur, Pakistan does not possess a nuclear explosive device and that proposed military assistance would significantly reduce the risk that Pakistan will possess a nuclear explosive device. This restriction does not apply to international narcotics control assistance, International Military Education and Training funds, funding for humanitarian and civic assistance projects, peacekeeping or other multilateral operations funds, or antiterrorism assistance. Sec. 620E was added to the Foreign Assistance Act of 1961 by sec. 736 of the International Security and Development Cooperation Act of 1981 ( P.L. 97-113 ; approved December 29, 1981). Sec. 620E(d) was amended by the Nuclear Proliferation Prevention Act of 1994 (title VIII of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995; P.L. 103-236 ; approved April 30, 1994) to reflect the repeal of secs. 669 and 670 and the enactment of secs. 101 and 102 of the Arms Export Control Act. Sec. 620E(e), the " Pressler amendment, " was added by sec. 902 of the International Security and Development Cooperation Act of 1985 ( P.L. 99-83 ; approved August 8, 1985). Sec. 559(a)(1)(D) of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1996 ( P.L. 104-107 ; approved February 12, 1996), amended the section to exclude certain assistance programs from the ban, as noted in the last sentence, above. The same Act amended the section to authorize the President to: release Pakistan from paying storage costs of items purchased before October 1, 1990, but not delivered (presumably F-16s); release other items serviced in the United States; and continue the applicability of other laws pertaining to ballistic missile sanctions. This bloc of amendments is sometimes referred to as the " Brownback amendment. " The same Act made several changes to restrict only " military assistance, " formerly the section had referred to assistance generally; this amendment is popularly referred to as the " Brown amendment. " After India and Pakistan tested nuclear explosive devices in May 1998, sanctions were imposed in accordance with requirements of sec. 102 of the Arms Export Control Act (see above). Subsequently, Congress enacted several laws to ease sanctions or to grant the President discretionary authority to waive their application. The Agriculture Export Relief Act of 1998 ( P.L. 105-194 ; approved July 14, 1998) authorizes the exemption of sanctions as they pertain to certain agricultural commodities. The India-Pakistan Relief Act (title IX of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999; division A, sec. 101(a) of P.L. 105-277 ; 112 Stat. 2681-40; approved October 21, 1998) authorizes the President to waive the application of most sanctions under secs. 101 and 102 of the AECA, sec. 620E(e) of the Foreign Assistance Act of 1961, and sec. 2(b)(4) of the Export-Import Bank Act of 1945, for a period of one year. The Department of Defense Appropriations Act, 2000 ( P.L. 106-79 ; approved October 21, 1999; see title IX), repeals the India-Pakistan Relief Act, but also authorizes the President to waive the same sections of law, including sec. 620E(e). President Clinton exercised this authority in issuing Presidential Determination No. 2000-4 on October 27, 1999 (64 F.R. 60649) to the extent it applied, in the case of Pakistan, to " credit, credit guarantee, or other financial assistance provided by the Department of Agriculture to support the purchase of food or other agricultural commodity; and the making of any loan or the providing of any credit to the Government of Pakistan by any U.S. bank. " On September 22, 2001, President Bush lifted all remaining nuclear test-related sanctions against India and Pakistan, including sec. 620E(e), under the authority granted him in P.L. 106-79 (Presidential Determinati on No. 2001-28; 66 F.R. 50095). Other measure s addressed sanctions imposed on Pakistan for other reasons. P.L. 107-57 (115 Stat. 403, approved October 27, 2001), authorizes the President to waive remaining restrictions (relating to military dictatorship and debt arrearage, statutorily required by the Foreign Assistance Act of 1961 and annual foreign operations appropriations measures) on foreign assistance to Pakistan. P.L. 108-447 (of which division D is the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2005; approved December 8, 2004), amends P.L. 107-57 to extend foreign assistance to Pakistan to October 1, 2005. P.L. 108-458 (of which title VII is the 9/11 Commission Implementation Act of 2004; approved December 17, 2004), sought to amend P.L. 107-57 to extend foreign aid to Pakistan to October 1, 2006. This amendment, however, was not executable for technical reasons. Sec. 117 of the Continuing Resolution ( P.L. 109-77 ; 119 Stat. 2037; approved September 30, 2005), and subsequently, sec. 534 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006 ( P.L. 109-102 ; 119 Stat 2210, approved November 14, 2005), however, authorize s the President to waive the applicability to Pakistan of restrictions imposed on a country under military dictatorship and waive s debt arrearage requirements for Fiscal Year 2006. Authorities contained in P.L. 109-102 , in turn, were continued into fiscal year 2007 by division B of P.L. 109-289 (120 Stat. 1257 at 1311; approved September 29, 2006), as amended. Henry J. Hyde United States-India Peaceful Atomic Energy Cooperation Act of 200625 The Hyde U.S.-India Peaceful Atomic Energy Cooperation Act of 2006 exempts some requirements of the Atomic Energy Act of 1954 in order for the President to negotiate a U.S.-India nuclear cooperation agreement. The Act reaffirms the United States' commitment to the Nuclear Non-Proliferation Treaty (to which India is not a signatory) and adherence to Nuclear Suppliers Group guidelines. The Act authorizes the Secretary of Energy, with consultation from the Secretaries of State and Defense, to "establish a cooperative nuclear nonproliferation program to pursue jointly with scientists from the United States and India a program to further common nuclear nonproliferation goals." The Act also implements a new U.S. Additional Protocol to the Nuclear Non-Proliferation Treaty, signed on June 12, 1998, to demonstrate the United States' commitment to the Treaty and to encourage non-nuclear-weapon states to commit to international nuclear nonproliferation standards. Section 104(d)(3) (Waiver Authority and Congressional Approval; Restrictions on Nuclear Transfers; Termination of Nuclear Transfers to India; 22 U.S.C. 8003(d)(3)) terminates exports of nuclear and nuclear-related material, equipment, or technology to India if, after the proposed U.S.-India nuclear cooperation agreement enters into force, any Indian person transfers: "(i) nuclear or nuclear-related material, equipment, or technology that is not consistent with NSG guidelines or decisions, or (ii) ballistic missiles or missile-related equipment or technology that is not consistent with MTCR guidelines." The President may determine "that cessation of such exports would be seriously prejudicial to the achievement of United States nonproliferation objectives or otherwise jeopardize the common defense and security" to allow nuclear-related exports to India to continue. The President may also allow exports to continue if he finds that (i) the transfer in question was made without the knowledge of the Government of India; (ii) at the time of the transfer, either the Government of India did not own, control, or direct the Indian person that made the transfer or the Indian person that made the transfer is a natural person who acted without the knowledge of a Indian commercial or government entity ; and "(iii) the President certifies to the appropriate congressional committees that the Government of India has taken or is taking appropriate judicial or other enforcement actions against the Indian person with respect to such transfer." Sec. 106. (Inoperability of Determination and Waivers; 22 U.S.C. 8005) cancels any waiver or determination issued under section 104 "if the President determines that India has detonated a nuclear explosive device after the date of the enactment of this title." Secs. 101 and 105 of the United States-India Nuclear Cooperation Approval and Nonproliferation Enhancement Act ( P.L. 110-369 ; approved October 8, 2008) modified sunset and report provisions in the Hyde Act. International Emergency Economic Powers Act26 Section 203 (Grants of Authorities; 50 U.S.C. 1702) authorizes the President "to deal with any unusual and extraordinary threat with respect to a declared national emergency." After he declares a national emergency exists, pursuant to the authority in the National Emergencies Act, the President may use the authority in this section to investigate, regulate, or prohibit foreign exchange transactions, credit transfers or payments, currency or security transfers, and may take specified actions relating to property in which a foreign country or person has interest. In terms of nonproliferation concerns, it is pursuant to this section that the President has continued the authority of the expired Export Administration Act, prohibited transactions with "those who disrupt the Middle East peace process," issued export controls on encryption items, established export controls related to weapons of mass destruction, prohibited transactions "with persons who commit, threaten to commit, or support terrorism," and blocked certain property of, and transactions with, governments of specific countries found to be engaged in activities that constitute an extraordinary threat, including the proliferation of weapons of mass destruction (see Table 1 for the proliferation-based exercise of IEEPA authorities and Table 2 for an index of regulations implementing those authorities). Enacted as title II of P.L. 95-223 ; approved December 28, 1977, to update and continue authority carried earlier in the Trading With the Enemy Act (P.L. 65-92; approved October 6, 1917). It has been amended from time to time to update the list of what cannot be restricted, mostly to keep up with changes in technology (for example, the law allows the free flow of informational materials, most recently amended to include CD ROMs). Most recently, the USA PATRIOT Act ( P.L. 107-56 ; approved October 26, 2001) made amendments to clarify the applicability of the IEEPA to persons or property subject to the jurisdiction of the United States, and to make available any classified materials in court proceedings related to IEEPA violations. Iran Freedom Support Act29 Section 101 (Codification of Sanctions) locks in place the substantive elements of three Executive orders in effect on January 1, 2006. The orders, first issued by President Clinton in 1995 and 1997, and renewed annually by him and then by his successors, impose economic sanctions on transactions and trade with Iran, including prohibiting any U.S. person from: entering into a contract or financing related to the development of petroleum resources in Iran; making new investments in property owned or controlled by the Government of Iran; or exporting goods or technology to Iran, investing there, or engaging in transactions to traffic Iran-made goods or technology. The executive orders were issued by the President under authority granted his office in the National Emergencies Act and the International Emergency Economic Powers Act. To terminate the sanctions, the President is now required to notify Congress 15 days in advance, unless circumstances require the President to first terminate sanctions and notify Congress after the fact, but then within three days after exercising the authority. In effect, the section dampens the President's authority to lift the sanctions on Iran without advising Congress, though notification is the only requirement to satisfy the law. Iran-Iraq Arms Nonproliferation Act of 199231 Section 1603 (Application to Iran of Certain Iraq Sanctions) makes sanctions in section 586G(a)(1) through (4) of the Iraq Sanctions Act of 1990 also fully applicable against Iran (see below, including notes as they pertain to Iraq). Section 1604 (Sanctions Against Certain Persons) requires the President to impose sanctions against any person whom he has determined to be engaged in transferring goods or technology so as to contribute knowingly and materially to the efforts by Iran or Iraq to acquire chemical, biological, nuclear, or destabilizing numbers and types of advanced conventional weapons. Section 1605 (Sanctions Against Certain Foreign Countries) similarly addresses activities of foreign governments. In both cases, mandatory sanctions prohibit, for a period of two years, the U.S. government from entering into procurement agreements with, or issuing licenses for exporting to or for the sanctioned person or country. Where a foreign country is found to be in violation of the law, the President must suspend U.S. assistance; instruct U.S. Executive Directors in the international financial institutions to oppose multilateral development bank assistance; suspend codevelopment and coproduction projects the U.S. government might have with the offending country for one year; suspend, also for one year, most technical exchange agreements involving military and dual-use technology; and prohibit the exportation of U.S. Munitions List items for one year. In the case of foreign countries targeted for sanctions under this Act, the President may, at his discretion, use authority granted him under the International Emergency Economic Powers Act to further prohibit transactions with the country. The President may waive the mandatory sanctions against persons or foreign country with 15 days notice to congressional committees that exercising such a waiver is essential to U.S. national interests. Enacted as title XVI of the National Defense Authorization Act for Fiscal Year 1993 ( P.L. 102-484 ; approved October 23, 1992). Sec. 1408(a) of P.L. 104-106 (110 Stat. 494) amended sections 1604 and 1605 to apply not just to conventional weapons but also to chemical, biological, or nuclear weapons. Sec. 1308 of the Foreign Relations Authorization Act, Fiscal Year 2003 ( P.L. 107-228 ; approved September 30, 2002) consolidated various reports related to missile proliferation and essential components of nuclear, biological, chemical, and radiological weapons in one section of law, and repealed language in other sections of law, including a report required under sec. 1607 of this Act, to result in fewer reports overall . Iran, North Korea, and Syria Nonproliferation Act of 200032 Sections 2 through 5 (Reports; Application; Procedures; Determination; 50 U.S.C. 1701 note) require the President to report to Congress twice a year to identify "every foreign person with respect to whom there is credible information indicating that the person, on or after January 1, 1999, transferred to or acquired from Iran, or on or after January 1, 2005, transferred to or acquired from Syria..." goods, services or technology the export of which (1) is controlled for nonproliferation reasons in accordance with various international agreements, or (2) is not controlled by the country of origin but would be subject to controls if shipped from the United States. The President is authorized to apply a range of sanctions against any foreign person included in his report, including denial of procurement contracts with the U.S. government, prohibition on importation into the United States, and denial of foreign assistance—sanctions laid out in Executive Order 12938, as amended. A foreign person named in the President's report may also be denied U.S. government sales of items on the U.S. Munitions List and export licenses for dual-use items. The decision to impose sanctions is left to the President, but if he decides to take no action, he is required to notify Congress of his reasons. The President may also take no action if he finds that (1) the person in question did not "knowingly transfer to or acquire from Iran or Syria" objectionable items; (2) the goods, services or technology "did not materially contribute to the efforts of Iran or Syria, as the case may be, to develop nuclear, biological, or chemical weapons, or ballistic or cruise missile systems, or weapons listed on the Wassenaar Arrangement Munitions List..."; (3) the named person falls under the jurisdiction of a government that is an adherent to "one or more relevant nonproliferation regimes" and his actions were consistent with such regime's guidelines; or (4) the government of jurisdiction "has imposed meaningful penalties" on the named person. Section 6 (Restrictions on Extraordinary Payments in Connection with the International Space Station) prohibits any agency of the U.S. government from making extraordinary payments to the Russian Aviation and Space Agency, or any affiliates, or the Government of the Russian Federation, or any entities of the government, until the President determines and reports to Congress that (1) it is the Russian government's policy "to oppose the proliferation to or from Iran or Syria of weapons of mass destruction and missile systems capable of delivering such weapons;" (2) the Russian government has demonstrated a commitment to preventing transfers of such goods to or from Iran or Syria; and (3) the Russian Aviation and Space Agency, or its affiliates, has not made such transfers to or from Iran or Syria in the preceding year (other than those allowed by the President's certification for exemptions). The President may allow extraordinary payments when "such payments are necessary to prevent the imminent loss of life by or grievous injury to individuals aboard the International Space Station." This allowance requires the President to notify to Congress such payments will be allowed, and to report to Congress on details within 30 days of the initial notification. The President may also allow extraordinary payments for specific development programs of the International Space Station provided he notify Congress ahead of payment and that the recipients of that payment are not subject to nonproliferation sanctions. P.L. 106-178 ; approved March 14, 2000. Originally enacted as the Iran Nonproliferation Act of 2000. Sec. 4(e) of the Iran Nonproliferation Amendments Act of 2005 ( P.L. 109-112 ; approved November 22, 2005) inserted the reference to Syria, and that Act broadened the application of the original Act to encompass transfers to and from both Iran and Syria. The North Korea Nonproliferation Act of 2006 ( P.L. 109-353 ; approved October 13, 2006) inserted the reference to North Korea throughout the Act. Sec. 125 of the Continuing Appropriations Resolution, 2009 (division A of P.L. 110-329 ; approved September 30, 2008) amended text unrelated to sanctions authorities. Sec. 1306 of the Foreign Relations Authorization Act, Fiscal Year 2003 ( P.L. 107-228 ; approved September 30, 2002), added the reference to weapons listed on the Wassenaar Arrangement Munitions List. See also sec. 708 of the Security Assistance Act of 2000 ( P.L. 106-280 ; 114 Stat. 862; 22 U.S.C. 2797b note; approved October 6, 2000), which requires the President to certify that any Russian person he identifies as " a party to an agreement related to commercial cooperation on MTCR equipment or technology with a United States person " is not also one who transfers goods, services, or technology to Iran, as identified pursuant to sec. 2(a)(1)(B) of this Act. Iran Sanctions Act of 199634 Section 4 (Multilateral Regime) authorizes the President to waive, on a case-by-case basis, sanctions imposed on any national of another country found to be investing in Iran's oil capabilities if he finds it vital to U.S. national security interests to do so. The section also authorizes the President to waive, on a case-by-case, basis, sanctions imposed on persons (as defined by the Act in sec. 14) whose government of jurisdiction cooperates "with the United States in multilateral efforts to prevent Iran from acquiring or developing chemical, biological, or nuclear weapons, or related technologies; or … acquiring or developing destabilizing numbers and types of advanced conventional weapons…." The President is required to determine such a waiver is vital to U.S. national security interests and report details to Congress. The President is required to investigate any person for which "credible information" indicates that person is engaged in sanctionable activity. Section 5 (Imposition of Sanctions) requires the President to impose sanctions on any person found to have invested in Iran's ability to develop petroleum resources, or sold, leased or provided Iran refined petroleum products or related technology, information, or support. The President is required to impose three or more of the sanctions listed in section 6 on any person he finds has, after July 1, 2010 (the date of enactment of amendments in the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010), "exported, transferred, or otherwise provided to Iran any goods, services, technology, or other items knowing that the provision of such ... items would contribute materially to the ability of Iran to ... acquire or development chemical, biological, or nuclear weapons or related technologies; or acquire or develop destabilizing numbers and types of advanced conventional weapons." In addition, the President is required to deny export licenses to any person subject to these sanctions, and the government of primary jurisdiction for the sanctioned person is also to be denied transfer or retransfer "of any nuclear material, facilities, components, or other goods, services, or technology that are or would be subject to an agreement for cooperation between the United States and that government" unless the President determines that the government "does not know or have reason to know about the activity" or "has taken, or is taking all reasonably steps necessary to prevent a recurrence of the activity and to penalize the person for the activity." The President also may waive the sanctions if he finds it "vital to the national security interests of the United States" to do so, and so notifies the Committees on Foreign Affairs and Foreign Relations. Section 6 (Description of Sanctions) authorizes the President to employ a range of punitive measures, including denial of Export-Import funding, denial of export licenses, prohibition on U.S. government and commercial bank financing, refusal of U.S. government procurement contracts, prohibition on foreign exchange transactions, limit on financial transactions including credit and inter-bank payments with banks under U.S. jurisdiction, prohibition on transactions related to property under U.S. jurisdiction, and additional measures as the President sees fit. Under language added by the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, persons entering into a U.S. government contract are now required to certify that they do not engage in any activity that could be subject to sanctions under this Act. Section 8 (Termination of Sanctions) cancels the requirement for sanctions if the President determines that Iran has ceased all efforts to design, develop, manufacture, or acquire weapons of mass destruction or related delivery systems, and if Iran is removed from the list of supporters of international terrorism. Section 9 (Duration of Sanctions; Presidential Waiver) authorizes the President to delay the imposition of sanctions for up to 90 days if consultations are entered into with a government that holds jurisdiction over the offending party. Sanctions may be further delayed another 90 days if the government of jurisdiction takes action to terminate the offending behavior and penalize the offender. Otherwise, sanctions are imposed for not less than two years or until such time that the President can certify that the offending behavior has ceased, at which juncture sanctions remain in place for at least one year. Alternatively, the President may waive the imposition of sanctions if he finds it necessary to U.S. national interests to do so. P.L. 104-172 ; approved August 5, 1996. Originally enacted as the Iran and Libya Sanctions Act. The President waived its application toward Libya on April 23, 2004 (see note), and the Iran Freedom Support Act ( P.L. 109-293 ; approved September 30, 2006) struck out the reference to Libya and made other substantive changes to focus the intent of the Act solely on Iran and that country's efforts to develop weapons of mass destruction or other military capabilities. Thus, for example, where section 5 previously required the imposition of sanctions on any person found to be contributing to Libya's pursuit of weapons of mass destruction, advanced conventional weapons, or other military resources, the amended section hones in only on Iran's development of military resources. The Iran Freedom Support Act also struck out references in section 8 to Libya's complicity in the PanAm Flight 103 explosion over Lockerbie, Scotland. Previously, the Act had been amended to lower the threshold of investment in Libya that triggered the imposition of sanctions, change reporting requirements, fine-tune definitions, and extend the authorities herein another five years, to 2006 ( P.L. 107-24 ; approved August 3, 2001). Authorities were further extended to September 29, 2006 ( P.L. 109-267 ; approved August 4, 2006), to December 31, 2011 ( P.L. 109-293 ), and again to December 31, 2016 ( P.L. 111-195 ). The Comprehensive Iran Sanctions, Divestment, and Accountability Act of 2010 ( P.L. 111-195 ; approved July 1, 2010) substantially reframed the original Act to intensify the focus on reducing the likelihood of Iran obtaining advanced conventional weapons, weapons of mass destruction, and the means to deliver them. Amendments therein: require close cooperation with the United States in multilateral nonproliferation efforts (sec. 4(c)(1)(B)); require the President to initiate investigations and impose more sanctions for a broader range of activities at lower transaction thresholds (sec. 4(e), sec. 5);and add restrictions on foreign exchange, banking, property, and government contracts to the list of sanction options available to the President (sec. 6). Iraq Sanctions Act of 199035 This Act reaffirmed the United States' commitment to sanctions leveled by the United Nations after Iraq invaded Kuwait in August 1990. The findings, laid out in section 586F (Declarations Regarding Iraq ' s Long-Standing Violations of International Law) , cite Iraq's violation of international law relating to chemical and biological warfare, Iraq's use of chemical weapons against Iran and its own Kurdish population, efforts to expand its chemical weapons capabilities, evidence of biological weapons development, and its efforts to establish a nuclear arsenal. Section 586C (Trade Embargo Against Iraq) continues sanctions imposed pursuant to four executive orders issued at the outset of Iraq's invasion of Kuwait. Sanctions include foreign assistance, trade, economic restrictions, and the freezing of Iraqi assets under U.S. jurisdiction. The President may alter or terminate the sanctions issued in his executive orders only with prior 15-day notification to Congress. Section 586D (Compliance with U.N. Sanctions Against Iraq) prohibits foreign assistance, Overseas Private Investment Corporation (OPIC) funding, and assistance or sales under the AECA to countries found to be not in compliance with United Nations Security Council sanctions against Iraq. The President may waive these sanctions if he determines and certifies to Congress that assistance is in U.S. national interest, that assistance will benefit the targeted country's needy, or such assistance will be in the form of humanitarian assistance for foreign nationals fleeing Iraq and Kuwait. Section 586G (Sanctions Against Iraq) prohibits the United States from engaging in the following activities relating to Iraq: (1) U.S. foreign military sales under the AECA; (2) commercial arms sales licensing of items on the U.S. Munitions List; (3) exports of control list goods and technology, as defined by secs. 4(b) and 5(c)(1) of the Export Administration Act; (4) issuance of licenses or other authorizations relating to nuclear equipment, materials, and technology; (5) international financial institutions support; (6) Export-Import Bank funding; (7) Commodity Credit Corporation funding; and (8) foreign assistance other than emergency medical or humanitarian funding. Pursuant to section 586H (Waiver Authority) , the President may waive the application of sec. 586G sanctions if he certifies to Congress that the Government of Iraq has demonstrated improved respect for human rights, does not support international terrorists, and "is not acquiring, developing, or manufacturing (I) ballistic missiles, (ii) chemical, biological, or nuclear weapons, or (iii) components for such weapons; has forsworn the first use of such weapons; and is taking substantial and verifiable steps to destroy or otherwise dispose of any such missiles and weapons it possesses..." The President must further certify that Iraq is meeting its obligations under several international agreements. Finally, the President must certify that it is in the national interest of the United States to make such a waiver and resume any or all of these economic supports. The section also authorizes the President to waive the restrictions in response to a fundamental change in Iraq's leadership, provided the new government makes credible assurances that it meets the above criteria. Section 586I (Denial of Licenses for Certain Exports to Countries Assisting Iraq ' s Rocket or Chemical, Biological, or Nuclear Weapons Capability) prohibits the export licensing of supercomputers to any government (or its officials) that the President finds to be assisting Iraq in improving its rocket technology, or chemical, biological, or nuclear weapons capability. While the section includes no waiver authority, it is triggered by the President making a determination and so its implementation rests with the executive branch. Enacted as secs. 586-586J of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1991 ( P.L. 101-513 ; approved November 5, 1990). It has not been amended. National Emergencies Act Title II (50 U.S.C. 1621, 1622) authorizes the President to declare, administer, and terminate national emergencies. Such a condition is required for the President to exercise his authority under the International Emergency Economic Powers Act. P.L. 94-412 ; approved September 14, 1976. There have been no substantive amendments specifically affecting proliferation issues. North Korea Threat Reduction Act of 1999 The North Korea Threat Reduction Act of 1999 prohibits the entering into effect for the United States of any international agreement or agreement for cooperation with North Korea that would result in North Korea obtaining nuclear materials. The law also prohibits U.S. issuance of export licenses for, or approval for transfer or retransfer of, a specified nuclear item. To make such items available, the President must determine and report to Congress that North Korea has met certain benchmarks on the safe use of nuclear materials, including cooperation with the IAEA on inspections, compliance with IAEA safeguard agreements, compliance with terms of the Agreed Framework it reached with the United States, implementation of terms of the Joint Declaration on Denuclearization, no accrual of enriched uranium or the means to develop that material, and no efforts to acquire or develop nuclear weapon capability. The President must also determine and certify that it is the U.S. national interest to transfer key nuclear components to North Korea. Enacted as subtitle B of title VIII of the Admiral James W. Nance and Meg Donovan Foreign Relations Authorization Act, Fiscal Years 2000 and 2001 ( H.R. 3427 , enacted by reference in sec. 1000(a)(7) of P.L. 106-113 ; 113 Stat. 1501A-472; approved November 29, 1999). Sec. 1307 of the Foreign Relations Authorization Act, Fiscal Year 2003 ( P.L. 107-228 ; 116 Stat. 1438) amended the Act to define more clearly what nuclear-related materials require licensing for export to North Korea by citing terms and requirements in the Atomic Energy Act of 1954 and Annex A and Annex B of the Nuclear Suppliers Group. Nuclear Non-Proliferation Act of 197837 The Nuclear Non-Proliferation Act of 1978 states U.S. policy for actively pursuing more effective international controls over the transfer and use of nuclear materials, equipment, and technology for peaceful purposes in order to prevent proliferation. The policy statement includes the establishment of common international sanctions. The Act promotes the establishment of a framework for international cooperation for developing peaceful uses of nuclear energy, authorizes the U.S. government to license exports of nuclear fuel and reactors to countries that adhere to nuclear non-proliferation policies, provides incentives for countries to establish joint international cooperative efforts in nuclear non-proliferation, and authorizes relevant export controls. The Act requires the Nuclear Regulatory Commission to publish regulations establishing procedures for granting, suspending, revoking or amending nuclear export licenses. The Act also requires the Department of Commerce to issue regulations relating to all export items that could be of significance for nuclear explosive purposes. Section 304(b) (Export Licensing Procedures; 42 U.S.C. 2155a) requires the Nuclear Regulatory Commission to publish regulations establishing the procedures for granting, suspending, revoking or amending nuclear export licenses. Section 309 (42 U.S.C. 2139a) similarly requires the Department of Commerce to issue regulations relating to all export items that could be of significance for nuclear explosive purposes. Section 402 (Additional Requirements; 42 U.S.C. 2153a) provides that, unless otherwise stated in a cooperation agreement, no source or special nuclear material exported from the United States may be enriched after exportation unless the United States approves the enrichment. The section prohibits the export of nuclear material for the purpose of enrichment or reactor fueling if the recipient country is party to a cooperation agreement with the United States amended or concluded after 1978, unless the agreement specifically allows for such transfers. Finally, the section prohibits export of any major critical component of any uranium enrichment, nuclear fuel reprocessing, or heavy water production facility, unless a cooperation agreement specifically designates these items as exportable. The Nuclear Non-Proliferation Act of 1978 was enacted as P.L. 95-242 ; approved March 10, 1978. Secs. 304(b) and 402 have not been amended. Minor changes have been incorporated into sec. 309 (42 U.S.C. 2139a) , relating to a requirement of prior consultation and the reorganization of the Department of State. Nuclear Proliferation Prevention Act of 1994 The Nuclear Proliferation Prevention Act of 1994 was enacted to update current law to reflect growing concerns about nuclear proliferation. Section 821 (Imposition of Procurement Sanction on Persons Engaging in Export Activities That Contribute to Proliferation; 22 U.S.C. 6301) requires U.S. government procurement sanctions against any U.S. person or foreign person if the President determines that person has materially, and with requisite knowledge, contributed, through export of goods or technology, to efforts to acquire unsafeguarded special nuclear material, or to use, develop, produce, stockpile, or otherwise acquire a nuclear explosive device. Terms of the sanctions are that the U.S. government may not, for 12 months, procure from or enter into procurement contracts with the sanctioned individual. Sanctions may be terminated after 12 months if the President determines and certifies to Congress that the individual has stopped whatever activities that brought on the sanctions, and that the individual will not engage in such activities in the future. Otherwise, to waive the sanctions at the end of 12 months, the President must determine and certify to Congress, 20 days in advance, that continuing the sanctions would have a serious adverse effect on vital U.S. interests. The President is not required to apply or maintain sanctions if the articles or services provided are essential to U.S. national security; if the provider is a sole source; if the articles or services are essential to national security under defense cooperative agreements; if the articles constitute essential spare parts, essential component parts, routine servicing or maintenance, or information and technology essential to U.S. production. Sanctions may also not be required if the individual relied on an advisory opinion of the State Department stating that a particular activity was not deemed to be sanctionable. In the case of a foreign person, the President is required to enter into consultation with the foreign government with primary jurisdiction over that person, and thus may delay the imposition of sanctions for up to 90 days. Sanctions may be further averted if the President determines and certifies that the foreign government has taken steps to end the foreign person's activities. Section 823 (Role of International Financial Institutions; 22 U.S.C. 6302) requires the Secretary of the Treasury to instruct U.S. executive directors of international financial institutions to use voice and vote to oppose promotion of the acquisition of unsafeguarded special nuclear material or the development, stockpiling, or use of nuclear explosive devices by any non-nuclear-weapon state. Section 824 (Prohibition on Assisting Nuclear Proliferation Through the Provision of Financing; 22 U.S.C. 6303) prohibits financial institutions and persons involved with financial institutions from assisting nuclear proliferation through the provision of financing. The section requires that when the President determines that a U.S. person or foreign person has engaged in a prohibited activity, he shall impose the following sanctions: (1) ban on dealing in U.S. government debt instruments; (2) ban on serving as a depositary for U.S. government funds; (3) ban on pursuing, directly or indirectly, new commerce in the United States; and (4) ban on conducting business from a new location in the United States. The President is required to consult with any foreign government that serves as primary jurisdiction for any foreign person sanctioned under this section. Sanctions may be delayed for 90 days while consultation with a foreign government is underway, and may be further averted if the foreign government takes steps to stop the prohibited activity. Sanctions are in place for not less than 12 months, and are terminated then only if the President determines and certifies to Congress that the person's engagement in prohibited activity has ceased and will not resume. The President may waive the continued use of sanctions when he determines and certifies to Congress that continuing the restrictions would have a serious adverse effect on the safety and soundness of the domestic or international financial system or the domestic or international payments system. The Nuclear Proliferation Prevention Act of 1994 was enacted as title VIII of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 ( P.L. 103-236 ; approved April 30, 1994). Sec. 157(b) of P.L. 104-164 (approved July 21, 1996) made changes to sec. 824, including striking out a requirement that any p residential determination pursuant to subsec. (c) be reviewed by the courts. Syria Accountability and Lebanese Sovereignty Restoration Act of 200339 Section 5 (Penalties and Authorization) requires the President to prohibit the export to Syria of any dual-use item on the U.S. Munitions List or Commerce Control List, prohibit the issuance of export licenses for such items, and to choose from a menu of other restrictions, to impose two or more of the following: (A) prohibit the export of most U.S. products, (B) prohibit U.S. businesses from operating in Syria, (C) limit U.S. travel of Syrian diplomats, (D) prohibit landing or flyover rights to Syrian air carriers, (E) curtail diplomatic relations between the United States and Syria, or (F) block transactions in which the Government of Syria has an interest. For sanctions to be lifted, the President must certify to Congress that four conditions have been met, that the Government of Syria has ceased: (1) providing support for international terrorist groups and does not allow terrorist groups to maintain facilities in territory under Syrian control; (2) its occupation of Lebanon; (3) "the development and deployment of medium-and long-range surface-to-surface ballistic missiles, is not pursuing or engaged in the research, development, acquisition, production, transfer, or deployment of biological, chemical, or nuclear weapons, has provided credible assurances that such behavior will not be undertaken in the future, and has agreed to allow United Nations and other international observers to verify such actions and assurances"; and (4) support for, and facilitation of, terrorist activities in Iraq. The President may waive any or all sanctions, however, if he finds it in the U.S. national security interest to do so and notifies Congress. P.L. 108-175 ; approved December 12, 2003. No amendments have been enacted.

The proliferation of nuclear, biological, and chemical weapons, and the means to deliver them, are front and center today for policy makers who guide and form U.S. foreign policy and national security policy, and economic sanctions are considered a valuable asset in the national security and foreign policy toolbox. The United States currently maintains robust sanctions regimes against foreign governments it has identified as proliferators (particularly Iran, North Korea, and Syria). If the 112th Congress takes up even a fraction of the proposals introduced by its predecessor involving economic sanctions, the President and the Departments of State, Commerce, and Treasury—those agencies that implement and administer the bulk of sanctions regimes—will likely find the role of Congress in determining the use of sanctions also robust. This report offers a listing and brief description of legal provisions that require or authorize the imposition of some form of economic sanction against countries, companies, persons, or entities that violate U.S. nonproliferation norms. For each provision, information is included on what triggers the imposition of sanctions, their duration, what authority the President has to delay or abstain from imposing sanctions, and what authority the President has to waive the imposition of sanctions.

About the U.S. Department of Health and Human Services (HHS) The mission of HHS is to "enhance the health and well-being of Americans by providing for effective health and human services and by fostering sound, sustained advances in the sciences underlying medicine, public health, and social services." HHS is currently organized into 11 main agencies, called "operating divisions" (see below), which are responsible for a wide variety of health and human services and related research. In addition, HHS has a number of "staff divisions" within the Office of the Secretary (OS). These staff divisions fulfill a broad array of management, research, oversight, and emergency preparedness functions in support of the entire department. HHS Operating Divisions Eight of the HHS operating divisions are part of the U.S. Public Health Service (PHS). PHS agencies have diverse missions in support of public health, including the provision of health care services and supports (e.g., IHS, HRSA, SAMHSA), the advancement of health care quality and medical research (e.g., AHRQ, NIH), the prevention and control of disease and injury and environmental health hazards (e.g., CDC, ATSDR), and the regulation of food and drugs (e.g., FDA). The three remaining HHS operating divisions—ACF, ACL, and CMS—are not PHS agencies. ACF and ACL largely administer human services programs focused on the well-being of vulnerable children, families, older Americans, and individuals with disabilities. CMS—which accounts for the largest share of the HHS budget by far—is responsible for administering the Medicare and Medicaid programs, in addition to some aspects of the private health insurance market. Methodology and Assumptions Underlying FY2019 Budget Documents The President's budget request for FY2019, which was released on February 12, 2018, occurred in the context of at least two significant circumstances. First, annual appropriations for FY2018 had not been enacted at the time of the budget's release. Second, on February 9, 2018—just days before the President's budget was released—the Bipartisan Budget Act of 2018 ( P.L. 115-123 ; BBA 2018) was enacted. This law increased the amount of discretionary spending that would be allowed for FY2018 and FY2019, extended temporary funding provided under earlier FY2018 continuing appropriations, provided new FY2018 supplemental appropriations, and extended funding for a number of HHS mandatory spending programs through FY2019 (or beyond). This section discusses the extent to which these circumstances affected the FY2018 and FY2019 funding levels published in the Office of Management and Budget (OMB) budget request materials and the HHS Budget in Brief (BIB), which are the primary data sources for this report. Interpreting FY2018 Funding Levels At the time that the budget request was released, discretionary funding for FY2018 was being provided by a series of temporary continuing resolutions (CRs), instead of full-year appropriations acts. Consequently, both the OMB and HHS budget materials use estimates for FY2018 that are derived from two sources: For discretionary spending programs, the materials display annualized estimates of funding provided under the fourth FY2018 CR ( P.L. 115-120 ), which was in effect at the time the budget request was being finalized. Generally, this CR included a formulaic extension of FY2017 funding levels with an across-the-board adjustment and exceptions for particular accounts and activities. For mandatory spending programs, the materials display estimates of the amounts expected to be needed for FY2018 based on criteria outlined in authorizing law. (For a related discussion, see " Budgetary Resources versus Appropriations .") While the estimates of annualized spending under FY2018 CRs might have informed FY2019 budget negotiations within the Administration, these estimates should not be treated as FY2018 "final" or enacted levels for the purposes of comparison to prior years or the FY2019 proposal. In addition, readers should note that BBA 2018 (discussed further in the next section) contains provisions that directly affect actual discretionary and mandatory spending levels for FY2018. The act contains full-year FY2018 supplemental appropriations for disaster relief, including for certain HHS programs or activities. It also extends a number of mandatory spending programs or activities through FY2019 (or beyond), and, in so doing, also provides FY2018 funding for a number of those purposes. Neither the FY2018 supplemental appropriations nor the FY2018 mandatory spending contained in BBA 2018 were incorporated into the FY2018 estimates presented in HHS or OMB budget materials (and thus, these amounts are also excluded from this report). Interpreting FY2019 Funding Levels During the time that the President's budget request for FY2019 was being formulated, policymakers had not yet agreed to changes to the statutory limits on discretionary spending for FY2018 and FY2019. (These limits on "defense" and "nondefense" spending are intended to restrict the total amount of discretionary funding that can result from appropriations decisionmaking each fiscal year.) On February 9, 2018, three days before the FY2019 budget was submitted, these limits were increased by the enactment of BBA 2018; the total nondefense limit was increased by $63 billion in FY2018, and by $68 billion in FY2019. Almost all HHS discretionary spending is subject to the nondefense limit. For the FY2019 budget submission, OMB and HHS materials dealt with this increase to the spending limits differently. The OMB budget materials generally were not revised to account for the additional spending allowed by BBA 2018. Instead, OMB released an "addendum" concurrent with the budget submission to outline proposed changes to the budget request in response to the increased spending limits. (The addendum explained that these increases did not equal the entire additional amount allowed by the new FY2019 spending limits because "the Administration strongly believes that we need to continue to restrain non-defense spending in light of the Nation's long-term fiscal challenges.") However, the HHS budgetary amounts displayed in the FY2019 BIB were revised ahead of their release to account for the increases that were outlined in the OMB addendum. This means that the agency-, account-, and program-level amounts for FY2019 listed in OMB budget materials in many cases differ from what is displayed in the HHS BIB—for both mandatory and discretionary accounts. The changes proposed in the OMB budget addendum (and reflected in the HHS BIB) represent a fairly significant shift in the Administration's discretionary request for HHS compared to the request as it existed before the BBA 2018 was enacted. Based on OMB materials prepared before the BBA 2018 was enacted, the Administration had planned to propose decreasing discretionary HHS budget authority in FY2019 by about 24% compared to FY2017 (the most recent year for which final funding levels are available). By contrast, the revised FY2019 request reflected in the HHS BIB calls for a 10% increase in discretionary HHS budget authority compared to FY2017. Finally, readers should be aware that, as was the case for the FY2018 mandatory spending in BBA 2018, the FY2019 mandatory spending in BBA 2018 was not incorporated into the HHS BIB or OMB budget materials for FY2019. Overview of the FY2019 HHS Budget Request Under the budget request, HHS would spend an estimated $1.216 trillion in outlays in FY2019 (see Table 1 ). This is $48 billion more than the FY2018 estimate (based on the annualized CR and current services mandatory spending) and about $113 billion (+10%) more than FY2017 actual. Historical estimates by OMB indicate that HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Most recently, HHS is estimated to have accounted for 28% of all federal outlays in FY2017. Figure 1 displays proposed FY2019 HHS outlays by major program or spending category in the President's request. As this figure shows, mandatory spending typically accounts for the vast majority of the HHS budget. In fact, two programs—Medicare and Medicaid—are expected to account for 86% of all estimated HHS spending in FY2019. Medicare and Medicaid are "entitlement" programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law. This figure also shows that discretionary spending accounts for about 8% of FY2019 HHS outlays in the President's request. Although discretionary spending represents a relatively small share of total HHS spending, the department nevertheless receives more discretionary money than most federal departments. According to OMB data, HHS accounted for 7.2% of all discretionary budget authority in FY2017. The Department of Defense is the only federal agency to account for a larger share of all discretionary budget authority in that year. Budgetary Resources versus Appropriations Readers should be aware that the HHS budget includes a broader set of budgetary resources than the amounts provided to HHS through the annual appropriations process. As a result, certain amounts shown in FY2019 HHS budget materials (including amounts for prior years) will not match amounts provided to HHS by annual appropriations acts and displayed in accompanying congressional documents. There are several reasons for this, which are described throughout this section. First, mandatory spending makes up a large portion of the HHS budget, and much of that spending is provided directly by authorizing laws, not through appropriations acts. All discretionary spending is controlled and provided through the annual appropriations process. By contrast, all mandatory spending is controlled by the program's authorizing statute. In most cases, that authorizing statute also provides the funds for the program. However, the budget authority for some mandatory programs (including Medicaid), while controlled by criteria in the authorizing statute, must still be provided through the annual appropriations process; such programs are commonly referred to as "appropriated entitlements" or "appropriated mandatories." In addition, the HHS budget request takes into account the department as a whole, while the appropriations process divides HHS funding across three different appropriations bills. While most of the discretionary funding for the department is provided through the Departments of Labor, Health and Human Services, and Education, and Related Agencies (LHHS) Appropriations Act, funding for certain HHS agencies and activities is appropriated in two other bills—the Departments of the Interior, Environment, and Related Agencies Appropriations Act (INT) and the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act (AG). Table 2 lists HHS agencies by appropriations bill. Moreover, the Administration's estimates for HHS programs may follow different conventions than those of congressional scorekeepers. For example, certain transfers of funding between HHS agencies (or from HHS to other federal agencies) that occurred in prior fiscal years, or are expected to occur in the current fiscal year, may be accounted for in the Administration estimates but not necessarily in the congressional documents. In addition, HHS budget materials may include two different estimates for mandatory spending programs in FY2019: proposed law and current law . Proposed law estimates take into account changes in mandatory spending proposed in the FY2018 HHS budget request. Such proposals would need to be enacted into law to affect the budgetary resources ultimately available to the mandatory spending program. HHS materials may also show a current law or current services estimate for mandatory spending programs. These estimates assume that no changes will be made to existing policies, and instead estimate mandatory spending for programs based on criteria established in current authorizing law. The HHS budget estimates in this report reflect the proposed law estimates for mandatory spending programs, but readers should be aware that other HHS, OMB, or congressional estimates might reflect current law instead. Finally, the amounts of discretionary funding provided in the appropriations bills do not necessarily account for all of the budgetary resources that are available to those agencies. This is because agencies within HHS may have the authority to expend user fees and other types of collections that effectively supplement those appropriations. In addition, agencies may receive transfers of budgetary resources from other sources, such as from the Public Health Service Evaluation Set-Aside (also referred to as the PHS Tap) or one of the mandatory trust funds established by the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended). Budgetary totals that account for these sorts of resources in the Administration estimates are referred to as being at the "program level." HHS agencies that have historically had notable differences between the amounts in the appropriations bills and their program level include the Food and Drug Administration (due to user fees) and the Agency for Healthcare Research and Quality (due to transfers). The program level for each agency is listed in the table entitled "Composition of the HHS Budget Discretionary Programs" in the HHS FY2019 BIB. HHS Budget by Operating Division Table 3 displays budgetary totals for each HHS operating division, as well as the Office of the Secretary. These totals are inclusive of both mandatory and discretionary funding. The FY2017 actual, FY2018 estimate (based on the annualized CR and current services mandatory spending), and FY2019 request figures are taken from the HHS BIB for FY2019; the FY2016 actual figures are taken from the FY2018 BIB. The remainder of this section provides a brief summary of the mission of each operating division, the FY2019 budget request, and links to additional resources related to that request. A table of relevant CRS key policy staff is included at the end of the report. The figures in this section are provided in terms of budget authority (BA) and outlays. BA is the authority provided by federal law to enter into contracts or other financial obligations that will result in immediate or future expenditures involving federal government funds. Outlays occur when funds are actually expended from the Treasury; they could be the result of either new budget authority enacted in the current fiscal year or unexpended budget authority that was enacted in previous fiscal years. As a consequence, the BA and outlays in this table represent two different ways of accounting for the funding that is provided to each HHS agency through the federal budget process. Food and Drug Administration (FDA) The FDA mission is focused on regulating the safety of human foods, dietary supplements, cosmetics, and animal foods; and the safety and effectiveness of human drugs, biological products (e.g., vaccines), medical devices, radiation-emitting products, and animal drugs. It also regulates the manufacture, marketing, and sale of tobacco products. Relevant Appropriations Bill: AG FY2019 Request: BA: $3.257 billion Outlays: $3.092 billion Health Resources and Services Administration (HRSA) The HRSA mission is focused on "improving access to health care for those who are uninsured, isolated, or medically vulnerable." Among its many programs and activities, HRSA supports health care workforce training, the National Health Service Corps, and the federal health centers program, which provides grants to nonprofit entities that provide primary care services to people who experience financial, geographic, cultural, or other barriers to health care. Relevant Appropriations Bill: LHHS FY2019 Request: BA: $9.891 billion Outlays: $10.634 billion Indian Health Service (IHS) The IHS mission is focused on providing "comprehensive health services for American Indians and Alaska Natives ... to improve their health status and overall quality of life." IHS provides health care for approximately 2.2 million eligible American Indians/Alaska Natives through a system of programs and facilities located on or near Indian reservations, and through contractors in certain urban areas. Relevant Appropriations Bill: INT FY2019 R equest: BA: $5.433 billion Outlays: $5.410 billion Centers for Disease Control and Prevention (CDC) and Agency for Toxic Substances and Disease Registry (ATSDR)30 The CDC mission is focused on "disease prevention and control, environmental health, and health promotion and health education." CDC is organized into a number of centers, institutes, and offices, some focused on specific public health challenges (e.g., injury prevention) and others focused on general public health capabilities (e.g., surveillance and laboratory services). In addition, the Agency for Toxic Substances and Disease Registry (ATSDR) is headed by the CDC director. For that reason, the ATSDR budget is often shown within CDC. Following the conventions of the FY2019 HHS BIB, ATSDR's budget request is included in the CDC totals shown in this report. ATSDR's work is focused on preventing or mitigating the adverse effects resulting from exposure to hazardous substances in the environment. Relevant Appropriations Bills: LHHS (CDC) INT (ATSDR) FY2019 Request (CDC and ATSDR combined): BA: $6.078 billion Outlays: $7.530 billion National Institutes of Health (NIH) The NIH mission is focused on supporting and conducting research "into the causes, diagnosis, treatment, control, and prevention of diseases" and promoting the "acquisition and dissemination of medical knowledge to health professionals and the public." NIH is organized into 27 research institutes and centers, headed by the NIH Director. (The FY2019 President's budget assumes that AHRQ's functions will be consolidated within NIH, in the new National Institute for Research on Safety and Quality [NIRSQ] . This assumption is reflected in the figures below.) Relevant Appropriations Bill: LHHS FY2019 Request: BA: $33.888 billion Outlays: $35.082 billion Substance Abuse and Mental Health Services Administration (SAMHSA) The SAMHSA mission is focused on reducing the "impact of substance abuse and mental illness on America's communities." SAMHSA coordinates behavioral health surveillance to improve understanding of the impact of substance abuse and mental illness on children, individuals, and families, and the costs associated with treatment. Relevant Appropriations Bill: LHHS FY2019 Request: BA: $3.426 billion Outlays: $3.616 billion Agency for Healthcare Research and Quality (AHRQ) The AHRQ mission is focused on research to make health care "safer, higher quality, more accessible, equitable, and affordable." Specific AHRQ research efforts are aimed at reducing the costs of care, promoting patient safety, measuring the quality of health care, and improving health care services, organization, and financing. The FY2019 President's budget proposes consolidating AHRQ's functions within NIH, in the new National Institute for Research on Safety and Quality (NIRSQ). Relevant Appropriations Bill: LHHS FY201 9 Request: BA: $0 Outlays: $240 million Centers for Medicare & Medicaid Services (CMS) The CMS mission is focused on supporting "innovative approaches to improve quality, accessibility, and affordability" of Medicare, Medicaid, the State Children's Health Insurance Program (CHIP), and private insurance and private insurance market reform programs. The President's budget estimates that in FY2018, "over 143 million Americans will rely on programs CMS administers including Medicare, Medicaid, the Children's Health Insurance Program (CHIP), and the Health Insurance Exchanges." Relevant Appropriations Bill: LHHS FY2019 Request: BA: $1,122.804 billion Outlays: $1,092.541 billion Administration for Children and Families (ACF) The ACF mission is focused on promoting the "economic and social well-being of children, youth, families, and communities." ACF administers a wide array of human services programs, including Temporary Assistance for Needy Families (TANF), Head Start, child care, the Social Services Block Grant (SSBG), and various child welfare programs. Relevant Appropriations Bill: LHHS FY201 9 Request: BA: $47.247 billion Outlays: $48.971 billion Administration for Community Living (ACL) The ACL mission is focused on maximizing the "independence, well-being, and health of older adults, people with disabilities across the lifespan, and their families and caregivers." ACL administers a number of programs targeted at older Americans and the disabled, including Home and Community-Based Supportive Services and State Councils on Developmental Disabilities. Relevant Appropriations Bill: LHHS FY201 9 Request: BA: $1.819 billion Outlays: $1.966 billion

This report provides information about the FY2019 budget request for the Department of Health and Human Services (HHS). The report begins by reviewing the department's mission and structure. Next, the report offers a brief explanation of the conventions used for the FY2018 estimates and FY2019 request levels in the budget documents released by the HHS and the Office of Management and Budget (OMB). The report also discusses the concept of the HHS budget as a whole, in comparison to how funding is provided to HHS through the annual appropriations process. The report concludes with a breakdown of the HHS request by agency, along with additional HHS resources that provide further information on the request. A table of CRS key policy staff is included at the end of the report. Historically, HHS has been one of the larger federal departments in terms of budgetary resources. Estimates by OMB indicate that HHS has accounted for at least 20% of all federal outlays in each year since FY1995. Most recently, HHS is estimated to have accounted for 28% of all federal outlays in FY2017. Under the FY2019 President's budget proposal, HHS would spend an estimated $1.2 trillion in FY2019. This is $48 billion more than FY2018 estimated spending levels and about $113 billion (+10%) more than FY2017 actual spending levels. Final FY2018 appropriations were not enacted prior to the release of the FY2019 President's budget request. As a result, the FY2018 estimates in FY2019 President's budget materials (and this report) are based on annualized amounts provided in an FY2018 continuing resolution, plus current services estimates for mandatory spending. Mandatory spending typically accounts for the majority of the HHS budget. Two programs—Medicare and Medicaid—are expected to account for 86% of all estimated HHS spending in FY2019, according to the President's request. Medicare and Medicaid are "entitlement" programs, meaning the federal government is required to make mandatory payments to individuals, states, or other entities based on criteria established in authorizing law. Discretionary spending accounts for about 8% of HHS outlays in the FY2019 President's request. Although discretionary spending represents a relatively small share of total HHS spending, the department nevertheless receives more discretionary money than most federal departments. According to OMB data, HHS accounted for 7% of all discretionary budget authority in FY2017.

Background In the 1980s, EPA determined that many of the roughly 2.2 million underground storage tanks (USTs) in the United States, most of them storing petroleum products, were leaking. Many other tanks were nearing the end of their useful life expectancy and were expected to leak in the near future. Approximately 50% of the U.S. population relies on ground water for their drinking water, and states were reporting that leaking underground tanks were the leading source of groundwater contamination. In 1984, Congress responded to this public health and environmental threat and established a leak prevention, detection, and cleanup program for USTs containing chemicals or petroleum by establishing an underground storage tank regulatory program in Subtitle I of the Solid Waste Disposal Act, also known as the Resource Conservation and Recovery Act (RCRA). Subtitle I directed EPA to establish operating requirements and technical standards for tank design and installation, leak detection, spill and overfill control, corrective action, and tank closure. The universe of regulated tanks was extremely large and diverse, and included many small businesses. Consequently, EPA phased in the tank regulations over a 10-year period (1988 through 1998). Strict standards for new tanks took effect in 1988, and all tanks were required to comply with leak detection regulations by late 1993. All tanks installed before 1988 had to be upgraded (with spill, overfill, and corrosion protection), replaced, or closed by December 22, 1998. In 1986, Congress established a response program for leaking petroleum USTs through the Superfund Amendments and Reauthorization Act (SARA; P.L. 99-499 ), which amended RCRA Subtitle I. The amendments authorized EPA and states to respond to petroleum spills and leaks. SARA also amended the Internal Revenue Code of 1986 to create the Leaking Underground Storage Tank (LUST) Trust Fund to help EPA and states cover the costs of responding to leaking USTs in cases where UST owners or operators do not clean up a site. EPA and the states have used the annual LUST Trust Fund appropriation mainly to oversee and enforce corrective actions performed by responsible parties. The law also authorized the use of funds to conduct corrective actions where no responsible party has been identified, where a responsible party fails to comply with a cleanup order, in the event of an emergency, and to take cost recovery actions against parties. EPA and states have been successful in getting responsible parties to perform most cleanups. In these cases, the cleanup costs typically have been paid for by a state fund (discussed below), the responsible party, and/or private insurance. State Funds The 1986 law further directed EPA to establish financial responsibility requirements to ensure that UST owners and operators are able to cover the costs of taking corrective action and compensating third parties for injuries and property damage caused by leaking tanks. As mandated, EPA issued regulations requiring most tank owners and operators selling petroleum products to demonstrate a minimum financial responsibility of $1 million. Alternatively, owners and operators could rely on state assurance funds to demonstrate financial responsibility, saving them the cost of purchasing private insurance. Most states established financial assurance funds. Unlike the federal LUST Trust Fund, state funds often are used to reimburse financially solvent tank owners and operators for some or all of the costs of remediating leaking tank sites. Revenues for state funds typically have been generated through tank fees and petroleum fees; collectively, these funds have provided more cleanup funds than the federal LUST Trust Fund. A 2009 survey of state financial assurance funds, conducted by the Vermont Department of Environmental Conservation, showed that, cumulatively, states had provided more than $17 billion through their funds to support the cleanup of leaking tank sites. During 2009, state funds collected $1.38 billion in annual revenues and paid out a total of $875 million, while outstanding claims against state funds reached $2.69 billion, up from $1.32 billion in 2006. States reported that the average cost of cleaning up a leaking tank site was roughly $127,000. The number of sites with claims also has increased annually, growing from 159,909 in 2006 to 173,717 in 2009. While 10 states have made a transition to private insurance, 20 states have extended their funds' original sunset date to address the backlog of leaking tanks. LUST Trust Fund: Funding and Uses The LUST Trust Fund is funded primarily through a 0.1 cent-per-gallon motor fuels tax which began in 1987. The Energy Policy Act of 2005 ( P.L. 109-58 ) extended the tax through September 2011. During FY2009, the fund earned approximately $107 million in interest and $169 million in tax receipts (down from $228.3 million in FY2007). The estimated total revenue value of the trust fund was roughly $276 million for the fiscal year. At the start of FY2010, the fund had an unobligated balance of approximately $3.0 billion. For a number of years, Congress appropriated approximately $72 million annually from the LUST Trust Fund to support the LUST response program. The Energy Policy Act of 2005 (EPAct; P.L. 109-58 ) authorized new uses of the trust fund and added new appropriations authorities to fund Subtitle I leak prevention and detection activities, in addition to cleanup activities. In the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ), Congress provided $105.8 million from the fund, including roughly $72 million for the cleanup program and $33.8 million for the UST leak prevention program, reflecting the broadened range of authorized uses of the fund under EPAct. EPA typically has allocated approximately 81% of the annual trust fund appropriation to the states in the form of cooperative agreements, and 4% to support LUST-eligible activities on Indian lands. The agency has used the remaining 15% for its program responsibilities. EPAct ( P.L. 109-58 , § 1522) specified that EPA must allot at least 80% of the LUST Trust Fund appropriation to the states. Under cooperative agreements with EPA, the states receive grants to help cover the cost of administering the LUST program. States have used most of their LUST program grants to hire staff for technical oversight of corrective actions performed by responsible parties. Typically, they have used about one-third of their LUST grants for cleaning up abandoned tank sites and undertaking emergency responses. In FY2009, EPA provided approximately $63 million through state cooperative agreements and to tribes for the cleanup program and used roughly $11 million to meet its responsibilities. EPA provided another $34.4 million from the trust fund for state and tribal grants to implement and enforce the UST leak prevention program. EPA uses its portion of the appropriation to oversee cooperative agreements with states, implement the LUST corrective action program on Indian lands, and support state and regional offices. EPA priorities in the LUST program have included reducing the backlog of confirmed releases; promoting better and less expensive cleanups; providing assistance to Indian tribes; assisting with the cleanup of more complicated sites, especially sites contaminated with MTBE; and implementing the Energy Policy Act provisions. More recent work areas for EPA's UST program involve evaluating the compatibility of fuel storage tanks with alternative fuels, and evaluating the transport and degradation characteristics of ethanol and biodiesel blends. Program Status and Issues EPA reports that since the federal underground storage tank program began, more than 1.7 million substandard underground storage tanks subject to regulation have been closed and, overall, the frequency and severity of leaks from UST systems have been reduced significantly. Through September 2009, 611,449 tanks remained in service (at approximately 223,000 sites) and subject to UST regulations. A total of 488,496 releases had been confirmed, and 463,060 cleanups had been initiated. Approximately 79.5% (388,331) of all reported releases had been cleaned up, and the backlog of sites requiring remedial action dropped to 100,165 sites. During FY2009, 7,168 releases were confirmed, and 12,944 cleanups were completed. Despite these cleanup achievements, program needs remain significant. Although EPA expects that private parties will pay for most cleanups, states estimated in 2007 that $12 billion was needed to remediate at least 54,000 tank sites that lack viable owners. Moreover, many tank owners and operators have yet to achieve full compliance with EPA technical regulations that are intended to prevent and detect leaks. EPA had estimated that by FY2001, 89% of USTs had upgraded tank equipment to meet federal requirements. However, the Government Accountability Office (GAO) reported that because of poor training of tank owners, operators, and other personnel, about 200,000 (29%) USTs were not being operated or maintained properly, thus increasing the risk of leaks and ground water contamination. GAO also reported that only 19 states physically inspected all their tanks every three years (the minimum EPA considered necessary for effective tank monitoring) and, consequently, EPA and states lacked the information needed to evaluate the effectiveness of the tank program and take appropriate enforcement actions. Among its initiatives to improve compliance, EPA revised the definition of compliance ("significant operational compliance") to place greater emphasis on the proper operation and maintenance of tank equipment and systems. At the close of FY20009, EPA reported that, nationwide, 79.3% of recently inspected UST facilities were in compliance with the release prevention regulations, 76.3% were in compliance with the leak detection regulations, and 66.4% of facilities had complied with the combined requirements. To address some of the program weaknesses and to improve leak prevention, Congress added new requirements to the UST regulatory program for EPA, states, and UST owners and operators, under the Energy Policy Act of 2005. The new provisions included requirements for inspections and for operator training. (See discussion below.) Methyl Tertiary Butyl Ether (MTBE) As the UST program matured during the 1990s, and states and EPA were making solid progress in addressing tank leaks, a new problem emerged. The gasoline additive MTBE was being detected at thousands of LUST sites and in numerous drinking water supplies, usually at low levels. Gasoline refiners had relied heavily on MTBE to produce gasoline that contained oxygenates, as required by the 1990 Clean Air Act Amendments as a way to improve combustion and reduce mobile source emissions. Once released into the environment, however, MTBE moves through soil and into water more rapidly than other gasoline components. Because of its mobility, MTBE is more likely to reach drinking water supplies, and it often is more difficult and costly to remediate than conventional gasoline. Although MTBE is thought to be less toxic than some gasoline components (such as benzene), even small amounts can render water undrinkable because of its strong taste and odor. Also, in 1993, EPA's Office of Research and Development concluded that the data support classifying MTBE as a possible human carcinogen. EPA continues to evaluate the health effects of this compound and, in particular, the potential effects associated with ingestion. Although EPA has not done so, at least seven states have set drinking water standards for MTBE, and many states have established cleanup standards or guidelines. At least 25 states have enacted limits or bans on the use of MTBE in gasoline. At least 42 states require testing for MTBE in ground water at LUST sites. In a 2000 survey, 31 states reported that MTBE was found in ground water at 40% or more of LUST sites in their states; 24 states reported MTBE at 60% to 100% of sites. An update of this survey found that many sites had not been tested for MTBE and that most states did not plan to reopen closed sites to look for MTBE. Congressional Actions The 109 th Congress addressed LUST and MTBE contamination issues in EPAct. Provisions of the act revised the UST leak prevention and cleanup programs (Title XV, Subtitle B), and extended the 0.1 cent-per-gallon motor fuels tax that finances the LUST Trust Fund through September 2011 (§ 1362). The House version of H.R. 6 had included a retroactive safe harbor provision to protect manufacturers and distributors of fuels containing MTBE or renewable fuels from product liability claims. This provision was opposed by water utilities, local government associations, and many states. Opponents argued that providing a liability shield would effectively leave gas station owners liable for cleanup, and as these businesses often have few resources, the effect of the provision would have been that the burden for cleanup would fall to local communities, water utilities, and the states. Proponents argued that a safe harbor was merited because MTBE was used heavily to meet federal clean air mandates. They further argued that the focus should be placed on preventing leaks from USTs, which have been the main source of MTBE contamination. Ultimately, the conferees dropped the safe harbor provision and dropped a provision to ban MTBE. P.L. 109-58 repealed the Clean Air Act oxygenated fuel requirement that had prompted extensive use of MTBE, and imposed a renewable fuels mandate. This CAA amendment eliminating the oxygen requirement in reformulated gasoline, combined with state bans and refiners' actions to eliminate MTBE in gasoline, has cut markedly into MTBE use (about 14 million barrels per year as of early 2008, down from about 100 million barrels per year at the peak). Underground Storage Tank Compliance Act Title XV, Subtitle B, of EPAct comprised the Underground Storage Tank Compliance Act (USTCA). The USTCA amended RCRA Subtitle I to add new leak prevention and enforcement provisions to the UST regulatory program and imposed new requirements on states, EPA, and tank owners. The USTCA requires EPA, and states that receive funding under Subtitle I, to conduct compliance inspections of tanks at least once every three years. It also requires states to comply with EPA guidance prohibiting fuel delivery to ineligible tanks, to develop training requirements for UST operators and individuals responsible for tank maintenance and spill response, and to prepare compliance reports on government-owned tanks in the state. Further, to protect groundwater, states must require either that new tanks located near drinking water wells are equipped with secondary containment, or that UST manufacturers and installers maintain evidence of financial responsibility to provide for the costs of corrective actions. The USTCA authorized the appropriation of $155 million annually for FY2006 through FY2011 from the LUST Trust Fund for states to use to implement new and existing UST leak prevention requirements and to administer state programs. For cleanup purposes, the USTCA authorized trust fund appropriations of $200 million annually for FY2006 through FY2011 for EPA and states to administer the LUST cleanup program, and another $200 million annually for FY2006 through FY2011, specifically for addressing MTBE and other oxygenated fuels leaks (such as ethanol). The 110th Congress To increase state program resources and facilitate cleanups, Congress provided the new funding authorities under EPAct (including the authority to use the LUST Trust Fund for prevention activities in addition to cleanup activities). Nonetheless, trust fund requests remained at roughly $72 million. For FY2008, the President requested $72.4 million from the LUST Trust Fund for cleanup activities, and another $22.3 million from general revenues through the State and Tribal Assistance Grants (STAG) account to support leak prevention activities. The Senate Committee on Appropriations similarly recommended cleanup funding from the trust fund and prevention funding from the STAG account ( S.Rept. 110-91 ). In contrast, the House report for EPA's FY2008 funding bill, H.R. 2643 ( H.Rept. 110-187 ) noted that the EPAct authorized the prevention grants to be funded from the LUST Trust Fund. The House combined the funding to reflect the broad uses of the trust fund authorized by EPAct. The House-passed bill approved $117.9 million from the trust fund for cleanup and leak prevention activities (including tank inspections). This amount included $10 million more than requested for LUST cooperative agreements, and $15.7 million more for state UST grants authorized by EPAct (which, when combined with the funds moved from the STAG account, would have provided a total of $35.5 million for prevention activities). Noting this increase in UST funding, the House rejected EPA's request that Congress revise the state inspection requirements under EPAct. The Consolidated Appropriations Act, 2008, followed the House approach and provided a total of $105.8 million from the Trust Fund to support both UST and LUST programs. For FY2009, EPA requested $72.3 million from the trust fund for the LUST cleanup program. EPA again requested funds under the STAG account ($22.8 million) to help states meet new EPAct responsibilities, including (1) triennial tank inspections, (2) operator training, (3) prohibition of delivery to non-complying tanks, and (4) secondary containment or financial responsibility for tank manufacturers and installers. In an effort to reduce EPAct costs to states, EPA submitted legislative language to allow states to use alternative mechanisms to meet the inspection mandate. The 110 th Congress, as part of its broader approach deferring final action on pending FY2009 appropriations to the 111 th Congress, did not consider specific EPA appropriations. Rather, the consolidated appropriations act for FY2009 ( P.L. 110-329 ) generally extended funding for EPA programs at FY2008 levels through March 6, 2009. The 111th Congress The 111 th Congress finalized appropriations to support agency programs for FY2009. The President had requested funding from the trust fund to support only the LUST cleanup program ($72.3 million), while requesting funding for the UST leak prevention program from general revenue funds. In the FY2009 Omnibus Appropriations Act ( P.L. 111-8 ), Congress provided $112.6 million from the trust fund, including $72.3 million for the LUST cleanup program and $20.3 million for grants to states to meet Energy Policy Act mandates. The American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ) provided an additional $200 million to EPA for the LUST cleanup program. Appropriated from the LUST Trust Fund, the funds have been allocated among the states through grant agreements with EPA. These recovery funds may be used for two general purposes: to oversee the cleanup of releases from underground storage tanks that contain petroleum products, where cleanups are conducted by responsible parties, and to conduct cleanups directly where the responsible party is unknown, unable, or unwilling to respond, or when prompt action is needed. The stimulus act waived the usual 10% state match requirement for the LUST program, and specified that EPA may use no more than 1.5% of the funds for program management and oversight. For FY2010, the Administration and Congress looked to the trust fund to support both LUST and UST program activities. P.L. 111-88 approved $113.1 million from the LUST Trust Fund, including $78.67 million for cleanup activities and $34.43 million for most other Subtitle I leak prevention and detection provisions. Congress provided another $2.5 million from general revenues for state grants to cover remaining Subtitle I responsibilities not authorized under EPAct to be supported by trust fund revenues. Several years of stable funding have enabled states to plan and administer their programs, and to meet the EPAct requirements, including tank inspections, which has been perhaps the most challenging new mandate imposed on the states. Table 1 provides the amounts appropriated for FY2009 and FY2010 for the LUST Program by EPA account and includes the amount requested for FY2011. The appropriations from the LUST Trust Fund have increased since the enactment of EPAct, as states had urged. However, the appropriation levels still remain below the amount of interest earned annually on the fund ($124 million in FY2009) and the levels authorized in EPAct. Moreover, the amount provided now is used for a broader range of activities, supporting both the LUST cleanup program and UST leak prevention program. Overall, the amount provided to the states for oversight and enforcement of the LUST cleanup program and for taking emergency remediation actions under that program has not increased markedly in recent years ($78.67 million for FY2010); thus states might continue to press Congress to release more money from the fund. That said, the American Recovery and Reinvestment Act provided a $200 million boost to the cleanup program, and Congress may be interested in knowing how readily states have been able to make use of the additional funding. Emerging Issue: Ethanol and Biofuels Compatibility An emerging UST issue concerns the impact that ethanol and other biofuels may have on storage tank infrastructure. Ethanol, for example, is more corrosive than gasoline, thus increasing the risk of fuel leaks in tank systems. The renewable fuel mandates in EPAct and, subsequently, the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140 ) present new technical issues for USTs and for fuel storage and delivery infrastructure, generally. Underground storage tanks typically have not been designed to store higher blends of ethanol (generally above 10%). EPA estimates that half the tanks in the ground are 20 years old and have never been tested for compatibility with higher ethanol blends. Tank owners, EPA, states, and the motor fuels industry are concerned that a new wave of leaks could occur as the amount of ethanol blended in gasoline increases to meet the EISA renewable fuel standards. To address this issue, the House in the 110 th Congress passed H.R. 547 ( H.Rept. 110-7 ) to require EPA to establish a research and development program on materials that could be added to biofuels to make them more compatible with existing infrastructure used to store and deliver petroleum-based fuels. The Senate did not act on this bill. EISA did include an amendment to section 211(c) of the Clean Air Act to allow EPA to regulate fuels and fuel additives to protect water quality, as well as air quality. This provision is intended to enable EPA to prevent or address potential water quality problems that might result from the use of alternative fuels and fuel additives (such as those experienced with MTBE use). In the 111 th Congress, legislation again has been introduced to address the issue of compatibility of higher ethanol blends with fuel storage and distribution infrastructure, and motor vehicle engines as well. S. 1666 would authorize the EPA Administrator to allow the introduction of mid-level ethanol blends into commerce only after the agency met several conditions, including responding to Science Advisory Board recommendations on mitigating materials compatibility and consumer safety issues associated with the use of those higher blends. Currently, priority research areas for EPA's UST program include evaluating the compatibility of fuel storage tanks with alternative fuels, and evaluating the transport and degradation characteristics of ethanol and biodiesel blends.

To address a nationwide water pollution problem caused by leaking underground storage tanks (USTs), Congress authorized a leak prevention, detection, and cleanup program in 1984, under Subtitle I of the Solid Waste Disposal Act. In 1986, Congress established the Leaking Underground Storage Tank (LUST) Trust Fund to provide a source of funds to support the Environmental Protection Agency (EPA) and states in remediating leaks from petroleum USTs. The LUST Trust Fund is funded primarily through a 0.1 cent-per-gallon motor fuels tax. Historically, EPA and states primarily have used LUST fund appropriations to oversee LUST cleanup activities by responsible parties and to clean up sites where owners fail to do so. Since the program began, the frequency and severity of releases from USTs have declined markedly. Through FY2009, cleanup had been initiated or completed at nearly 80% of the 488,000 confirmed release sites, while a backlog of some 100,000 contaminated sites remained. Despite much progress in the program, challenges have remained. A key issue has been that state resources have not met the demands of administering the UST leak prevention program. States have long sought larger appropriations from the trust fund to support the LUST cleanup program, and some also sought flexibility to use fund resources to administer and enforce the UST leak prevention program. Another issue has concerned the detection of methyl tertiary butyl ether (MTBE) in groundwater at many LUST sites and in some drinking water supplies. This gas additive was used widely to meet Clean Air Act requirements to reduce auto emissions. However, MTBE is very water-soluble, and, once released, it is more likely to reach water supplies and often is more costly to remediate than conventional gasoline leaks. In the Energy Policy Act of 2005 (EPAct; P.L. 109-58), the 109th Congress expanded the leak prevention provisions in the UST program, imposed new program responsibilities on EPA and states, and authorized use of the LUST Trust Fund for prevention as well as cleanup purposes. The law also repealed the Clean Air Act oxygenated fuel requirement that had prompted the extensive use of MTBE. In the Energy Independence and Security Act of 2007 (EISA; P.L. 110-140), the 110th Congress amended the Clean Air Act to authorize EPA to regulate fuels and fuel additives for the purpose of protecting water quality, as well as air quality. EISA also increased the renewable fuel standard (RFS), and an emerging issue concerns the compatibility of ethanol and biofuels with storage tank infrastructure. Ethanol is more corrosive than gasoline, and EPA estimates that half the tanks in the ground have not been tested for compatibility with ethanol blends greater than 10%. The RFS is likely to push blending beyond 10% in a few years. The concern is that a new wave of leaks could occur as the amount of ethanol in gasoline increases to meet the RFS. S. 1666 would direct EPA to allow the use of mid-level ethanol blends only after infrastructure compatibility and consumer safety issues are addressed. Congress has increased program funding since the enactment of EPAct. The American Recovery and Reinvestment Act (ARRA; P.L. 111-5) appropriated $200 million from the trust fund for the LUST cleanup program, and Congress provided another $112.6 million from the fund for cleanup and leak prevention and detection activities in regular FY2009 appropriations. For FY2010, in P.L. 111-88, Congress provided $113.1 million from the fund, including $78.7 million for LUST cleanup activities, and $34.4 million for UST leak prevention, detection, and other program responsibilities added by the EPAct. The Administration has requested similar amounts for FY2011. This report reviews UST and LUST programs and related issues and developments.

Introduction The Obama Administration requested $94.5 billion for the Department of Transportation (DOT) for FY2017, $19.5 billion (26%) more than DOT received in FY2016. The Obama Administration proposal included significant increases in funding for highway, transit, and intercity passenger rail programs. Around 75% of DOT's funding is mandatory budgetary authority drawn from trust funds; the Administration's request would have drawn a larger portion (87%) from mandatory budget authority, reducing the amount of discretionary budget authority in DOT's budget from $18.6 billion in 2016 to $12.0 billion for FY2017. The Senate Committee on Appropriations recommended a total of $76.9 billion in new budget authority for DOT for FY2017 ($74.7 billion after scorekeeping adjustments); this is $1.8 billion (2.5%) above the comparable FY2016 amount. The committee rejected the request to reclassify some DOT expenditures as "mandatory." On May 12, 2016, the full Senate began consideration of FY2017 appropriations for Transportation, HUD, and Related Agencies. By custom, appropriations bills originate in the House of Representatives. Because House action on the FY2017 THUD bill had not yet occurred, the Senate substituted the text of the Senate-reported FY2017 THUD bill ( S. 2844 ) for the text of H.R. 2577 , which originally contained the text of the Senate-reported FY2016 THUD bill. The Senate Appropriations Committee substitute amendment ( S.Amdt. 3896 ) to the bill also includes as Division B the text of the Senate Appropriations Committee-reported FY2017 Military Construction, Veterans Affairs, and Related Agencies bill. On May 24, 2016, the House Committee on Appropriations reported out H.R. 5394 . According to press reports, the Trump Administration has requested that the Essential Air Service program and the TIGER (National Infrastructure Investment) grant program be eliminated, and that the transit New Starts (Capital Investment Grants) program be reduced by $400 million from its FY2016 level, for FY2017. Understanding the DOT Appropriations Act DOT's funding arrangements are unusual compared to those of most other federal agencies. Two large trust funds, the Highway Trust Fund and the Airport and Airway Trust Fund, provide 91% of DOT's budget authority (see Table 1 ). The scale of the funding coming from these funds is not entirely obvious in DOT budget tables, because most of the funding from the Airport and Airway Trust Fund is in the form of discretionary budget authority and so is combined with the discretionary budget authority provided from the general fund. Also, for most federal agencies discretionary funding is close or identical to total funding. But roughly three-fourths of DOT's funding is mandatory budget authority derived from trust funds. Only one-fourth of DOT's budget authority is truly discretionary authority. Table 2 shows the breakdown between the discretionary and mandatory funding in DOT's budget. Approximately 80% of DOT's funding is distributed to states, local authorities, and Amtrak in the form of grants (see Table 3 ). Of DOT's largest sub-agencies, only the Federal Aviation Administration, which is responsible for the operation of the air traffic control system and employs roughly 83% of DOT's 56,252 employees, many as air traffic controllers, has a budget whose primary expenditure is not making grants. Reauthorization of Air Transportation Programs Since most DOT funding comes from trust funds whose revenues typically come from taxes, the periodic reauthorizations of the taxes supporting these trust funds, and the apportionment of the budget authority from those trust funds to DOT programs, are a significant aspect of DOT funding. The current authorization for the federal aviation programs is scheduled to expire during FY2017. Reauthorization of this program may affect both its structure and funding level. DOT Funding Trend In current (nominal) dollars, DOT's nonemergency annual funding has risen from a recent low of $70 billion in FY2012 to $75 billion in FY2016. However, adjusting that funding for inflation tells a somewhat different story. DOT's inflation-adjusted funding peaked in FY2010 at $85.4 billion (in constant 2016 dollars) and declined from that point until FY2015, before rising in FY2016 (see Figure 1 ). Since FY2012, DOT's funding has been lower, after adjustment for inflation, than in any year during the FY2006-FY2011 period. DOT FY2017 Appropriations Table 4 presents a selected account-by-account summary of FY2017 appropriations for DOT, compared to FY2016. Selected Issues Overall, the Obama Administration's FY2017 budget request totaled $96.9 billion in new budget resources for DOT. The requested funding is $21.9 billion more than that enacted for FY2016. The Obama Administration request called for significant increases over the authorized amounts for highways, transit, and intercity rail. According to press reports, the Trump Administration has requested $1 billion in reductions from FY2016 levels, zeroing out the Essential Air Services program (-$150 million) and the TIGER (National Infrastructure Investment) grant program (-$500 million) and reducing funding for the transit New Starts program (-$400 million). Highway Trust Fund Solvency Virtually all federal highway funding and most federal transit funding come from the Highway Trust Fund, whose revenues comes largely from the federal motor fuels excise tax ("gas tax"). For several years, expenditures from the fund have exceeded revenues; for example, for FY2017, revenues are projected to be approximately $42 billion, while authorized outlays are projected to be approximately $56 billion. Congress transferred about $143 billion, mostly from the general fund of the Treasury, to the Highway Trust Fund during the period FY2008-FY2016 to keep the trust fund solvent. One reason for the shortfall in the fund is that the federal gas tax has not been raised since 1993. The tax is a fixed amount assessed per gallon of fuel sold, not a percentage of the cost of the fuel sold: whether a gallon of gas costs $1 or $4, the highway trust fund receives 18.3 cents for each gallon of gasoline and 24.3 cents for each gallon of diesel. Meanwhile, the value of the gas tax has been diminished by inflation (which has reduced the purchasing power of the revenue raised by the tax) and increasing automobile fuel efficiency (which reduces growth in gasoline sales as vehicles are able to travel farther on a gallon of fuel). The Congressional Budget Office (CBO) has forecast that gasoline consumption will be relatively flat through 2024, as continued increases in the fuel efficiency of the U.S. passenger fleet are projected to offset increases in the number of miles driven. Consequently, CBO expects Highway Trust Fund revenues of $40 billion to $42 billion annually from FY2017 to FY2026, well short of the annual level of projected expenditures from the fund. National Infrastructure Investment (TIGER Grants) For FY2017, the Administration requested $1.25 billion for TIGER grants, the same amount as in previous years. The Senate bill would have provided $525 million, $25 million above the FY2106 amount. The Senate bill also recommended that the portion of funding allocated to projects in rural areas be increased from 20% to 30%; the same change was included in the Senate-passed bill in FY2016, but was not enacted. The House Committee on Appropriations recommended $450 million. The Transportation Investments Generating Economic Recovery (TIGER) grant program originated in the American Recovery and Reinvestment Act ( P.L. 111-5 ), where it was called "national infrastructure investment" (as it has been in subsequent appropriations acts). It is a discretionary grant program intended to address two criticisms of the current structure of federal transportation funding: that virtually all of the funding is distributed to state and local governments, which select projects based on their individual priorities, making it difficult to fund projects that have national or regional impacts but whose costs fall largely on one or two states; and that federal transportation funding is divided according to mode of transportation, making it difficult for projects in different modes to compete on the basis of comparative benefit. The TIGER program provides grants to projects of national, regional, or metropolitan area significance in various modes on a competitive basis, with recipients selected by DOT. Although the program is, by description, intended to fund projects of national, regional, and metropolitan area significance, in practice its funding has gone more toward projects of regional and metropolitan area significance. In large part this is a function of congressional intent, as Congress has directed that the funds be distributed equitably across geographic areas, between rural and urban areas, and among transportation modes, and has set relatively low minimum grant thresholds ($5 million for urban projects, $1 million for rural projects). Congress has continued to support the TIGER program through annual DOT appropriations. It is heavily oversubscribed; for example, DOT announced that it received a total of $10.1 billion in applications for the $500 million available for FY2015 grants. The U.S. Government Accountability Office (GAO) has reported that, while DOT has selection criteria for the TIGER grant program, it has sometimes awarded grants to lower-ranked projects while bypassing higher-ranked projects without explaining why it did so, raising questions about the integrity of the selection process. DOT has responded that while its project rankings are based on transportation-related criteria (e.g., safety, economic competitiveness), it must sometimes select lower-ranking projects over higher-ranking ones to comply with other selection criteria established by Congress, such as geographic balance and a balance between rural and urban awards. Critics argue that TIGER grants go disproportionately to urban areas. For several years Congress has directed that at least 20% of TIGER funding should go to projects in rural areas. According to the 2010 Census, 19% of the U.S. population lives in rural areas. As Table 5 illustrates, the TIGER grant appropriation process has followed a pattern for several years: the Administration requests as much as or more than Congress has previously provided; the House zeroes out the program or proposes a large cut; the Senate proposes an amount similar to the previously enacted figure; and the final enacted amount is similar to the previously enacted amount. Essential Air Service (EAS)14 As Table 6 shows, the Obama Administration requested $150 million for the EAS program in FY2017, in addition to $104 million in mandatory funding for a total of $254 million. The Senate bill would have provided a total of $254 million, the requested amount. This was a reduction of $29 million (10%) from the FY2016 level. The requested reduction is based on an expectation of reduced costs as cost-saving measures previously enacted come into effect. The House Committee on Appropriations likewise recommended $150 million. The program is funded through a combination of mandatory and discretionary budget authority. In addition to the annual discretionary appropriation, there is a mandatory annual authorization, $108 million in FY2016, financed by overflight fees collected from commercial airlines by FAA. These overflight fees apply to international flights that fly over, but do not land in, the United States. The fees are to be reasonably related to the costs of providing air traffic services to such flights. The EAS program seeks to preserve commercial air service to small communities by subsidizing service that would otherwise be unprofitable. The cost of the program in real terms has doubled since FY2008, in part because route reductions by airlines resulted in new communities being added to the program (see Table 7 ). Congress made changes to the program in 2012, including allowing no new entrants, capping the per-passenger subsidy for a community at $1,000, limiting communities that are less than 210 miles from a hub airport to a maximum average subsidy per passenger of $200, and allowing smaller planes to be used for communities with few daily passengers. Supporters of the EAS program contend that preserving airline service to small communities was a commitment Congress made when it deregulated airline service in 1978, anticipating that airlines would reduce or eliminate service to many communities that were too small to make such service economically viable. Supporters also contend that subsidizing air service to smaller communities promotes economic development in rural areas. Critics of the program note that the subsidy cost per passenger is relatively high, that many of the airports in the program have very few passengers, and that some of the airports receiving EAS subsidies are little more than an hour's drive from major airports. Intercity Rail Safety In 2008, Congress directed railroads to install positive train control (PTC) on certain segments of the national rail network by the end of 2015. PTC is a communications and signaling system that is capable of preventing incidents caused by train operator or dispatcher error. Freight railroads have reportedly spent billions of dollars thus far to meet this requirement, but most of the track required to have PTC installed was not in compliance at the end of 2015; in October 2015 Congress extended the deadline to the end of 2018—with an option for individual railroads to extend to 2020 with Federal Railroad Administration (FRA) approval. Congress provided $50 million in FY2010 and again in FY2016 for grants to railroads to help cover the expenses of installing PTC. The Obama Administration's FY2017 budget request included $875 million for the cost of PTC implementation on commuter railroad routes. The Senate recommended $199 million for PTC implementation on commuter and state-supported intercity passenger rail lines, as did the House Committee on Appropriations. Intercity Passenger Rail Development The Passenger Rail Reform and Investment Act of 2015 (Title XI of P.L. 114-94 ) reauthorized Amtrak while changing the structure of its federal grants: instead of getting separate grants for operating and capital expenses, it will now receive separate grants for the Northeast Corridor and the rest of its national network. This act also authorized three programs to make grants to states, public agencies, and rail carriers for intercity passenger rail development. The Administration's FY2017 budget for intercity rail development requested a total of $6 billion in two new programs: a Current Rail Passenger Service Program, which would primarily fund maintenance and improvement of existing intercity passenger rail service (i.e., Amtrak), and a Rail Service Improvement Program, which would fund new intercity passenger rail projects as well as some improvements to freight rail. The funding would come from a new transportation trust fund rather than discretionary funding. The Administration has made a similar proposal annually since FY2014. The Senate bill includes $1.42 billion for Amtrak, $30 million more than its FY2016 appropriation of $1.39 billion (see Table 8 ), and observed that creating a new transportation trust fund was a task for authorizing committees, not appropriations committees, while acknowledging that Amtrak has a state of good repair backlog of $28 billion on the Northeast Corridor. The House Committee on Appropriations likewise recommended $1.42 billion for Amtrak. The $85 million in the Senate bill, and $50 million recommended in the House bill, for intercity passenger rail grants in FY2017 in addition to the grants to Amtrak would be the first funding provided for intercity passenger rail (other than grants for positive train control implementation) since the 111 th Congress (2009-2010), which provided $10.5 billion for DOT's high-speed and intercity passenger rail grant program. Since then, Congress has provided no additional funding, and in FY2011 rescinded $400 million that had been appropriated but not yet obligated. Federal Transit Administration Capital Investment Grants The majority of the Federal Transit Administration's (FTA's) roughly $12 billion in funding is funneled to state and local transit agencies through several formula programs. The largest discretionary transit grant program is the Capital Investment Grants program (commonly referred to as the New Starts and Small Starts program). It funds new fixed-guideway transit lines and extensions to existing lines. The program has four components. New Starts funds capital projects with total costs over $300 million that are seeking more than $100 million in federal funding. Small Starts funds capital projects with total costs under $300 million that are seeking less than $100 million in federal funding. Core Capacity grants are for projects that will increase the capacity of existing systems. The Expedited Project Delivery Pilot Program will provide funding for eight projects in the previous three categories that require no more than a 25% federal share and are supported, in part, by a public-private partnership. The Capital Investment Grants program funds for any project are typically disbursed over a period of years. Much of the funding for this program each year is committed to projects with multiyear grant agreements signed in previous years. For FY2017, the Obama Administration requested $3.5 billion for the program, $1.323 billion (61%) more than the $2.177 billion provided in FY2016. The Senate bill would have provided $2.338 billion, the authorized level, which is 7% ($161 million) above the FY2016 level. The House Committee on Appropriations recommended $2.5 billion. A New Starts grant, by statute, can be up to 80% of the net capital project cost. Since FY2002, DOT appropriations acts have included a provision directing FTA not to sign any full funding grant agreements for New Starts projects that would provide a federal share of more than 60%. That provision was not included in the Senate bill. The House-reported bill included a provision prohibiting grant agreements where the federal share was more than 50%. Critics of lowering the federal share provided for New Starts projects note that the federal share for highway projects is typically 80%, and in some cases is higher. They contend that the higher federal share makes highway projects relatively more attractive than public transportation projects for communities considering how to address transportation problems. Advocates of this provision note that the demand for New Starts funding greatly exceeds the amount available, so requiring a higher local match allows FTA to support more projects with the available funding. They also assert that requiring a higher local match likely encourages communities to estimate the costs and benefits of proposed transit projects more carefully, reducing the risk of subsequent cost overruns. Grant to the Washington Metropolitan Area Transit Authority The Passenger Rail Investment and Improvement Act of 2008 authorized $1.5 billion over 10 years in grants to the Washington Metropolitan Area Transit Authority (WMATA) for preventive maintenance and capital grants, to be matched by funding from the District of Columbia and the states of Maryland and Virginia. Under this agreement, Congress has provided $150 million to WMATA in each of the past six years. WMATA faces a number of difficulties. It is dealing with a backlog of maintenance needs due to inadequate maintenance investment over many years, and it has experienced several fatal incidents, most recently in January 2015, and a number of other incidents that have raised questions about the safety culture of the agency. An investigation that found numerous instances of mismanagement of federal funding has led FTA to restrict WMATA's use of federal funds. An FTA audit of WMATA's safety practices in 2015 produced many recommendations for change, and in October 2015 FTA assumed oversight of WMATA's safety compliance practices from the Tri-State Oversight Committee, the agency created by the governments of the District of Columbia, Maryland, and Virginia to oversee WMATA safety performance. The three jurisdictions are to create a new, more effective oversight entity to replace the Tri-State Oversight Committee. The National Transportation Safety Board has recommended that oversight of WMATA's rail operations be assigned to the Federal Railroad Administration (FRA), which has a long history of safety enforcement, rather than the FTA, which is primarily a grant management agency. However, Congress would have to act to give FRA authority to oversee WMATA, while FTA already has such authority. For FY2017, the Senate bill would have provided $150 million for WMATA, while expressing frustration at the lack of progress the agency has made in improving safety with the additional funding it has been receiving. The House Committee on Appropriations likewise recommended $150 million. Commercial Driver Hours of Service and the 34-Hour Restart Requirement The Senate bill would have amended a provision from the FY2016 THUD act, and made a provisional change in the hours-of-service rule. The FY2016 THUD act included a provision that suspends portions of the commercial driver hours-of-service rules pending a study of their costs and benefits. These Federal Motor Carrier Safety Administration (FMCSA) rules took effect in June 2013. Prior to that time, drivers were required to take at least 34 hours off duty after working for 60 hours in a seven-day period (or 70 hours in an eight-day period); this was referred to as the "34-hour restart requirement." The 2013 rules required that the 34-hour off-duty period cover two consecutive 1 a.m.-5 a.m. periods, and drivers were limited to taking this 34-hour "restart" once in a 168-hour (seven-day) span. If drivers work for less than 60 hours in a week, they do not have to take the 34-hour restart; for example, if a driver works eight hours every day, for a total of 56 hours in any seven-day period, that driver is not required to take a 34-hour rest period. The purpose of the 2013 change in the hours-of-service rules was to promote highway safety by reducing the risk of driver fatigue. Under the previous rules, drivers could start their 34-hour rest period at any time of the day, and could take more than one such rest period per seven-day period. Thus a driver was able to work the maximum permitted time per day (14 hours) and take the 34-hour restart after five days, and then, after a rest period of as little as one night and two daytime periods, work 14 hours a day for another five consecutive days. FMCSA asserted that this schedule allowed a driver to work up to 82 hours over a seven-day period, which it judged to not allow sufficient rest over time to prevent driver fatigue. By requiring that the 34-hour restart period cover two 1 a.m.-5 a.m. periods, the 2012 rule was intended to allow drivers to get more sleep during the night hours, when studies indicate that sleep is most restorative (compared to sleeping during other times of the day). A provision included in the FY2016 THUD appropriations act prohibited enforcement of the new requirements, returning the rule to what it was prior to June 2013, unless a study required by Section 133 of Division K of P.L. 113-235 (the FY2015 THUD act) finds that commercial drivers operating under the new restart provisions showed "statistically significant improvement in all outcomes related to safety, operator fatigue, driver health and longevity, and work schedules." This is slightly different than the original standard set in the FY2015 DOT appropriations act, P.L. 113-235 , which set as the standard whether the study showed a "greater net benefit for the operational, safety, health and fatigue impacts of the restart provisions." The Senate bill would have made a technical correction to the provision in the FY2016 THUD bill. It also would have provided that, should the results of the study be such that the rule changes implemented in 2013 are rolled back, the maximum work time for a driver would be 73 hours in a seven-day period (down from the potential 82 hours calculated by FMCSA). FMCSA published a cost-benefit analysis in the final rule that implemented the 2013 changes, which found that the changes were cost-beneficial, but critics of the changes said that the costs were greater than FMCSA had estimated. FMCSA submitted the new study to Congress at the beginning of March 2017; it found that the 2013 rule changes did not result in significant safety benefits.

In February 2016, the Obama Administration proposed a $96.9 billion budget for the Department of Transportation (DOT) for FY2017. That is approximately $22 billion more than was provided for FY2016. The budget request reflected the Administration's call for significant increases in funding for highway, transit, and rail programs. The DOT appropriations bill funds federal programs covering aviation, highways and highway safety, public transit, intercity rail, maritime safety, pipelines, and related activities. Federal highway, transit, and rail programs were reauthorized in the fall of 2015, and their future funding authorizations were somewhat increased. There is general agreement that more funding is needed for transportation infrastructure, but Congress has not been able to agree on a source that could provide the additional funding. The federal excise tax on motor fuel, which is the primary funding source for federal highway and transit programs, has not been increased in over 20 years, and does not raise enough revenue to support even the current level of spending. To address this shortfall, Congress periodically transfers money from the general fund to keep the programs going. The annual appropriations for DOT are combined with those for the Department of Housing and Urban Development (HUD) in the Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations bill. In the 114th Congress, the Senate passed H.R. 2577, in which Division A was FY2017 appropriations for THUD. The bill would have provided $76.9 billion in new budget authority for DOT, $1.8 billion more than the comparable figure in FY2016 but roughly $20 billion less than the Administration request. The increase in spending over FY2016 was not obvious in budget tables due to a proposed rescission of $2.2 billion of contract authority, which made the net FY2017 amount $344 million less than the comparable FY2016 appropriation. The House Committee on Appropriations reported out H.R. 5394, which would have provided $76.9 billion in new budget authority for DOT. The major changes from FY2016 levels in these bills were more funding for highways, transit, and intercity passenger rail. FY2017 funding is being provided by a continuing resolution (CR) at roughly FY2016 levels. The current CR ends on April 28, 2017. According to press reports, the Trump Administration has requested a $1 billion reduction in DOT funding from FY2016 levels, with cuts to the Essential Air Service, TIGER (National Infrastructure Investment), and transit New Starts grant programs.

Introduction At the height of Soviet military power in 1985-1986, there were 4.9 million servicemen and women in the active duty forces, and about another 1 million belonged to the Warsaw Treaty Organization (a mutual defense alliance including several Eastern European countries). After the collapse of the Soviet Union at the end of 1991, severe budgetary problems in Russia—which inherited the bulk of former Soviet military forces—precipitated deep cuts in troop numbers and weapons acquisition. Although Russia's economy improved in the 2000s, permitting higher defense expenditures, the military continued to resist reforms to its mission and organization. Despite the sizeable reduction in the size of the armed forces, the Russian military is still the fifth largest in the world in terms of active personnel—officially 1 million in 2011—exceeded only by militaries in China, India, North Korea, and the United States. Although Russian defense spending also has greatly decreased, it still is among the highest in the world. Because of the lessened capabilities of its conventional forces, Russia has relied on nuclear forces as a deterrent to conventional or nuclear attack and as a means of response to attack. Russia has undertaken several largely piecemeal and halting efforts to revamp the armed forces it inherited from the Soviet Union. In 2007, near the end of then-President Vladimir Putin's second term in office, he appointed Anatoliy Serdyukov—the former head of the Federal Tax Service—as defense minister as part of an effort to combat corruption in the military and carry out reforms. After the August 2008 Russia-Georgia conflict revealed large-scale Russian military operational failures, the leadership became more determined to boost military capabilities, and a new wave of reforms was launched in September-October 2008. According to most observers, the reforms launched by Serdyukov have gone further than previous reforms in altering the force structure and operations of the armed forces inherited from the Soviet Union, although near-term and longer-range effects are subject to debate. This report examines the character and status of these changes and debate, focusing mainly on those reforms that have impacted conventional armed forces capabilities. The report provides basic information about the military's leadership and structure, the arms industry and efforts to modernize weaponry (including through foreign arms technology transfers), power projection efforts, and the military budget. The Question of Russian Intentions A major question regarding the military reforms launched in 2008 is whether they are intended to recreate or approach the capabilities of a Soviet-era "superpower" armed forces with global reach threatening U.S. interests or to create smaller, professional, armed forces for homeland security and counter-terrorist missions. The intentions of Russia's leaders are contradictory, according to some observers, with some "Cold Warriors" seeking to recreate a military with global reach to fight vast wars while others seek to tailor forces for modern missions. Elements of both goals appear to various degrees in Russia's national security strategy, defense doctrine, and other documents and programs (described directly below). Even in military reform efforts launched in late 2008 these contradictions are apparent, although the main thrust of reforms appears to support modern missions. Perhaps regardless of intentions, there are major economic, technological, demographic, and other impediments both to Russia's ability to recreate "superpower" armed forces ready to carry out strategic land, sea, and air battles in the East and West and to its efforts to create modern armed forces, according to most observers. Medvedev's National Security and Defense Policy On May 13, 2009, Russian President Dmitriy Medvedev promulgated a National Security Strategy of Russia through the year 2020, which in principle provides the basis for Russia's military doctrine and foreign policy. The strategy outlines current threats facing Russia and its security priorities. The strategy praises former President Putin (without naming him) for leading Russia out of its "political and socio-economic systemic crisis" of the 1990s. It proclaims the emergence of "multi-vector diplomacy" in the world (implying that U.S. superpower status is eroding) and "Russia's resource potential" as ensuring that Russia will "consolidate its influence in the world arena" as a leading political and economic power. Both the national security strategy and the military doctrine were drawn up by the Russian Security Council, headed by Nikolay Patrushev, the former chief of the Federal Security Service, and deputy head Yuriy Baluyevskiy, the former chief of the General Staff of the Armed Forces. Both are considered by many observers to represent those within the leadership who advocate bolstering Russia's international "great power" status. The strategy states that globalization has led to new external and internal threats and challenges ranging from resource wars to rising social inequality and poverty within the country that could contribute to unrest. NATO is criticized as an obsolete regional security organization that should be superseded by a new regional security architecture. Nonetheless, the strategy urges a greater regional security role for the Collective Security Treaty Organization (CSTO, a Russia-led mutual security alliance; other members include Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan), which it appears to view as potentially equivalent to NATO. It states that NATO's enlargement to countries sharing borders with Russia and NATO's adoption of out-of-area missions are "unacceptable," although it also avers that Russia is open to cooperation with NATO. An increasing global competition for resources could lead to military conflict, including near the borders of Russia and its allies, the strategy warns. The United States (though not named) appears to be criticized as threatening Russia's military security by attempting to achieve "overwhelming supremacy in the military sphere." The strategy proclaimed that despite this U.S. effort, Russia would "undertake all necessary efforts at the lowest level of expenditures to maintain parity with the United States in strategic offensive weapons." At the same time, the strategy calls for establishing a "strategic partnership" with the United States that appears to be envisaged as a global diarchy. The strategy proclaims that national defense and internal control are the main national security priorities. To ensure national defense, the strategy calls for preserving strategic nuclear capabilities, reorganizing the conventional armed forces, and revitalizing defense industries. Perhaps reflecting the 2008 Russian-Georgian conflict, the strategy stresses that the military has a responsibility to protect Russian citizens in nearby states. Internal control is assured through enhanced counter-intelligence, counter-terrorism, anti-transnational crime and corruption, and border control efforts. U.S. analyst Stephen Blank suggests that the U.S.-Russia "reset" of relations being undertaken at the time of the release of the strategy led to the removal of explicit references to the United States as a threat. He suggests, however, that the strategy remains a largely conservative document opposed to Serdyukov's military reforms (although Serdyukov endorsed the threat assessment presented by the strategy), which was written by military officers and security officials who retained Soviet-era views of threats. German analyst Henning Schröder appears to take a different view, stating that the strategy seems to be "written by several authors whose threat perceptions diverge radically." He argues that the presentation of possible threats to national security—including the Federal Security Service's fear of spies, the military's fear of NATO, the economists' concern for economic development, and the elite's fear of social unrest—provides "no clues as to which of the competing ... risk perceptions will determine the future course of politics." Military Doctrine President Medvedev approved a new military doctrine on February 5, 2010. The doctrine has legal force as state policy and in principle dictates decisions on capabilities. The doctrine qualifies language it repeats from the previous 2000 doctrine—that the threat of large-scale war is reduced—by raising concerns that "dangers" are increasing that could develop into threats. The 2010 doctrine follows the 2009 national security strategy in mentioning NATO as a "danger" because of its enlargement to states bordering Russia and its assumption of out of area missions. Other dangers include the development of strategic missile defenses and conventional precision strike weapons, including cruise missiles. The doctrine calls for Russian troops to be used abroad to protect Russian interests and uphold international security. Legislation in October 2009 had provided for the Federation Council to authorize the use of troops abroad to protect its "peacekeepers" and citizens, and to combat piracy at sea, making it somewhat easier for Medvedev to call for such deployments. The protection of Russian citizens abroad reflects a greater emphasis on forward-basing in former Soviet republics that are regarded as within a privileged sphere of influence, according to some observers. The new doctrine repeats nearly verbatim language—with perhaps one significant change—contained in the 2000 doctrine emphasizing nuclear retaliation in case of nuclear attack. There had been speculation before the release of the doctrine that it might elevate the concept of preemptive nuclear strikes, but these are mentioned only as contingencies in cases where nonnuclear weapons of mass destruction are used against Russia "and/or against its allies, as well as in cases when aggression against the Russian Federation with the use of conventional weapons endangers the very existence of the [Russian] state." The perhaps one significant change may be the language permitting use in cases when the "very existence" of the Russian state is threatened. This language may narrow the circumstances under which such weapons could be used, since the 2000 doctrine permitted their use "in situations critical to the national security" of Russia. In any event, the doctrine continues to authorize the possible first use of nuclear weapons during an ongoing conflict. The national security strategy and its theoretically supporting foreign policy concept (and other foreign policy pronouncements) appear less militaristic than the military doctrine. The national security strategy raises the possibility of improved U.S.-Russian ties, perhaps reflecting the early period of the bilateral "reset," while the latter does not. Because of this, some observers suggest that some elements of the military doctrine were written before the national security concept. According to analyst Kier Giles, the military doctrine largely fails to reflect the military reforms launched a year before the doctrine's release. The doctrine discusses the mobilization of reserves, although the military reforms greatly reduce the necessity of such mobilization by shifting to fully manned brigades. The doctrine also fails to reflect experience gained in combating insurgency in the North Caucasus. In this view, the doctrine continues to call for the armed forces to be prepared to project great power status worldwide and fight major land battles in Europe and Asia. Serdyukov's Defense Reforms In February 2007, then-President Putin appointed Anatoly Serdyukov as defense minister, a position that Serdyukov retained after Medvedev was elected president the next year. Many observers supposed that Serdyukov was chosen to carry out an wide-ranging anti-corruption campaign in the armed forces, since he had a nonmilitary career in accounting. In early to mid-2008, however, Serdyukov began calling for reducing the size of the armed forces and other reforms. These initiatives were opposed by Army General Yuriy Baluyevskiy, then-chief of the General Staff, who was relieved in July 2008 by President Medvedev and replaced by Army General Nikolay Makarov. Some of Baluyevskiy's associates also resigned or were ousted, creating command uncertainties on the eve of the August 2008 Russia-Georgia conflict (as mentioned below, Baluyevskiy remained somewhat influential in his new assignment as the deputy chairman of the Security Council). The August 2008 Russia-Georgia conflict revealed a need to decisively revamp war-fighting capabilities. According to analysts Dale Herspring and Roger McDermott, the conflict forced the Russian government to realize that "the forces currently at the state's disposal were in no condition to fight a modern war." The U.S. think-tank STRATFOR has stated that "command, control and communications; intelligence, surveillance and reconnaissance; [and] joint planning and operations were either not evident during the [conflict] or were executed ineffectively," by Russian invading forces. STRATFOR suggests that the Russian air force lacked basic intelligence necessary for targeting, including for the suppression of Georgian air defenses, and that there was a general failure of secure tactical communications necessary for command and control. The United Kingdom-based International Institute for Strategic Studies likewise has stated that the poorly executed Russian invasion of Georgia "increased doubt that the military could be seen as a reliable instrument to support Russian foreign- and security policy objectives, and also reinforced the perception that the armed forces could not in the future guarantee reliable conventional defense capabilities." Russian media reported that in September-October 2008, President Medvedev and Defense Minister Serdyukov discussed a radical military reform plan with military officers and State Duma deputies. According to one account, in mid-September 2008 Medvedev decreed the launching of these new military reforms. On September 26, 2008, Medvedev specified that the reform called for creating permanent combat-ready military units, improving command and control, bolstering personnel training, equipping the armed forces with new weapons, and increasing salaries and benefits, and he directed military officials to work out how to implement the plan by the end of the year. A few days later, he also stated that the reforms would involve strengthening the Strategic Rocket Forces and the Navy, creating aerospace defense forces, and bolstering rapid reaction forces. On October 14, 2008, Serduyukov announced more details of the reform plan (see directly below). In his November 5, 2008, address to the legislature, Medvedev announced that he had ordered a "new configuration for our country's armed forces," and a rearmament effort because of military shortcomings that were exposed by the August 2008 Russia-Georgia conflict and ongoing efforts by the United States to create global missile defenses, encircle Russia with military bases, and expand NATO. According to some observers, Russia's experiences in combating separatism and terrorism in the North Caucasus also motivated the reform effort. The promotion of Lieutenant General Vladimir Shamanov—a veteran of combat in Russia's breakaway Chechnya region and in Georgia during the 2008 Russia-Georgia conflict—as the commander of the Russian Airborne Forces in 2009 exemplified these motivations, according to these observers. In December 2008, Serdyukov openly stressed that the reforms were intended to switch from a mass mobilization army for vast land, sea, and air wars to "a performance-capable, mobile, and maximally armed army and navy ready to participate in three regional and local conflicts, at a minimum." Some observers suggested that the reforms were patterned after the U.S. military force structure. Defense Ministry civilian adviser Vitaliy Shlikov explicitly stated that the military education reforms were designed to "match the more effective American model." As set out by Serdyukov and other officials in October 2008, the reform plan called for reducing the total size of the armed forces from 1.2 million in 2008 to under 1 million by 2012. Three major initiatives were launched: Accelerating planned cuts in the officer corps to reduce their numbers from 355,000 to 150,000. Serdyukov lamented that the current structure of the military was "like an egg, swollen in the middle, we have more colonels and lieutenant-colonels than junior officers," and that the ratio of officers to troops had dwindled in recent years. The reform plan also included abolishing the noncommissioned officers' ranks of warrant officer and midshipman in the Russian Army and Navy. The bulk of these 140,000 NCOs—many or most of which were conscripts who had received little specialized training—would be replaced by 78,000 newly trained sergeants. Among other personnel changes, the number of officials and officers at the Defense Ministry and General Staff would be cut. Consolidating partially manned units and reducing the four-tier command system of military districts, armies, divisions, and regiments to a basic two-tier system of strategic commands and fully manned brigades that could be deployed for combat operations within a few hours (termed "permanent readiness brigades"). Sharply reducing the number and revamping the system of higher military education and training. During 2009, the brigade system for ground forces was set up and other reforms were carried out. The reforms fundamentally affected the Ground Forces, reducing them in size from about 400,000 to 270,000 troops, converting 203 partially staffed divisions to 85 brigades, and eliminating 20,000 of 22,000 tanks. The Air Force and Navy were somewhat less affected by restructuring. Except for the move of the Navy headquarters to St. Petersburg, there was not an emphasis on opening new naval bases, but rather on boosting the acquisition of ships and submarines. On March 5, 2010, President Medvedev claimed that the armed forces reorganization had been completed and that personnel had been successfully reduced to 1 million. He stated that improving the combat readiness of combined-arms forces in their new organizational and staffing structure would be the focus in 2010, as well as the development of a 10-year plan for weapons modernization. However, authorities and observers highlighted many ongoing challenges, including problems with contract troops and the size of the officer corps, and with supplying the new brigades with adequate weaponry. The Reversal in Policy Over Contract Troops Army General Makarov, Chief of the General Staff, admitted in February 2010 that the transition to professional (contract) soldiers had largely failed, and that future contracting would focus on NCOs. This most recent effort to increase the number of contract troops in the military had been launched by former President Putin in 2003. Critics argued that the sums paid to contractees were far below adequate wages, so that the quality and number of contractees had remained low. Critics also alleged that large sums in the 2004-2007 defense budgets for transitioning to contracts had been pilfered. In late 2010, a large number of contractees reportedly were discharged, reportedly leaving about 110,000 contractees, and Makarov announced that the number of draftees would be increased. Serdyukov stated that there was no money for contractees, and he and other military officials suggested that funding was being shifted to procure weapons and to boost the salaries of remaining contractees. The reduction in contractees was highly controversial, with influential military officials calling for new contracting efforts to obtain skilled personnel. Military officers belonging to the Airborne Troops, which contains five battalions largely made up of contractees serving as rapid reaction forces, were among those strongly objecting to the reductions. Many civilians also condemned the boost in conscription. In seeming response, in March 2011 President Medvedev approved raising the number of contract personnel to 425,000 by 2017. In late March 2011, General Makarov stated that the provision for 425,000 contract troops "is only the first stage" of reforms, and pointed to staffing in the Czech armed forces, which consists of about 10%-15% draftees, as the ultimate goal for the Russian military. He stressed that boosted pay and housing benefits will be essential to increasing the numbers of contractees in the Russian military. He explained that the previous contractees that had been let go "were mainly soldiers who had served for six months and who, through persuasion, coercion, and threats, were made to sign a contract. We clothed them and shod them as contractees and then ... they took off," at the end of one year, ignoring their three-year obligation as contractees. A new process would be introduced, he stated, whereby the prospective contractees are trained and then offered contracts. He stated that there was a demographic need to shift to more contractees, since the pool of draft-age males was decreasing. Criticizing this apparent volte face , Russian military analyst Viktor Litovkin stated that "first the chief of General Staff says that we committed a monstrous mistake and that the federal targeted program for forming professional units has failed; therefore, we need to rid ourselves of contractors. Half a year passes, and the same chief of General Staff steps up to the podium, saying that it seems the country again needs 425,000 professionals." The Reversal of Policy Over the Size of the Officer Corps The planned reduction in the officer corps fueled large-scale resistance among active-duty officers and various unions and other military associations. Perhaps in the face of such resistance, in another apparent volte face , Serdyukov told the defense ministry collegium in mid-March 2011 that President Medvedev had approved an increase in the number of planned officers from 150,000 to 220,000 by 2012. He explained that these "additional" 70,000 officers would be highly qualified specialists needed by the newly created Aerospace Defense Command and other billets requiring high technology-savvy officers. In early July 2011, Serdyukov stated that the ranks of the 70,000 added officers could be filled from various sources, including from a group of 39,000 officers who had been taken off staff but had not been discharged, and remained "at the disposal of" the armed forces. Also, some lieutenants that had been serving as sergeants are being reinstated as officers. He stated that the Aerospace Defense Command would absorb about 40,000 of these added officers but that others would go to a number of missile brigades being established by two Strategic Missile Troops divisions and to several air defense regiments. Goals for 2011 At a mid-March 2011 meeting of the Defense Ministry Collegium, President Medvedev set five reform tasks for 2011: to implement the new State Armaments Program; to enhance troop control, particularly at the level of strategic commands and armies; to create the Aerospace Defense Command by the end of the year; to strengthen defense of the country's borders, including eastern borders (presumably with China); to give "undoubted priority" to social guarantees for servicemen and military pensioners. He pledged that a lieutenant's pay would be increased to 50,000 rubles a month (about $1,800) at the beginning of 2012 and that average pensions would be increased by at least 60%. Serdyukov proclaimed at the meeting that "the first most difficult stage" of modernizing the armed forces had been completed with the creation of brigades, the improvement of logistics, combat readiness and training, the boosting of modern weapons procurement (which he claimed now accounted for 15% of the arsenal), and the construction of new housing for officers. As pointed out by Russian military analyst Pavel Felgenhauer, however, "Russia's inventory of nonstrategic weapons has never been officially published. Serdyukov announced some meaningless overall figures of 'new weapons' procured in 2010, not disclosing any information about what types and if they are indeed 'modern.' Almost total secrecy makes any attempt at an independent analysis of procurement or military reform a guessing game in Russia." In late March 2011, at a meeting of the Academy of Military Sciences, a Russian think tank, Makarov blamed Russia's past failures to modernize its armed forces on the incompetence of military think-tank planners. The results of "new-generation maneuvered defense, exclusively professionally trained armed forces, and network-centric warfare," first highlighted by the multinational Persian Gulf War in 1990-1991, were unheeded by these planners, who instead remained fixated on "large-scale linear actions by multi-million [man] armies" and on the "procurement of obsolete arms." He stated that the Russia-Georgia conflict in 2008 had finally forced the military to implement reforms, "even in the absence of a sufficient scientific-theoretical basis." He appeared to highlight this "absence" as a reason for the seemingly ad hoc nature of some of the reform efforts. Force Structure The Commander-in-Chief of the Armed Forces, the Ministry of Defense and the General Staff Under Serdyukov's reforms, the responsibilities and staffing of the Ministry of Defense and the General Staff changed, with many observers suggesting that the Ministry of Defense under Serdyukov gained more power to implement reforms through personnel changes among the General Staff and officer corps. Under the Russian constitution, the president is the commander-in-chief of the armed forces. He forms and heads the Security Council, approves the military doctrine, appoints and dismisses the top commanders of the armed forces, and confers higher military ranks. According to the president's website, as commander-in-chief, he endorses ... the concept and plans for building the Armed Forces, economic mobilization plans, civil defense plans and other laws and regulations involving military organization. The head of state also endorses all arms-related regulations and the regulations of the Ministry of Defense and the General Staff. The Minister of Defense and the Chief of the General Staff are directly subordinate to the President. The President issues annual decrees concerning the draft and the reserves, and signs international treaties on joint defense and military cooperation. The constitution and the 1996 law on defense provide for scant legislative oversight over the Ministry of Defense or defense budgets, although defense ministers occasionally discuss defense-related legislation and defense policy with the legislature. The Ministry of Defense provides civilian control over the military. Serdyukov is a civilian, as is a majority of the deputy ministers. In late June 2011, Russian media reported that the ministry had launched an effort to replace military officers or otherwise increase the number of civilians in the ministry. In the past, the General Staff, composed of the service and arms chiefs, had substantial operational control over military affairs. Amendments in 2004 to the law on defense strengthened the role of the Defense Ministry vis-a-vis the General Staff by specifying that the chiefs of the army, navy, and air force would report directly to the defense minister, and could not bypass the defense minister and report only to the president. However, until Serdyukov was appointed, the General Staff retained much of its previous power. President Medvedev stated in June 2008 that he was replacing Balyuevskiy with Makarov as chief of the General Staff at Serdyukov's request, a sign that the General Staff "is now firmly subordinated to the defense ministry." Under Serdyukov's military reforms, the General Staff has been downsized and has become primarily responsible for defense research, education, and liaison with foreign militaries. The General Staff's prestigious Center for Military-Strategic Research, which has been responsible for developing defense policy, has been retained but subordinated to the General Staff Academy. The Main Intelligence Directorate (GRU) long has constituted a major element of the General Staff's power as the "brain of the army." Some Russian analysts have argued that to reduce the power of the General Staff, the GRU should be removed from its control. Perhaps in an attempt to reduce the General Staff's power, in early 2010 the Spetsnaz (special forces) brigades subordinated to the GRU were partially reassigned to Ground Forces. However, in March 2011 the Spetsnaz brigades reportedly were resubordinated to the GRU, perhaps indicating an ongoing struggle for power between the Defense Ministry and the General Staff. The General Staff explained the return of Spetsnaz to the GRU as due to the growing risk of instability in Afghanistan and Pakistan, which might affect the "Central Asian axis," and increase the need for effective and covert action. In February 2011, General Makarov stated at a meeting of reserve officers from Moscow and the Central Federal District that "there is no improvisation in military reform. Serdyukov and I have a clear month-to-month plan for military reform to the year 2020. And we will not retreat from it one micron." Some observers claimed that this statement demonstrated the subordination of the general staff to the defense minister. However, other analysts argued that it was an assertion that the General Staff and the Defense Ministry were equal partners in carrying out reforms. These analysts have pointed to the moving of Spetsnaz brigades back to the GRU and to Makarov's call for the Aerospace Defense Forces to be subordinate to the General Staff as indications that it aims to assert some operational powers. The Security Council—composed of the president, prime minister, and top security and foreign affairs officials—is a consultative body tasked with threat assessments, doctrine formulation, and force structure planning. After President Medvedev removed Baluyevskiy as chief of the General Staff and appointed him to the Security Council, several Russian analysts suggested that the Security Council was a sinecure for military and security officials on their way to retirement. Its limited role also may have been indicated during the August 2008 Russia-Georgia conflict, when the Security Council met on the second day of warfare, after Medvedev had already directed the engagement of Russian forces against Georgia. However, the Security Council appeared influential in brokering agreement on the new national security strategy and military doctrine. An edict on the Security Council issued by President Medvedev in early May 2011 appeared to strengthen the role of the presidential administration in overseeing military affairs. The edict clarified that the Security Council examines issues and prepares "presidential decisions" on the "organization of defense, military organizational development, defense production, and military and military-technical cooperation of [Russia] with foreign states." Perhaps a new function related to combating corruption, the Security Council "organiz[es] the monitoring of targeted expenditure of budgetary appropriations envisaged in the federal budget for the relevant year for funding expenditures for national defense." An Interdepartmental Commission for Military Security composed of government officials serving in a voluntary capacity is established under the Security Council to assist in carrying out these functions. The status of the secretary of the Security Council appears to be strengthened. He "monitor[s] implementation of Security Council decisions and monitor[s] activities of the ... Armed Forces, other troops, military force elements, and entities ... [and] submit[s] an annual report to the ... President on the status of national security and measures for strengthening it." Branches, Combat Arms of Service, Military Districts/Joint Strategic Commands, and Brigades There are three military branches—Ground Forces, Navy, and Air Force—and three "combat arms of service" that are not under the command of the three branches. These include the Strategic Rocket Forces, Airborne Forces, and Military Space Forces. Serdyukov's military reforms have affected all of the military branches and combat arms of service to various degrees, including the introduction of the brigade system in most of the branches and combat arms of service. In addition, the six existing military districts were consolidated into four larger military districts (termed Joint Strategic Commands during wartime operations) with new responsibilities, and a new command—Aerospace Defense—is being set up. Aerospace Defense Operational-Strategic Command In November 2010 in his address to the Federal Assembly, President Medvedev called for aerospace defenses to be unified under a single command by the end of 2011, and in March 2011 specified that "existing systems of air and missile defense, missile attack warning, and space surveillance are to be united." The kernel of the new force is the Aerospace Defense Operational-Strategic Command, formerly the Moscow Air Defense District Special Purpose Command. The current commander of the Aerospace Defense Operational-Strategic Command, Lieutenant-General Valeriy Ivanov, stated in May 2011 that he envisaged the main function of the command to be "to detect the initiation of an attack and to warn the state leadership in order to facilitate further decisions to detect, destroy, suppress, or close down the assets." In June 2011, he led a planning exercise in Moscow on shooting down air attackers. After extensive inter-service wrangling, it has appeared that the command will be merged with the Military Space Forces, recreating in some form the aerospace defense structure that existed in 1967-1982. S-400 missile systems and follow-on planned S-500 systems are to form the basis of the Command. Some military planners appear to view the development of the S-500 surface-to-air missiles by the Almaz-Antey Air Defense Open Joint-Stock Company as necessary to the effectiveness of the new command. Reportedly, however, the S-400 long-range (250-mile) missile and the S-500 are years from development. In late May 2011, Major-General Igor Anatolyevich Sheremet, Deputy Chief of the General Staff and Chairman of the General Staff's Military-Science Committee (see below, " Weapons Modernization "), stressed that the creation of the Operational-Strategic Command of Aerospace Defense was a fundamental part of Serdyukov's reforms. Seeming to indicate the Russian leadership's fears of a U.S. or NATO-led attack, similar to NATO actions against Serbia in 1999, he stated that "we foresaw, that by the 2020s there would be in the inventories of the Western countries on the order of 80,000 cruise missiles including on the order of 2,000 with nuclear capabilities." He warned that these cruise missiles could be used for "a decapitating strike ... against the upper level of command and control agencies. On the strength of this, the issue was raised and the corresponding documents were approved at the highest level on the creation of the Operational-Strategic Command of Aerospace Defense." Other observers suggest that U.S. efforts to develop hypersonic military aircraft also spurred the creation of the new Command. Military Districts/Joint Strategic Commands In July 2010, President Medvedev decreed the creation of four military districts (which would be termed Joint Strategic Commands during wartime operations) to replace the Soviet-era distribution of equipment and manpower among the former six military districts. Some Russian analysts compared these new commands to those in the U.S. and other Western militaries (except that, according to Russian military doctrine, the role of the military districts/JSCs are to defend Russia against foreign invasion). The new military districts/JSCs are the Central, Eastern, Southern, and Western (see the Ministry of Defense, Russian Federation, at http://eng.mil.ru/en/index.htm ). Center Command controls the former Volga-Urals Military District and the western part of the Siberian Military District. Southern Command is in charge of the former North Caucasian Military District and the Black Sea Fleet and Caspian Flotilla. Eastern Command is in charge of the former Far Eastern Military District and the larger part of the Siberian Military District. Western Command controls personnel and equipment from the former Moscow and Leningrad military districts and the Northern and Baltic Fleets. In late October 2010, Serdyukov announced that the military districts/JSCs had been established. Each of the four military districts/JSCs has its own commander with authority over personnel and equipment provided by the individual military arms and branches located within the command area, which in theory will reduce the bureaucratic hurdles to warfighting. Troops of the Interior Ministry, the Emergency Situations Ministry, and the Border Guards that are located in a military district/JSC fall under the operational control of the commander, except for personnel belonging to the Strategic Rocket Forces, who remain under the direct authority of the president. Reportedly, the four new commanders of the military districts/JSCs formerly served with or under Makarov and are pro-reform. Mission planning was transferred from the branches of service and the general staff to the military districts/JSCs, while training and armaments needs remain part of the responsibilities of the branches of service. In the case of Ground Forces, combat training, including some inter-branch training, and the training of junior specialists and NCO's, has been retained under the control of the Ground Forces Main Combat Training Directorate. Also, participation in peacekeeping activities and the planning of armaments needs has remained under the control of the Ground Forces Main Command. Brigades To combat insurgency in the North Caucasus, two mountain warfare brigades had become fully operational by 2008. These brigades formed the template for Serdyukov's reform effort to introduce brigades throughout most of the armed forces by the end of 2009. In the Ground Forces, Serdyukov reported that 85 brigades had been formed by the end of 2009, among them 39 combined-arms brigades (later mentioned as 47), 21 missile troops and artillery brigades, 7 army air defense brigades, 12 signal brigades, 2 electronic warfare brigades, and 4 air assault brigades. One Russian media source claimed in early 2011 that the brigades "are at 95-100% strength and are fully outfitted with military equipment and other material resources." This optimistic assessment has been contradicted by Russian and other observers. Colonel General Alexander Postnikov, the commander-in-chief of the Ground Forces, testified to the Defense and Security Committee of the Federation Council in March 2011 that there were 70 Ground Forces brigades, and Russian defense analyst and State Duma member Alexey Arbatov suggested in April 2011 that there might only be 64 Ground Forces brigades. Postnikov also reported that the readiness of the Ground Forces remained stymied by the fact that the vast majority of weaponry is aged and needs to be modernized. He also reported that a decision had been made in early 2011 to set up heavy, medium, and light combined-arms brigades in the Ground Forces, a decision seemingly linked to readiness issues. Heavy brigades will be equipped with tanks and tracked armored infantry fighting vehicles weighing up to 65 tons and will be gradually modernized; medium brigades will be multirole and would feature armored vehicles still being designed; and light brigades will be ready for rapid deployment (but see below, " Implications for Russia ") and equipped with "Tiger" high-mobility multi-purpose vehicles. These latter brigades might also be used in mountainous or Arctic terrain. The Airborne Forces of the Army, the main elite rapid-reaction force prior to the reforms, resisted the switch to the brigade structure and was exempted. Its current structure is 35,000 personnel in four airborne divisions (each with 2-3 regiments), one brigade, a communications regiment, and a reconnaissance commando regiment (Spetsnaz). Its commander reports directly to the defense minister and president, reflecting its special status in the armed forces as a rapid reaction force. Despite exemption from the shift to brigades, the Airborne Forces nevertheless have been heavily impacted by the reforms. The Commander of the Airborne Forces, Lieutenant-General Vladimir Shamanov, reported in late July 2011 that readiness remained below what it was before the reforms began, since the number of conscriptees in the Airborne Forces had risen to 69% of personnel. He stated that his goal for the Airborne Forces was a minimum of 50% contract personnel. To maintain some rapid-reaction capabilities, several airborne and air assault battalions had been formed in 2010 that were staffed with 70% contract personnel. Manpower Levels and Training According to General Makarov, as an interim outcome of the reforms, in mid-2011 there were 184,000 contract troops and about 600,000 conscripts, with the number of officers rising from 150,000 to 220,000 by 2012. However, these publicly released numbers fall somewhat below the level of 1 million personnel, fuelling suggestions by some observers that the armed forces is actually below 1 million personnel. These observers question whether this number of conscripts has been attained, given lower levels of actual reported recruitment, and whether it has been possible quickly to bolster the number of contractees (see below, " Demographics and Quality of Personnel and Training "). With the planning for 425,000 contractees by 2017, the possible number of required conscriptees then required might be around 355,000. Reserve Forces As noted above, the reforms call for the creation of fully manned brigades able to be deployed for combat operations within a few hours under the concept of "permanent readiness," which implies that the need for the mass mobilization of reserves is supposedly greatly reduced. However, the existing mobilization system has been only partially restructured and its ultimate status is unclear. Some elements of the military continue to call for the preservation of a substantial mobilization capability. Under the military reforms, responsibility for training reservists was assigned in 2010 to the commander of the military districts/JSCs, eliminating the practice of reservists being trained within brigades and other units upon call-up for up to 60 days of service. There reportedly are about 20 million former military personnel in reserve, 10% of whom have seen active service within the last five years. Reportedly, the reserve system is in collapse, suffering from equipment pilferage and scant involvement of reservists in refresher training. In February 2011, Makarov denied that the reserve system had been "destroyed," stating that a mass mobilization could result in the manning of 180 brigades. These brigades are only partly manned "in peacetime" but quickly can come to full strength in case of a threat with the inclusion of reservists, he claimed. He admitted that currently these "peacetime" brigades needed a full complement of combat equipment. Some observers questioned how Makarov arrived at the figure of 180 brigades and raised concerns that plans were unclear on who would update the training of reserve troops and officers in case they were mobilized. A mobilization brigade is being created on an experimental basis to participate in the "Center 2011" military exercise scheduled for September 2011. After months of discussion, a government-backed bill to create an active reserve was submitted to the Russian Duma in early July 2011. It calls for phasing in an active reserve over the next three years. During the phase-in period, 332 former officers and 3,968 former privates and sergeants who volunteer are to sign three-year contracts in 2011 to participate in regular training and exercises, and to be eligible for call-up for extended active duty if required. The reserve officers and sergeants would be paid about $400-$500 per month. The budget to create an active reserve was set at $15.8 million for 2011, with a gradual increase to $34.6 million in 2014 to cover 8,600 active reservists. Military Education and Training Even before the August 2008 Russia-Georgia conflict that spurred reform efforts, President Medvedev had issued a decree in July 2008 that directed the closure or consolidation of 65 military higher educational institutions to 10 (later changed to 16) large training centers dispersed to various parts of the country. These include 3 military training and science centers for officer training for each branch of the armed forces, 11 military academies, and 2 military universities. All former higher military academies and military institutes, including military science research organizations, were subordinated to these 16 schools, and the number of these institutes and organizations are planned to be reduced by 2013. Because the military reforms had resulted in thousands of officers relieved of duty but retained in a pool for possible reassignment, general admissions of officer candidates to military higher educational institutions were sharply reduced in the autumn of 2010, with only some admissions occurring for limited specialties. In early 2011, General Makarov stated that troop and officer training for permanent operational readiness is being worked out. He admitted that improving such readiness among the troops and officers has required "the reworking of all the guidance documents, instructions, regulations, and teaching aids, which were still geared to past wars. We have already reworked them four times in the recent past but are not yet satisfied. And only by the end of 2011 will we hopefully be able to get them up to scratch." In the context of creating permanent readiness units that are fully manned, the failure of the contract system has meant that conscription remains the major source of soldiers. The shift to one-year terms of conscription raised the need for enhanced training and supervision by a professional corps of NCOs, particularly since hazing among conscriptees remained a serious problem. To address the need for noncommissioned officers (NCOs) with adequate training, Serdyukov reassigned 5,000 junior officers who had graduated in 2009-2010 to serve as NCOs. He also reorganized the Ryazan Airborne Troops Higher Command School to train senior and staff sergeants, which is to graduate its first class of 240 in 2012. These trainees have signed contracts to serve for five years. Recognizing the urgent need for more NCOs, the Ryazan School began training conscripts in autumn 2010 under a three-month program. Other military educational institutions that would temporarily not be training officer-candidates also switched to NCO training. Programs were geared to two years for senior sergeants and 5-10 months for other sergeants. It was envisaged that 5,000-10,000 sergeants trained under the 10-month program would be available in 2011-2012. Those admitted included former sergeants and warrant officers, who are being retrained; former conscripts in the reserves; and active duty contractees. The Soviet-era Voluntary Society for the Promotion of the Army, Aviation, and Navy (DOSAAF), an ostensibly private organization—actually affiliated with the Communist Party—survived fitfully in post-Soviet Russia (although it was renamed) to provide some paramilitary training to secondary school-age youth. In 2009, however, the organization reassumed its former moniker as part of the reform process to revitalize pre-induction training in the face of the reduction of the length of conscription to one year. In May 2011, deputy head of the General Staff Vasiliy Smirnov hailed DOSAAF for providing training beneficial to 64,000 individuals who would join the armed forces in 2011, and called for the expansion of DOSAAF training by making it part of the secondary school curriculum. Russian commentators Viktor Baranets and Colonel (Retired) Mikhail Timoshenko likewise called for strengthening pre-draft military training through DOSAAF and other means, so that "the lads will not arrive at the [military] training school like blind kittens," but argued that pre-draft training still would not permit inductees to become fully proficient in one year of service. Instead, they called for at least two years of service on national security grounds. As part of the effort to enhance pre-induction training and to increase the attractiveness of military careers, President Medvedev decreed in March 2010 the setting up of eight "presidential cadet schools" for servicemen's children and orphans. The first opened in Orenburg, Russia, in September 2010 with a planned 800 students, and the second is scheduled to open in Tula, Russia, in 2012. Weapons Modernization Weapons modernization has been a fundamental aspect of recent reform efforts. Russia has attempted to maintain the Soviet-era objective of manufacturing all the weapons used by its armed forces, although these efforts have faced extreme challenges. The break-up of the Soviet Union resulted in many production facilities coming under the sovereignty of newly independent republics, but in many cases Russia has endeavored to establish business relations with these firms or to reassume ownership over them for supply chain purposes. The 2010 military doctrine calls for ensuring "the technological independence of [Russia] in the sphere of production of strategic and other models of armaments and military and specialized equipment in accordance with the state arms program." Nonetheless, some significant foreign weapons and components purchases have occurred (see below, " Foreign Arms Technology Purchases "). There are about 1,500 Russian defense research institutes, design bureaus, and industries, all of which are either partly or wholly owned by the state. According to some reports, defense industries employ up to 3 million workers (about 4% of the labor force), and combined revenue of the top 20 firms or groups of firms was nearly $20 billion in 2009. The government has undertaken to consolidate defense industries by grouping them by product lines into holding companies. Among recent holding companies being set up are several dealing with the out-sourcing of functions that are deemed to be not an inherent part of military duties, such as growing crops for the military and other food services, laundry services, repairs of facilities and weapons, and housing. Most of the holding companies have revenues of less than $1 billion per year, making them unable to invest substantial sums to develop new technologies. The holding companies have substantially raised the prices they charge the government, which has led the government to contest the mark-ups (see below, " Weapons Production and Procurement Challenges "). In an effort to consolidate many defense and nondefense high-technology firms, the Rostekhnologii (Russian Technologies) State Corporation was established under legislation approved in December 2007. Then-President Putin named former KGB associate Sergey Chemizov to head Rostekhnologii. In legal form, the state corporation is substantially under government control although its assets are technically private. It is not subject to the bankruptcy law and has limited reporting requirements, but it does submit annual and auditors' statement to the government. The former defense holding company headed by Chemizov—Rosboroneksport (Russian Arms Exports)—became a major subsidiary of Rostekhnogii. By December 2010, Rostekhnologii had taken over 580 defense and nondefense firms and reportedly employed 780,000 workers. In mid-2011, the law on the formation of Rostekhnologii was changed to extend its period of formation until 2013. The goal in forming Rostekhnologii is to boost the high-technological transformation of defense and nondefense industries, foster sales of high-technology goods in domestic and foreign markets, and attract investment. Rostekhnologii has stepped up foreign defense technology transfers, including joint ventures and the purchases of components and maintenance services. After declining in the 1990s, defense industrial production increased somewhat in the 2000s, due to boosted military procurement orders and arms exports. Nonetheless, production remained far below that of the Soviet period. According to many analysts, Russian state-controlled defense industries face dim prospects since they are producing arms largely based on Soviet-era designs and technology, most of their employees are reaching retirement age, their production assets are aged, their management is inefficient, and up to one-third are effectively bankrupt. Also, they lack relationships with Western defense firms that can provide technology exchanges. The ongoing crisis of the defense industrial sector was illustrated at the end of 2008, when Prime Minister Putin announced an emergency $1.7 billion infusion of funds to stave off the bankruptcies of several defense firms. A Rostekhnologii official verified in December 2010 that a large number of the mainly defense firms it had taken over were effectively bankrupt because of mismanagement, corruption, "problems with the state defense order, the obsolescence of fixed production capital, [and] technological backwardness." For example, he stated that when the corporation had assumed ownership over the Izhmash holding company (manufacturer of the Kalashnikov rifle and other weapons), which he described as the "flagship" of Russia's defense industries, it discovered that "the general director, incompetently managing the business, … had reduced not only the parent plant but also a number of Izhmash group enterprises to a state verging on bankruptcy." Lieutenant General Sergey Karakayev, commander of Strategic Rocket Forces, has stressed that Serdyukov's reforms aim to protect Russia's offensive nuclear weapons capabilities, and that procurement is prioritized to maintain and modernize these forces. He has argued that nuclear forces will remain the most important deterring factor during the reform of the conventional armed forces. German defense analyst Margarete Klein asserts that because Russia continues to give priority to maintaining parity in strategic nuclear weapons with the United States, and to devote most budgetary resources to this effort, the modernization of conventional armed forces will continue to suffer from inadequate funding. For many years, the defense industrial sector was heavily dependent on arms sales abroad, since these sales exceeded defense procurements by the Russian armed forces. However, while arms exports have been steady, ranging from about $2 billion to $6 billion over the period from 1993-2009, they have not greatly increased and have declined in some areas of weaponry (see below, " Arms Exports "). In recent years, defense procurements have been increasing (except for a dip in 2008-2009 as a result of the global economic downturn's effects on Russia's budget), and are set to rise sharply as a result of Putin's new arms acquisition plan for 2011-2020 (see below, " State Armaments Procurement Program for 2011-2020 "). The Russia-Georgia conflict contributed to greater recognition by the Russian leadership that some military equipment and technology needed to be purchased abroad to supplant problematic domestic military production. Nonetheless, there has remained much reluctance among some sectors of the leadership and the defense industrial sector to greatly enlarge such purchases and to close obsolete defense industries. To increase the defense ministry's control over defense contracting, a Federal Agency on Procurement of Weapons Systems, Military, and Specialized Equipment and Logistics was set up in 2008. This agency aims to restrict the ability of each branch of service to sign and manage defense contracts, a practice which had increased expenditures for large numbers of questionable weapons and expanded the scope of corruption and mismanagement. Reportedly, the new agency has been given responsibility over a small fraction of contracts placed under the 2011 state defense order, but will handle over one-half of contracts in 2012 and 100% in 2013. Similarly, a Scientific-Technical Council (NTS)—the defense minister is the head, the chief of the general staff is the deputy head, and the head of the Armed Forces Military-Scientific Committee is the executive secretary—was formed to decide on proposals for R&D for arms and special equipment received from the institutes and services. The Military-Scientific Committee (shifted from subordination to the General Staff to the Defense Ministry) oversees the activities of 5 newly created military scientific research institutes, which had been formed following the consolidation of 19 military science committees and 38 scientific research organizations. For the 2011 defense order, the NTS decided to fund only about one-fifth of the proposals for R&D. Failure of the 2010 State Defense Order The 2010 state defense order—a plan and budget for yearly weapons acquisition worked out by the presidential administration's Military-Industrial Commission—was not fulfilled, leading to accusations and explanations from the government and defense industries. A Nezavisimaya gazeta newspaper editorial in March 2011 strongly criticized the apparent failure by defense industries to deliver more than 30% of the weaponry they agreed to supply in 2010 despite full budget allocations. Among the failures, only 5 of 11 space satellites were manufactured, and 2 nuclear submarine cruisers, a corvette, 4 Yak-130 aircraft, and 73 BMP-3 infantry fighting vehicles were not delivered as scheduled. The editorial called for disciplinary actions against managers of defense industries (another newspaper argued that although the delays should lead to repercussions, such delays in the delivery of weapons systems also occur in the United States and Europe). In addition to these nondeliveries, the future of work on the Type-667 diesel submarine was uncertain, the fielding of a new Yak-30 trainer was delayed, and the testing of the Su-35 fighter was behind schedule, the editorial complained. Seeking to explain why the 2010 state defense order was not fulfilled, the Nizhnyy Novgorod Association of Manufacturers and Enterprises (NAPP) in late January 2011 sent a letter to President Medvedev claiming that the shortfalls were due to inadequate government funding for defense industry modernization and to an unrealistic procurement process. Ministry of Industry official Vladimir Nefedov appeared to support this latter defense industry argument when he argued in March 2011 that the failure of the 2010 defense order was in part due to the Defense Ministry's tardiness in finalizing competitions for defense contracts, which in effect gave defense industries only a few months to produce weaponry without incurring penalties. Analyst Ivan Safronov argued that compared to state defense orders of past years, the 2010 order was substantially completed, except for some understandable delays. According to this argument, only 50% of weapons had been delivered as funded by the 2009 defense order, whereas 70% had been delivered in 2010. Reportedly, by early March 2011, Serdyukov had sent a report to President Medvedev detailing the failures of the 2010 state defense order and suggesting disciplinary measures against some directors of defense industries. On May 10, 2011, in a speech to the heads of defense industries, President Medvedev condemned the lack of fulfillment of the defense order, stating that "it is an unacceptable situation when decisions are made at the highest level, the money is allocated, and yet the output is not delivered." He reminded the listeners that in his 2009 address to the Federal Assembly, he had spelled out the numbers of various weapons that would be procured in 2010, and that these numbers had been pledged by the members of the audience. He asked why the pledge had not been fulfilled, and raised a threat that "in different times half of you present here would already be engaged in hard physical labor." Eight days later, Deputy Prime Minister Sergey Ivanov (in charge of the defense industrial sector) reported to Medvedev that several personnel had been dismissed, including Anatoliy Perminov, chief of the Russian Federal Space Agency (Roskosmos), and that others had been reprimanded (in actuality, some of these personnel had been dismissed or reprimanded before Medvedev's complaint). State Armaments Procurement Program for 2011-2020 In mid-December 2010, Prime Minister Putin announced a 19.4 trillion ruble ($698.4 billion) weapons procurement plan for 2011-2020 aimed at modernizing the armed forces. The procurement plan greatly boosts planned spending from a superseded 2007-2015 arms procurement plan. The new procurement plan calls for upgrading 11% of military equipment each year, with a final goal of increasing the share of modern weaponry to 70% of the total inventory by 2020. The program calls for gradually boosting funds in the first few years and greatly increasing them in later years. To reduce the past problem of delays in providing payments to defense firms, which sometimes even led to furloughs at defense firms, Serdyukov stated in early July 2011 that up to 100% of funding each year would be provided in advance to firms with a good track record, and that firms would be permitted to make a 25% profit, as long as a large part of the profit was plowed back into modernization. In early 2011, General Makarov asserted that the need to modernize weapons was a major motivation of the defense reforms. He stated that "our army needs to be equipped with not the latest but at least modern models of weaponry and military equipment. But … there are virtually no such models in Russia…. The Armed Forces should receive … all the necessary resources that will actually make it possible to [create a new army]. And the [19.4] trillion rubles … give us the opportunity to carry out what we have planned." The 2011-2020 military procurement program is to specifically focus on nuclear weapons and delivery systems for the Strategic Rocket Forces; fifth-generation fighter aircraft for the Air Force; ships and submarines for the Navy; and air-defense systems, digital communications means, and intelligence capabilities. As mentioned above, the 10-year procurement plan calls for cuts to R&D to about 10% of the planned spending, compared to 20%-30% in the superseded 2007-2015 plan. In July 2011, Serdyukov complained that a substantial part of R&D expenditures had "vanished" without results. Perhaps to partly compensate for cutting R&D costs, Russia has shifted to some foreign weapons purchases that emphasize technology transfers. Also, some procurement funding for basic research has been accentuated. In early July 2011, the prominent general-designer of the Moscow Institute of Thermal Engineering (MITE), Yuriy Solomonov (who has headed the design of the Bulava and other missiles), asserted that there was danger that the 2011 defense order could fail, in part because of continuing tardiness by the Defense Ministry in issuing contracts. Responding to this warning, President Medvedev ordered Serdyukov to report on the status of the defense order and to fire any officials hindering its fulfillment. He also warned that if allegations about the failure of the defense order proved unfounded, such "panic-mongers" would be punished. Serdyukov dismissed Solomonov's charge as a "lobbying" effort by MITE to pressure the Defense Ministry to approve a contract with MITE that contained large price increases. Serdyukov too threatened unspecified sanctions against such "lobbyists." However, Serdyukov admitted that about one-fifth of defense order funding had not yet been contracted out, allegedly because of questions about sharply raised prices requested by some holding companies. He stated that all contracts would be signed in August 2011. He also pledged that defense contracts for 2012 would be completed and signed by the end of 2011, and that 100% funding would be provided to the firms, so that the situation in 2010-2011 would not be repeated. Foreign Arms Technology Purchases Military doctrine and procurement plans emphasize bolstering domestic weapons production as a national security priority, but Russian officials also have pursued purchases of some advanced military weapons and technology from "advanced industrialized countries," in order to facilitate the revitalization of the domestic defense industrial sector. As stated by former First Deputy Defense Minister Vladimir Popovkin, "our task is not to buy foreign equipment [per se], but technologies on the basis of which we would be capable of organizing production in Russia. We, unlike some other countries [perhaps referring to China], are not secretly copying examples, but openly we say we are prepared to pay for technologies, to buy licenses for production…. The main condition is the transfer of production to Russian territory and the transfer of technologies." However, potential suppliers have often been reluctant to provide sensitive technologies to Russia. According to some observers, Russia's arms import policy is two-staged, at first involving the purchase of equipment with some technology transfer, and at the second stage involving the setting up of joint ventures for serial production of weapons in Russia. In June 2011, the deputy chair of the State Duma's Defense Committee, Igor Barinov, endorsed plans by the Defense Ministry to purchase foreign weapons, arguing that such purchases stimulate Russian defense industries to lower production costs and to improve their products. The policy of arms technology purchases has included reforging ties with defense industries in the "near abroad" countries of the former Soviet Union, including co-production of components and complete weapons, mostly based on Soviet-era designs and factories. Russia has aggressively pursued control over Soviet-era defense firms in the "near abroad," such as its signing of joint venture accords with Armenia in late 2009. In the latter part of the 2000s, Russia began pursuing defense-related high-technology transfers from the "advanced industrialized countries" in Europe and Asia. In July 2007, Russian arms trader Rosoboroneksport and France's Thales had signed a deal to purchase Catherine FC thermal imagers for 100 Russian T-90 tanks. Nonetheless, discussing the design of a new generation of military vehicles, then-First Deputy Prime Minister Sergey Ivanov asserted in April 2008 that Russian military vehicles must consist of only domestically made parts. Similarly, Prime Minister Putin lamented during a tour of an air defense missile plant that "we are now dependent on foreign suppliers in such a sensitive area [as air defense]…. We need to secure our independence from foreign supplies when working on defense contracts." According to some observers, the argument over whether to only import materials or otherwise limit weapons technology transfers or to import weapons components and whole weapons in order to quickly reequip the armed forces came to a head after the August 2008 Russia-Georgia conflict. In December 2008, Lieutenant-General Vladimir Shamanov, who helped lead Russia's invading forces during the conflict and subsequently was the chief of the Defense Ministry's Main Combat Training Directorate, asserted that "the defense minister's position is extremely specific … regarding the outfitting of troops with all necessary assets…. If domestic industry cannot create a competitive product for the troops, we will purchase it from foreign manufacturers." Another argument in favor of collaboration with foreign defense industries was made by Rosoboroneksport General Director Anatoliy Isaykin, who argued in August 2011 that such collaboration is necessary so that Russia will be able to offer modern weapons for export. The 2009 purchase of 12 unmanned aerial vehicles (UAVs) from Israel Aerospace Industries (IAI) highlighted Russia's efforts to acquire technology to modernize its defense production. The $53 million purchase of three types of UAVs was spurred by Russia's observation of the use of Israeli UAVs by Georgia during the 2008 Russia-Georgia conflict, which were assessed to be far more effective on the battlefield than Russian UAVs. Under the deal, IAI trained about 50 Russian pilots to operate the UAVs. The transfer was completed in late 2010, and the two sides signed a follow-on three-year, $400 million contract to set up a joint venture, reportedly to assemble Heron medium-altitude long-endurance UAVs in Russia. In August 2011, the deputy director of the Federal Service for Military-Technical Cooperation (FSVTS), Konstantin Biryulin, complained that existing domestic UAV production had suffered from the poor quality (industrial rather than military-certified) micro-electronics that Russia was able to import, but claimed that indigenous micro-electronics and UAV design were improving. Among other purchases, since the 1990s, the French Sagem firm has supplied inertial navigation systems for Russian MiG and Sukhoi aircraft for the export market. In December 2010, Sagem and Rosboroneksport signed an agreement on forming a joint venture (Russia will have 51% of the shares) in Russia to produce inertial navigation systems for Russian military aircraft. In February 2011, former First Deputy Defense Minister Popovkin stated that Russia is negotiating to procure the FELIN "soldier of the future" infantry combat uniform and equipment from Sagem, with the intention of producing a Russian version by 2020. Defense cooperation with India dates from the Soviet period. During President Medvedev's visit to India in December 2010, India's Hindustan Aeronautics Limited and Russia's Sukhoi Design Bureau and Rosoboronexport signed a $295 million design contract for joint development of a fifth-generation fighter aircraft (FGFA). Design work on the aircraft is envisaged to be completed within 18 months, followed by a development phase of 10 years and the construction of up to 300 FGFA. The Mistral Purchase Beginning in 2009, Russia negotiated with France over the purchase of a newly designed French Mistral-Class Amphibious Assault, Command, and Force Projection Warship. French President Nicolas Sarkozy declared at first that the warship would be sold without armaments, while Makarov asserted that a sale was contingent on the inclusion of command and navigation systems and weapons. Some Members of Congress raised concerns with France over the Mistral negotiations, as did the government of Georgia, which feared that Russia might in the future use the ship against it. On January 25, 2011, the French Defense Minister, Alain Juppe, and a Russian Deputy Prime Minister, Igor Sechin, signed an intergovernmental cooperation agreement for two Mistrals to be built in France and two in Russia, the first sale by a NATO member of a major weapons system to Russia. The agreement calls for technology transfers necessary for the construction of the hulls and for information management and communications, but for no weapons systems to be transferred. Reportedly, new shipyard facilities will be built in Kronstadt, Russia, to construct the two Mistrals, after which the facilities will be used to build other warships. In late April 2011, then-First Deputy Minister of Defense Popovkin, who was responsible for negotiating the Mistral purchase, was transferred to head the Roskosmos, and his duties regarding the purchase were taken on by Deputy Minister Bulgakov. His transfer may have been linked to a reported controversy over Vice Admiral Nikolay Borisov, the deputy commander-in-chief of the Navy, who allegedly was removed from the negotiating team for the Mistral purchase on the grounds that he had unilaterally made decisions on the terms of the purchase. New negotiators from Rosoboroneksport were brought in. In mid-June 2011, Russia's Rosoboronexport General Director Anatoly Isaikin signed a contract with France's DCNS (Direction des Constructions Navales) Director Patrick Boissier on the purchase of two Mistral-class warships. President Medvedev and French Foreign Trade Minister Pierre Lellouche attended the signing ceremony, held on the sidelines of the St. Petersburg International Economic Forum. Trotsenko stated that "the French side has accepted an unprecedented level of cooperation in the handover of know-how, and will transfer know-how to Russia, including the basic computer codes of the combat information control systems and communications systems." Reportedly, about 20% of the construction of the first warship and 40% of the second will be carried out by Russian firms. Details on pricing and timeframes, and the building of two more warships in Russia, will be worked out in a separate agreement. In early July 2011, Serdyukov stated that "with the purchase of the Mistral we demonstrated rather serious intentions of continued cooperation with foreign firms and of further procurements and foreign contracts." Arms Exports In recent years, Russia and the United States have vied for top place in world arms sales. Over the period 2005-2009, Russia accounted for about one-quarter of global weapons exports, and the United States accounted for slightly less than one-third, according to the Stockholm International Peace Research Institute (SIPRI). Using U.S. government-derived data, the Congressional Research Service (CRS) has estimated that Russia's arms deliveries to the world have fluctuated from 2000 to 2009, ranging from a low of $3.3 billion in 2005 to a high of $6 billion in 2006 (see Table 2 ). According to the director of the Russian Defense Ministry's Federal Service for Military-Technical Cooperation (FSVTS), Russia's arms export deliveries jumped in 2010 to $10 billion; in addition, Russia received $48 billion in future orders, he claimed. Over the past decade, he asserted, Russia expanded "the geography of our cooperation and increas[ed] the volumes of arms deliveries including spare parts, tools and accessories, and servicing." For 2011, Rosoboronexport General Director Anatoly Isaikin claimed that arms deliveries would be over $9 billion, despite unrest in the Middle East that had jeopardized some contracts. Military aircraft and helicopters account for most of the value of agreements and deliveries in 2011, he stated. Major recipients of Russian arms over the period 2000-2010 include China, India, Algeria, Venezuela, Iran, Vietnam, Malaysia, and Yemen. In all, some 70 countries field Soviet-era weaponry and are customers for servicing and upgrades. Weaponry is provided to fellow members of the Russia-led Collective Security Treaty Organization at a discount. Russia's substantial arms agreements with Algeria, Yemen, and Libya may have been jeopardized by recent unrest in those countries. Russia's defense industries relied on arms exports during most of the 1990s and into the 2000s in order to gain revenues in the face of the fall-off of weapons purchases by the Russian armed forces. Commenting on this situation, Russian military academician Vladimir Lutovinov lamented in 2008 that the defense industrial sector "survive[es] mainly on the basis of the production of armaments for other countries' armies…. The arms and military equipment that are being developed and produced are not designed to be delivered to Russia's military organization, but are being sold abroad…. And the prices at which the weapons are sold abroad are sometimes lower … than those at which arms and military equipment are purchased by our own Armed Forces." The FSVTS oversees the issuance of import and export licenses for military products, participates in negotiations for arms sales, and assists in setting up arms shows abroad. Formally attached to the Defense Ministry, it reportedly is controlled by the president. According to FSVTS Director Mikhail Dmitriyev, the number of international complaints about the quality of Russian weapons, spare parts, and services has decreased in recent years. He stated that "overall, the situation is changing for the better, albeit slowly, and we have managed to maintain our key advantages in the arms market," which are competitive pricing and "sufficient quality." However, the reorganization of defense industries, in particular the incorporation of Rosoboroneksport into Rostekhnologii, and increasing Russian involvement in joint design and production, have posed challenges to the mission of FSVTS to facilitate high efficiency and good quality military-technical cooperation. The Rosoboroneksport holding company established control over arms exports by over 100 firms in 2007. According to FSVTS, besides Rosoboroneksport, there are 21 other firms authorized to export weapons. Even though Russian arms transfers to major customers India and China have declined recently, these sales are likely to remain substantial for several years. Russia has sold combat fighter aircraft, battle tanks, and other major weaponry to India, along with licenses for co-production, and continues to provide support services. To look at one major weapon transfer, in January 2004, Russia agreed to sell the Admiral Gorshkov aircraft carrier to India, to be renamed the Vikramaditya , for $1.5 billion, to include upgrading at a Russian shipyard and aircraft and helicopters. The carrier was to be delivered in late 2008. However, delays in refurbishing the carrier and cost overruns—causing contention in Russia-India relations—have set back delivery until early 2013, at a final price of $2.3 billion. Russian Sukhoi Su-30 fighter aircraft and the T-90 tank are being co-produced in India. A joint venture is producing the BrahMos short-range supersonic cruise missile, and Russia may possibly use the missile in its Navy. Russia has sold Su-30 multi-role fighter aircraft, Sovremenny-class destroyers, Kilo-class diesel submarines, and other weaponry to China, and transferred licenses for the production of Su-27 fighter aircraft. In recent years, however, there have been no substantial Russian arms agreements with China, including because of tensions over Chinese reverse engineering of weapons purchased from Russia. In May 2011, Rosoboroneksport signed its first contract with the U.S. Department of Defense, to export 21 Mi-17 helicopters in 2011-2012 to Afghanistan for use by the Afghan Army. Power Projection Capabilities According to some observers, one of the main goals of Serdyukov's reforms, as an extension of homeland security, is to maintain and enhance Russia's power projection capabilities in the territories of Soviet successor states. Leases for bases and other military facilities have been extended in several cases, and new troops have been sent to Georgia's breakaway regions, indicating no plans to reduce such military expenditures for force deployments as part of the reforms. On the other hand, the reforms have placed less priority on global power projection, although there is interest in asserting influence in the Arctic and in holding demonstrative exercises elsewhere. Russia has bases or facilities in most of the Soviet successor states, and recently has strengthened its presence through lengthy extensions of basing agreements with Armenia and Ukraine (see text box below ). In Georgia, where Russia had reported that it had closed its bases by late 2007, it reintroduced or buttressed substantial forces in South Ossetia and Abkhazia after the August 2008 Russia-Georgia conflict, numbering some 7,000 military forces. Russia also has 1,500 troops in the Moldovan separatist region of Transnistria. The Russian military is also cooperating with international forces (see text box below) and participating in exercises such as twice-yearly search and rescue and anti-terrorism operations carried out by the Black Sea Naval Force (BLACKSEAFOR; members include other littoral states Turkey, Bulgaria, Romania, Ukraine, and Georgia). A major element of Russia's power projection has involved recent efforts to bolster the military power of the Collective Security Treaty Organization. Russia also participates in the Shanghai Cooperation Organization (SCO; other members include China and Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan), a military and economic cooperation organization where it shares leadership responsibilities with China. According to some observers, Russian participation in the SCO aims to enhance regional security as well as check Chinese influence in the region. In 2007, then-President Putin relaunched a policy of power projection beyond the borders, at the same time that he increased rhetoric against U.S. foreign policy and NATO activities. In August 2007, for the first time since 1992, Russia resumed strategic long-range bomber patrols that approached U.S. and NATO airspace. In late 2007-early 2008, up to 30 naval vessels including the aircraft carrier Admiral Kuznetsov conducted exercises in the North Atlantic and Mediterranean Sea. In November-December 2008, the missile cruiser Peter the Great , the anti-submarine destroyer Admiral Chabanenko , and other ships visited Venezuela to participate in naval exercises, and later visited Cuba, the first major Russian naval presence in the Caribbean Sea since the breakup of the Soviet Union. These ship visits required substantial advance preparation. In November 2008, Presidents Medvedev and Bush agreed to combat piracy in the Gulf of Aden and off the Somali coastline, and Russian ships subsequently began parallel operations with the Combined Task Force 151 international coalition. Although Russia has relaunched air and naval patrols, "show the flag" visits, and participation in exercises, it has not ramped up a global network of military bases, seemingly reflecting the lesser priority the military reform agenda places on stepping up military expenditures and deployments necessary for global power projection. Russia's Admiral Kuznetsov aircraft carrier is due at the end of 2012 for a lengthy refitting, and Russian defense officials have stressed despite some opposition that there will be no funding to build new aircraft carriers. The Mistral warship purchase will provide some power projection capabilities. The first two Mistrals are planned for delivery in 2014-2015. Economic Resources: Defense Budget Trends Earlier reforms attempted by former President Putin, as well as the most recent reform effort, have contributed to rising defense budgets. The improvement of Russia's economy since 1999, fueled in large part by the cash inflow from sharply rising world oil and gas prices, has enabled Russia to reverse the budgetary starvation of the military during the 1990s. Defense spending increased substantially in most of the 2000s, and even continued to increase slightly after the global financial crisis of 2008 impacted Russia's economy. The increased defense spending in 2011 has been explained by the Russian leadership as a means of boosting the Russian economy as well as modernizing defense procurement. Virtually all observers agree that Russian defense spending still lags far behind current U.S. or former Soviet levels. Moreover, the efficacy of the recent large boosts in defense spending has been reduced by systemic corruption and mismanagement. It is difficult to estimate Russia's military spending. During the 1990s and early 2000s, the defense budget presented by the government to the legislature contained up to 19 line items, and some items of expenditure were declassified at the request of the legislature, but during the 2000s the number of line items shrank, so that they "are so general that they provide no sense to Duma members, or society, of how the armed forces is actually allocating its budget." In addition, much military spending is not reflected in the official defense budget. The Stockholm International Peace Research Institute (SIPRI) and the International Institute of Strategic Studies (IISS) have estimated that Russia's military expenditures are now the fifth largest in the world, after the United States, China, France, and the United Kingdom. Because of budget austerity plans by France and the United Kingdom and Russia's plans to boost defense spending, Russia could soon surpass them to have the third-largest military expenditures in the world. The cutbacks in military personnel have not resulted in near-term budgetary savings because of expenditures on pensions and mandated housing for retiring officers. These costs have reduced the amounts available for boosting salaries and increasing the numbers of contract soldiers. Russia's data submission to the U.N. Office of Disarmament Affairs for 2010 reported military expenditures of $33.9 billion, excluding a reported $4.5 billion for paramilitary forces. Of this amount, 36% was for the Ground Forces, 17% was for the Navy, 15% was for the Air Force, and 17% was for other combat forces (no data were provided for Strategic Rocket Forces, a major gap in the report). Of the reported military expenditures, 56% was expended on personnel, 21% on operations and maintenance, 17% on arms procurement, 2% on construction of facilities and bases, and 5% on R&D. In the area of procurement, the submission indicates that a large share was for acquisition of electronics, communications equipment, and warships (about 7% of all procurement spending). In December 2010, President Medvedev stated that in 2011-2020 defense spending would be maintained at the level of 2.8% of GDP, which would permit "equipping the troops with new technology and … resolving all the social issues that servicemen have," including carrying out the pledge to greatly increase pay and allowances beginning in 2012 and to contract out nonmilitary services. However, the 2011-2020 State Program of Armaments calls for spending 1.5 trillion rubles ($54 billion) in 2011, rising to 2 trillion rubles ($72 billion) annually in 2013 and thereafter, for a total of 19.4 trillion rubles ($698.4 billion) over the 10-year period. These amounts would appear to boost defense spending as a percentage of GDP beyond what Medvedev has claimed. The State Program of Armaments 2011-2020 ostensibly includes the net proceeds from arms exports from state-owned defense firms, which are not included in the defense budget. In July 2011, Prime Minister Putin unveiled draft budget guidelines for 2012-2014, which call for boosting defense spending to 1.85 trillion rubles ($66.6 billion) in 2012, 2.33 trillion rubles ($83.9 billion) in 2013, and 2.75 trillion rubles ($99 billion) in 2014. Weapons expenditures account for the largest portion of the increased funding, he indicated, but salaries for military personnel and military pensions also would be substantially boosted. Spending for a more substantial clothing kit and food rations also are envisaged. At the same time, the guidelines call for reducing nondefense spending, which could squeeze social programs. Russian Finance Minister Alexey Kudrin reportedly stated in June 2011 that defense spending would be $70 billion in 2012 (perhaps similar to Putin's reported $66.6 billion). However, he also revealed that costs for military pensions would be $28.5 billion, for a total of $98.5 billion. Putin's announced guidelines seemed to contradict his assertion two months previously that the planned military budget did not denote the "militarization" of the state budget. He argued that the guidelines for defense spending were still "25 times less than the military expenditures of the United States," and urged adding 3 billion rubles ($98 million) to the 10-year plan for weapons procurement. Implications for Russia The military reforms launched in late 2008 have been partly successful in changing from mobilization divisions to what is proclaimed to be fully staffed brigades, and in setting up military districts with more modern joint command and control. However, the reforms have faced myriad challenges, partial reversals, and other setbacks. As discussed below, these include problems in carrying out the ambitious weapons modernization program, in conscripting enough quality troops, and in boosting the number of professional soldiers. The reforms also may contribute to political instability and economic dislocations. Political Instability The military reform effort launched in 2008 has created ongoing tensions among active and ex-military personnel and diverted budgetary resources from social programs and nonmilitary development efforts that had long been starved of government funding. Military discontent has included high-profile resignations by generals and several protest actions by active duty servicemen and veterans. Major-General (retired) Vladimir Dvorkin, chief research officer at the Institute of World Economy and International Relations, and former head of the defense ministry's 4 th Central Research Institute, has argued that because the reforms have been "decided within a restricted circle of senior officials … without any feasibility studies or independent research," they have damaged military morale. In November 2010, veterans belonging to the Union of Airborne Troopers of Russia sponsored a rally in Moscow of up to 1,000 or more veterans, ultranationalists, and others to demand Serdyukov's resignation. In February 2011, veterans staged another reportedly small-scale protest in Moscow against the reform and demanded Serdyukov's resignation. Despite the reported discontent among some military personnel, most observers view it as falling far short of the risk of a military coup against the government. French analyst Thomas Gomart has argued that the Putin-Medvedev era has witnessed the strengthening of political control over the military, and that the military reforms reflect this trend. Besides combating discontent within the military over the reforms, government officials have claimed that they do not siphon resources from nongovernment spending, seemingly an effort to sidestep civilian criticism. Denouncing the increased defense spending, Russian analyst Vladimir Spacibo has stated that the increased weapons expenditure plans "demonstrate that we're again [as in the communist era] being dragged into a senseless and dangerous arms race which in no way increases our military security. On the contrary, it increases the risk of creeping into military conflicts." Russian analyst Ilya Kramnik and others have complained that the defense budget and other basic military affairs are largely hidden from democratic public oversight. Some observers argue that the civilian population has long been largely apathetic and cynical, and subject to forcible means of suppressing dissent. Other observers suggest that public interest in political affairs appears to be increasing, and could contribute to leadership efforts to mollify or otherwise co-opt discontent. There previously have been economically related demonstrations, and these could recur on a larger scale, some observers warn. Among possible attempts to assuage military discontent with the reforms, in early February 2011, Putin announced that officers' salaries and pensions would be greatly boosted in 2012. In late February 2011, he pledged to increase military pensions by 70%, perhaps to appease disgruntled former officers who had been forced to retire. It is possible that the recall of some officers slated for dismissal similarly reflected an effort to mollify discontent. These efforts also may well have been aimed at gaining military support in the run-up to December 2011 legislative and March 2012 presidential elections, and were exemplified by the welcome given by the All-Russia People's Front (ONF)—a creation of Prime Minister Putin to increase support for his United Russia Party—to a June 2011 decision by the Armed Forces' All-Russia Veterans Organization to join it. Political motives also may have been involved in a public appeal by the Association of Russian Trade Unions for Defense Sectors of Industry and the Federation of Independent Trade Unions of Russia for the legislature to ban arms imports. According to one analyst, the appeal was aimed against President Medvedev's support for some arms technology imports, and by implication signaled support for Putin as the next president. Among other attempts to assuage military discontent with the reforms, some observers suggest that Putin or Medvedev may soon oust Serdyukov and Makarov as the symbols of the turmoil of the reforms. In this case, the reform process may face more difficulties, according to these observers, but this does not mean that the reforms would, or could, be fully reversed. Economic Challenges The defense reforms may be a two-edged sword for the overall Russian economy. On the one hand, as mentioned above, the reforms may siphon budgetary resources away from other social and developmental needs and thereby set back the government's campaign to compensate for previous low spending in these areas. If the reform spending contributes to budget deficits, they could exacerbate inflation. On the other hand, combating corruption and the inflation of prices charged by the defense industries are said to be significant elements of the reforms, and could possibly improve the performance of the overall economy if carried out. So far, it appears to many observers that efforts by the reformers to combat corruption have been mixed at best. Inflation in the prices charged by defense industries continues to erode the value of increased procurement budgets. As one example of the persistence of corruption, in late May 2011, Main Military Procurator Sergey Fridinskiy announced that Defense Ministry officials had colluded with a medical supply firm to inflate the price of its products, presumably to permit kickbacks to the officials. The newspaper reporting this and other military corruption concluded that "scandals associated with the wasteful expenditure of resources and direct corruption in the state defense order system have recently become virtually the norm." In late July 2011, Fridinskiy claimed that corruption had actually increased during the reform process on a per capita basis. The strain of increased defense spending on the budget was indicated as early as February 2011, when Minister of Finance Aleksey Kudrin reportedly criticized an optimistic projection by the Ministry of Economic Development that budget deficits could be held to only 2% through 2030 if energy exports and prices increased. In late May 2011, Kudrin called for cutting planned military expenditures in order to reduce a projected increase in the 2012 budget deficit perhaps amounting to 2%-3% GDP. Among the cuts urged were those involving plans to boost the number of officers and contract soldiers, to increase weapons procurement, and to improve military housing. At a government meeting in early June 2011, the Finance Ministry reportedly prevailed in winning a reduction of military budgets over the next two years, including by cutting planned manpower levels, although details were not revealed. German analyst Klein argues that even the boosted defense budgets are inadequate to modernize an armed forces of 1 million personnel. The rate of spending planned per person will remain far lower than in NATO countries, she avers. Weapons Production and Procurement Challenges Threats to the success of the State Armament Program include armaments orders that are mismatched to mission requirements; mismanagement, inefficiency, and technological backwardness in the defense industrial sector that causes failures in developing and delivering weapons; corruption; inflation in procurement prices; and the uncertainty of economic growth and sufficient budgets, as mentioned above. For instance, technological backwardness has stymied efforts to modernize command and control, according to many observers. Faced with the failure to fulfill the 2010 defense order and reported problems with the 2011 defense order, President Medvedev has fired or disciplined various Defense Ministry officials and defense industry heads, but these efforts may have a minimal long-term impact on correcting the many problems of procurement, according to most observers. Indicative of other sanctions, in June 2011 the Defense Ministry reportedly cut off Kurganmashzavod (part of the Volgograd Traktomyye Zavody holding company) from participating in some defense orders, reportedly because the firm had failed to fulfill the 2010 defense order for deliveries of infantry fighting vehicles and airborne combat vehicles. In June 2011, Serdyukov complained that prices for weapons set by the defense industries were inflated by the inclusion of "factory town" social infrastructure in the pricing, including such costs as "kindergartens, Young Pioneer camps, rest homes, and polyclinics," which rendered the cost higher than a comparable foreign weapon, he asserted. He condemned the frittering away of funds allocated for weapons production by these costs, and stated that the contracting system now requested that all costs for building a weapon be spelled out, which already had resulted in some of the social costs being excluded. In early July 2011, Serdyukov similarly criticized the huge price requested by the Sevmash shipyard to deliver a nuclear submarine. Russian analyst Felganhauer termed that the reported price requested by Sevmash, $12.4 billion, presumably for the new Borei-class platform, "astonishing," and stated that "the overpricing and misappropriation involved are mindboggling: for the price of one domestically built submarine Russia could have ordered from France some fifteen new Mistral-class helicopter assault ships … or two Nimitz-class nuclear carriers in the US." Analyst Dmitry Gorenburg argues that the rate of arms renewal has been 2% per year in recent years, and did not approach 11%—as called for by the procurement plan—even during the height of the Cold War. He also suggests that corruption and the advanced decay of much of the defense industry will make it extremely difficult to reach the goals set by the procurement plan over the next decade. Moreover, efforts to purchase weapons abroad to improve readiness face push-back from the powerful defense industry lobby. Some critics argue that the new state armaments program retains too many elements of the military doctrine that call for a large land army and remains insufficiently focused on arming a slimmed-down professional military that can effectively carry out counter-terrorism and rapid-deployment missions. The program is aimed at threats that do not exist and threatens to drain funding from useful reforms such as boosting salaries and numbers of contract troops, they claim. Demographics and Quality of Personnel and Training In 2006, the Russian legislature reduced the then-two-year term of service to 18 months for those conscripted in 2007 and to one year from 2008 onward. The reduction was motivated by popular concerns about hazing and the risk that conscripted soldiers would be killed in the North Caucasus. The reduction in the term of service from two years to one year meant that the number of men conscripted each year needed to substantially increase, although the public expected that the planned expansion of voluntary service through contracts would reduce the need for such a large expansion of conscription. However, efforts to increase the number of contractees fell far short of expectations. Due to the fall-off in births in the years just after the break-up of the Soviet Union, the cohort of draft-eligible men aged 18-27 recently has begun to decline. The yearly draft quota—about 440,000 in 2011—has become more and more difficult to fill given the declining age cohort, particularly as exacerbated by the large number of educational deferments and disqualifications due to medical conditions. Starting in 2009, the draft boards have been forced to admit many young men with criminal records in order to fulfill draft quotas. Up to one-third of young men recruited reportedly are physically weak, under-nourished, have mental disorders, are drug-addicts, or otherwise are medically unfit, or possess extremist (racist) attitudes or criminal records. Foreseeing the shrinking age cohort, the Russian leadership had envisaged an increase in contract soldiers, but was unable or unwilling to raise salaries enough to attract enlistees. Also, many military leaders apparently were opposed on philosophical grounds to shifting to an armed forces where a substantial portion, if not all, troops were on contract. In January 2011, the Defense Ministry called for an amendment to the Law on Military Duty to increase the number of months of the spring draft call-up period. Some Russian critics suggested that the move was a disguised means to increase service for many draftees to 18 months, perhaps as a preliminary to an open effort to increase the length of service for all conscripts. Perhaps indicating a clash of views, the presidential administration indicated in late March 2011 that it did not support the Duma bill, after it received an appeal from the chairman of the Presidential Council for Development of Civil Society Institutions and Human Rights, Mikhail Fedotov, to oppose it. The presidential administration instead called for the Duma to act on the president's request to enlarge the number of contract troops, which is planned to reach 425,000 by 2017. If this number is reached, then the number of conscriptees required for a 1-million-man army would be around 355,000 (the planned number of officers is 225,000), which would be more manageable given the demographic situation. In late March 2011, Colonel General Valeriy Smirnov, the Deputy Chief of the General Staff, stated that although about 280,000 conscripts would fulfill their service in spring 2011 and be released from service, the Spring military draft would remain at slightly more than 200,000 conscripts, with the shortfall being made up by new efforts to attract contractees (of the conscripts, the bulk enter military service, but about 10%-15% are detailed to the Interior or Emergency Situations ministries). At the same time, he reported that about one-third of men called up for military service in Autumn 2010 proved to be unfit for service. Of the men deemed fit, one-half were not healthy enough for unrestricted service, he stated. The Committee of Soldiers' Mothers has claimed that the military increasingly is inducting men with chronic conditions and even men from other Soviet successor states in order to meet quotas. The committee also alleged that police raids were conducted at higher educational institutions in 2010 to round up men who had legitimate deferments. In mid-July 2011, the Defense Ministry announced that it had fulfilled its goal of recruiting 218,000 men for military service. According to some observers, this level of recruitment is not sufficient to man what the Russian leadership claims is a 1-million-man armed forces. Reportedly, the Defense Ministry decided not to draft a full complement of soldiers from the North Caucasus, because of alleged hazing by these soldiers against those of other ethnic groups (see directly below). Of the 7,000 young men conscripted in Chechnya, the Defense Ministry reportedly permitted all of them to serve under the personal forces of republic President Ramzan Kadyrov, the only local leader of Russia permitted such a level of autonomy. According to some estimates, the percentage of North Caucasian and other Muslims in the armed forces is already greater than their percentage of population, in part because of increased draft deferments and draft-dodging by ethnic Slavs. The percentage of Muslims in the armed forces is expected to increase as the population percentage increases. Some military leaders reportedly are concerned not only about hazing by North Caucasians in the military, but about the loyalty of these forces in the future if they are deployed to the North Caucasus or abroad. Despite the reduction in the term of conscription to one year, hazing that culminates in death or serious injuries has unexpectedly increased, according to Fridinsky. He has warned that discipline is declining and that conscripts from different parts of Russia "are forming ethnic gangs that are criminalizing military units." He stated that the increase in hazing could not be blamed on lowering the term of service to one year, but to the doubling of the number of draftees vis-à-vis contractees. This boosted draft cohort, he intimated, contained many more petty criminals. The cohort also reflects the prejudices of society, particularly ethnic and religious prejudices, that lead to violence in the barracks, he stated. He also decried the continued troubling number of suicides as well as noncombat deaths, which contribute to draft-dodging. There are hopes that the entry of professional sergeants and military police into the armed forces will ameliorate some of these discipline problems, but a greatly ramped-up and sustained program will be necessary to train the tens of thousands of such sergeants that are needed for a 1-million-man armed forces, according to many observers. Thousands of military police also are needed. Although the Defense Ministry announced in 2010 that it planned to create military police, it was not until July 2011 that Serdyukov reported that a military police force attached to the Defense Ministry would begin deploying military police later in the year. Commenting on the creation of the military police force, Main Military Procurator Fridinskiy stated that it is "a necessary step to strengthen discipline and bring order to the troops, and will greatly assist in strengthening the rule of law," but he warned that military police would not be able to halt all crime within the military, since conscriptees will continue to reflect society. Some observers criticized the slow pace of creation of the force and skeptics warned that the military police could become tainted by the rampant corruption and violence in the armed forces. According to some reports, military officers have become increasingly demoralized by coping with low-quality recruits, including those with low intelligence quotients and education levels, ill health, alcoholism and drug addiction, and criminal convictions. According to these reports, in addition to the problematic quality of recruits, the one-year term of service seriously limits training and reduces the amount of time that the recruit serves in an operational capacity. According to Felgenhauer, "brigades in which the men, NCOs, and specialists are wholly made up of conscripts who have completed just several months of service are cannon fodder, not an army." The reforms have included some efforts to ameliorate popular prejudices disfavoring military service and reduce draft-dodging by out-sourcing nonmilitary duties and by slowly increasing the quality of rations and living conditions. Assessments of Prospects for the Military Reforms According to most observers, the reforms launched by Serdyukov have gone further than previous reform efforts in altering the force structure and operations of the armed forces inherited from the Soviet Union. However, because the reforms have experienced a number of adjustments and modifications, including some reversals, while being implemented and because of secrecy it is difficult to tell yet whether they will result in enhanced capabilities. President Medvedev has proclaimed that Russian conventional armed forces are more capable than they were in the 1990s and have reaffirmed Russia's status as a "great power," if not superpower, whose interests must be considered in all world affairs. German analyst Klein has defined the term "great power" as denoting not only that the country has a retaliatory nuclear weapons capability, but also has at least an even chance to emerge victorious in a conventional armed conflict with the strongest existing power and has global power projection capabilities. In these latter areas, she argues, Russia falls short of "great power" status. Even if the military reforms are mostly successful, she asserts, "Russia's lack of capabilities for global power projection" will not be fundamentally altered. Instead, she suggests, at best the reforms will improve the combat readiness of the armed forces in local and regional conflicts, in counter-terrorism, in combating insurrections in the North Caucasus, and in exercising military influence within the CIS. Military modernization continues to face resistance from some Russian military theorists who want to restore a mobilization army, and this resistance may continue to stymie Serdyukov's reforms, according to some observers. These theorists argue that a substantial mobilization capability and large divisions, rather than smaller brigades, are needed to address the growing threat to Russia's vast Far Eastern borders posed by China. Reflecting this point of view, Russian defense analyst Aleksandr Sharavin, stressing that Russia has long borders with potential enemies, has called for the draft to be maintained for the next two decades. United Kingdom defense analyst Roger McDermott argues that the effort to create an active reserve indicates that some Russian decision-makers still think in terms of mobilization, so that the "the reform is now transmuting into a mixture of old and new." Jane's similarly has argued that the ground forces still retain many elements of traditional tactics, "operating to carefully pre-developed battle plans, in large numbers, and relying on firepower and mass over speed, agility and flexibility," in spite of Makarov's efforts to develop network-centric modern warfare capabilities. Analysts Dale Herspring and Roger McDermott believe that Serdyukov's reforms will not be successful in creating a "modern fighting force" by 2020, since budget problems, production inefficiencies, and poor maintenance will inhibit reform efforts. The reform process thus far, according to McDermott, "has resulted in inadvertently lowering combat capability and combat readiness…. A scarcely believable official line that 'all is well' with the reform fails to disguise the reality that for some time it has undergone a series of 'corrections.'" These include the partial reversal in the decision to reduce the officer corps to 150,000 and differing proposals for the number of contract soldiers. McDermott points out that "officer downsizing was conducted too rapidly, while the goal to introduce new professional NCOs faltered, [and] the two reforms were not mathematically correlated." He also warns that the military is finding it more and more difficult to fulfill its conscription needs, while its efforts to boost the number of quality contractees have faltered. He argues that "whatever the precise details of modernization include, a hybrid army has formed combining the salvageable elements of the original reform plan with the old army and its manifold problems." As one sign of these problems, even the 34 th Separate Motorized Rifle (Mountain) Brigade, which became operational under the personal direction of then-President Putin at the beginning of 2008 and (as mentioned above) serves as a template for the brigade system, has had to give up its fully professional 5,000-man force. Currently, the force is mostly conscripts serving for 12 months, and reportedly struggles to train these troops to meet standards. Implications for the United States While some observers have argued that Russia's military reforms do not pose a threat to U.S. interests, others maintain that the reforms do pose challenges, although they do not represent the reassertion of a Soviet-style threat. According to German defense analyst Margarete Klein, since Russia's reforms do not involve greatly reducing the size of its military and greatly increasing defense budgets, the reforms will not result in the creation of fully modern armed forces. Further reductions in the size of the armed forces face strong resistance from military and political elites, and impulses for greatly boosted defense spending face competition from needed socio-economic modernization programs. Also, protecting parity in strategic nuclear capabilities vis-a-vis the United States remains the main priority of Russian defense spending. Klein also argues that defense industries have struggled to produce new weapons. She concludes that Russia's threat posture will "have a more demonstrative and symbolic quality rather than constituting realistic scenarios.... The gap between great power pretensions and reality in military affairs [will] continue to grow." However, the reforms may well boost Russia's regional power projection capabilities, which should make Europe more interested in the revival of conventional arms control efforts with Russia, she suggests. Similarly, Jane's has argued that U.S.-Russian relations are likely to remain good regardless of Russia's military reform efforts, because "Russian military capabilities and interests are focused almost exclusively upon relations with former members of the Soviet Union and potential secessionist movements" within Russia. Jane's also suggests that Russia's economic growth is constrained by world market demand for its oil and gas, and that Russia needs stable ties with these importers. Also, Russia's ability to "compete with U.S. power and influence" may be constrained by its aging and declining population and "its low ability to project naval power owing to lack of warm water access," Jane's argues. Some analysts suggest that discussions by Russian officials about the threat from NATO may even be code for concerns about the growing strategic threat posed by China's increased military and economic power. In examining the 10-year procurement plans for the Navy, Gorenburg argues that planners no longer view the United States and NATO as its primary potential opponents, but rather appear to focus on attempting to counter China and to combat piracy and instability along Russia's southern flank. The procurement plan emphasizes the construction of frigates, corvettes, and diesel submarines for the Pacific Fleet and the Black Sea Fleet, he argues, rather than large surface combatants and nuclear attack submarines. Perhaps reflecting a view that Russian military reforms bear greater implications for U.S. interests, U.S. analyst Janusz Bugajski argues that Russia's strategic ambition is to be a Eurasian regional if not global superpower, equal in status, if not power, to the United States and EU and dominant in power and status to most other nations. The debilitation of Euro-Atlantic cooperation and the increase in influence over Europe remain primary Russian ambitions, in his view. While Russia has relied heavily on "soft power" (diplomatic, economic, political, and informational) tactics to advance its ambitions, it also endeavors to bolster its armed forces as an instrument to achieve its ambitions. Bugajski warns that such military pressure is "a serious threat to [Russia's] weaker neighbors" and other Western interests. He urges "a realistic appraisal of Russia's imperial [ambitions] and a thorough assessment of Moscow's diverse capabilities," in order to develop countervailing defense policies. Seeming to support Bugajski's concerns about Russia's intentions, Felganhauer argues that Russian decision-makers continue to regard the United States and NATO as the main threats to Russia and that military reforms aim to counter these perceived threats. He states (as mentioned above) that the creation of the Aerospace Defense Forces in 2011 was dictated by views that the United States has the capability and intention to launch an "air-space attack" with cruise missiles and other means against Russian leadership assets. Also, the August 2008 Russia-Georgia conflict convinced the Russian leadership that conventional military capabilities needed improvement to counter U.S. and NATO interference in possible future conflicts in Georgia or elsewhere. Disagreeing with what he claims are the views of these decision-makers, he asserts that "it seems illogical" that Russia is "spend[ing] hundreds of billions of rubles and turn[ing] aside resources from existing threats"—such as insurgency in the North Caucasus and possible Islamic extremist threats emanating from Afghanistan—to develop capabilities against these supposed threats. In actuality, he argues, the 2011 U.S. National Military Strategy indicates that "the Pentagon ... is not interested in confronting Russia," and that similar errant spending "bankrupted and destroyed the [Soviet Union]." Perhaps representative of Russian decision-makers' views mentioned by Felganhauer, Russian Duma deputy and defense analyst Aleksey Arbatov asserts that cruise missiles and other conventional means being developed and fielded by the United States to decapitate enemy command and control as part of net-centric warfare could be used against Russia. Mainly for this reason, Arbatov claims, the State Armaments Program for 2011-2020 stresses the building of offensive and defensive means to counter U.S. net-centric warfare. Also to address this claimed threat, he calls for future U.S.-Russia arms control talks to include conventional strike weapons and for a revival of the Conventional Arms Control in Europe Treaty. Perhaps providing evidence of such leadership concerns, the Shygys military exercise between Russia and Kazakhstan, held in late June 2011, featured an attempt to intercept attacking enemy cruise missiles. U.S. Policy Regarding Russia as a Military Threat Since the Serdyukov reforms were launched in late 2008, U.S. policymakers have provided varying assessments regarding their potential threat to U.S. interests. In general, an ongoing policy of engagement with Russia has been followed in recent years along with a hedging strategy against the emergence of a more aggressive Russian military policy matched to capabilities. In mid-2008, a bipartisan Congressional Strategic Posture Commission was formed as directed by the National Defense Authorization Act for FY2008 ( H.R. 4986 ; P.L. 110-181 ). In its May 2009 report—issued early in the Obama Administration—it argued that the August 2008 Russia-Georgia conflict, anti-Western statements by Russian officials, and other Russian behaviors created "uncertainty about the future of Russia's political relationships with the West and thus the security threat it poses." The commission observed that Russia no longer threatens Europe with a large land army and is not seeking nuclear supremacy, and that the overall risk of U.S.-Russian military confrontation is greatly reduced. However, it also warned that "these assessments might change for the worse at some future time, and the United States needs to hedge against that possibility.... Even as it works to engage Russia and assure Russia that it need not fear encirclement and containment, the United States needs to ensure that deterrence will be effective [and] continue to concern itself with stability in its strategic military relationship with Russia." The commission claimed that "the sizing of U.S. forces remains overwhelmingly driven by Russia. This is ... because some of our allies see Russia as a potential threat and also because it retains the ability to destroy the United States.... Russia and the United States are certainly not enemies but neither are they allies.... The two are strategic partners on some important international questions, but strategic competitors on others." To improve what were viewed as cooling U.S.-Russia relations, the incoming Obama Administration launched what it termed a "reset" of bilateral ties in 2009. Reflecting this "reset," the Obama Administration's National Security Strategy (NSS), released in May 2010, asserts that the United States endeavors "to build a stable, substantive, multidimensional relationship with Russia, based on mutual interests. The United States has an interest in a strong, peaceful, and prosperous Russia that respects international norms." The strategy calls for bilateral cooperation with Russia—termed one of the 21 st century centers of influence in the world—in bolstering global nonproliferation; confronting violent extremism, especially in Afghanistan; forging new trade and investment arrangements; promoting the rule of law, accountable government, and universal values within Russia; and cooperating as a partner in Europe and Asia. At the same time, the strategy stresses that the United States "will support the sovereignty and territorial integrity of Russia's neighbors." Similarly, the 2011 National Military Strategy, released by the Joint Chiefs of Staff in February 2011, stresses the national military objectives of countering violent extremism, deterring and defeating aggression, strengthening international and regional security, and shaping future military forces. It may allude to Russia in stating that "there are global and regional powers exhibiting nationalism and assertiveness that tests our partners' resilience and U.S. leadership." Specific references to Russia call for increasing "dialogue and military-to-military relations with Russia, building on our successful efforts in strategic arms reduction. We seek to cooperate with Russia on counter-terrorism, counter-proliferation, space, and Ballistic Missile Defense, and welcome it playing a more active role in preserving security and stability in Asia." In his 2011 threat assessment, Director of National Intelligence James Clapper testified to Congress on February 10, 2011, that Serdyukov's defense reforms pose "both risks and opportunities for the United States and the West." He warned that "Russian military programs are driven largely by Moscow's perception that the United States and NATO are Russia's principal strategic challenges and greatest potential threat." In an apparent assessment of Russia's performance during the August 2008 Russia-Georgia conflict, he stated that the increase in Russia's conventional military capabilities and "a strategy of asymmetric and rapid response raise the specter of a more aggressive Russian reaction to crises perceived to impinge on Moscow's vital interests." At the same time, he raised the possibility that "as the Russian military continues its post-Soviet recovery and Moscow feels more comfortable asserting itself internationally, Russian leaders may be more inclined to participate in international peacekeeping operations," an apparent opportunity for U.S. engagement with Russia. He appeared to de-emphasize Russia's conventional military threat to Europe when he stated that the country's "still-significant conventional military capabilities, oriented toward Eastern Europe, the Caucasus, Central Asia, and the Far East, are intended to defend Russia's influence in these regions and serve as a 'safety belt' from where Russian forces can stage a defense of Russian territory." At the hearing, Director Clapper also stated that "Russia's nuclear forces support deterrence and enhance Moscow's geopolitical clout." He specified that Russia still possesses "a very formidable nuclear arsenal [which] does pose ... potentially a mortal threat to us. I don't think they have the intent to do that." He also stated that China's nuclear forces pose such a potentially mortal threat. Upon questioning about which country might have more of a potential intention to harm U.S. interests, he stated that since the United States has concluded new START with Russia, "I would rank them a little lower [as a potential threat] because of that, and we don't have such a treaty with the Chinese." However, he stressed that while the two countries "may potentially have the capability to strike a mortal blow to us ... I don't think either country today has the intent to mortally attack us." As part of the Obama Administration's "reset" in U.S.-Russia relations, at the July 2009 U.S.-Russia Summit, the two sides agreed to the resumption of defense and military cooperation, which largely had been suspended since the August 2008 Russia-Georgia conflict. Admiral Mullen and General Makarov signed in Moscow a Military Framework document for cooperation between the countries' armed forces in July 2009. Under this framework, the United States has promoted cooperation in counter-terrorism, international peace-keeping, missile defense, search and rescue cooperation, crisis response exercises, and military education. This includes eliciting Russia's support for U.S. and ISAF operations in Afghanistan (see below), to advocate democracy and respect for human rights within Russian military, and also to assess Russian military reforms and civil-military relations. Reportedly, 67 events, exchanges, exercises, and consultations between the armed forces are planned for 2011. Bilateral military cooperation also has been evidenced by the signing of a memorandum of understanding on counter-terrorism cooperation in May 2011 by Makarov and the Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen. During Minister Serdyukov's visit to Washington, DC, in September 2010, he and then-Secretary of Defense Gates signed an agreement establishing the Defense Relations Working Group to foster engagement between the Russian Ministry of Defense and the Defense Department. This Working Group meets annually at the ministerial level, while its eight sub-groups, which cover topics from logistics to strategy, meet more frequently and have permitted the two countries to compare policies and practices. The public accounts of these meetings seem to indicate that Russia seeks knowledge of best practices as part of its defense reform effort. Among Russia's strategic cooperation with the United States, Russia facilitates the trans-shipment of U.S. nonlethal and lethal military equipment through its land and air corridors in support of the Northern Distribution Network to Afghanistan, and has cooperated on other measures to enhance security in Afghanistan, including through collaboration in the NATO-Russia Council. Congressional Concerns Examination of the possible implications of Russia's military reform efforts falls under the jurisdiction of several congressional committees dealing with foreign affairs and armed services, and has included hearings dealing with the annual threat assessment, as mentioned above. In 2008-2009, Congress also formed a commission to examine and make recommendations with respect to the long-term strategic posture of the United States, as mentioned above, that as part of its deliberations also discussed the implications of Russia's national security and defense policy and its military reform efforts. Other hearings and specific legislation have addressed concerns about Russia's military operations in Georgia and its continued military occupation of parts of Georgia. The latter concern also has included Russia's continued unwanted military presence in Moldova, and to the broader issue of Russia's suspension of the Conventional Armed Forces in Europe Treaty, as mentioned above. Other concerns addressed by Congress have included the implications of the military reform plans on the sovereignty and security of other Soviet successor states and on Eastern European countries once occupied by Soviet forces, many of which are now NATO members and members of the OSCE. Congress will continue to pay close attention to Russian policy statements of intentions and to the actual outcome of the military reforms over the next few years, and to assess them within the context of broader Russian domestic and foreign policy and U.S. engagement with Russia on international issues of U.S. national security interest.

Russia has undertaken several largely piecemeal and halting efforts to revamp the armed forces it inherited from the Soviet Union. In 2007, near the end of then-President Vladimir Putin's second term in office, he appointed Anatoliy Serdyukov—the former head of the Federal Tax Service—as defense minister as part of an effort to combat corruption in the military and carry out reforms. After the August 2008 Russia-Georgia conflict revealed large-scale Russian military operational failures, the leadership became more determined to boost military capabilities. U.S. government and congressional policymakers are following the progress and goals of these reforms as they consider issues related to U.S.-Russia relations and U.S. national security interests. The reforms launched by Russian leadership called for reducing the total size of the armed forces from its size of 1.2 million in 2008 to under 1 million. Three major initiatives included accelerating planned cuts in the officer corps to reduce their numbers from 355,000 to a later-adjusted total of 220,000. The reforms also included revamping the training of noncommissioned officers to make them more effective and introducing military police, both aimed partly at boosting discipline in the barracks. The reforms aimed to reduce the four-tier command system of military districts, armies, divisions, and regiments to a two-tier system of strategic commands and fully manned brigades that could be quickly deployed for combat. A large-scale 10-year weapons modernization plan also was launched, and military budgets are being increased substantially. The weapons modernization plan prioritizes the procurement of new missiles and platforms to maintain strategic nuclear deterrence, but also includes new planes, helicopters, ships, missiles, and submarines for the Ground Forces, Air Force, Navy, and other arms of service. Russia's national security strategy, military doctrine, and some aspects of the military reforms reflect assessments by some Russian policymakers that the United States and NATO remain concerns, if not threats, to Russia's security. Other assessments, however, emphasize enhancing counter-terrorism capabilities and possibly hedges against the rise of China. Seeming to stress these latter concerns, in December 2008, Serdyukov asserted that the reforms were aimed at switching to a performance-capable, mobile, and maximally armed military ready to participate in at least three regional and local conflicts. Compared to Russia's previous attempts to revamp its armed forces, the current reform effort has gone further in altering the force structure and operations of the armed forces, according to most observers. However, the reforms face daunting delays, modifications, and setbacks. It remains highly uncertain whether Russia will be able to marshal the budgetary and demographic resources to field a substantially professional military with high readiness, as planned, or to modernize its ailing defense industries to obtain a new array of weaponry over the next 10 years. U.S. policymakers have maintained that Serdyukov's defense reforms pose both risks and opportunities for the United States and the West. While warning that Russian military programs are driven largely by Moscow's perception that the United States and NATO remain the greatest potential threats, U.S. policymakers also have raised the possibility that Russia's military reforms might in the future make it feel less strategically vulnerable and that it might participate more in international peacekeeping operations. In general, U.S. policymakers and others have urged a policy of hedging against these possible risks through countervailing diplomacy and defense efforts while also following an engagement policy with Russia to cooperate on global issues of mutual interest and to encourage Russia to democratize, respect human rights, and embrace pro-Western foreign policies.

Introduction As part of recent health care reform efforts, Congress, in t he Affordable Care Act, imposed a 2.3% excise tax on the sale of certain medical devices by device manufacturers, producers, or importers. The excise tax is effective on sales of devices made after December 31, 2012. The implementation of the medical device tax has prompted some Members of Congress to seek a delay of the enforcement of the tax out of a concern that the "uncertainty and confusion" regarding compliance with the medical device excise tax will harm the medical technology industry. Others in Congress have sought an outright repeal of the tax. While December 31, 2012, passed without Congress changing or repealing the medical device excise tax, congressional interest remains. On December 7, 2012, the Department of the Treasury (Treasury) issued its final regulations that provide guidance on both who must pay the excise tax and the scope of products encompassed by the excise tax. This report provides a brief overview of the regulations, discusses the extent to which the rules have clarified the excise tax imposed on the sale of medical devices, and answers frequently asked questions about the medical device tax. On Whom Is the Medical Device Excise Tax Imposed? Pursuant to §4191(a) of the Internal Revenue Code (IRC), a "manufacturer, producer, or importer" making the sale of a taxable medical device is liable for a tax of 2.3% of the price for which the device was sold. Treasury, in the newly released regulations on the medical device excise tax, states that the "existing chapter 32 rules," including the definitions for "manufacturer," "producer," and "importer," apply with respect to the medical device excise tax. In turn, the general chapter 32 rules define the term "manufacturer" as "any person who produces a taxable article ... by processing, manipulating, or changing the form of an article or by combining or assembling two or more articles." Moreover, the general definition for a manufacturer necessarily includes the terms "producer" and "importer." While courts have interpreted the term "manufacturer" within the general chapter 32 rules to encompass a range of activities where a person physically changes a taxable article, the medical device excise tax, by definition, is not directly levied upon a consumer of a medical device. What Is a "Taxable Medical Device"? The medical device excise tax created by the ACA is imposed on the sale of "taxable medical device[s]." The statute defines that term by incorporating the definition of "medical device" from the Federal Food, Drug and Cosmetic Act (FFDCA), as that term pertains to a device "intended for humans." Courts have recognized that Congress defined the term "medical device" in the FFDCA "very broadly," as the Food and Drug Administration (FDA) regulates a range of devices from tongue depressors to artificial hearts. As such, the Health Care and Education Reconciliation Act of 2010 (HCERA) casts a wide net with the term "taxable medical device." In line with the broad scope of the term "taxable medical device," the December 7, 2012, Treasury Regulations explain that a "taxable medical device" is a device that has been registered with the Food and Drug Administration pursuant to Section 510(j) of the FFDCA and 21 C.F.R. Part 807. Importantly, Treasury resisted efforts by commenters to narrow the scope of the general term "taxable medical device," by limiting, for example, the term to devices that could exclusively be used by humans or could only be used for a medical purpose, preferring instead to maintain a broad reading of what devices are subject to the excise tax. As a result, devices like infusion pumps, which can be used on both humans and animals, and latex gloves, which can be used for both medical and non-medical purposes, fall within the broad definition of a "taxable medical device." Medical Devices Exempted from the Excise Tax In an effort to limit the ambit of the excise tax imposed on medical device manufacturers, Congress explicitly excluded three types of devices from the term "taxable medical device" in IRC §4191(a). Specifically, Congress exempted eyeglasses, contact lenses, and hearing aids from the excise tax. Moreover, the statute empowers the Secretary of the Treasury under the "retail exemption" to exempt "any other medical device" which is determined to be of a "type which is generally purchased by the general public at retail for individual use" from the 2.3% excise tax. The Retail Exemption The regulations issued by Treasury on December 7, 2012, provide a broad framework as to which medical devices fall within the "retail exemption" to the excise tax under IRC §4191(b)(2)(d). Specifically, the new Treasury regulations provide a two-prong test to resolve whether a device should fall within the residual exception to the excise tax. First, the device in question should be "regularly available for purchase and use by individual consumers who are not medical professionals." Second, the device's design should "demonstrate[] that it is not primarily intended for use" in a medical institution, office, or by a medical professional. Neither prong is dispositive to the determination, as the regulations caution that an analysis of whether a device fits within the retail exemption is dependent on "all" "relevant facts and circumstances." To guide the analysis of whether a particular device meets the relevant requirements for the retail exemption, the new Treasury regulations provide a host of factors to examine. Factors implicating the question of whether a device is regularly available for purchase by individual consumers include (1) the ability of end consumers to purchase the device in person through a drug store or other retailer that primarily sells a particular device; (2) the need of a consumer to seek help from a medical professional to use the device safely and effectively; and (3) whether the device has been classified by the Food and Drug Administration as a "physical medicine device" for human use. To illustrate, with respect to adhesive bandages, an application of the multi-factor test would conclude that the device is regularly available for purchase by individual consumers. Specifically, while adhesive bandages are not a "physical medicine device," the product can be readily purchased at various retail stores and can be properly used without formal training from a medical professional. Treasury also issued a list of factors to aid the determination of whether a device is designed primarily for use in a medical institution or office or by a medical professional. Relevant factors include (1) whether the device must be implanted, inserted, operated, or administered by a medical professional; (2) the cost of obtaining and using the device; (3) how the device has been classified by the FDA; and (4) whether the device is one for which payment is available "exclusively on a rental basis" and is an item requiring "frequent and substantial servicing" as those terms are defined under Medicare Part B payment rules. Returning to the example of adhesive bandages, the multi-factor test counsels that the product is not primarily intended for use in a medical institution, office, or by a medical professional. Specifically, using adhesive bandages does not require the aid of a medical professional, and bandages are inexpensive to obtain and use. Moreover, adhesive bandages are not classified as a complex medical device or a device needing frequent and substantial servicing. Coupled with the earlier conclusion that adhesive bandages are regularly available for purchase by individual consumers, the totality of the circumstances indicates that "adhesive bandages are devices that are of a type that" should fall within the retail exemption to the medical device excise tax. Notably, Treasury explained in issuing the medical device excise tax regulations that two potential factors—the packaging or labeling of a medical device and the nature of documents submitted to the FDA in obtaining approval of a device—are irrelevant in assessing whether a device should fall within the retail exemption to the excise tax. As a consequence, a medical device manufacturer cannot hope to escape the excise tax, for example, by labeling that its product is "intended for retail use only." The Retail Exemption's Safe Harbor Provisions In contrast to the malleable multi-factor test that outlines the limits to the retail exemption, the December 7, 2012, Treasury regulations also include a list of "safe harbor" devices that necessarily fall within the retail exemption. The purpose of the safe harbor provisions is to "provide greater certainty" with respect to which devices are subject to the retail exemption. The safe harbor includes medical devices, like pregnancy test kits, that are described as "over-the-counter" (OTC) devices in the FDA's online database for in vitro diagnostic tests, the FDA's classification regulations, or the FDA's device registration and listing database. In addition, the safe harbor includes certain devices that qualify as "durable medical equipment, prosthetics, orthotics, and supplies" for which payment is available on a purchase basis under Medicare part B payment rules, such as therapeutic shoes. Examples of How the Retail Exemption Is Applied The Treasury regulations conclude by providing 15 different examples of how the retail exemption to the medical device excise tax would be applied in practice. The examples range from the aforementioned "adhesive bandages" to "blood glucose monitors" to "magnetic resonance systems." Examples of devices that Treasury concludes "based on the totality of the facts and circumstances" fall within the retail exemption include "absorbent tipped applicators," "adhesive bandages," "snake bite suction kits," "denture adhesives," "mechanical and powered wheelchairs," "portable oxygen concentrators," and "therapeutic AC powered adjustable home use beds." Treasury also concludes that "pregnancy test kits," "blood glucose monitors, test strips, and lancets," "prosthetic legs and certain prosthetic leg components," and "urinary ileostomy bags" fall within the regulations' safe harbor provisions. In contrast, Treasury, in its examples, finds that the following devices, based on the totality of the circumstances, are not exempt from the medical device excise tax: "mobile x-ray systems," "nonabsorbable silk sutures," "nuclear magnetic resonance imaging systems," and "powered floatation therapy beds." The Future of the Medical Device Tax Whether the new Treasury regulations provide the needed clarity to alleviate the "uncertainty and confusion" that some Members of Congress have feared that the new tax would engender within the medical technology industry remains to be seen. To be sure, the medical device tax regulations, with their safe harbor provisions, clarify that generally devices recognized as over-the-counter devices will not be the subject of the tax, providing an easy to understand exemption to manufacturers, importers, and producers of such products. However, the safe harbor provisions are narrow, and the regulations open-ended two-part test defining the limits of the retail exemption, while providing flexibility as to the scope of the exemption, naturally creates ambiguity with respect to which products are exposed to the excise tax, save those specifically exempted under the regulations. Moreover, the limits of the retail exemption, which are based, in part, on regulations that were not crafted with the retail exemption in mind, could prove to be either over or under inclusive of Congress's original intent in enacting the medical device excise tax. Treasury, in the release of the final regulations, identified several issues raised by the medical device tax regulations that warranted the agency issuing separate clarifying guidance, including the treatment, for purposes of the medical device excise tax, of licensing software and "kits." Given the wide variety of items that are categorized as medical devices, some may see a need for further clarification with respect to other medical devices, including potentially expanding the safe harbor provisions. As a result, the December 7, 2012, regulations could be only the first step in clarifying the application of a tax that the Treasury Department acknowledges "may present certain implementation challenges." Moreover, looming over all the questions about the implementation and enforcement of the medical device tax is whether Congress will repeal the tax. On March 21, 2013, the Senate voted 79-20 on an amendment to the Senate's 2014 budget to repeal the medical device excise tax. Nonetheless, in 2012 the White House threatened to veto a repeal of the medical device tax, and in the wake of recent debates over the federal budget, the majority leader of the Senate expressed doubts with respect to the likelihood of an outright repeal of the tax. In short, the future of the medical device tax is at best uncertain. Frequently Asked Questions About the Medical Device Excise Tax What is the text of the law that imposes the medical device tax? The excise tax on medical devices has been codified in the United States Code in section 4191 of Internal Revenue Code. That section reads: (a) In general. There is hereby imposed on the sale of any taxable medical device by the manufacturer, producer, or importer a tax equal to 2.3 percent of the price for which so sold.   (b) Taxable medical device. For purposes of this section—    (1) In general. The term "taxable medical device" means any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for humans.    (2) Exemptions. Such term shall not include—       (A) eyeglasses,       (B) contact lenses,       (C) hearing aids, and       (D) any other medical device determined by the Secretary to be of a type which is generally purchased by the general public at retail for individual use. What is the taxable amount? The tax is 2.3 percent of the price for which a manufacturer, producer, or importer sold the taxable medical device. What is the effective date for the medical device tax? The medical device tax applies to sales made after December 31, 2012. Can the tax be imposed on a contract to purchase a medical device that was agreed to prior to January 1, 2013? The regulations provide some transition relief with respect to certain long-term contracts. Specifically, payments made on or after January 1, 2013 for contracts entered into before March 30, 2010 are not subject to the medical device excise tax unless the contract was materially modified on or after March 30, 2010. Where do the funds that are collected go as a result of the medical device excise tax? The funds from the medical device tax go into the general treasury. The law that created the medical device excise tax, HCERA, did not contain any language regarding the disposition of the funds collected from the tax.   Without any specific overriding language governing with respect to the disposition of the funds, the Miscellaneous Receipts Statute would control. That statute provides that generally "an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim." As such, without any other authorization, the Internal Revenue Service, upon collecting the medical device tax, must deposit all funds received in the general fund of the Treasury as a miscellaneous receipt. Is there a complete list of taxable medical devices? The medical device tax is imposed on manufacturers, producers, or importers of a medical device that is intended for humans. The Treasury's regulations interpret such medical devices as those that are listed with the FDA under section 510(j) of the FFDCA and 21 CFR part 807. This list is quite broad and open-ended, and, as such, the tax applies generally to all devices intended for humans subject to certain exemptions and exclusions, such as the retail exemption. Is there a complete list of medical devices that are not subject to the tax? The statute imposing the medical device tax lists three specific devices that are not subject to the tax: eyeglasses, contact lenses, and hearing aids. The statute also exempts "any other medical device determined by the Secretary to be of a type which is generally purchased by the general public at retail for individual use." Treasury regulations have provided examples of devices that would generally fall into the open-ended retail exemption. Examples that Treasury has provided with respect to devices that are exempt from the tax are: absorbent tipped applicators, adhesive bandages, snake bite suction kits, denture adhesives, pregnancy test kits, blood glucose monitors, test strips, and lancets, prosthetic legs, endoskeletal shin systems, mechanical and powered wheelchairs, portable oxygen concentrators, urinary ileostomy bags, and powered adjustable home use beds. In addition, the FDA has provided a list of certain "safe harbor" items that fall within the retail exemption. Nonetheless, because of the malleable nature of the retail exemption, there is no complete list of medical devices that are not subject to the excise tax. Are there reporting requirements for entities that have to pay the tax? Just as with other excise taxes, in order to report the tax liability to the government and pay the tax, those that are required to pay the medical device tax generally must file a quarterly return with the Internal Revenue Service using form 720. In addition, section 40.6302(c)-1(a) of the Excise Tax Procedural Regulations generally requires entities that are liable for excise taxes to make semimonthly deposits of tax during the period in which the tax liability is incurred. Generally under section 6656 of the Internal Revenue Code, failure to deposit the requisite tax subjects delinquent taxpayers to certain penalties. However, the Internal Revenue Service has waived such penalties for the first three quarters of 2013. Will the medical device tax appear on a line item on a consumer receipt? The medical device tax does not regulate what can or cannot appear on a consumer receipt for a medical device. Nonetheless, because of the retail exemption to the medical device tax, it would be unlikely for the medical device tax to be imposed on a good that is sold to the general public at retail. In recent months, customers of the sporting goods chain Cabela's have circulated images of a receipt indicating that the company was imposing an additional charge on customer receipts for a "medical excise tax." The charge imposed by Cabela's was reportedly the result of a software glitch and was not the product of any mandate imposed by HCERA's imposition of the medical device excise tax. Did HCERA, in addition to imposing a medical device tax, also impose excise taxes on other items, such as sporting equipment? E-mails have been circulated suggesting that HCERA also imposed excise taxes on hunting and fishing equipment, gas guzzler automobiles, vaccines, tires, and coal. HCERA imposed two main excise taxes, the medical device excise tax and, beginning in 2018, a forty percent excise tax on the value of health insurance benefits exceeding a certain threshold. These excise taxes were added to the list of excise taxes that already existed under subtitle D of the Internal Revenue Code. The origins of several of the excise taxes that have been confused for originating in HCERA are summarized in Table 1 . What bills have been introduced to repeal the medical device excise tax? Table 2 contains a list of major bills and resolutions in the 112 th and 113 th Congresses to fully repeal the medical device excise tax.

On December 7, 2012, the Department of the Treasury and the Internal Revenue Service issued final regulations explaining the scope of the medical device excise tax created by the Health Care and Education Reconciliation Act of 2010 (HCERA), which modified the Patient Protection and Affordable Care Act of 2010. The new regulations were issued less than a month before the 2.3% excise tax took effect on January 1, 2013. This report provides a brief overview of the recently enacted Treasury regulations, analyzes the legal implications of the regulations, and answers frequently asked questions about the medical device tax. The Treasury regulations on the medical device excise tax explain both who is subject to the excise tax and the scope of the statutory exemptions provided for the tax. Specifically, the regulations incorporate by reference the general definitions for a "manufacturer, producer, or importer" outlined in the Internal Revenue Code, meaning that the excise tax will be directly paid by manufacturers, as opposed to consumers or others that use a given medical device. Furthermore, the regulations attempt to clarify the limits to the medical device excise tax. Beyond the statutory exemptions created for eyeglasses, contact lenses, and hearing aids, the law created a "retail exemption" to the excise tax, excluding from the tax medical devices that are "generally purchased by the general public at retail for individual use." The Treasury regulations attempt to simultaneously provide certainty to potential taxpayers as to which devices are subject to the retail exemption, while allowing the government the flexibility to properly apply the retail exemption to the variety of devices that could be exposed to the excise tax. The regulations provide a flexible two-prong test to determine whether a device should fall within the retail exemption, applying the exemption when the device is (1) regularly available for purchase by non-professional consumers and (2) not primarily intended for use by medical professionals. The regulations provide several factors to consider when applying the two-prong test. To provide some certainty to the scope of the retail exemption, the regulations also included several "safe harbor" provisions, explicitly acknowledging that certain devices, such as "over-the-counter" devices, fall within the retail exemption. The new Treasury regulations on the medical device excise tax, while providing some certainty with respect to what devices will be exempt from the tax, generally favor a more flexible approach to defining the scope of the central exemption to the tax. As a consequence, uncertainty remains as to which medical devices will be subject to the tax. Indeed, Treasury, in releasing the medical device excise tax regulations, notes that further clarification on various issues implicated by the tax is still needed. As such, the regulations constitute only the first step in defining the limits of the medical device excise tax.

What Is the Lifeline Program? Lifeline is a federal program, established in 1984, that assists eligible individuals in paying the recurring monthly service charges associated with either wireline or wireless telephone usage. The program is part of the Low Income Program supported by the Universal Service Fund. Eligible households can receive up to $9.25 per month in Lifeline discounts. Additional state support may be available. Approximately 2,000 telephone companies are eligible to provide these discounts. A household applies for the discounts through their designated telecommunications service provider. Support is not given directly to the subscriber, but to the service provider. The provider is reimbursed through the Lifeline Program and in turn passes the discount on to the subscriber. Who Oversees the Lifeline Program? The Universal Service Administrative Company (USAC), an independent not-for-profit organization, is the designated administrator of the Universal Service Fund (USF), of which the Lifeline Program is a part. USAC administers the USF programs for the Federal Communications Commission and does not set or advocate policy. What Is Covered Under the Lifeline Program? The Lifeline program covers the minutes of use for the eligible subscriber. Depending on the package selected the subscriber is allocated a set number of usage minutes per month. Once the allocation is used the subscriber may choose to pay for additional minutes of use. Although not required, most providers that offer a prepaid wireless option provide a wireless phone to the subscriber for free. The cost of this phone is not covered under the Lifeline program but is borne by the designated provider. Although the prepaid wireless option is growing in popularity the Lifeline program also covers a wireline option or a postpaid wireless option. As with the case of the prepaid wireless option the program solely covers the minutes of use, not the device. What Are the Requirements for Eligibility? The Lifeline program is available to eligible low-income consumers in every state, territory, and commonwealth, and on Tribal lands. To participate in the program, consumers must either have an income that is at or below 135% of the federal Poverty Guidelines or participate in one of the following assistance programs: Medicaid; Supplemental Nutrition Assistance Program (Food Stamps or SNAP); Supplemental Security Income (SSI); Federal Public Housing Assistance (Section 8); Low-Income Home Energy Assistance Program (LIHEAP); Temporary Assistance to Needy Families (TANF); National School Lunch Program's Free Lunch Program; Bureau of Indian Affairs General Assistance; Tribally-Administered Temporary Assistance for Needy Families (TTANF); Food Distribution Program on Indian Reservations (FDPIR); Head Start (if income eligibility criteria are met); or state assistance programs (if applicable). The Lifeline Pre-Screening Tool ( http://www.lifelinesupport.org/ls/eligibility/default.aspx ) provided by USAC can help determine whether a household is eligible for Lifeline assistance. At least once each year, beginning in 2012, consumers who are receiving lifeline service must recertify their eligibility and that no one else in their household has a lifeline discounted service. A failure to recertify eligibility will result in removal from the program. How Does Someone Enroll? Consumers apply for Lifeline through their local telephone company or designated state agency. The Companies in My State ( http://www.lifelinesupport.org/ls/companies.aspx ) provided by USAC can help locate a Lifeline provider in your state. The National Association of Regulatory Utility Commissioners (NARUC) provides a listing and links to state utility commissions ( http://www.naruc.org/Commissions/CommissionsList.cfm ). Who Pays for the Lifeline Program? Telecommunications carriers that provide interstate service and certain other providers of telecommunications services are required to contribute to the federal USF based on a percentage of their end-user interstate and international telecommunications revenues. These companies include wireline telephone companies, wireless telephone companies, paging service providers, and certain Voice over Internet Protocol (VoIP) providers. The USF receives no federal monies. Some consumers may notice a "Universal Service" line item on their telephone bills. This line item appears when a company chooses to recover its USF contributions directly from its customers by billing them this charge. The FCC permits, but does not require, this charge to be passed on directly to customers. Each company makes a business decision about whether and how to assess charges to recover its Universal Service obligations. The charge, however, cannot exceed the amount owed to the USF by the company. Can a Household Have More Than One Discounted Service? No. Federal rules prohibit eligible low-income consumers from receiving more than one Lifeline discount per household. An eligible consumer may receive a discount on either a wireline or wireless service, but not both. If a household is currently receiving more than one monthly Lifeline service, it must select one provider to provide Lifeline service and it must contact the other provider to de-enroll from their program. Subscribers found to be violating this rule will be de-enrolled and may also be subject to criminal and/or civil penalties.

The concept that all Americans should have affordable access to the telecommunications network, commonly called the "universal service concept," can trace its origins back to the 1934 Communications Act. The preservation and advancement of universal service has remained a basic tenet of federal communications policy, and in the mid-1980s the Federal Communications Commission (FCC) established the Lifeline program to provide support for low-income subscribers. The Lifeline program, which is administered under the Universal Service Fund (USF) Low Income Program, was established by the FCC in 1984 to assist eligible low-income subscribers to cover the recurring monthly service charges incurred for telephone usage. Although the program solely covers costs associated with the minutes of use, not the telephone, misinformation connecting the program to payment for a "free phone" has resulted in a significant number of constituent inquiries.

Introduction1 The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) under negotiation between the United States and 11 other countries. Current participants include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Participation in the negotiations has grown over time with Canada and Mexico joining in late 2012 and Japan, the most recent country to participate, joining in July 2013. The proposed agreement's ability to attract and incorporate new members will likely affect the ultimate global significance of its regional platform and the new trade rules the agreement may come to embody. Congress has a major role in the negotiation and implementation of FTAs. Throughout the negotiating process, Congress may conduct oversight hearings and consultations with U.S. trade negotiators, providing Members an opportunity to oversee and influence the development of the final TPP. Congress may also establish U.S. trade negotiating objectives as part of its granting of Trade Promotion Authority (TPA) to the executive branch. Congress would also have to consider and approve implementing legislation before a final FTA could enter into force. The United States has a number of objectives in the proposed TPP agreement. These include achieving a comprehensive and high standard regional FTA that eliminates and reduces trade barriers and increases opportunities for U.S. trade and investment; allowing the United States to play a role in developing a broader platform for trade liberalization, particularly throughout the Asia-Pacific region; and providing the United States with an opportunity to establish new rules on emerging trade issues, such as regulatory coherence, supply chain management, state-owned enterprises, and increasing trade opportunities for small- and medium-sized businesses. This report focuses primarily on U.S. economic interests in the TPP agreement. It provides a comparative economic analysis of the countries currently negotiating the TPP and describes the U.S. trade flows with these countries at the bilateral level and in relation to the countries' economic linkages with the rest of the world. It also provides information on the existing trade agreements of TPP countries. As such, this report aims to serve as an introduction to the economic relationship these countries have, both individually and collectively, with the United States. Economic Overview Asia-Pacific Region The Asia-Pacific region, defined for the purposes of this report as the current members of the Asia-Pacific Economic Cooperation (APEC) forum, has substantial global economic significance. Among its 21 member economies, APEC includes all 12 of the current TPP participants ( Table 1 ). It is home to 40% of the world's population and nearly 60% of global GDP. Moreover, the region's economies are growing quickly. In 2014, six of these 21 economies had GDP growth above 5%, while GDP growth in the United States was 2.4%. Along with increasing economic influence these economies account for a growing share of world trade. For example, Asia's share of world imports grew from 18.5% in 1983 to 31.8% in 2013. The region is significant not just as a burgeoning market, but also as an integral part of global value chains. The East Asian members, in particular, are highly connected through global value chains and involve the United States in complex production networks spanning the Pacific. In 2009, for example, 64% of Asian non-fuel imports were in intermediate goods and over $600 billion in intermediate goods moved between Asia and North America. The Asia-Pacific region represents an important source and destination for U.S. trade and investment. Together, these economies represent nearly 60% of overall U.S. trade and about one-quarter of the stock of foreign direct investment (FDI) into and out of the United States. Yet, there remains great potential for further U.S. economic engagement with the region. Some U.S. policy observers argue that the United States has fallen behind in its focus on market access abroad, particularly in emerging Asia and Latin America. The ongoing U.S. involvement in regional trade negotiations, including the TPP and the Transatlantic Trade and Investment Partnership (T-TIP) with the European Union, plurilateral initiatives such as the potential Trade in Services Agreement (TISA), and multilateral negotiations at the World Trade Organization (WTO), as well as recent congressional approval of Trade Promotion Authority legislation, suggest continued U.S. interest in opening markets and expanding U.S. economic engagement abroad. TPP Countries The 12 countries that constitute the current group of TPP participants are economically and demographically diverse. As shown in Figure 1 , the United States is more than twice as large as any other TPP country in terms of its economy and population. Japan, the newest and next largest TPP country, has a GDP and population that are 27% and 40% of the U.S. level, respectively. GDP per capita at purchasing power parity (PPP), a rough measure of a country's level of economic development, ranges from just over $5,500 in Vietnam to over $80,000 in Singapore, more than $20,000 higher than that of the United States. These countries vary greatly in their geography as well. They range from Australia, a large and resource-rich continent, to Singapore, a small, trade-dependent city-state. As discussed in the final section of this report, some of this economic and demographic diversity is reflected in both the type and intensity of trade and investment flows between the United States and TPP countries. A potential TPP FTA may present an opportunity for the United States to expand its trade and investment with a large and fast-growing regional market. Non-U.S. TPP partners collectively represent a potential market with a population about 50% larger than the United States and several TPP economies have grown rapidly over the past decade (e.g. , average GDP growth for 2005-2014 was 6.2% in Vietnam and Peru, 5.9% in Singapore, and 4.9% in Malaysia). U.S. trade and FDI flows with these countries have increased significantly. U.S. exports to TPP countries increased by just over 90% during this period, exceeding $178 billion in services in 2013 and $727 billion in goods in 2014. U.S. imports from TPP countries increased by nearly 60% since 2004, with services imports of $95 billion in 2013 and goods imports of $882 billion in 2014. The annual flow of both inbound and outward foreign direct investment (FDI) between the United States and TPP countries was much higher in 2013 than 2004, although it has fluctuated throughout the decade. The flow of U.S. FDI abroad to TPP countries was $86 billion in 2013 with inward FDI at $69 billion. The stock of both U.S. FDI in TPP countries and inward FDI from TPP countries nearly doubled from 2004 to 2013 ($440 billion to $983 billion and $350 billion to $664 billion). The United States has consistently run a goods trade deficit with TPP countries and a services trade surplus ( Figure 2 ) . The U.S. services trade surplus with TPP countries increased over most of the past decade while the U.S. goods trade deficit fell (became less negative) sharply during the recession and has yet to reach its pre-recession levels. In services, the U.S. trade surplus has increased from $38 billion in 2004 to $83 billion in 2013. In goods, the U.S. trade deficit in 2014 of $155 billion was less than the deficit in 2004 of $203 billion, and significantly less than the peak deficit in 2006 of $247 billion. Crude oil, a major U.S. import from both Canada and Mexico, is a large and growing contributor to the overall trade deficit with TPP countries. Excluding trade in crude oil, the United States actually had an overall trade surplus (goods and services) with TPP countries in 2013. New and Potential TPP Participants One of the United States' expressed interests in the proposed TPP FTA is its potential expansion to include other Asia-Pacific economies. To date the expansion of the negotiations has included only APEC members. In May 2011, the TPP trade ministers agreed "to consider the membership of any APEC members if and when they are ready to meet the high standards of the agreement." In November 2011, Canada, Japan, and Mexico announced their intent to seek consultations with existing participants on the possibility of joining the negotiations. Canada and Mexico became official participants in late 2012, and Japan joined the negotiations in July 2013. South Korea and other APEC economies have also expressed interest in potentially joining the negotiations, as have non-APEC members such as Costa Rica and Colombia among other countries. Ambassador Froman welcomed South Korea's expression of interest in the TPP negotiations, noting the existing trade and investment commitments South Korea had made with the United States through the U.S.-South Korea (KORUS) FTA, but suggested that the current negotiating members would prioritize concluding the existing negotiations before considering the entry of new members. According to press reports, South Korea has been consulting bilaterally with the existing TPP negotiating parties about what steps would be required to join the TPP negotiations and what a potential timeframe for participation may be. The recent participation of Canada, Japan, and Mexico greatly expanded the size of the TPP in terms of U.S. trade. Using trade figures from 2013, the share of U.S. goods and services trade encompassed by TPP partners increased from 5% to 31% with the addition of Canada and Mexico, increased further to 37% with the addition of Japan, and though unlikely in the near future, expansion of the potential agreement to all of APEC would increase its share of U.S. trade to 57% ( Figure 3 ). Japan's entry into the agreement is particularly significant. Japan is the third-largest economy in the world, the fourth-largest U.S. trading partner, and not party to an existing U.S. FTA, as opposed to Canada and Mexico, which are part of the North American Free Trade Agreement (NAFTA). Japan is now the second-largest country participating in TPP, both in terms of population (127 million) and GDP ($4.6 trillion). Some analysts argue that Japan's participation in the TPP negotiations has attracted other Asia-Pacific countries and will help achieve the goal of membership expansion. For example, South Korea first expressed potential interest in joining in 2013, a few months after Japan became an official member of the negotiations. Others contend that Japan's entry may have complicated the negotiation process, adding a significant economic counterweight to the United States and perhaps slowing the overall speed of the negotiations. U.S. bilateral negotiations with Japan on sensitive issues including autos and agriculture remain major sticking points in the overall TPP negotiations. Existing Trade and Economic Agreements TPP participants belong to various multilateral, regional, and bilateral trade and economic agreements. For example, all TPP countries are members of the World Trade Organization (WTO), with Vietnam joining most recently in 2007. In addition, TPP countries have a number of bilateral and regional FTAs in effect, of varying degrees, some of which include other TPP negotiating partners. The United States, for example, has FTAs with 20 countries including 6 TPP participants (Australia, Canada, Chile, Mexico, Peru, and Singapore). In total, there are more than 180 preferential trade agreements among Asia-Pacific countries, most of which do not include the United States. The United States Trade Representative (USTR), as well as certain stakeholder groups, view the proposed TPP FTA as an opportunity for the United States to address this rapid rise in preferential trade agreements, with a goal of ensuring that U.S. goods and services remain competitive in the region and that the United States plays a central role in developing a framework for future regional free trade negotiations. Given the potential for future expansion in TPP membership, supporters contend that the ability to influence the strength and coverage of the agreement at the beginning stage may be particularly advantageous. Asia-Pacific Economic Cooperation (APEC) TPP participants are part of a broader network of international partnerships within the Asia-Pacific. The Asia-Pacific Economic Cooperation (APEC) forum is a primary vehicle for broader regional cooperation on trade and economic issues in the Asia-Pacific region. The annual APEC Leaders (heads-of-state) meeting provides an opportunity for stakeholders throughout the region, including political and business leaders, to address regional impediments to trade and economic integration through non-binding commitments. Although the organization itself does not negotiate trade agreements, its stated goals, known as the "Bogor Goals," include freer trade and investment throughout the region. Specifically, APEC views itself as an "incubator" of an eventual Free Trade Area of the Asia-Pacific (FTAAP) and supports the TPP as one step towards that goal. APEC's 21 members include the three largest economies in the world and the four largest U.S. trading partners. Association of Southeast Asian Nations (ASEAN) ASEAN is another major regional economic partnership that includes TPP countries. ASEAN members include Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Unlike APEC, ASEAN has already created a free trade area among its members. However, import tariffs on intra-ASEAN trade are being removed at different rates in different ASEAN countries depending on levels of economic development. According to the group's economic community blueprint, ASEAN members intend to promote further economic integration and freer flow of goods, services, investment, capital, and labor throughout their membership in the future. The association has also established FTAs collectively with non-ASEAN countries, including Australia, China, India, Japan, New Zealand, and South Korea. Talks have also begun on a potential single trade agreement that would encompass ASEAN and its six FTA partners, known as the Regional Comprehensive Economic Partnership (RCEP). This agreement may present an alternative to the TPP in achieving freer trade throughout the Asia-Pacific region, though it may be less comprehensive in its trade liberalization ambitions. Some see these ASEAN economic partnerships that exclude the United States but include the other major economies of the Asia-Pacific as presenting a challenge to the United States' ability to retain its economic clout engagement in the region. However, at least one study has shown that while there may be benefits to whichever country or country-group has more influence in setting the trade rules for the region, there would remain significant economic benefits for the two largest economies in RCEP and TPP, China and the United States, to eventually merge the two separate efforts into one region-wide FTA. Free Trade Agreements Table A-1 in the appendix shows free trade agreements of TPP countries that have either been concluded or are under negotiation. While such a list provides a general overview of a country's proclivity toward economic openness, these FTAs differ in the extent of their tariff reduction, product inclusion, and trade rules. Due to this variation, a country may enter into a trade agreement as a member of a larger body (e.g., ASEAN-Australia) and also negotiate separate bilateral FTAs (e.g., Malaysia-Australia). The table includes both bilateral FTAs and larger regional agreements. TPP participants have multiple FTAs in place throughout the Asia-Pacific and the world. As shown in Table A-1 , nine of the twelve TPP countries have agreements in place or are in negotiations with China, the largest economy in the region not currently participating in the TPP negotiations. Ten TPP countries, including the United States, also have agreements or are negotiating with the European Union. TPP countries are also well connected to one another through their existing trade agreements. Figure 4 shows that the number of agreements in force among TPP countries range from Canada with only four existing FTAs among the TPP countries, to Chile with 11 FTAs in place covering the entire TPP membership. The FTA among Brunei, Chile, New Zealand, and Singapore that served as the starting point for the current TPP, known as the Trans-Pacific Strategic Economic Partnership agreement (P-4), and ASEAN, play a large part in this interconnectedness, each joining four of the TPP economies into a free trade area. The North American Free Trade Agreement (NAFTA) joins three TPP partners, Canada, Mexico, and the United States, and encompasses over 50% of all TPP goods trade. This preexisting network of trade agreements among TPP members suggests that the negotiating countries may envision benefits from a concluded TPP agreement that extend beyond those achieved in their existing agreements. U.S. FTAs and TPP The United States currently has FTAs in force with 20 countries. Figure 5 places the potential TPP agreement in context with these existing U.S. FTAs and the potential T-TIP FTA the United States is negotiating with the European Union. Now that the members of NAFTA are part of the TPP negotiations, this potential FTA would be the largest U.S. FTA in terms total goods trade. U.S. trade with TPP partners was larger than the level of U.S. trade with South Korea, the largest of the recent U.S. FTA partners, by a factor of fourteen in goods trade in 2014 and a factor of nine in services trade in 2013. However, as noted above, much of this U.S.-TPP trade is already covered by existing trade agreements. U.S. trade with FTA partners accounted for 82% of U.S.-TPP goods trade in 2014 and 69% of U.S.-TPP services trade in 2013. Japan is the largest U.S. trading partner in the negotiations without an existing FTA. In terms of foreign direct investment (FDI) the TPP would be larger than any existing U.S. FTA, although the proposed T-TIP would be larger still, highlighting that existing U.S. investment linkages are greater with the European Union than with the Asia-Pacific TPP countries. Bilateral Investment Treaties International trade and economic relations include investment flows between nations, in addition to trade in goods and services. These investment flows can be the subject of negotiated disciplines in bilateral investment treaties (BITs) or FTAs. The United States typically includes investment provisions in its FTAs, as with each of the six existing FTAs between the United States and TPP participants. Currently, no U.S. BITs are in place with the other five TPP countries. Among TPP participants, Malaysia has been the most proactive in negotiating BITS, according to the latest United Nations data on international investment treaties. As of June 2015, Malaysia had 50 BITs in force, while New Zealand had the lowest number of investment treaties with only 2 in force. The United States had 40 BITs in force as of June 2015 ( Table 2 ) . Trade, Investment, and Tariff Patterns This section examines trade and investment flows into and out of TPP countries as well as their tariff rates. Given the variation in geography, population, and economic development among TPP countries, the type and quantity of trade and investment varies greatly from country to country. Additionally, existing tariff structures among the TPP countries highlight the variation in their openness to trade and may identify some potential difficulties as well as opportunities in liberalizing trade between such diverse countries. The analysis and description that follows depends on the quality and scope of the relevant data. Hence, the most comprehensive examination is on merchandise trade. U.S.-TPP Trade Merchandise Trade31 Trade between the United States and other TPP countries represents about 40% of overall U.S. goods trade. The United States had a deficit in merchandise trade with TPP countries in 2014 ( Table 3 ) . Energy imports, particularly crude oil from Canada and Mexico, and imports of vehicles and parts from Japan accounted for most of this deficit. Canada, Mexico, and Japan are the first, third, and fourth-largest U.S. trade partners overall. The majority of U.S.-TPP trade is concentrated with these three TPP negotiating partners. Figure 6 below shows that U.S. imports each from Canada, Japan, and Mexico were larger than U.S. imports from the other eight TPP countries combined. The same held for U.S. exports to Canada and Mexico, but U.S exports to Japan were about only about 60% of the value of U.S. exports to the other eight TPP countries. In 2014, U.S. merchandise trade with these three countries accounted for nearly 87% of U.S. trade with TPP negotiating partners. Among the other eight TPP countries, Australia and Singapore are the major export markets for the United States, while Malaysia and Vietnam are the major import markets. In 2014, of the $108 billion in U.S. goods exports to these other 8 TPP countries, over half went to Australia and Singapore, while over 70% of the $108 billion in U.S. imports came from Malaysia, Singapore, and Vietnam. Over the past decade, substantial increases in trade between the United States and some of the smaller economies have occurred ( Figure 7 and Figure 8 ). For example, U.S. trade with Peru and Chile has tripled, and U.S. trade with Vietnam has increased more than 5-fold. Figure 8 below highlights Vietnam's rapid rise in supplying goods to the United States, moving from the fourth-biggest to the largest supplier of U.S. imports among these eight TPP countries, gaining more ground in the U.S. market than even recent FTA partners such as Peru and Chile. Much of this increase likely reflects the improved trade relations between Vietnam and the United States over the past decade. The United States granted Vietnam conditional normal trade relations (NTR) status in 2001 and then permanent NTR (PNTR) status in 2006 when Vietnam acceded to the WTO. Over the past decade the U.S. trade balance with these eight TPP countries has fluctuated. The trade deficit grew (became more negative) from 2004, peaked in 2006, and then fell to a surplus in 2008. The surplus grew until 2012 and then fell becoming a small deficit again in 2014. Driving this shifting trade balance were falling imports from Malaysia from 2004 to 2009 which then recovered by 2014 and a rapid rise in imports from Vietnam from 2009 to 2014. Exports have grown more consistently throughout the period but the largest increases have been in exports to Singapore, Australia, Chile, and Peru, who like Canada and Mexico are current U.S. FTA partners. At the aggregate level, the top U.S. import categories are motor vehicles, oil and gas (primarily crude oil), motor vehicle parts, semiconductors and other electronic components, computer equipment, nonferrous metal, and communications equipment. The top export categories are motor vehicle parts, petroleum and coal products, motor vehicles, aircraft, computer equipment, semiconductors and electronic components, and basic chemicals. Similarities in these product categories among the top U.S. imports and exports may reflect the supply chains and production linkages that exist between the United States and Asia-Pacific countries. Even in petroleum products, for example, raw crude is the primary U.S. import, while refined petroleum products are the primary U.S. export. Other major supply chains include motor vehicle and electronic equipment production. Considering bilateral flows, U.S. exports are largely in the same top product categories across countries and include those listed above. However, U.S. imports from TPP countries vary greatly. Table 4 shows the top three imports/exports for each of the TPP countries, their value, and the percent of each country's total U.S. imports/exports that category represents. Top U.S. exports including motor vehicles and aircraft highlight the U.S. advantage in high-tech products. U.S. imports from TPP countries reflect the dominant industries and relative strengths in each country. Agriculture and natural resource products are the top U.S. imports from Australia, Chile, New Zealand, and Peru. Malaysia and Singapore's exports to the United States consist primarily of manufactured products such as computers, semiconductors and electronic components, and chemicals. From Canada and Mexico, the United States imports both raw materials, such as crude oil, and manufactured goods such as motor vehicles and parts. Vietnam, the TPP country with the lowest per capita GDP, specializes in lower skilled, labor-intensive apparel and footwear industries, which represent over 40% of its exports to the United States. Over 40% of U.S. imports from Japan are advanced manufacturing products such as motor vehicles and parts and aircraft and parts. Agriculture Trade Trade is particularly important to U.S. agriculture, with exports accounting for approximately 20% of U.S. agriculture production. In the context of the TPP negotiations, the United States has both potential import sensitivities and major export interests, which vary by product and country, given the range of TPP participants, making for a complex negotiating dynamic. Other TPP participants include major agriculture exporters such as Australia and New Zealand as well large consumer markets with relatively high agricultural tariffs such as Japan, Malaysia, and Vietnam. Table 4 below provides data on U.S. agricultural trade with TPP countries. Canada, Japan, and Mexico are the largest U.S. trade partners in agriculture products. The United States has an overall surplus in trade in agriculture products with TPP countries, due primarily to the large U.S. surplus with Japan. Services Trade33 A main focus of the proposed TPP FTA, billed as a "21 st century" agreement, is emerging issues in international trade. Although covered in previous U.S. FTAs, trade in services, particularly as it relates to digital trade, is one such emerging issue. The United States, in which services provide 80% of U.S. civilian employment and account for 70% of GDP, is considered to be particularly competitive in this sector. Services, unlike goods, are typically intangible (e.g., financial, legal, accounting), making their trade more complex to measure than tracking a shipping container from location A to location B. As a result, trade in services data lack the detail provided for trade in goods. The analysis below only covers the TPP countries individually included in U.S. services trade statistics: Australia, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, and Singapore. The most recent bilateral services trade statistics are available through 2013. Elsewhere in this document, if not specified, trade simply refers to merchandise (goods) trade. U.S. services trade with the eight TPP countries for which data are available presents the same pattern of competitiveness seen in U.S. services trade with the rest of the world. In 2013, the United States had a collective services trade surplus of more than $83 billion with these eight TPP countries. As with goods trade, Canada, Japan, and Mexico are the largest U.S. services trade partners among TPP members ( Figure 9 ) . However, during the past decade U.S. services trade with other TPP countries, particularly Australia, have increased at a faster rate than those from Mexico, such that U.S. services trade with the other TPP countries, collectively, now exceeds U.S. trade with Mexico. Services exports from the United States to these eight TPP countries collectively have more than doubled over the past decade, and services exports to Australia, in particular, have nearly tripled. In 2013, the United States had a significant services trade surplus with all TPP countries for which individual data are available ( Table 6 ). The composition of U.S. services exports to the eight TPP countries differs somewhat from the composition of U.S. services imports. Figure 10 below shows that while the United States has a trade surplus in each of the six categories listed, some categories have relatively more balanced trade than others. For example, U.S.-TPP trade in financial services shows a large U.S. surplus—U.S. exports are more than three times as great as U.S. imports. In the categories of royalties or charges for the use of intellectual property, U.S. exports are also more than double U.S. imports. U.S. exports of travel and transport services, the largest category of U.S.-TPP trade, are slightly less than twice as large as U.S. imports from TPP countries. For business services trade and insurance, telecommunications and other private services, U.S. exports and imports with TPP countries are relatively balanced. Services Supplied through Foreign Affiliates Countries also provide services to foreign residents by establishing a commercial presence in local markets. The BEA collects data on services supplied to foreign residents by majority-owned foreign affiliates (MOFAs) of U.S. multi-national corporations (MNCs) (i.e., U.S. companies with operations in foreign countries). Typically, the value of U.S. services supplied through MOFAs is considerably larger than trade in services discussed above. For instance, in 2012, more than $1.2 trillion in services were provided to foreign residents through foreign affiliates of U.S. companies, compared to just over $600 billion supplied through trade in services. At a smaller scale, the same pattern holds true for U.S. services provided to the eight TPP countries for which services data are available. During 2004-2012, the latest period for which consistent data are available, services supplied through U.S. MOFAs grew rapidly in most TPP countries, doubling in TPP countries as a whole. In 2012, slightly over half of services supplied to TPP countries through U.S. MOFAs went to Canada (34%) and Japan (20%), although the other TPP countries share of this trade has grown considerably ( Figure 11 ) . In 2012, the value of services supplied to U.S. residents through majority-owned U.S. affiliates (MOUSAs) of foreign MNCs (i.e. , foreign companies that have established a commercial presence in the United States) was only about 60% of the value of services supplied abroad through MOFAs of U.S. MNCs. This same pattern is evident among all TPP countries except Japan: the value of services supplied to the United States through TPP MOUSAs, excluding Japan, are about half of those supplied to TPP countries from U.S. MOFAs. Conversely Japan's services supplied to the United States through its MOUSAs are one-third larger than the U.S. services supplied through MOFAs in Japan. This likely reflects the fact that Japan's investment in the United States has exceeded U.S. investment in Japan (see investment discussion below). Among TPP countries, Japan (48%) and Canada (36%) account for the vast majority of services supplied through MOUSAs ( Figure 12 ) . Aggregate TPP Trade Who trades with TPP countries? Figure 13 shows TPP countries' aggregate goods trade with each other and the rest of the world. Goods trade among TPP partners was more than $2 trillion in 2014. As the largest country in the TPP, both in terms of population and GDP, U.S. trade with TPP partners accounts for much of the trade among TPP countries. Specifically, trade among the NAFTA countries, Canada, Mexico, and the United States, was over $1.2 trillion in 2012—over half of all intra-TPP trade. U.S. trade with Japan, the third largest bilateral trade partnership in the TPP, accounted for nearly $200 billion of total intra-TPP trade. See Table A-2 in the Appendix for intra-TPP trade data for each TPP country. Even larger than intra-TPP trade, however, is TPP country trade with the other APEC members not currently party to the TPP negotiations. This goods trade amounted to over $2.7 trillion in 2014. Trade between China and the TPP countries, nearly $1.5 trillion, made up over half of all TPP country trade with the other APEC members. In terms of goods trade, expansion of the TPP to include China and the other APEC members would encompass more TPP country trade than expanding the agreement in any other region including the European Union ($1.3 trillion) and Latin America ($459 billion). Investment Flows The proposed TPP FTA, like previous U.S. FTAs, is expected to include provisions on investment. As mentioned above, the FTAs the United States already has in place with six of the TPP countries (Australia, Canada, Chile, Mexico, Peru, and Singapore) include investment provisions. However, no other bilateral investment treaties (BITs) exist between the United States and the remaining TPP countries. The most recent available investment data is through 2013. Nearly all of the top U.S. investment partners in the TPP are covered by an existing FTA and the stock (accumulated value) of U.S. investment in these countries exceeds their investments in the United States ( Figure 14 ) . Japan, however, does not have an existing U.S. FTA, and uniquely among TPP countries, the stock of Japanese investment in the United States is more than double the stock of U.S. investment in Japan. As discussed above, this pattern can also be seen in U.S.-Japanese services trade through affiliates. TPP-U.S. FDI flows in 2013 show that Japan and Canada were the largest U.S. investment partners accounting for 34% and 30% of total inward and outward U.S. FDI with TPP countries. Australia (13%), Singapore (12%), and Mexico (7%) were the other top U.S. investment partners among TPP countries ( Table 7 ). Flows of FDI can vary significantly from year to year. From 2012 to 2013 outward U.S. direct investment in TPP countries declined slightly from $90 billion to $86 billion, while inward U.S. FDI from TPP countries nearly doubled from $37 billion to $69 billion. Tariff Levels TPP negotiating partners are striving for a high standard and comprehensive FTA that addresses trade barriers beyond tariffs. Traditional tariff barriers, however, still exist among TPP members and can be an impediment to expanded trade. While tariffs are only one form of potential trade barriers, they are relatively easy to compare and can provide a general picture of a country's openness to trade. As all TPP members are members of the WTO, one relevant tariff to consider is the applied most-favored nation (MFN) tariff. The MFN concept is a WTO principle that requires member countries to non-discriminately apply their tariff rates to other members. The average applied MFN tariff then is simply the average, among all products, of the tariff rates actually applied to other countries, as opposed to bound rates, which are essentially caps, or the maximum level that may be imposed under WTO commitments. Often, applied rates are well below bound rates. For example, Chile's average MFN applied rate is 6% compared to an average bound rate of 25%. Both levels are important and the proposed TPP FTA aims to eventually reduce and eliminate tariffs at both the applied and bound level. The average applied MFN tariffs vary greatly among TPP countries. Vietnam has an average rate of almost 10%, while Singapore charges tariffs on so few items that it has an average rate of 0%. Figure 15 below shows the average MFN tariffs for TPP participants as reported in the most recent WTO tariff profiles. Per capita GDP, a rough measure of economic development, is graphed on the right axis, revealing that, in general, the more highly developed TPP countries tend to be those with the lower tariff levels. Hence, movement towards zero tariff rates will require a greater reduction in applied tariffs among the less developed members. Although average tariff rates among all products are below 10% for TPP countries, some industrial and agricultural sectors have relatively high tariffs. For example, the average applied MFN tariff rate on Canadian dairy products is 249%, even though the overall Canadian average applied MFN tariff rate is only 4.2%. Table 8 below provides the product category with the highest tariff rate for each TPP country. These include dairy, clothing, beverages/tobacco, sugar, and electrical machinery. Uniquely among the TPP members, Chile and Singapore have little variation in tariffs at the industry level. Singapore has an average tariff of 0% in every category except beverages and tobacco. Chile has a higher but still uniform tariff structure, with an average tariff of 6% in all but one product group. When considering tariff rates, it is useful to consider the overall importance of trade in a nation's economy. Trade-to-GDP ratios, shown in Figure 16 provide one such measure. The figure shows a great range in trade-to-GDP ratios among TPP countries. Singapore's trade-to-GDP ratio of over 366% implies that the country's imports and exports are nearly four times larger than its total domestic production of goods and services. Such a high figure likely reflects Singapore's importance as a regional shipping hub, re-exporting products that merely pass through its borders, as well as its importance in international supply chains, perhaps domestically producing only a portion of the components in the manufactured goods it exports. Given this significant reliance on international trade, it is less surprising that Singapore would have such a low average applied tariff level. The United States, the TPP country with the largest population and economy, and, hence, the largest domestic market, has a trade-to-GDP ratio of 30%, indicating that trade accounts for a smaller share of economic activity in the United States than in any other the TPP countries. The United States, however, has one of the lowest average applied tariff rates among the TPP countries, suggesting that the importance of trade in a country's economy is not the only determinant of its openness to trade. The variation in trade-to-GDP ratios is another indicator of the diversity among the TPP countries, which may ultimately be reflected in their trade policy priorities. Conclusion The proposed Trans-Pacific Partnership FTA would be a significant FTA for the United States and could eventually become the platform for a broader Asia-Pacific free trade area, an area that encompasses 40% of the world's people and over half of global production. TPP would be the largest U.S. FTA based on trade flows, and with the entry of Japan, a significant share of U.S.-TPP trade is not currently covered by an FTA. Due to the great diversity among the TPP participants, there may be challenges in achieving a comprehensive and high standard agreement. TPP countries vary in terms of population, economic development, and geography. In goods and services trade, Canada is the top U.S. partner among TPP countries, with Mexico and Japan as the next largest partners in most categories. In terms of FDI flows, Japan was the largest U.S. partner among TPP countries in 2013. Australia, Malaysia, and Singapore are the other top U.S. partners in merchandise trade among TPP countries, and Australia and Singapore are also major U.S. partners in services trade and investment flows among TPP countries. Vietnam, given its significant population and quickly growing economy, may hold the greatest potential for increased economic relations with the United States moving forward. Malaysia, Mexico, Chile, and Peru also represent growing economies that have populations above 20 million. Chile, Peru, and Mexico's potential for increased U.S. economic exchange due to the TPP, however, may be somewhat lessened given their existing FTAs with the United States. Appendix.

The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) among 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The negotiating parties describe the TPP as a proposed "living agreement," which seeks to cover new trade topics and to include new members that are willing to adopt its high standards. The ongoing negotiations, which TPP country trade ministers have repeatedly announced are in the final stages, may progress more quickly with the recent congressional grant of Trade Promotion Authority (TPA) to the Obama Administration. The TPP negotiations are of ongoing interest to Congress. Congressional involvement includes consultations with U.S. negotiators on and oversight of the details of the negotiations, and eventual consideration of legislation to implement the final trade agreement. In assessing the TPP negotiations, Members may be interested in understanding the potential economic impact and significance of TPP and the economic characteristics of the other TPP countries as they evaluate the potential impact of the proposed TPP on the U.S. economy and the commercial opportunities for expansion into TPP markets. This report provides a comparative economic analysis of the TPP countries and their economic relations with the United States. TPP negotiating partners encompass great diversity in population, economic development, and trade and investment patterns with the United States. This economic diversity and inclusion of fast-growing emerging markets present both opportunities and challenges for the United States in achieving a comprehensive and high standard regional FTA among TPP countries. The proposed TPP and its potential expansion are important due to the economic significance of the Asia-Pacific region for both the United States and the world. The region is home to 40% of the world's population, produces nearly 60% of global GDP, and includes some of the fastest-growing economies in the world. Including Canada, Mexico, and Japan, TPP negotiating partners made up 37% of total U.S trade in 2013, and the Asia-Pacific economies as a whole made up 57%. The TPP would be the largest U.S. FTA to date by trade value. The United States is the largest TPP market in terms of both GDP and population. In 2014, non-U.S. TPP partners collectively had a GDP of $10.6 trillion, just over 60% of the U.S. level, and a population of 486 million, about 50% larger than the U.S. population. Japan's entry (pop. 127 million and GDP $4.6 trillion) increased the significance of the agreement on both these metrics. Unlike most previous U.S. FTA negotiations, the TPP involves countries with which the United States already has an FTA. The United States has FTAs in place with Australia, Canada, Chile, Mexico, Peru, and Singapore, which together account for over 82% of U.S. goods trade with TPP countries. Japan is by far the largest U.S. trade partner among TPP members without an existing U.S. FTA. Other TPP partners also have extensive existing FTA networks. The Association of Southeast Asian Nations (ASEAN), of which Brunei, Malaysia, Singapore, and Vietnam are members, and its collective FTAs with other countries, accounts for the bulk of this interconnectedness. Moreover, ASEAN agreements with larger regional economies (e.g., China, India, Japan, and South Korea) present a second possible avenue for Asia-Pacific economic integration; albeit one that currently excludes the United States.